As filed with the Securities and Exchange Commission on October 28, 1999
File No. 811-8842
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5
U.S. MONEY MARKET PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
Butterfield House, Fort Street, P.O. Box 2330, George Town,
Grand Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (345) 949-4719
Philip W. Coolidge, 21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to: John E. Baumgardner, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
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EXPLANATORY NOTE
This Amendment to the Registration Statement on Form N-1A (the
"Registration Statement") has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended. However, beneficial
interests in the Registrant are not being registered under the Securities Act of
1933 (the "1933 Act") because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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PART A
Responses to Items 1 through 3 and 9 have been omitted pursuant to
Item 2(b) of Instruction B of the General Instructions to Form N-1A.
ITEM 4. Investment Objective, Principal Investment Strategies
and Related Risks.
The investment objective of the Portfolio is to achieve as high a level
of current income as is consistent with the preservation of capital and the
maintenance of liquidity.
The investment objective of the Portfolio is a fundamental policy and
may be changed only with the approval of the holders of a "majority of the
outstanding voting securities" as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), of the Portfolio. As used in this Registration
Statement, the term "majority of the outstanding voting securities" (as defined
in the 1940 Act) currently means the vote of (i) 67% or more of the voting
securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
However, the investment policies as described below are not fundamental and may
be changed without such approval.
Currently, the Investor Adviser of the Portfolio invests only in the
highest rated, short-term money market instruments denominated in U.S. dollars.
These instruments include U.S. Government securities and bank obligations
(such as certificates of deposit, fixed time deposits and bankers' acceptances),
commercial paper, repurchase agreements, reverse repurchase agreements,
when-issued and delayed delivery securities, bonds issued by U.S. corporations
and obligations of certain supranational organizations.
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PRINCIPAL RISK FACTORS
The principal risks of investing in the Portfolio and the circumstances
reasonably likely to adversely affect an investment are described below. An
investor may lose money by investing in the Portfolio.
o Market Risk:
The price of a debt security will fluctuate in response to changes in
interest rates. A major change in interest rates, a default on an investment
held by the Portfolio or a significant decline in the value of the Portfolio's
investment could cause the value of your investment in the Portfolio, or its
yield, to decline. In general, short-term securities have relatively small
fluctuations in price in a response to general changes in interest rates.
o Interest Rate Risk:
Investing in the highest quality short-term instruments may result in a
lower yield than investing in lower quality or longer-term instruments.
o Credit Risk:
Credit risk refers to the likelihood that an issuer will default on
interest or principal payments. The Portfolio invest in high quality debt
securities, which limit the exposure to credit risk.
o Industry Concentration Risk:
The Portfolio invests in bank obligations. The value of these
investments could decline as a result of adverse events affecting the banking
industry. Banks are sensitive to changes in money market and general economic
conditions, as well as decisions by regulators that can affect their
profitability.
o Foreign Investment Risk:
Non-U.S. securities are subject to additional risks such as adverse
political, social and economic developments abroad, different kinds and levels
of market and issuer regulations and the different characteristics of overseas
economies and markets. There may be rapid changes in the values of these
securities.
Investments in the Portfolio are neither insured nor guaranteed by the
U.S. Government. Interests in the Portfolio are not deposits or obligations of,
or guaranteed by, Brown Brothers Harriman & Co. or any other bank, and the
interests are not insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other federal, state or other governmental agency.
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ITEM 6. Management, Organization and Capital Structure.
The Investment Adviser is Brown Brothers Harriman & Co., Private
Bankers, a New York limited partnership established in 1818. The firm is subject
to examination and regulation by the Superintendent of Banks of the State of New
York and by the Department of Banking of the Commonwealth of Pennsylvania. The
firm is also subject to supervision and examination by the Commissioner of Banks
of the Commonwealth of Massachusetts.
The Investment Adviser provides investment advice and portfolio
management services to the Portfolio. Subject to the general supervision of the
Portfolio's Trustees, Brown Brothers Harriman & Co. makes the day-to-day
investment decisions for the Portfolio, places the purchase and sale orders for
the portfolio transactions, and generally manages the Portfolio's investments.
The Investment Adviser provides a broad range of investment management services
for customers in the United States and abroad. At June 30, 1999, it managed
total assets of approximately $33 billion.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by Brown Brothers Harriman & Co. under the
Investment Advisory Agreement, Brown Brothers Harriman & Co. receives from the
Portfolio an annual fee, computed daily and payable monthly, equal to 0.15% of
the average daily net assets of the Portfolio. An affiliate of Brown Brothers
Harriman & Co. receives annual administration fees from the Portfolio equal to
0.035% of the average daily net assets of the Portfolio.
ITEM 7. Investor Information.
The net asset value of the Portfolio is determined each day the New
York Stock Exchange is open for regular trading and New York banks are open for
business. This determination is made once each business day as of 12:00 p.m. New
York time.
The Portfolio's assets are valued by using the amortized cost method of
valuation. This method involves valuing a security at its cost at the time of
purchase and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. The market value of the securities held by
the Portfolio fluctuates on the basis of the creditworthiness of the issuers of
such securities and on the levels of interest rates generally. While the
amortized cost method provides certainty in valuation, it may result in periods
when the value so determined is higher or lower than the price the Portfolio
would receive if the security were sold.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio. The net asset value of the Portfolio
is determined once on each business day.
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There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the account
of the Custodian by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
Portfolio Business Day after the reduction is effected, but in any event within
seven days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted
or, to the extent otherwise permitted by the 1940 Act if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
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ITEM 8. Distribution Arrangements.
Not applicable.
ADDITIONAL INVESTMENT INFORMATION
Investments for the Portfolio mature or are deemed to mature within 397
days from the date of purchase and the average maturity of the investments held
by the Portfolio (on a dollar-weighted basis) is 90 days or less.
U.S. Government Securities. The Portfolio may invest in securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities. These
securities, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States.
Bank Obligations. The Portfolio may invest in U.S. dollar-denominated
negotiable certificates of deposit, fixed time deposits and bankers' acceptances
of banks, savings and loan associations and savings banks organized under the
laws of the United States or any state thereof, including obligations of
non-U.S. branches of such banks, or of non-U.S. banks or their U.S. or non-U.S.
branches, provided that in each case, such bank has more than $500 million in
total assets, and has an outstanding short-term debt issue rated within the
highest rating category for short-term debt obligations by at least two (unless
only rated by one) nationally recognized statistical rating organizations (e.g.,
Moody's and S&P) or, if unrated, are of comparable quality as determined by or
under the direction of the Portfolio's Board of Trustees.
Commercial Paper. The Portfolio may invest in commercial paper including
variable rate demand master notes issued by U.S. corporations or by non-U.S.
corporations which are direct parents or subsidiaries of U.S. corporations.
Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand. At the date of investment, commercial paper must be rated
within the highest rating category for short-term debt obligations by at least
two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's and S&P) or, if unrated, are of comparable quality
as determined by or under the direction of the Portfolio's Board of Trustees.
Repurchase Agreements. The Portfolio may enter into repurchase agreements
for the Portfolio only with a "primary dealer" (as designated by the Federal
Reserve Bank of New York) in U.S. Government securities. A repurchase agreement
is an agreement in which the seller (the "Lender") of a security agrees to
repurchase from the Portfolio the security sold at a mutually agreed upon time
and price. As such, it is viewed as the lending of money to the Lender. The
Portfolio always receives as collateral securities which are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
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Other Obligations. Assets of the Portfolio may be invested in bonds, with
maturities not exceeding one year, issued by U.S. corporations which at the date
of investment are rated within the highest rating category for such obligations
by at least two (unless only rated by one) nationally recognized statistical
rating organizations (e.g., Moody's and S&P) or, if unrated, are of comparable
quality as determined by or under the direction of the Portfolio's Board of
Trustees.
Assets of the Portfolio may also be invested in obligations of the
International Bank for Reconstruction and Development which may be supported by
appropriated but unpaid commitments of its member countries, although there is
no assurance that these commitments will be undertaken in the future. However,
assets of the Portfolio may not be invested in obligations of the Inter-American
Development Bank or the Asian Development Bank.
The Investment Adviser invests all of the assets of the Portfolio in
securities which are rated within the highest rating category for short-term
debt obligations by at least two (unless only rated by one) nationally
recognized statistical rating organizations (e.g., Moody's Investors Service,
Inc. ("Moody's") and Standard & Poor's Corporation ("S&P")) or, if unrated, are
of comparable quality as determined by or under the direction of the Board of
Trustees of the the Portfolio.
Year 2000 issue. Information technology experts are concerned about
computer systems' ability to process data-related information on and after
January 1, 2000. This situation, commonly known as the "Year 2000" issue, could
have an adverse impact on the Portfolio. The cost of addressing the Year 2000
issue, if substantial, could adversely affect companies and governments that
issue securities held by the Portfolio. The Investment Adviser is addressing the
Year 2000 issue for its systems. The Portfolio has been informed by its other
service providers that they are taking similar measures. Although the Portfolio
does not expect the Year 2000 issue to adversely effect it, the Portfolio cannot
guarantee that the efforts of the Portfolio, which are limited to requesting and
receiving reports from its services providers, or the efforts of its services
providers to correct the problem will be successful.
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PART B
ITEM 10. COVER PAGE.
Not applicable.
TABLE OF CONTENTS. PAGE
Portfolio History . . . . . . . . . . . B-
Description of Portfolio and Its Investments and Risks B-
Management of the Portfolio . . . . . . . . . . . . . B-
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . B-
Investment Advisory and Other Services . . . . . . . B-
Brokerage Allocation and Other Practices . . . . . . B-
Capital Stock and Other Securities . . . . . . . . . B-
Purchase, Redemption and Pricing of
Securities Being Offered. . . . . . . . . . . . . . . B-
Tax Status . . . . . . . . . . . . . . . . . . . . . B-
Underwriters . . . . . . . . . . . . . . . . . . . . B-
Calculations of Performance Data . . . . . . . . . . B-
Financial Statements . . . . . . . . . . . . . . . . B-
ITEM 11. PORTFOLIO HISTORY.
Not applicable.
ITEM 12. DESCRIPTION OF PORTFOLIO AND ITS INVESTMENTS AND RISKS.
The investment objective of U.S. Money Market Portfolio (the
"Portfolio") is to achieve as high a level of current income as is consistent
with the preservation of capital and the maintenance of liquidity.
Brown Brothers Harriman & Co. is the Portfolio's investment adviser
(the "Investment Adviser").
The following supplements the information regarding the investment
objective of the Portfolio and the policies to be employed to achieve this
objective as set forth above and in Part A.
U.S. GOVERNMENT SECURITIES
Assets of the Portfolio may be invested in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. These
securities, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States. In the case of securities not backed by the full faith and
credit of the United States, it may not be possible to assert a claim against
the United States itself in the event the agency or instrumentality issuing or
guaranteeing the security for ultimate repayment does not meet its commitments.
Securities which are not backed by the full faith and credit of the United
States include, but are not limited to, securities of the Tennessee Valley
Authority, the Federal National Mortgage Association (FNMA), the U.S. Postal
Service and the Resolution Funding Corporation (REFCORP), each of which has a
limited right to borrow from the U.S. Treasury to meet its obligations, and
securities of the Federal Farm Credit System, the Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation (FHLMC) and the Student Loan Marketing
Association, the obligations of each of which may be satisfied only by the
individual credit of the issuing agency. Securities which are backed by the full
faith and credit of the United States include Treasury bills, Treasury notes,
Treasury bonds and pass through obligations of the Government National Mortgage
Association (GNMA), the Farmers Home Administration and the Export-Import Bank.
There is no percentage limitation with respect to investments in U.S. Government
securities.
BANK OBLIGATIONS
Assets of the Portfolio may be invested in U.S. dollar-denominated
negotiable certificates of deposit, fixed time deposits and bankers' acceptances
of banks, savings and loan associations and savings banks organized under the
laws of the United States or any state thereof, including obligations of
non-U.S. branches of such banks, or of non-U.S. banks or their U.S. or non-U.S.
branches, provided that in each case, such bank has more than $500 million in
total assets, and has an outstanding short-term debt issue rated within the
highest rating category for short-term debt obligations by at least two (unless
only rated by one) nationally recognized statistical rating organizations (e.g.,
Moody's and S&P) or, if unrated, are of comparable quality as determined by or
under the direction of the Portfolio's Board of Trustees. There is no additional
percentage limitation with respect to investments in negotiable certificates of
deposit, fixed time deposits and bankers' acceptances of U.S. branches of U.S.
banks and U.S. branches of non-U.S. banks that are subject to the same
regulation as U.S. banks. Since the Portfolio may contain U.S.
dollar-denominated certificates of deposit, fixed time deposits and bankers'
acceptances that are issued by non-U.S. banks and their non-U.S. branches, the
Portfolio may be subject to additional investment risks with respect to those
securities that are different in some respects from obligations of U.S. issuers,
such as currency exchange control regulations, the possibility of expropriation,
seizure or nationalization of non-U.S. deposits, less liquidity and more
volatility in non-U.S. securities markets and the impact of political, social or
diplomatic developments or the adoption of other foreign government restrictions
which might adversely affect the payment of principal and interest on securities
held by the Portfolio. If it should become necessary, greater difficulties might
be encountered in invoking legal processes abroad than would be the case in the
United States. Issuers of non-U.S. bank obligations may be subject to less
stringent or different regulations than are U.S. bank issuers, there may be less
publicly available information about a non-U.S. issuer, and non-U.S. issuers
generally are not subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those applicable to U.S.
issuers. Income earned or received by the Portfolio from sources within
countries other than the United States may be reduced by withholding and other
taxes imposed by such countries. Tax conventions between certain countries and
the United States, however, may reduce or eliminate such taxes. All such taxes
paid by the Portfolio would reduce its net income available for distribution to
its investors; however, the Investment Adviser would consider available yields,
net of any required taxes, in selecting securities of non-U.S. issuers. While
early withdrawals are not contemplated, fixed time deposits are not readily
marketable and may be subject to early withdrawal penalties, which may vary.
Assets of the Portfolio are not invested in obligations of Brown Brothers
Harriman & Co., or Signature Financial Group, Inc., or in the obligations of the
affiliates of any such organization. Assets of the Portfolio are also not
invested in fixed time deposits with a maturity of over seven calendar days, or
in fixed time deposits with a maturity of from two business days to seven
calendar days if more than 10% of the Portfolio's net assets would be invested
in such deposits.
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COMMERCIAL PAPER
Assets of the Portfolio may be invested in commercial paper including
variable rate demand master notes issued by U.S. corporations or by non-U.S.
corporations which are direct parents or subsidiaries of U.S. corporations.
Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand. At the date of investment, commercial paper must be rated
within the highest rating category for short-term debt obligations by at least
two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's and S&P) or, if unrated, are of comparable quality
as determined by or under the direction of the Portfolio's Board of Trustees.
Any commercial paper issued by a non-U.S. corporation must be U.S.
dollar-denominated and not subject to non-U.S. withholding tax at the time of
purchase. Aggregate investments in non-U.S. commercial paper of non-U.S. issuers
cannot exceed 10% of the Portfolio's net assets. Since the Portfolio may contain
commercial paper issued by non-U.S. corporations, it may be subject to
additional investment risks with respect to those securities that are different
in some respects from obligations of U.S. issuers, such as currency exchange
control regulations, the possibility of expropriation, seizure or
nationalization of non-U.S. deposits, less liquidity and more volatility in
non-U.S. securities markets and the impact of political, social or diplomatic
developments or the adoption of other foreign government restrictions which
might adversely affect the payment of principal and interest on securities held
by the Portfolio. If it should become necessary, greater difficulties might be
encountered in invoking legal processes abroad than would be the case in the
United States. There may be less publicly available information about a non-U.S.
issuer, and non-U.S. issuers generally are not subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S.
issuers.
REPURCHASE AGREEMENTS
Repurchase agreements may be entered into for the Portfolio only with a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. This is an agreement in which the seller (the "Lender")
of a security agrees to repurchase from the Portfolio the security sold at a
mutually agreed upon time and price. As such, it is viewed as the lending of
money to the Lender. The resale price normally is in excess of the purchase
price, reflecting an agreed upon interest rate. The rate is effective for the
period of time assets of the Portfolio are invested in the agreement and is not
related to the coupon rate on the underlying security. The period of these
repurchase agreements is usually short, from overnight to one week, and at no
time are assets of the Portfolio invested in a repurchase agreement with a
maturity of more than one year. The securities which are subject to repurchase
agreements, however, may have maturity dates in excess of one year from the
effective date of the repurchase agreement. The Portfolio always receives as
collateral, securities which are issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. Collateral is marked to the market daily and
has a market value including accrued interest at least equal to 100% of the
dollar amount invested on behalf of the Portfolio in each agreement along with
accrued interest. Payment for such securities is made for the Portfolio only
upon physical delivery or evidence of book entry transfer to the account of
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State Street Bank and Trust Company, the Portfolio's Custodian. If the Lender
defaults, the Portfolio might incur a loss if the value of the collateral
securing the repurchase agreement declines and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the Lender, realization upon the
collateral on behalf of the Portfolio may be delayed or limited in certain
circumstances. A repurchase agreement with more than seven days to maturity may
not be entered into for the Portfolio if, as a result, more than 10% of the
Portfolio's net assets would be invested in such repurchase agreement together
with any other investment for which market quotations are not readily available.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements may be entered into only with a "primary
dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. This is an agreement in which the Portfolio agrees to
repurchase securities sold by it at a mutually agreed upon time and price. As
such, it is viewed as the borrowing of money for the Portfolio. Proceeds of
borrowings under reverse repurchase agreements are invested for the Portfolio.
This is the speculative factor known as "leverage". If interest rates rise
during the term of a reverse repurchase agreement utilized for leverage, the
value of the securities to be repurchased for the Portfolio as well as the value
of securities purchased with the proceeds will decline. In these circumstances,
the Portfolio's entering into reverse repurchase agreements may have a negative
impact on the ability to maintain an investor's stable net asset value per
share. Proceeds of a reverse repurchase transaction are not invested for a
period which exceeds the duration of the reverse repurchase agreement. A reverse
repurchase agreement is not entered into for the Portfolio if, as a result, more
than one-third of the market value of the Portfolio's total assets, less
liabilities other than the obligations created by reverse repurchase agreements,
is engaged in reverse repurchase agreements. In the event that such agreements
exceed, in the aggregate, one-third of such market value, the amount of the
Portfolio's obligations created by reverse repurchase agreements is reduced
within three days thereafter (not including weekends and holidays) or such
longer period as the Securities and Exchange Commission may prescribe, to an
extent that such obligations do not exceed, in the aggregate, one-third of the
market value of the Portfolio's assets, as defined above. A segregated account
with the Custodian is established and maintained for the Portfolio with liquid
assets in an amount at least equal to the Portfolio's purchase obligations under
its reverse repurchase agreements. Such a segregated account consists of liquid
high grade debt securities marked to the market daily, with additional liquid
assets added when necessary to insure that at all times the value of such
account is equal to the purchase obligations.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Securities may be purchased for the Portfolio on a when-issued or
delayed delivery basis. For example, delivery and payment may take place a month
or more after the date of the transaction. The purchase price and the interest
rate payable on the securities are fixed on the transaction date. The securities
so purchased are subject to market fluctuation and no interest accrues to the
Portfolio until delivery and payment take place. At the time the commitment to
purchase securities for the Portfolio on a when-issued or delayed delivery basis
is made, the transaction is recorded and thereafter the value of such securities
is reflected each day in determining the Portfolio's net asset value. At the
time of its acquisition, a when-issued security may be valued at less than the
purchase price. Commitments for such when-issued securities are made only when
there is an intention of actually acquiring the securities. To facilitate such
acquisitions, a segregated account with the Custodian is maintained for the
Portfolio with liquid assets in an amount at least equal to such commitments.
Such a segregated account consists of liquid high grade debt securities marked
to the market daily, with additional liquid assets added when necessary to
insure that at all times the value of such account is equal to the commitments.
On delivery dates for such transactions, such obligations are met from
maturities or sales of the securities held in the segregated account and/or from
cash flow. If the right to acquire a when-issued security is disposed of prior
to its acquisition, the Portfolio could, as with the disposition of any other
portfolio obligation, incur a gain or loss due to market fluctuation.
When-issued commitments for the Portfolio may not be entered into if such
commitments exceed in the aggregate 15% of the market value of the Portfolio's
total assets, less liabilities other than the obligations created by when-issued
commitments.
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OTHER OBLIGATIONS
Assets of the Portfolio may be invested in bonds, with maturities not
exceeding one year, issued by U.S. corporations which at the date of investment
are rated within the highest rating category for such obligations by at least
two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's and S&P) or, if unrated, are of comparable quality
as determined by or under the direction of the Portfolio's Board of Trustees.
Assets of the Portfolio may also be invested in obligations of the
International Bank for Reconstruction and Development which may be supported by
appropriated but unpaid commitments of its member countries, although there is
no assurance that these commitments will be undertaken in the future. However,
assets of the Portfolio may not be invested in obligations of the Inter-American
Development Bank or the Asian Development Bank.
LOANS OF PORTFOLIO SECURITIES
Loans of portfolio securities up to 30% of the total value of the
Portfolio are permitted and may be entered into for not more than one year.
These loans must be secured continuously by cash or equivalent collateral or by
an irrevocable letter of credit in favor of the Portfolio at least equal at all
times to 100% of the market value of the securities loaned plus accrued income.
By lending securities, the Portfolio's income can be increased by its continuing
to receive income on the loaned securities as well as by the opportunity to
receive interest on the collateral. Any appreciation or depreciation in the
market price of the borrowed securities which occurs during the term of the loan
inures to the Portfolio and its investors.
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Reasonable finders' and custodial fees may be paid in connection with a
loan. In addition, all facts and circumstances, including the creditworthiness
of the borrowing financial institution, are considered before a loan is made and
no loan is made in excess of one year. There is the risk that a borrowed
security may not be returned to the Portfolio. Securities of the Portfolio are
not loaned to Brown Brothers Harriman & Co. or to any affiliate of the
Portfolio, its investors or Brown Brothers Harriman & Co.
INVESTMENT RESTRICTIONS
The Portfolio is operated under the following investment restrictions
which are deemed fundamental policies and may be changed only with the approval
of the holders of a "majority of the outstanding voting securities" as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), of the
Portfolio. As used in this Registration Statement, the term "majority of the
outstanding voting securities" (as defined in the 1940 Act) currently means the
vote of (i) 67% or more of the voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or represented by proxy; or (ii) more than 50% of the outstanding voting
securities, whichever is less.
The Portfolio may not:
(1) purchase securities which may not be resold to the public without
registration under the Securities Act of 1933, as amended (the "1933 Act");
(2) enter into repurchase agreements with more than seven days to
maturity if, as a result thereof, more than 10% of the market value of its net
assets would be invested in such repurchase agreements together with any other
investment for which market quotations are not readily available;
(3) enter into reverse repurchase agreements which, including any
borrowings under Investment Restriction No. 4, exceed, in the aggregate,
one-third of the market value of its total assets, less liabilities other than
obligations created by reverse repurchase agreements. In the event that such
agreements exceed, in the aggregate, one-third of such market value, it will,
within three days thereafter (not including weekends and holidays) or such
longer period as the Securities and Exchange Commission may prescribe, reduce
the amount of the obligations created by reverse repurchase agreements to an
extent that such obligations will not exceed, in the aggregate, one-third of the
market value of its assets;
(4) borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of its total
assets, taken at cost, at the time of such borrowing; mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 10% of the value of its net assets at the time of such
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<PAGE>
borrowing. The Portfolio will not purchase securities while borrowings exceed 5%
of its total assets. This borrowing provision is included to facilitate the
orderly sale of portfolio securities, for example, in the event of abnormally
heavy redemption requests, and is not for investment purposes and does not apply
to reverse repurchase agreements (see "Other Investments - Reverse Repurchase
Agreements");
(5) enter into when-issued commitments exceeding in the aggregate 15%
of the market value of its total assets, less liabilities other than obligations
created by when-issued commitments;
(6) purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately after
such purchase, the value of such investments in such industry would exceed 25%
of the value of its total assets. For purposes of industry concentration, there
is no percentage limitation with respect to investments in U.S. Government
securities and negotiable certificates of deposit, fixed time deposits and
bankers' acceptances of U.S. branches of U.S. banks and U.S. branches of
non-U.S. banks that are subject to the same regulation as U.S. banks;
(7) purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of its total assets
would be invested in securities or other obligations or any one such issuer.
This limitation does not apply to issues of the U.S. Government, its agencies or
instrumentalities;
(8) make loans, except through the purchase or holding of debt
obligations, repurchase agreements or loans of portfolio securities in
accordance with its investment objective and policies (see "Investment Objective
and Policies");
(9) purchase or sell puts, calls, straddles, spreads, or any
combinations thereof; real estate; commodities; commodity contracts or interests
in oil, gas or mineral exploration or development programs. However, bonds or
commercial paper issued by companies which invest in real estate or interests
therein including real estate investment trusts may be purchased;
(10) purchase securities on margin, make short sales of securities or
maintain a short position, provided that this restriction is not deemed to be
applicable to the purchase or sale of when-issued securities or of securities
for delivery at a future date;
(11) invest in fixed time deposits with a duration of over seven
calendar days, or in fixed time deposits with a duration of from two business
days to seven calendar days if more than 10% of its total assets would be
invested in such deposits;
(12) acquire securities of other investment companies;
(13) act as an underwriter of securities; or
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(14) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.
Except with respect to Investment Restriction No. 3, there will be no
violation of any investment restriction if that restriction is complied with at
the time the relevant action is taken notwithstanding a later change in market
value of an investment, in net or total assets, in the securities rating of the
investment, or any other later change.
NON-FUNDAMENTAL RESTRICTIONS. The Portfolio does not purchase more than
10% of all outstanding debt obligations of any one issuer (other than securities
issued by the U.S. Government, its agencies or instrumentalities). The Portfolio
may not as a matter of operating policy invest more than 10% of its net assets
(taken at the greater of cost or market value) in restricted securities. These
policies are not fundamental and may be changed without investor approval.
PERCENTAGE AND RATING RESTRICTIONS. If a percentage or rating
restriction on investment or utilization of assets set forth above or referred
to in Part A is adhered to at the time an investment is made or assets are so
utilized, a
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later change in percentage resulting from changes in the value of the portfolio
securities or a later change in the rating of a portfolio security is not
considered a violation of policy. If respective investment restrictions relating
to any particular investment practice or policy are inconsistent between the
Portfolio and an investor, the Portfolio will adhere to the more restrictive
limitation.
BOND, NOTE AND COMMERCIAL PAPER RATINGS
BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Aaa - Bonds rated Aaa are judged to be of the "best quality". Issues
rated Aaa may be further modified by the numbers 1, 2 or 3 (3 being the highest)
to show relative strength within the rating category.
STANDARD & POOR'S CORPORATION ("S&P")
AAA - The AAA rating is the highest rating assigned to debt obligations
and indicates an extremely strong capacity to pay principal and interest.
NOTE AND VARIABLE RATE INVESTMENT RATINGS
Moody's - MIG-1. Notes rated MIG-1 are judged to be of the best
quality, enjoying strong protection from established cash flow of funds for
their services or from established and broad-based access to the market for
refinancing or both.
S&P - SP-1. SP-1 denotes a very strong or strong capacity to pay
principal and interest. Issues determined to possess overwhelming safety
characteristics are given a plus (+) designation (SP-1+).
CORPORATE COMMERCIAL PAPER RATINGS
Moody's - Commercial Paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Prime-1 indicates highest quality repayment
capacity of rated issue.
S&P - Commercial Paper ratings are a current assessment of the
likelihood of timely payment of debts having an original maturity of no more
than 365 days. Issues rated A-1 have the greatest capacity for timely payment.
Issues rated "A-1+" are those with an "overwhelming degree of credit
protection."
OTHER CONSIDERATIONS
Among the factors considered by Moody's in assigning bond, note and
commercial paper ratings are the following: (i) evaluation of the management of
the issuer; (ii) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(iii) evaluation of the issuer's products in relation to competition and
customer
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<PAGE>
acceptance; (iv) liquidity; (v) amount and quality of long-term debt; (vi) trend
of earnings over a period of 10 years; (vii) financial strength of a parent
company and the relationships which exist with the issuer; and (viii)
recognition by management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
Among the factors considered by S&P in assigning bond, note and
commercial paper ratings are the following: (i) trend of earnings and cash flow
with allowances made for unusual circumstances, (ii) stability of the issuer's
industry, (iii) the issuer's relative strength and position within the industry
and (iv) the reliability and quality of management.
ITEM 13. MANAGEMENT OF THE PORTFOLIO.
The Portfolio's Trustees, in addition to supervising the actions of the
Investment Adviser and the Portfolio's administrator, Brown Brothers Harriman
Trust Company, (the "Administrator"), as set forth below, decide upon matters of
general policy with respect to the Portfolio.
Because of the services rendered to the Portfolio by the Investment
Adviser and the Administrator, the Portfolio requires no employees, and its
officers, other than the Chairman, receive no compensation from the Portfolio.
The Trustees and executive officers of the Portfolio, their business
addresses, and principal occupations during the past five years (although their
titles may have varied during the period) are:
TRUSTEES OF THE PORTFOLIO
RICHARD L. CARPENTER** - Trustee of the Portfolio and the
Portfolios(1); Trustee of Dow Jones Islamic Market Index Portfolio (since March
1999); Trustee of The 59 Wall Street Trust (since October 1999); Director of The
59 Wall Street Fund, Inc. (since October 1999); Retired; Director of Internal
Investments, Pennsylvania Public School Employees' Retirement System (prior to
December 1997). His business address is 12664 Lazy Acres Court, Nevada City, CA
95959.
CLIFFORD A. CLARK** - Trustee of the Portfolio and the Portfolios;
Trustee of Dow Jones Islamic Market Index Portfolio (since March 1999); Trustee
of The 59 Wall Street Trust (since October 1999); Director of The 59 Wall Street
Fund, Inc. (since October 1999); Retired; His business address is 42 Clowes
Drive, Falmouth, MA 02540.
DAVID M. SEITZMAN** - Trustee of the Portfolio and the Portfolios;
Trustee of The 59 Wall Street Trust (since October 1999); Director of The 59
Wall Street Fund, Inc. (since October 1999); Physician, Private Practice. His
business address is 7117 Nevis Road, Bethesda, MD 20817.
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<PAGE>
J.V. SHIELDS, JR.* - Trustee of the Portfolio and the Portfolios (since
October 1999); Chairman of the Board and Trustee of The 59 Wall Street Trust;
Director of The 59 Wall Street Fund, Inc.; Managing Director, Chairman and Chief
Executive Officer of Shields & Company; Chairman of Capital Management
Associates, Inc.; Director of Flowers Industries, Inc.(2). Vice Chairman and
Trustee of New York Racing Association. His business address is Shields &
Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD** - Trustee of the Portfolio and the Portfolios (since
October 1999); Director of The 59 Wall Street Fund, Inc.;Executive Vice
President - Finance and Operations of The Interpublic Group of Companies. His
business address is The Interpublic Group of Companies, Inc., 1271 Avenue of the
Americas, New York, NY 10020.
DAVID P. FELDMAN** - Trustee of the Portfolio and the Portfolios (since
October 1999); Director of The 59 Wall Street Fund, Inc.; Retired; Vice
President and Investment Manager of AT&T Investment Management Corporation
(prior to October 1997); Director of Dreyfus Mutual Funds, Jeffrey Co. and
Heitman Financial. His business address is 3 Tall Oaks Drive, Warren, NJ 07059.
ALAN G. LOWY** - Trustee of the Portfolio and the Portfolios (since
October 1999); Director of The 59 Wall Street Fund, Inc.; Private Investor;
Secretary of the Los Angeles County Board of Investments (prior to March 1995).
His business address is 4111 Clear Valley Drive, Encino, CA 91436.
ARTHUR D. MILTENBERGER** - Trustee of the Portfolio and the Portfolios
(since October 1999); Director of The 59 Wall Street Fund, Inc.; Trustee of the
Portfolios (since October 1999); Retired, Executive Vice President and Chief
Financial Officer of Richard K. Mellon and Sons (prior to June 1998); Treasurer
of Richard King Mellon Foundation (prior to June 1998); Vice President of the
Richard King Mellon Foundation; Trustee, R.K. Mellon Family Trusts; General
Partner, Mellon Family Investment Company IV, V and VI; Director of
Aerostructures Corporation (since 1996) (2). His business address is Richard K.
Mellon and Sons, P.O. Box RKM, Ligonier, PA 15658.
J. ANGUS IVORY - Trustee of the Portfolio and the Portfolios (since
October 1999); Trustee of The 59 Wall Street Trust (since October 1999);
Director of The 59 Wall Street Fund, Inc. (since October 1999); Trustee of Dow
Jones Islamic Market Index Portfolio (since March 1999); Director of Brown
Brothers Harriman Ltd., subsidiary of Brown Brothers Harriman & Co.; Director of
Old Daily Saddlery; Advisor, RAF Central Fund; Committee Member, St. Thomas
Hospital Pain Clinic (since 1999).
OFFICERS OF THE PORTFOLIO
PHILIP W. COOLIDGE - President; Chief Executive Officer and President
of Signature Financial Group, Inc., 59 Wall Street Distributors, Inc. ("59 Wall
Street Distributors") and 59 Wall Street Administrators, Inc. ("59 Wall Street
Administrators") .
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JAMES E. HOOLAHAN - Vice President; Senior Vice President of
Signature Financial Group, Inc.
JOHN R. ELDER - Treasurer; Vice President of Signature Financial Group,
Inc. (since April 1995); Treasurer of Phoenix Family of Mutual Funds (prior to
April 1995).
LINDA T. GIBSON - Secretary; Senior Vice President and Secretary of
SFG; Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.
LINWOOD C. DOWNS - Assistant Treasurer; Senior Vice President and
Treasurer of SFG.
SUSAN JAKUBOSKI - Assistant Treasurer and Assistant Secretary of the
Portfolio; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Cayman) Limited (since August 1994).
MOLLY S. MUGLER - Assistant Secretary; Legal Counsel and Assistant
Secretary of Signature Financial Group, Inc.; and Assistant Secretary of 59 Wall
Street Distributors and 59 Wall Street Administrators.
CHRISTINE D. DORSEY - Assistant Secretary; Vice President, Signature
Financial Group, Inc. (since January 1996); Paralegal and Compliance Officer,
various financial companies (July 1992 to January 1996); Graduate Student,
Bentley College (prior to December 1994).
- -------------------------
*Mr. Shields is an "interested" person of the Portfolio because of
his affiliation with a registered broker-dealer.
**These Trustees are members of the Audit Committee of the Portfolio.
(1) The Portfolios consist of the following active investment companies:
U.S. Money Market Portfolio, U.S. Small Company Portfolio and International
Equity Portfolio and the following inactive investment companies: U.S. Equity
Portfolio, European Equity Portfolio, Pacific Basin Equity Portfolio and
Inflation-Indexed Securities Portfolio.
(2) Shields & Company, Capital Management Associates, Inc. and Flowers
Industries, Inc., with which Mr. Shields is associated, are a registered
broker-dealer and a member of the New York Stock Exchange, a registered
investment adviser, and a diversified food company, respectively.
(3) Richard K. Mellon and Sons, Richard King Mellon Foundation, R.K. Mellon
Family Trusts, Mellon Family Investment Company IV, V and VI and
Aerostructures Corporation, with which Mr. Miltenberger is or has been
associated, are a private foundation, a private foundation, a trust, an
investment company and an aircraft manufacturer, respectively.
The address of each officer of the Portfolio is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge, Hoolahan Downs and Elder and Mss. Gibson,
Jakuboski, Mugler and Drapeau also hold similar positions with other investment
companies for which affiliates of Signature Financial Group, Inc. serve as the
principal underwriter.
No Trustee of the Portfolio is an "interested person" of the Portfolio
as that term is defined in the 1940 Act.
Trustees of the Portfolio
The Trustees of the Portfolio receive a base annual fee of $15,000
(except the Chairmen who receive a base annual fee of $20,000) and such base
annual fee is allocated among all series of The 59 Wall Street Trust, all series
of The 59 Wall Street Fund, Inc. and the Portfolio and any other active
Portfolios having the same Board of Trustees based upon their respective net
assets. In addition, each series of The 59 Wall Street Trust and The 59 Wall
Street Fund, Inc., the Portfolios and any other active Portfolios which has
commenced operations pays an annual fee to each Trustee of $1,000.
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Total
Aggregate Retirement Compensation
Compensation Benefits Accrued Estimated Annual from Fund
Name of Person, from the Fund as Part of Benefits upon Complex* Paid
Position Complex* Fund Expenses Retirement to Trustees
J.V. Shields, Jr.***, $19,584 none none $31,000
Trustee
Eugene P. Beard***, $15,828 none none $26,000
Trustee
Richard L. Carpenter**, $11,970 none none $15,000
Trustee
Clifford A. Clark**, $11,970 none none $15,000
Trustee
David P. Feldman***, $15,828 none none $26,000
Trustee
J. Angus Ivory**, $0 none none $0
Trustee
Alan G. Lowy*** $15,828 none none $26,000
Trustee
Arthur D. Miltenberger***, $15,828 none none $26,000
Trustee
David M. Seitzman**, $11,970 none none $15,000
Trustee
<FN>
* The Fund Complex consists of the Portfolio, The 59 Wall Street Trust,
The 59 Wall Street Fund, Inc. (which currently consists of seven series) and the
seven Portfolios.
**Prior to October 22, 1999, these Trustees received no compensation
from The 59 Wall Street Trust or The 59 Wall Street Fund, Inc.
***Prior to October 22, 1999, these Trustees received no compensation from
U.S. Money Market Portfolio.
</FN>
</TABLE>
By virtue of the responsibilities assumed by Brown Brothers Harriman &
Co. under the Investment Advisory Agreement with the Portfolio and by Brown
Brothers Harriman Trust Company under the Administration Agreement with the
Portfolio (see "Investment Adviser" and "Administrator"), the Portfolio requires
no employees other than its officers, and none of its officers devote full time
to the affairs of the Portfolio or, other than the Chairman, receive any
compensation from the Portfolio.
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ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of September 30, 1999, The 59 Wall Street Money Market Fund (the
"Fund"), a series of The 59 Wall Street Trust owned approximately 100% of the
outstanding beneficial interests in the Portfolio. So long as the Fund controls
the Portfolio, it may take actions without the approval of any other holders of
beneficial interest in the Portfolio.
The Fund has informed the Portfolio that whenever it is requested to
vote on matters pertaining to the Portfolio (other than a vote by the Portfolio
to continue the operation of the Portfolio upon the withdrawal of another
investor in the Portfolio), it will hold a meeting of its shareholders and will
cast its vote as instructed by those shareholders.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
INVESTMENT ADVISER. Under its Investment Advisory Agreement with the
Portfolio, subject to the general supervision of the Portfolio's Trustees and in
conformance with the stated policies of the Portfolio, Brown Brothers Harriman &
Co. provides investment advice and portfolio management services to the
Portfolio. In this regard, it is the responsibility of Brown Brothers Harriman &
Co. to make the day-to-day investment decisions for the Portfolio, to place the
purchase and sale orders for portfolio transactions and to manage, generally,
the Portfolio's investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Portfolio is dated December 15, 1993 and remains in effect for two years
from such date and thereafter, but only as long as the agreement is specifically
approved at least annually (i) by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Portfolio, or
by the Portfolio's Trustees, and (ii) by a vote of a majority of the Trustees of
the Portfolio who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of the Portfolio ("Independent
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement was most recently approved by the
Independent Trustees on February 9, 1999. The Investment Advisory Agreement
terminates automatically if assigned and is terminable at any time without
penalty by a vote of a majority of the Trustees of the Portfolio or by a vote of
the holders of a "majority of the outstanding voting securities" (as defined in
the 1940 Act) of the Portfolio on 60 days' written notice to Brown Brothers
Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written notice
to the Portfolio.
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<PAGE>
The investment advisory fee paid to the Investment Adviser is
calculated daily and paid monthly at an annual rate equal to 0.15% of the
Portfolio's average daily net assets. For the fiscal years ended June 30, 1997,
1998 and 1999, the Portfolio incurred $1,274,559, $1,466,761 and $1,593,123,
respectively, for advisory services.
The investment advisory services of Brown Brothers Harriman & Co. to
the Portfolio are not exclusive under the terms of the Investment Advisory
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
advisory services to others, including other registered investment companies.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting, selling or distributing securities and
from sponsoring, organizing or controlling a registered open-end investment
company continuously engaged in the issuance of its shares. There is presently
no controlling precedent prohibiting financial institutions such as Brown
B-14
<PAGE>
Brothers Harriman & Co. from performing investment advisory or administrative
functions. If Brown Brothers Harriman & Co. were to terminate its Investment
Advisory Agreement with the Portfolio, or were prohibited from acting in such
capacity, it is expected that the Trustees of the Portfolio would recommend to
the investors that they approve a new investment advisory agreement for the
Portfolio with another qualified adviser.
ADMINISTRATOR.
Brown Brothers Harriman Trust Company acts as administrator of the
Portfolio. Brown Brothers Harriman Trust Company is a wholly-owned subsidiary of
of Brown Brothers Harriman & Co.
Brown Brothers Harriman Trust Company, in its capacity as
Administrator, administers all aspects of the Portfolio's operations subject to
the supervision of the Trustees except as set forth above under "Investment
Adviser". In connection with its responsibilities as Administrator and at its
own expense, Brown Brothers Harriman Trust Company (i) provides the Portfolio
with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of the Portfolio, including the maintenance of certain
books and records, receiving and processing requests for increases and decreases
in the beneficial interests in the Portfolio, notification to the Investment
Adviser of available funds for investment, reconciliation of account information
and balances between the Custodian and the Investment Adviser, and processing,
investigating and responding to investor inquiries; (ii) oversees the
performance of administrative and professional services to the Portfolio by
others, including the Custodian; (iii) provides the Portfolio with adequate
office space and communications and other facilities; and (iv) prepares and/or
arranges for the preparation, but does not pay for, the periodic updating of the
Portfolio's Registration Statement for filing with the Securities and Exchange
Commission and the preparation of tax returns for the Portfolio and reports to
investors and the Securities and Exchange Commission.
For the services rendered to the Portfolio and related expenses borne
by Brown Brothers Harriman Trust Company as Administrator of the Portfolio,
Brown Brothers Harriman Trust Company receives from the Portfolio an annual fee,
computed daily and payable monthly, equal to 0.035% of the Portfolio's average
daily net assets. For the fiscal years ended June 30, 1997, 1998 and 1999, the
Portfolio incurred $297,397, $342,244 and $371,729, respectively, for
administrative services.
The Administration Agreement between the Portfolio and Brown Brothers
Harriman Trust Company (dated March 1, 1999) will remain in effect for two years
from the date thereof and thereafter, but only so long the agreement is
specifically approved at least annually in the same manner as the Investment
Advisory Agreement (see "Investment Adviser"). The Independent Trustees most
recently approved the Portfolio's Administration Agreement on February 9, 1999.
The agreement will terminate automatically if assigned by either party thereto
and is terminable with respect to the Portfolio at any time without penalty by a
vote of a majority of the Trustees of the Portfolio or by a vote of the holders
of a "majority of the outstanding voting securities" (as defined in the 1940
Act) of the Portfolio. The Portfolio's Administration Agreement is terminable by
the Trustees of the Portfolio or by investors in the Portfolio on 60 days'
written notice to Brown Brothers Harriman Trust Company. The agreement is
terminable by the Administrator on 90 days' written notice to the Portfolio.
Prior to March 1, 1999, Brown Brothers Harriman Trust Company (Cayman)
Limited acted as administrator to the Portfolio under the same terms and
conditions as set forth herein.
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<PAGE>
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman Trust Company, 59 Wall Street Administrators, Inc. performs such
subadministrative duties for the Portfolio as are from time to time agreed upon
by the parties. The offices of 59 Wall Street Administrators are located at 21
Milk Street, Boston, MA 02109. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. 59 Wall Street Administrators's
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the Portfolio, participation in
the preparation of documents required for compliance by the Portfolio with
applicable laws and regulations, preparation of certain documents in connection
with meetings of Trustees of and investors in the Portfolio, and other functions
that would otherwise be performed by the Administrator as set forth above. For
performing such subadministrative services, 59 Wall Street Administrators
receives such compensation as is from time to time agreed upon, but not in
excess of the amount paid to the Administrator from the Portfolio.
Prior to March 1, 1999, Signature Financial Group (Cayman) Limited
acted as subadministrator to the Portfolio under the same terms and conditions
as set forth herein.
PLACEMENT AGENT
The Portfolio has not retained the services of a principal underwriter
or distributor, since interests in the Portfolio are offered solely in private
placement transactions. 59 Wall Street Distributors, Inc. acting as agent for
the Portfolio, serves as the placement agent of interests in the Portfolio. 59
Wall Street Distributors receives no compensation for serving as placement
agent.
CUSTODIAN
State Street Bank and Trust Company ("State Street" or the
"Custodian"), 225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02101, is
the Custodian for the Portfolio.
As Custodian, it is responsible for maintaining books and records of
portfolio transactions and holding the Portfolio's securities and cash pursuant
to a custodian agreement with the Portfolio. Cash is held for the Portfolio in
demand deposit accounts at the Custodian. Subject to the supervision of the
Administrator, the Custodian maintains the accounting and portfolio transaction
records for the Portfolio and each day computes the net asset value and net
income of the Portfolio.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Boston, Massachusetts are the independent
auditors of the Portfolio.
ITEM 16. BROKERAGE ALLOCATION, TRANSACTIONS AND OTHER PRACTICES.
Brown Brothers Harriman & Co., as Investment Adviser for the Portfolio,
places orders for all purchases and sales of portfolio securities, enters into
repurchase and reverse repurchase agreements and executes loans of portfolio
securities. Fixed-income securities are generally traded at a net price with
dealers acting as principal for their own account without a stated commission.
The price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. From time to time certificates of deposit may
be purchased through intermediaries who may charge a commission for their
services.
Brown Brothers Harriman & Co. does not seek profits through short-term
trading. However, Brown Brothers Harriman & Co. may on behalf of the Portfolio
dispose of any portfolio security prior to its maturity if it believes such
disposition is advisable even if this action realizes profits.
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<PAGE>
Money market securities are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes. Where possible
transactions on behalf of the Portfolio are entered directly with the issuer or
from an underwriter or market maker for the securities involved. Purchases from
underwriters of securities may include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
may include a spread between the bid and asked price. The policy of the
Portfolio regarding purchases and sales of securities is that primary
consideration will be given to obtaining the most favorable prices and efficient
executions of transactions. In seeking to implement the Portfolio's policies,
the Investment Adviser effects transactions with those brokers and dealers who
the Investment Adviser believes provide the most favorable prices and are
capable of providing efficient executions. If the Investment Adviser believes
such prices and executions are obtainable from more than one broker or dealer,
it may give consideration to placing portfolio transactions with those brokers
and dealers who also furnish research and other services to the Portfolio and or
the Investment Adviser. Such services may include, but are not limited to, any
one or more of the following: information as to the availability of securities
for purchase or sale; statistical or factual information or opinions pertaining
to investment; and appraisals or evaluations of portfolio securities.
Since brokerage commissions are not normally paid on investments which
are made for the Portfolio, turnover resulting from such investments should not
adversely affect the net asset value of the Portfolio. In connection with
portfolio transactions for the Portfolio, Brown Brothers Harriman & Co. intends
to seek best price and execution on a competitive basis for both purchases and
sales of securities. For the fiscal years ended June 30, 1998 and 1999, the
Portfolio paid no brokerage commissions.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased with those to be sold or purchased for other
customers in order to obtain best execution, including lower brokerage
commissions, if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction are made
by Brown Brothers Harriman & Co. in the manner it considers to be most equitable
and consistent with its fiduciary obligations to its customers, including the
Portfolio. In some instances, this procedure might adversely affect the
Portfolio.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio is organized as a trust under the laws of the State of
New York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
B-17
<PAGE>
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees if they choose to do so
and in such event the other investors in the Portfolio would not be able to
elect any Trustee. The Portfolio is not required and has no current intention to
hold annual meetings of investors but the Portfolio will hold special meetings
of investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. Investors have under
certain circumstances (e.g., upon application and submission of certain
specified documents to the Trustees by a specified percentage of the outstanding
interests in the Portfolio) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified percentage
of the outstanding interests in the Portfolio. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors. No material amendment may
be made to the Portfolio's Declaration of Trust without the affirmative majority
vote of investors (with the vote of each being in proportion to the amount of
its investment).
The end of the Portfolio's fiscal year is June 30.
Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.
Investor inquiries may be directed to 59 Wall Street Distributors, 21
Milk Street, Boston, Massachusetts 02109, (617) 423-0800.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to its percentage of the
beneficial interests in the Portfolio), except that if the Trustees recommend
such sale of assets, the approval by vote of a majority of the investors (with
the vote of each being in proportion to its percentage of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets if approved by
the
B-18
<PAGE>
vote of two thirds of its investors (with the vote of each being in proportion
to the amount of its investment) or (ii) by the Trustees by written notice to
its investors.
Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.
The Portfolio's Declaration of Trust further provides that obligations
of the Portfolio are not binding upon the Trustees individually but only upon
the property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act.
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each day the New York Stock Exchange is open for regular
trading and New York banks are open for business. At 12:00 P.M., New York time
on each such business day, the value of each investor's beneficial interest in
the Portfolio is determined by multiplying the net asset value of the Portfolio
by the percentage, effective for that day, which represents that investor's
share of the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 12:00
P.M., New York time on such day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 12:00 P.M., New York time on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 12:00 P.M., New York time on
the following business day of the Portfolio.
The net income and capital gains and losses, if any, of the Portfolio
are determined at 12:00 P.M., New York time on each business day. Net income for
days other than business days is determined as of 12:00 P.M., New York time on
the immediately preceding business day. All the net income, as defined below,
and capital gains and losses, if any, so determined are allocated pro rata among
the investors in the Portfolio at the time of such determination.
For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) consists of (i) accrued interest,
accretion of discount and amortization of premium on securities held by the
Portfolio, less (ii) all actual and accrued expenses of the Portfolio (including
the fees payable to the Investment Adviser and Administrator of the Portfolio).
The securities held by the Portfolio are valued at their amortized
cost. Pursuant to a rule of the Securities and Exchange Commission, an
investment company may use the amortized cost method of valuation subject to
certain conditions and the determination that such method is in the best
interests of the Portfolio's investors. The use of amortized cost valuations is
subject to the following conditions: (i) as a particular responsibility within
the overall duty of care owed to the Portfolio's investors, the Trustees of the
Portfolio have established procedures reasonably designed, taking into account
current market conditions and the investment objective of its investors, to
stabilize the net asset value as computed; (ii) the procedures include periodic
review by the Trustees of the Portfolio, as they deem appropriate and at such
intervals as are reasonable in light of current market conditions, of the
relationship between the value of the Portfolio's net assets using amortized
cost and the value of the Portfolio's net assets based upon available
indications of market value with respect to such portfolio securities; (iii) the
Trustees of the Portfolio will consider what steps, if any, should be taken if a
difference of more than 1/2 of 1% occurs between the two methods of valuation;
and (iv) the Trustees of the Portfolio will take such steps as they consider
appropriate, such as shortening the average portfolio maturity, realizing gains
or losses as a result of investment in the Portfolio, establishing the value of
the Portfolio's net assets by using available market quotations, or reducing the
number of interests in the
B-19
<PAGE>
Portfolio, to minimize any material dilution or other unfair results which might
arise from differences between the two methods of valuation.
Any reduction of outstanding interests will be effected by having each
investor contribute to the Portfolio's capital the necessary interests on a pro
rata basis. Each investor will be deemed to have agreed to such contribution in
these circumstances by that investor's investment in the Portfolio.
Such conditions also generally require that: (i) investments for the
Portfolio be limited to instruments which the Trustees of the Portfolio
determine present minimal credit risks and which are of high quality as
determined by any nationally recognized statistical rating organization that is
not an affiliated person of the issuer of, or any issuer, guarantor or provider
of credit support for, the instrument, or, in the case of any instrument that is
not so rated, is of comparable quality as determined by the Investment Adviser
under the general supervision of the Trustees of the Portfolio; (ii) a
dollar-weighted average portfolio maturity of not more than 90 days be
maintained and no instrument is purchased with a remaining maturity of more than
397 days; (iii) the Portfolio's available cash will be invested in such a manner
as to reduce such maturity to 90 days or less as soon as is reasonably
practicable, if the disposition of a portfolio security results in a
dollar-weighted average portfolio maturity of more than 90 days; and (iv) no
more than 5% of the Portfolio's total assets may be invested in the securities
of any one issuer (other than U.S. Government securities).
ITEM 19. TAX STATUS.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. However each investor in the Portfolio will be
taxable on its share (as determined in accordance with the governing instruments
of the Portfolio) of the Portfolio's ordinary income and capital gain in
determining its income tax liability. The determination of such share will be
made in accordance with the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder.
Although, as described above, the Portfolio will not be subject to
federal income tax, it will file appropriate income tax returns.
It is intended that the Portfolio's assets will be managed in such a
way that an investor in the Portfolio will be able to satisfy the requirements
of Subchapter M of the Code.
Gains or losses on sales of securities by the Portfolio will be treated
as long-term capital gains or losses if the securities have been held by it for
more than one year. Other gains or losses on the sale of securities will be
short-term capital gains or losses.
ITEM 20. UNDERWRITERS.
The placement agent for the Portfolio is 59 Wall Street Distributors,
which receives no compensation for serving in this capacity.
B-20
<PAGE>
Other investment companies, insurance company separate accounts, common and
commingled trust funds and similar organizations and entities may continuously
invest in the Portfolio.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The Portfolio's June 30, 1999 annual report filed with the Securities
and Exchange Commission pursuant to Section 30(b) of the 1940 Act and Rule
30b2-1 thereunder is incorporated herein by reference.
B-21
<PAGE>
PART C
ITEM 23. EXHIBITS.
1(a) Declaration of Trust of the Registrant as amended.(2)
1(b) Certificate of Amendment to Declaration of Trust of
the Registrant.(3)
2 By-Laws of the Registrant. (2)
5 Investment Advisory Agreement between the Registrant
and Brown Brothers Harriman & Co. (2)
8(a) Custodian Contract between the Registrant and State
Street Bank and Trust Company. (1)
9(a) Administration Agreement between the Registrant and
Brown Brother Harriman Trust Company (Cayman)
Limited. (1)
9(b) Administration Agreement between the Registrant and
Brown Brothers Harriman Trust Company.(3)
13 Investment representation letters of initial
investors. (1)
27 Financial Data Schedule. (3)
- ---------------------
(1) Filed with the initial Registration Statement on October 28, 1994.
(2) Filed with Amendment No. 1 to the Registration Statement on October 27,
1995
(3) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
<PAGE>
ITEM 25. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed in the initial Registration Statement as an Exhibit.
The Trustees and officers of the Registrant are insured under an errors
and omissions liability insurance policy. The Registrant and its officers are
also insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940, as amended.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Registrant's investment adviser, Brown Brothers Harriman & Co., is
a New York limited partnership. Brown Brothers Harriman & Co. conducts a general
banking business and is a member of the New York Stock Exchange.
To the knowledge of the Registrant, none of the general partners or
officers of Brown Brothers Harriman & Co. is engaged in any other business,
profession, vocation or employment of a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of:
U.S. Money Market Portfolio
Butterfield House
Fort Street, P.O. Box 2330
George Town, Grand Cayman
Cayman Islands, BWI
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment adviser)
Brown Brothers Harriman Trust Company
63 Wall Street
New York, NY 10005
(administrator)
59 Wall Street Administrators, Inc.
21 Milk Street
Boston, MA 02109
(subadministrator)
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, MA 02109
(placement agent)
C-2
<PAGE>
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
(custodian)
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of , on the 28th day of October, 1999.
U.S. Money Market Portfolio
By /s/PHILIP W. COOLIDGE
Philip W. Coolidge, President
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO.: DESCRIPTION OF EXHIBIT
EX-99.B1(b) Certificate of Amendment to Declaration of Trust.
EX-99.B9(b) Administration Agreement.
EX-99.B27 Financial Data Schedule.
U.S. MONEY MARKET PORTFOLIO
CERTIFICATE OF AMENDMENT TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of U.S. Money
Market Portfolio (the "Trust"), a business trust organized under the laws of the
State of New York, pursuant to a Declaration of Trust, as of the 15th day of
June, 1993 (the "Declaration"), do hereby certify, as provided by the provisions
of the first sentence of Section 10.4(a) of the Declaration, by vote duly
adopted by a majority of the investors of the Trust on October 22, 1999, and by
a majority of the Trustees on August 10, 1999, that Section 1.2 was duly amended
and restated as follows:
"Independent Trustees" shall mean those Trustees who are not
"interested persons" of the Trust as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended.
and that Sections 2.2 and 2.3 of Article II were duly amended and restated as
follows:
Section 2.2. Term and Election. Each Trustee named herein, or elected
or appointed prior to the first meeting of the Holders, shall (except
in the event of resignations or removals or vacancies pursuant to
Section 2.3 or 2.4 hereof) hold office until his successor has been
elected at such meeting and has qualified to serve as Trustee, as
required under the 1940 Act. Subject to the provisions of Section 16(a)
of the 1940 Act and except as provided in Section 2.3 hereof, each
Trustee shall hold office until he or she attains the age of seventy
(except with respect to Trustees who are elected as Trustees prior to
January 1, 2000, until he or she attains the age of seventy-two), or
until he or she sooner dies, resigns or is removed as provided in
Section 2.3 below.
Section 2.3. Resignation, Removal and Retirement Any Trustee may resign
his or her trust (without need for prior or subsequent accounting) by
an instrument in writing executed by such Trustee and delivered or
mailed to the Chairman, if any, the President or the Secretary of the
Trust and such resignation shall be effective upon such delivery, or at
a later date according to the terms of the instrument. Any Trustee may
be removed by the affirmative vote of Holders of two-thirds of the
Interests or with a cause, by the action of two-thirds of the remaining
Trustees. Any Trustee may be removed with or without cause by the
action of three-quarters of the remaining Trustees who are Independent
Trustees (provided the aggregate number of Trustees, after such removal
and after giving effect to any appointment made to fill the vacancy
created by such removal, shall not be less than the number required by
Section 2.1 hereof). Removal with cause includes, but is not limited
to, the removal of a Trustee due to physical or mental incapacity or
failure to comply with such written policies as from time to time may
be adopted by at least two-thirds of the Trustees with respect to the
conduct of the Trustees and attendance at meetings. Any Trustee who has
attained a mandatory retirement age, if any, established pursuant to
any written policy adopted from time to time by at least two-thirds of
the Trustees shall, automatically and without action by such Trustee or
the remaining Trustees, be deemed to have retired in accordance with
the terms of such policy, effective as of the date determined in
accordance with such policy. Any Trustee who has become incapacitated
by illness or injury as determined by a majority of the other Trustees,
may be retired by written instrument executed by a majority of the
other Trustees, specifying the date of such Trustee's retirement. Upon
the resignation, retirement or removal of a Trustee or a Trustee
otherwise ceasing to be a Trustee, such resigning, retired removed or
former Trustee shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust Property held in the name of
such resigning, retired, removed or former Trustee. Upon the death of
any Trustee or upon removal, retirement or resignation due to any
Trustee" incapacity to serve as Trustee, the legal representative of
such deceased, removed, retired or resigning Trustee shall execute and
deliver on behalf of such deceased, removed, retired or resigning
Trustee such documents as the remaining Trustees shall require for the
purpose set forth in the preceding sentence.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
__ day of October, 1999.
- ----------------------
Richard L. Carpenter
- ----------------------
Clifford A. Clark
- ----------------------
David M. Seitzman
U.S. MONEY MARKET PORTFOLIO
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated March 1, 1999, between U.S. Money
Market Portfolio, a New York trust (the "Trust"), and Brown Brothers Harriman
Trust Company, a company organized under the laws of the State of New York (the
"Administrator").
W I T N E S S E T H:
WHEREAS, the Trust is a diversified open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust has been organized for the purpose of investing its
funds in securities and has retained an investment adviser for this purpose and
desires to avail itself of the facilities available to the Administrator with
respect to the administration of the day to day affairs of the Trust, and the
Administrator is willing to furnish such administrative services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
Section 1. The Trust hereby appoints the Administrator to administer
all aspects of the operations of the Trust (except those subject to the
supervision of the investment adviser), subject to the overall supervision of
the Trustees of the Trust for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such appointment and agrees during
such period to render the services herein described and to assume the
obligations set forth herein, for the compensation herein provided.
Section 2. Subject to the supervision of the Trustees of the Trust, the
Administrator shall administer all aspects of the operations of the Trust
(except those subject to the supervision of the investment adviser) and, in
connection therewith, shall (i) furnish the Trust with adequate office
facilities, utilities, office equipment and related services; (ii) be
responsible for the financial and accounting records required to be maintained
(including those being maintained by the custodian) other than those being
maintained by the investment adviser; (iii) furnish the Trust with ordinary
clerical, bookkeeping and recordkeeping services at such office facilities; (iv)
arrange, but not pay for, the preparation of all required tax returns and
reports to its investors and the Securities and Exchange Commission and the
periodic updating of its registration statement; and (v) oversee the performance
of administrative and professional services to the Trust by others, including
the custodian.
In connection with the services rendered by the Administrator under
this Agreement, the Administrator assumes and will pay all expenses incurred by
the Administrator or by the Trust in connection with administering the ordinary
course of business of the Trust, other than those assumed by the Trust herein.
The Trust assumes and will pay the expenses described below:
(a) the fees and expenses of the investment adviser or expenses
otherwise incurred in connection with the management of the investment and
reinvestment of its assets,
(b) the fees and expenses of Trustees of the Trust who are not
affiliated persons of the Administrator, or of any entity with whom the
Administrator has subcontracted its performance under this Agreement (the
"Subadministrator") or any investment adviser,
(c) the fees and expenses of the custodian which relate to (i) the
custodial function and the recordkeeping connected therewith, (ii) the
maintenance of the required accounting records not being maintained by the
Administrator or the Subadministrator, (iii) the valuation of interests,
including the cost of any pricing service or services which may be retained
pursuant to the authorization of the Trustees of the Trust, and (iv) the
cashiering function in connection with the purchase and withdrawal of interests,
(d) the fees and expenses of any transfer agent, which relate to the
maintenance of each investor account,
(e) the charges and expenses of legal counsel and independent
accountants for the Trust,
(f) brokers' commissions and any issue or transfer taxes chargeable to
the Trust in connection with its securities transactions,
(g) all taxes and corporate fees payable by the Trust to federal, state
or other governmental agencies,
(h) the fees of any trade association of which the Trust may be a
member,
(i) the fees and expenses involved in registering and maintaining
registration of the Trust with the Securities and Exchange Commission, including
the preparation and printing of the Trust's registration statements for filing
under federal securities laws for such purposes,
(j) the cost of any liability insurance or fidelity bonds,
(k) allocable communications expenses with respect to investor services
and all expenses of investors' and Trustees' meetings and of preparing, printing
and mailing reports to investors in the amount necessary for distribution to
investors, and
(l) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of business of the Trust.
Section 3. As full compensation for the services performed and the
facilities furnished by the Administrator, the Administrator shall receive a fee
from the Trust, computed daily and paid monthly, at an annual rate equal to
0.035% of the average daily net assets of the Trust.
Section 4. The Administrator assumes no responsibility under this
Agreement other than to render the services called for hereunder, and
specifically assumes no responsibilities for investment advice or the investment
or reinvestment of Trust assets.
Section 5. The Administrator shall not be liable for any error of
judgment or for any loss suffered by the Trust in connection with the matters to
which this Agreement relates, except a loss resulting from wilful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
Section 6. The Administrator may subcontract for the performance of its
obligations hereunder with any one or more persons; provided, however, that the
Administrator shall not enter into any such subcontract unless the Trustees of
the Trust shall have found the subcontracting party to be qualified to perform
the obligations sought to be subcontracted; and provided, further, that unless
the Trust otherwise expressly agrees in writing, the Administrator shall be as
fully responsible to the Trust for the acts and omissions of any subcontractor
as it would be for its own acts or omissions. If permitted by the
subadministration agreement between the Administrator and the Subadministrator,
the Subadministrator may authorize and permit any of its trustees, officers and
employees who may be elected as officers of the Trust to serve in the capacities
in which they are elected and the Subadministrator will pay the salaries of all
personnel of the Trust who are affiliated with the Subadministrator.
Section 7. This Agreement shall become effective on the date determined
by mutual agreement of the parties. This Agreement shall continue in effect for
successive annual periods, but only so long as its continuance is specifically
approved at least annually in the same manner as an investment advisory contract
under the 1940 Act; provided, however, that this Agreement may be terminated by
the Trust at any time, without the payment of any penalty, by the Trustees of
the Trust or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Trust, upon not less than 60 days' written
notice to the Administrator, or by the Administrator at any time, without the
payment of any penalty, upon not less than 90 days' written notice to the Trust.
This Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
Section 8. Nothing in this Agreement shall limit or restrict the right
of any trustee, officer or employee of the Administrator who may also be an
officer or employee of the Trust to engage in any other business or to devote
his time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
right of the Administrator to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
Section 9. During the term of this Agreement, the Trust agrees to
furnish the Administrator at its principal office all registration statement,
reports to investors, or other material prepared for distribution to investors,
which refer in any way to the Administrator, prior to use thereof and not to use
such material if the Administrator reasonably objects in writing within five
business days (or such other time as may be mutually agreed) after receipt
thereof. In the event of termination of this Agreement, the Trust will continue
to furnish to the Administrator copies of any of the above-mentioned materials
which refer in any way to the Administrator. The Trust shall furnish or
otherwise make available to the Administrator such other information relating to
the business affairs of the Trust as the Administrator at any time, or from time
to time, reasonably requests in order to discharge its obligations hereunder.
Section 10. This Agreement may be amended only by mutual written
consent.
Section 11. The Trustees have authorized the execution of this
Agreement in their capacity as Trustees and not individually and the
Administrator agrees that neither investors nor the Trustees nor any officer,
employee, representative or agent of the Trust shall be personally liable upon,
nor shall resort be had to their private property for the satisfaction of,
obligations given, executed or delivered on behalf of or by the Trust, that
neither investors nor the Trustees, officers, employees, representatives or
agents of the Trust shall be personally liable hereunder, and that the
Administrator shall look solely to the property of the Trust for the
satisfaction of any claim hereunder.
Section 12. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Administrator at 59 Wall Street,
New York, NY 10005 Attention: Senior Vice President; or (2) to the Portfolio at
U.S. Money Market Portfolio, Butterfield House, Fort Street, P.O. Box 2330,
George Town, Grand Cayman, BWI.
Section 13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
U.S. MONEY MARKET PORTFOLIO
By
BROWN BROTHERS HARRIMAN TRUST COMPANY
By
WS5221A
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information from the U.S. Money Market Portfolio
Annual Report, dated June 30,1999, and is qualified in its entirety
by reference to such report.
</LEGEND>
<CIK> 0000932281
<NAME> U.S. Money Market Portfolio
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUN-30-1998
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 1,068,620,530
<INVESTMENTS-AT-VALUE> 1,068,620,530
<RECEIVABLES> 6,844,661
<ASSETS-OTHER> 9,440
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,075,474,631
<PAYABLE-FOR-SECURITIES> 0
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