SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the Registrant
Check appropriate box:
Preliminary proxy statement
Definitive proxy statement
Definitive additional materials
Solicitation material
Standish, Ayer & Wood Investment Trust (Name of Registrant as Specified in Its
Charter)
Board of Trustees of Standish, Ayer & Wood Investment Trust (Name of Person(s)
Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration number, or the form or
schedule and the date of its filing:
(1) Amount previously paid: $125
(2) Form, schedule or registration no.: PRE 14A
(3) Filing party: Standish, Ayer & Wood Investment Trust
(4) Date filed: 25-Jan-96
STANDISH SMALL CAPITALIZATION EQUITY FUND
A Series of
STANDISH, AYER & WOOD INVESTMENT TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 29, 1996
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Standish Small
Capitalization Equity Fund (the "Fund"), a series of Standish, Ayer & Wood
Investment Trust (the "Trust"), will be held on March 29, 1996, at 10:00 a.m.,
Eastern time, at the offices of the Trust, One Financial Center, 26th Floor,
Boston, MA 02111 for the following purposes:
(1) To consider and act upon a proposal to adopt and to implement
a new investment policy to authorize the Fund to invest all of
its investable assets in a specific corresponding open-end
management investment company (the "Portfolio") having
substantially the same investment objective, policies and
restrictions as the Fund, and to amend certain investment
restrictions to permit such investment;
(2) To consider and act upon proposals to authorize the Trust to
vote as a holder of an interest in the Portfolio to (A) elect
Trustees of Standish, Ayer & Wood Master Portfolio; (B) ratify
the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and (C) approve the Investment
Advisory Agreement between the Portfolio and its
investment adviser, Standish, Ayer & Wood, Inc.;
(3) To consider and act upon a proposal to eliminate the Fund's
fundamental investment restriction regarding investment in
investment companies; and
(4) To consider and act upon any matters incidental to the
foregoing purposes or any of them, and any other matters which
may properly come before the Meeting or any adjourned session
thereof.
The subjects referred to above are discussed in the accompanying Proxy
Statement. Each shareholder is invited to attend the Meeting in person.
Shareholders of record at the close of business on February 1, 1996 have the
right to receive notice of and to vote at the Meeting. We urge you to complete,
date, sign and promptly return the enclosed proxy card in order that the Meeting
may be held and the Fund may avoid the additional expense of further
solicitation.
David W. Murray
SECRETARY
February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
STANDISH SMALL CAPITALIZATION EQUITY FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
One Financial Center
Boston, Massachusetts 02111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Trustees") of Standish, Ayer & Wood
Investment Trust (the "Trust"). The proxies will be voted at the Special Meeting
of Shareholders of Standish Small Capitalization Equity Fund (the "Fund"), a
series of the Trust, to be held on March 29, 1996, at 10:00 a.m. (Boston time)
at the offices of the Trust, One Financial Center, 26th Floor, Boston, MA 02111
(such meeting and any adjournment or postponement thereof are referred to as the
"Meeting").
The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Meeting. Should other business properly be brought before the Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This Proxy Statement and the enclosed proxy card are expected to be
mailed on or about February 16, 1996 to shareholders of record at the close of
business on February 1, 1996 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. On the Record Date, there were 3,355,375 shares of beneficial
interest of the Fund outstanding and entitled to vote at the Meeting. (The
shares are referred to individually as a "Share" and collectively as the
"Shares".) Each Share is entitled to one vote, and fractional Shares are
entitled to proportionate shares of one vote.
The executive offices of the Trust are located at One Financial Center,
Boston, Massachusetts 02111. THE FUND'S ANNUAL REPORT TO SHAREHOLDERS FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995 MAY BE OBTAINED FREE OF CHARGE BY WRITING TO
THE TRUST AT THE ADDRESS SET FORTH ABOVE OR BY CALLING 1-800-221-4685 (TOLL
FREE).
IT IS ESSENTIAL THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD.
In order that your Shares may be represented at the Meeting, you are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which requires
no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received by 10:00 a.m.
on March 29, 1996.
PROPOSAL 1: TO APPROVE AND TO IMPLEMENT A NEW INVESTMENT POLICY AND TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
SUMMARY
The Trustees of the Trust have approved, and are submitting to the
shareholders of the Fund for approval, the adoption and implementation of a new
investment policy for the Fund and the amendment of certain of the Fund's
fundamental investment restrictions to permit the Fund to invest all of its
investable assets ("Investable Assets") in the Standish Small Capitalization
Equity Portfolio (the "Portfolio"). The Portfolio, a series of Standish, Ayer &
Wood Master Portfolio (the "Portfolio Trust"), has substantially the same
investment objective, policies and restrictions as the Fund. The adoption and
implementation of the new investment policy and changes in the investment
restrictions for the Fund are subject to approval by the Fund's shareholders. If
this Proposal is approved by the Fund's shareholders, the Trustees intend to
invest all the Fund's Investable Assets in the Portfolio, thereby converting the
Fund to the Hub and Spoke(R) master-feeder fund structure.1
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe that the Fund's conversion to
the Hub and Spoke master-feeder fund structure will be advantageous to the
shareholders of the Fund in several respects. Please see "Recommendation of the
Board of Trustees" on page 7 of this Proxy Statement for a discussion of the
Trustees' recommendation.
NEW INVESTMENT POLICY
The Trustees recommend that the shareholders of the Fund approve the
adoption and implementation of a new investment policy for the Fund, I.E., to
invest all of the Fund's Investable Assets in the Portfolio. The Portfolio
is a series of the Portfolio Trust, a newly formed trust to be registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Portfolio has substantially the same investment
objective, policies and restrictions as the Fund. Standish, Ayer & Wood, Inc.
("Standish" or the "Adviser") serves as the Fund's investment adviser and,
subject to shareholder approval, will serve as the Portfolio's investment
adviser. By investing in the Portfolio, the Fund would seek its investment
objective through its investment in the Portfolio, rather than through direct
investments in securities. The Portfolio in turn would invest in securities in
accordance with its investment objective, policies and restrictions. Interests
in the Portfolio are not available for purchase directly by members of the
general public.
To the extent required by applicable law or the Trust's Declaration of
Trust, the approval by Fund shareholders of this Proposal will authorize the
- --------
1 Hub and Spoke is a registered service mark of Signature Financial Group, Inc.
2
Trustees of the Trust to implement the Fund's conversion to the Hub and Spoke
master-feeder fund structure. If this Proposal is approved by the shareholders
of the Fund and the Trustees are satisfied with certain tax matters discussed
below, the Trustees intend to convert the Fund to the Hub and Spoke
master-feeder fund structure on or about the close of business on March 29, 1996
or such later date as the Trustees may approve.
The Trustees expect to implement the Fund's conversion to the Hub and
Spoke master-feeder fund structure by causing the Fund to exchange all of its
Investable Assets (securities and cash) as well as certain other assets
(including receivables for securities sold and interest on securities) for an
interest in the Portfolio. The value of a shareholder's investment in the Fund
will be the same immediately after the Fund's investment in the Portfolio as
immediately before that investment. Of course, the value of a shareholder's
investment in the Fund may fluctuate thereafter.
THE INVESTMENT ADVISER AND ADMINISTRATOR
To the extent that the Fund invests all of its Investable Assets in the
Portfolio, the Fund would no longer directly require investment advisory
services. For this reason, if shareholders of the Fund approve the changes in
investment restrictions and adopt and authorize the implementation of the new
investment policy described in this Proposal, and the Fund invests all of its
Investable Assets in the Portfolio, the Fund will terminate its investment
advisory agreement with the Adviser. The investment advisory function will then
be performed by the Adviser under an investment advisory contract with the
Portfolio Trust. The Fund will, therefore, indirectly bear its proportionate
share of the advisory fees paid by the Portfolio pursuant to its investment
advisory agreement with the Adviser.
Pursuant to the Portfolio's investment advisory agreement, the Adviser
will be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund. For information about the Adviser, the
identity of its directors and its other contractual arrangements with the Trust,
see pages 13-16 of this Proxy Statement.
Upon exchange of its Investable Assets for an interest in the
Portfolio, the Fund will retain the services of Standish under an administration
agreement. Under the administration agreement, Standish would provide the Fund
with general office facilities, supervise the overall administration of the Fund
and allow the Fund to use the name "Standish." In addition, Standish has agreed
in the administration agreement to limit the Fund's aggregate annual operating
expenses
3
(excluding brokerage commissions, taxes and extraordinary expenses) to the
permissible limit applicable in any state in which shares of the Fund are then
qualified for sale. For these services, Standish currently will not receive any
additional compensation. The Trustees may, however, determine in the future to
compensate Standish for its services under the administration agreement.
COMPARATIVE EXPENSES
The following table shows the actual expenses of the Fund for the
fiscal year ended December 31, 1995 and a pro forma adjustment thereof assuming
that the Fund had invested all of its Investable Assets in the Portfolio for the
entire period then ended. The pro forma adjustment includes the estimated costs
of operating the Fund in the Hub and Spoke master-feeder fund structure. The pro
forma adjustment assumes that: (i) there were no holders of interests in the
Portfolio other than the Fund; and (ii) the average daily net assets of the Fund
and the Portfolio were equal to the actual average daily net assets of the Fund
during the period.
AGGREGATE PRO FORMA
EXPENSES (ASSUMING THAT THE
AVERAGE DAILY NET ASSETS
INVESTED BY THE FUND IN THE
ACTUAL PORTFOLIO WERE $146,207,195)
EXPENSES
ANNUAL FUND OPERATING EXPENSES
Investment advisory fees............ 0.60% 0.60%
12b-1 distribution expenses......... none none
Other expenses...................... 0.15% 0.15%*
----- -----
Total Operating Expenses............ 0.75% 0.75%*
===== =====
Example 1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
You would pay the following
expenses on a hypothetical
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period: $8 $24 $42 $93
THE INFORMATION IN THE HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
If the Fund is converted to the Hub and Spoke master-feeder fund
structure, actual Total Operating Expenses to be incurred may vary from the pro
forma Total Operating Expenses indicated above due to changes in the Fund's
expenses and net asset value between December 31, 1995 and the conversion date.
Assuming that the Fund was the only holder of an interest in the Portfolio and
that the Fund was fully invested therein, the net asset value per share,
distributions per share and net investment income per share of the Fund would
have been approximately the same on a pro forma basis as the actual net asset
value, distributions and net investment income per share of the Fund during the
period indicated.
*After expense limitation. Standish has voluntarily agreed to limit the
master- feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. In the absence of this agreement, Other Expenses and Total Operating
Expenses are estimated to be on a pro forma combined basis approximately 0.19%
and 0.79%, respectively. Standish may discontinue or modify such limitation in
the future at its discretion, although it has no current intention to do so.
4
TAX CONSIDERATIONS
The Trust will apply for a ruling from the Internal Revenue Service
("IRS") to the effect that its contribution of the Fund's Investable Assets to
the Portfolio in exchange for an interest in the Portfolio will not result in
the recognition of gain or loss to the Fund for federal income tax purposes.
Management of the Trust currently intends to proceed with the transfers only
upon the issuance of a favorable ruling by the IRS or the availability of an
opinion of tax counsel with respect to the matters requested in the Ruling.
There can be no assurance that such Ruling will be issued or such an opinion
will be available.
As a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), the Fund does not pay federal income or excise
taxes to the extent that it distributes to shareholders its net investment
income and net realized capital gains in accordance with the timing requirement
imposed by the Code. Under current law, so long as the Fund qualifies as a
regulated investment company for federal income tax purposes, the Fund itself is
not liable for any income, corporate excise or franchise taxes in the
Commonwealth of Massachusetts. The Portfolio is organized and intends to conduct
its operations in a manner such that it also will not be required to pay any
federal or Massachusetts income or excise taxes.
DESCRIPTION OF THE PORTFOLIO
The Portfolio Trust was organized as a master trust fund under New York
law on January 18, 1996. The investment objective of the Portfolio is the same
as the investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy.
The approval of the Portfolio's investors (I.E., the Fund and other holders of
interests in the Portfolio) would be required to change any of its fundamental
investment policies or restrictions; however, any change in nonfundamental
investment policies or restrictions would not require such approval.
Shareholders of the Fund will receive at least thirty days prior written notice
with respect to any change of the Portfolio's investment objective. As a
fundamental policy, the Fund's investment objective may not be changed without
shareholder vote. If the Portfolio proposed to change its investment objective,
the Fund would either obtain shareholder approval to make a corresponding change
to its investment objective or withdraw its investment in the Portfolio. The
Fund would be able to withdraw its investment in the Portfolio at any time if
the Trustees determine that it is in the best interests of the Fund to do so
(including if the Fund's and the Portfolio's investment objectives were not
substantially the same). Upon any such withdrawal, the Trustees would consider
what action might be taken, including investing all the Investable Assets of the
Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention of an investment adviser to
manage directly the Fund's assets in accordance with its investment objective
(as is presently the case).
Like the Fund, the Portfolio determines its net asset value on each day
on which the New York Stock Exchange is open. The net asset value is determined
as of the close of regular trading on the New York Stock Exchange (currently
4:00 p.m., New York City time). The Portfolio's net asset value is computed by
determining the value of the Portfolio's total assets (the securities it holds
plus any cash or other assets, including interest accrued but not yet received),
and subtracting all of the Portfolio's liabilities (including accrued expenses).
5
The Fund's net asset value is determined at the same time and on the
same days that the net asset value of the Portfolio is calculated. The Fund's
net asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting all
of the Fund's liabilities (including accrued expenses), and dividing the result
by the total number of shares outstanding at such time.
Interests in the Portfolio Trust have no preemptive or conversion
rights, and are fully paid and non-assessable. The Portfolio Trust normally will
not hold meetings of holders of such interests except as required under the 1940
Act. The Portfolio Trust would be required to hold a meeting of holders in the
event that at any time less than a majority of its Trustees holding office have
been elected by holders. The Trustees of the Portfolio Trust continue to hold
office until their successors are elected and have qualified. Holders holding a
specified percentage of interests in the Portfolio Trust may call a meeting of
holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the Portfolio Trust qualified to vote in the
election. The 1940 Act requires the Portfolio Trust to assist its holders in
calling such a meeting. Upon liquidation of the Portfolio, holders in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its shareholders and will cast its votes proportionately as
instructed by Fund shareholders that voted at the Fund meeting. Fund
shareholders who do not vote at the Fund meeting will not affect the Fund's
votes at the Portfolio meeting. The percentage of the Fund's votes representing
Fund shareholders not voting will be voted by the Trustees of the Trust in the
same proportion as the Fund shareholders who do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund
would not be required to request a vote of its shareholders with respect to (a)
any proposal relating to the Portfolio, which proposal, if made with respect to
the Fund, would not require the vote of the shareholders of the Fund, or (b) any
proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Fund. Any proposal submitted to holders in the Portfolio that is not required to
be voted on by shareholders of the Fund would nonetheless be voted on by the
Trustees of the Trust.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable for the
obligations of the Portfolio, up to the amount of its interest in the Portfolio.
In addition, holders in the Portfolio may be held personally liable as partners
for the Portfolio's obligations. However, because the Portfolio Trust's
declaration of trust disclaims holder liability and provides for indemnification
against such liability, the risk of a holder in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both
6
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. As such, it is unlikely that the Fund would experience liability
from the new investment structure itself. In any event, shareholders of the Fund
will continue to remain shareholders of a Massachusetts business trust, and the
risk of such a person incurring liability by reason of being a shareholder of
the Fund is remote.
The Portfolio has its own Board of Trustees, including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Portfolio (the "Independent Trustees"). The Trustees of the Portfolio Trust are
identical to the present Trustees of the Trust and are listed on page 10 of this
Proxy Statement.
PROPOSED AMENDMENT OF CERTAIN INVESTMENT RESTRICTIONS
The Trustees have approved, subject to a shareholder vote, the
amendment of the investment restrictions of the Fund to permit the Fund to
invest all of its Investable Assets in the Portfolio. The proposed amendments to
the Fund's fundamental investment restrictions are subject to approval by the
Fund's shareholders. Certain of the Fund's investment restrictions may be deemed
to prohibit the Fund from seeking its investment objective by investing all of
its Investable Assets in the Portfolio. (See Investment Restrictions 1, 2, 6,
and 9 in Exhibit A.)
The investment restrictions for the Fund would be amended to provide
that "NOTWITHSTANDING THE CURRENT INVESTMENT RESTRICTIONS, THE FUND MAY
INVEST SUBSTANTIALLY ALL OF ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT
"INVESTMENT SECURITIES," AS DEFINED IN THE 1940 ACT, OR ARE EXCEPTED BY THE SEC)
IN AN OPEN-END MANAGEMENT INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AS THE FUND".
Additional changes are necessary to certain non-fundamental investment
restrictions of the Fund in order to make the Fund's current restrictions
consistent with the foregoing exception. The complete list of proposed
investment restrictions with respect to the Fund is attached as Exhibit A. These
proposed investment restrictions have been marked to show changes from the
Fund's current investment restrictions. Proposed additions are highlighted and
proposed deletions are struck out.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe, based primarily on their
discussions with the Adviser, that the Hub and Spoke master-feeder fund
structure will permit other collective investment vehicles having different
distribution arrangements to invest in the Portfolio. Since certain of these
other vehicles would not otherwise invest in the Fund due to tax and other
reasons, additional assets should be attracted to the Portfolio, thus increasing
the Portfolio's asset base. This anticipated larger asset base will be
advantageous to the shareholders of the Fund in several respects. The following
and other factors were considered by the Board in approving the Fund's
conversion to the Hub and Spoke master-feeder fund structure.
7
First, because certain expenses of operating an investment portfolio
are relatively fixed, those expenses should decline as a percentage of net asset
value as a result of an increased asset base following the conversion to the Hub
and Spoke master-feeder fund structure. Currently, the Fund bears these expenses
alone. After the conversion, these expenses would be borne in whole or in part
by the Portfolio and shared pro rata by the Fund and other investors in the
Portfolio.
Second, to the extent that the Portfolio will have a larger asset base
than that of the Fund, greater diversification of its investment portfolio can
be achieved than is currently possible for the Fund. Greater diversification is
expected to be beneficial to shareholders of the Fund and other investors in the
Portfolio because it may reduce the negative effect which the adverse
performance of any one portfolio security may have on the performance of the
entire investment portfolio.
Third, the larger anticipated size of the Portfolio would permit the
purchase of investments in larger denominations than the Fund currently is able
to purchase.
Although these benefits could be realized by the direct growth of the
Fund's assets, the Trustees believe that growth is more likely to be achieved
through investments in the Portfolio by entities in addition to the Fund. There
can, however, be no assurance that either an increase in assets of the Portfolio
or the benefits described above will be realized and no such benefits are
anticipated until other investors invest their assets in the Portfolio.
The Trustees also recognized that the Adviser could benefit from the
proposed Hub and Spoke master-feeder fund structure because such structure could
enable the Adviser to increase its assets under management through the
development of new vehicles to attract investor assets to the Adviser. These
additional investors may include other investment companies or advisory accounts
advised by the Adviser. In addition, this structure could attract corollary
advisory and related fees to the Adviser with less economic risk of limited
success in early years.
The Trustees believe that over time the aggregate per share expenses of
the Fund and the Portfolio should not be more than the expenses that would be
incurred by the Fund if it continued to retain the services of an investment
adviser and invested directly in securities, although there can be no assurance
that any expense savings will be realized. The Trustees also considered risks
associated with an investment in the Portfolio. The Trustees believe that the
Portfolio's investment policies and restrictions involve substantially the same
risks as are associated with the Fund's direct investment in securities.
In recommending that the shareholders authorize the conversion of the
Fund to the Hub and Spoke master-feeder fund structure, the Trustees have taken
into account and evaluated the possible effects that increased assets in the
Portfolio may have on the expense ratio of the Fund and have considered the
expense limitation voluntarily agreed to by Standish. After carefully weighing
the costs involved against the anticipated benefits of converting the Fund to
the Hub and
8
Spoke master-feeder fund structure, the Trustees recommend that the shareholders
of the Fund vote to approve Proposal 1.
Based on their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant to this Proposal,
the Trustees (including the Trustees who are not "interested persons" as defined
in the 1940 Act ("Interested Persons") of the Trust) have concluded that it
would be in the best interests of the Fund and its shareholders to approve the
adoption and implementation of a new investment policy and the amendment of
certain investment restrictions to enable the Fund to invest all of its
Investable Assets in the Portfolio.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" of the
Fund. Under the 1940 Act, this means that to be approved, the Proposal must
receive the affirmative vote of the lesser of (a) 67% of the shares of the Fund
present at the Meeting if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy at the Meeting, or (b) more than
50% of the outstanding shares of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 1.
In the event the shareholders of the Fund fail to approve this
Proposal, the Trustees would continue to retain Standish, Ayer & Wood, Inc. as
the investment adviser for the Fund to manage the Fund's assets through directly
investing in securities, and the advisory agreement with Standish, Ayer & Wood,
Inc. would continue in effect in its current form.
PROPOSAL 2: AUTHORIZATION TO VOTE AS A PORTFOLIO INVESTOR
Shareholders of the Fund are being asked to vote on certain matters
with respect to the Portfolio because the Portfolio Trust is expected to ask the
Fund as an initial holder in the Portfolio to vote on such matters. Any vote is
expected to take place just after the Fund's investment in the Portfolio.
Specifically, it is expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement between the
Portfolio Trust, on behalf of the Portfolio, and its
investment adviser, Standish, Ayer & Wood, Inc.
The Trust on behalf of the Fund will cast its votes on each matter in
the same proportions as the votes cast by the Fund's shareholders. At the
present time it is anticipated that there will be at least two holders of
interests with
9
respect to the Portfolio. However, the Fund is expected initially to own
substantially all of the interests in the Portfolio.
PROPOSAL 2(A): AUTHORIZATION TO ELECT TRUSTEES OF THE PORTFOLIO TRUST
It is the present intention that the enclosed proxy will, unless marked to
the contrary, be used for the purpose of authorizing the Trust to vote for the
election of the seven nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Portfolio
Trust's Declaration of Trust. Please note that each of the nominees currently
serves as a Trustee of the Trust and has consented to serve as a Trustee of the
Portfolio Trust if elected at the Meeting. Pursuant to the Declaration of Trust
of the Portfolio Trust, the Trustees have the power to establish and alter the
number and the terms of office of the Trustees (subject to certain removal
procedures, including vote by holders of interests), to appoint successor
Trustees and to fill vacancies, including vacancies existing by reason of an
increase in the number of Trustees, provided that always at least a requisite
majority of the Trustees has been elected by the holders of interests.
Generally, there will not be meetings of holders of interests for the purpose of
electing Trustees.
Should any nominee withdraw from the election or otherwise be unable to
serve (an event not now anticipated), the Trust will vote FOR the election of
such substitute nominee as the Board of Trustees of the Portfolio Trust may
recommend (unless authority to vote for election of one or more nominees is
specifically withheld by executing the proxy in the manner stated thereon or a
decision is made to reduce the number of Trustees serving on the Board). The
following table sets forth certain information about the nominees:
BUSINESS EXPERIENCE
NAME AGE DURING PAST FIVE YEARS
D. Barr Clayson* 60 Vice President and Managing Director,
Standish, Ayer & Wood, Inc.; President,
Standish International Management Company,
L.P.
Samuel C. Fleming 55 Chairman of the Board and Chief Executive
Officer, Decision Resources, Inc.; through
1989, Senior V.P. Arthur D. Little
Benjamin M. Friedman 51 William Joseph Maier Professor of Political
Economy, Harvard University
John H. Hewitt 60 Trustee, The Peabody Foundation; Trustee,
Visiting Nurse Alliance of Vermont and New
Hampshire
10
Edward H. Ladd* 58 Chairman of the Board and Managing
Director, Standish, Ayer & Wood, Inc.;
formerly, President of Standish, Ayer &
Wood, Inc.
Caleb Loring III 52 Trustee, Essex Street Associates (family
investment trust office); Director, Holyoke
Mutual Insurance Company
Richard S. Wood* 41 Vice President, Secretary and Director,
Standish, Ayer & Wood, Inc.; Executive Vice
President, Standish International
Management Company, L.P.
*Interested Person of the Portfolio Trust by reason of his affiliation with the
Adviser.
Messrs. Fleming, Friedman, Hewitt and Loring, each of whom is an
Independent Trustee, are members of the Committee of the Independent Trustees of
the Portfolio Trust which is chaired by Mr. Fleming. The Portfolio Trust has not
yet held any meetings of this Committee. The Committee of the Independent
Trustees, among other things, (1) will serve as the liaison between the
independent auditors and the Portfolio Trust's management as their duties relate
to assuring the integrity of the Portfolio's financial reporting and the
safeguarding of each Portfolio's assets; (2) will seek to assure the
independence of the auditors, the integrity of management and the adequacy of
disclosures to holders of interests; and (3) will review the scope of the audit,
the financial results of each series of the Portfolio Trust for the year and the
auditors' evaluation of the overall adequacy of internal controls and thereby
will assist the Board of Trustees in fulfilling its fiduciary responsibilities
as to accounting policies and reporting practices.
As of January 15, 1996, no officer or Trustee or nominee for election
as Trustee of either the Trust or the Portfolio Trust, individually, directly or
indirectly beneficially owned more than 1% of the outstanding shares of the Fund
or the Portfolio. As a group, such individuals beneficially owned approximately
1.03% of the outstanding shares of the Fund as of January 15, 1996.
No fees have been paid by the Portfolio Trust to date to the nominees
for election as Trustees of the Portfolio Trust. The following table estimates
the amount of compensation to be paid to the Portfolio Trust's Trustees for the
fiscal year ending December 31, 1996. In addition, each Trustee will be
reimbursed for out-of-pocket expenses associated with attending Trustee
meetings.
11
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS FROM PORTFOLIO
COMPENSATION ACCRUED AS AND OTHER
FROM THE PART OF FUNDS IN
NAME OF TRUSTEE PORTFOLIO* PORTFOLIO'S EXPENSES COMPLEX**
- --------------- --------- -------------------- ----------
D. Barr Clayson $ 0 $0 $ 0
Samuel C. Fleming 1,445 0 41,750
Benjamin M. Friedman 1,273 0 36,750
John H. Hewitt 1,273 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 1,273 0 36,750
Richard S. Wood 0 0 0
- ------------
* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.
** As of the date of this Proxy Statement, there were 14 mutual funds
in the fund complex.
REQUIRED VOTE
Approval of the election of the Trustees of the Portfolio Trust
requires the affirmative vote of a majority of the outstanding interests in the
Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE PROPOSAL 2(A).
PROPOSAL 2(B): RATIFICATION OF SELECTION OF ACCOUNTANTS
The Trustees of the Portfolio Trust, including a majority of the
Independent Trustees, have selected Coopers & Lybrand, P.O. Box 219, Grand
Cayman, Cayman Islands, BWI, as independent accountants for the fiscal year
ending December 31, 1996. The employment of such auditors is expressly
conditioned upon the right of the Portfolio by the "vote of a majority of the
outstanding voting securities" (as defined above in Proposal 1) of the Portfolio
at any meeting called for the purpose to terminate such employment forthwith
without any penalty. Such selection was made pursuant to provisions of Section
32(a) of the 1940 Act, and is subject to ratification or rejection by the
holders of interests in the Portfolio at the meeting of such holders. Coopers &
Lybrand, L.L.P., an affiliate of Coopers & Lybrand, currently serves as the
independent accountants of the Fund and for Standish. The Fund will be informed
that no member of Coopers & Lybrand has any direct or material indirect interest
in the Fund or the Portfolio.
The Portfolio Trust's independent accountants provide customary
professional services in connection with the audit function for a management
investment company such as the Portfolio Trust, and their fees for such services
12
include fees for work leading to the expression of opinions on the financial
statements included in annual reports to the holders of interests in the
Portfolio Trust, opinions on the financial statements and other data included in
each Portfolio's annual report to the Securities and Exchange Commission,
opinions on financial statements included in amendments to the Portfolio Trust's
registration statement, and preparation of the Portfolio's federal and state
income tax returns.
Representatives of Coopers & Lybrand are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
If the Trust receives a written request from any shareholder at least five days
prior to the Meeting stating that the shareholder will be present in person at
the Meeting and desires to ask questions of the accountants, the Trust will
arrange to have a representative of Coopers & Lybrand present at the Meeting who
will respond to appropriate questions and have an opportunity to make a
statement.
It is intended that proxies, unless marked to the contrary, will be
voted in favor of authorizing the Trust to ratify the selection of Coopers &
Lybrand as the independent accountants employed by the Portfolio Trust to sign
or certify financial statements required to be signed or certified by
independent accountants and filed with the Securities and Exchange Commission in
respect of all or part of the fiscal year ending December 31, 1996.
REQUIRED VOTE
Approval of the selection of Coopers & Lybrand as independent
accountants of the Portfolio Trust requires the affirmative vote of a majority
of the outstanding interests in the Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 2(B).
PROPOSAL 2(C): AUTHORIZE THE TRUST TO APPROVE AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO TRUST AND STANDISH, AYER & WOOD, INC.
Standish, Ayer & Wood, Inc. (the "Adviser" or "Standish"), One
Financial Center, Boston, Massachusetts 02111, is expected to serve as
investment adviser to the Portfolio pursuant to an investment advisory agreement
(the "Proposed Advisory Agreement") between the Adviser and the Portfolio Trust
and to manage the Portfolio's investments and affairs subject to the supervision
of the Trustees of the Portfolio Trust. The Adviser is a Massachusetts
corporation incorporated in 1933 and is a registered investment adviser under
the Investment Advisers Act of 1940.
Edward H. Ladd is the Chairman of the Board of Directors and Managing
Director of Standish. The following, constituting all of the Directors and all
of the shareholders of the Adviser, are the Adviser's controlling persons: Caleb
F. Aldrich, Nicholas S. Battelle, Walter M. Cabot, Sr., David H. Cameron, Karen
K. Chandor, D. Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A.
Flaherty, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
13
Ladd, Laurence A. Manchester, David W. Murray, George W. Noyes, Arthur H.
Parker, Howard B. Rubin, Austin C. Smith, David C. Stuehr, James J. Sweeney,
Ralph S. Tate, and Richard S. Wood. Please see Exhibit B to this Proxy Statement
for a list of each officer and Trustee of the Portfolio Trust who is an officer,
employee or director of Standish.
The Adviser provides fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States. In addition to the Fund, the Adviser provides investment advisory
services to certain other funds within the Standish, Ayer & Wood family of
funds, acting as investment adviser to Standish Controlled Maturity Fund,
Standish Equity Fund, Standish Fixed Income Fund, Standish Fixed Income Fund II,
Standish Short-Term Asset Reserve Fund, Standish Intermediate Tax Exempt Bond
Fund, Standish Massachusetts Intermediate Tax Exempt Bond Fund and Standish
Securitized Fund, which had net assets of $8 million, $89 million, $2.3 billion,
$8 million, $243 million, $33 million, $33 million and $55 million,
respectively, at December 31, 1995. Standish also serves as the investment
adviser to Standish Tax-Sensitive Equity Fund and Standish Small Cap
Tax-Sensitive Equity Fund, which commenced operations on January 2, 1996. An
affiliate of the Adviser, Standish International Management Company, L.P.
("SIMCO"), acts as investment adviser to Standish International Equity Fund,
Standish International Fixed Income Fund, and Standish Global Fixed Income Fund,
which had assets of $59 million, $804 million, and $138 million at December 31,
1995. Corporate pension funds are the largest asset under active management by
the Adviser. The Adviser's clients also include charitable and educational
endowment funds, financial institutions, trusts and individual investors. As of
December 31, 1995, the Adviser managed approximately $29 billion of assets.
In order so that the Portfolio Trust not be deemed to be engaged in a
"trade or business within the United States" under Section 864 of the Code,
certain services must be performed on behalf of the Portfolio Trust outside the
United States. The Portfolio Trust's compliance with these requirements will not
subject investors in the Portfolio Trust that are not otherwise subject to
taxation in the United States to U.S. taxation solely by reason of being an
investor in the Portfolio Trust. In this regard, it is expected that IBT Trust
Company (Cayman) Ltd., P.O. Box 501 Grand Cayman, Cayman Islands, BWI ("IBT"),
will serve as the Portfolio Trust's administrator (the "Portfolio
Administrator") pursuant to an administration agreement. As Portfolio
Administrator, IBT will manage the affairs of the Portfolio Trust and will
currently receive a fee from the Portfolio in the amount of $7,500 annually.
Standish currently provides similar administrative services to the Fund without
additional compensation.
In recommending that the shareholders of the Fund authorize the Fund to
approve the Proposed Advisory Agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing the
Fund (as the equivalent of the Portfolio for this purpose) with other investment
companies of similar size and with similar investment objectives. Before making
this recommendation, the Trustees conducted a review of the various documents,
reports and other materials submitted to them by the Adviser, information that
they were familiar with as Trustees, and information obtained from independent
sources such as Lipper Analytical Services, Inc. The Trustees' review and
evaluation of certain of these materials was made with respect to the Fund in
November 1995.
TERMS OF THE PROPOSED ADVISORY AGREEMENT
The terms of the Proposed Advisory Agreement are substantially the same
as the terms of the current investment advisory agreement between the Adviser
and the Trust on
14
behalf of the Fund (the "Current Advisory Agreement"), except: (i) the date of
execution and the initial term; and (ii) as described above administrative
services will be provided to the Portfolio by IBT under a separate
administrative services agreement, which services are currently performed by
Standish with respect to the Fund under the Current Advisory Agreement. The
approval by Fund shareholders of this proposal will not result in an increase in
the rate at which the advisory fee will be indirectly borne by the Fund after
the proposed conversion to the Hub and Spoke master-feeder fund structure.
The following description of the terms of the Proposed Advisory
Agreement is qualified in its entirety by reference to the copy of the Proposed
Advisory Agreement attached to this Proxy Statement as Exhibit C.
ADVISORY FEES AND EXPENSE LIMITATION. The rate at which the advisory
fee is payable by the Portfolio under the Proposed Advisory Agreement is the
same as the rate at which the advisory fee is payable by the Fund under the
Current Advisory Agreement. The advisory fee under the Current Advisory
Agreement and under the Proposed Advisory Agreement is payable by the Fund or
the Portfolio, as the case may be, at a rate equal on an annual basis to 0.60%
of the Fund's or the Portfolio's, as the case may be, average daily net assets.
Upon conversion of the Fund to the Hub and Spoke master-feeder fund structure,
the Current Advisory Agreement with the Fund will be terminated and the advisory
function will be performed by the Adviser under the Proposed Advisory Agreement.
As such, although the Fund will not directly pay any advisory fees to the
Adviser, it will indirectly bear its proportionate share of the advisory fees
paid by the Portfolio to the Adviser pursuant to the Proposed Advisory
Agreement.
As discussed in Proposal 1, Standish has voluntarily agreed to limit
the master-feeder aggregate annual operating expenses of the Fund and the
Portfolio (excluding brokerage commissions, taxes and extraordinary expenses) to
the Fund's ratio of expenses to average net assets in effect immediately prior
to the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. Standish may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. In addition, Standish
has agreed to limit the Fund's aggregate annual operating expenses (excluding
brokerage commissions, taxes and extraordinary expenses) to the permissible
limit applicable in any state in which shares of the Fund are then qualified for
sale. As is the case with respect to the Fund in the Current Advisory Agreement,
Standish has agreed in the Proposed Advisory Agreement to limit the Portfolio's
aggregate annual operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to 1.5% of the Portfolio's average daily net assets, the
compensation due Standish for such fiscal year shall be proportionately reduced
by the amount of such excess by a reduction or refund thereof at the time such
compensation is payable after the end of each calendar month, subject to
readjustment during such fiscal year. For fiscal year ended December 31, 1995,
advisory fee paid by the Fund amounted to $877,243, which represented 0.60% of
the Fund's average daily net assets.
ADVISORY SERVICES. Pursuant to the Proposed Advisory Agreement and
subject to the supervision and approval of the Trustees of the Portfolio Trust,
Standish is responsible for providing continuously an investment program for the
15
Portfolio, consistent with the Portfolio's investment objective, policies and
restrictions. Specifically, Standish will be required to determine what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested and make
changes in the Portfolio's investments. Standish will also manage, supervise and
conduct the other affairs and business of the Portfolio and matters incidental
thereto, including supervision of the Portfolio Administrator except that
Standish will not perform such administrative services that would cause the
Portfolio to be engaged in a U.S. trade or business.
The Fund's portfolio manager is Nicholas S. Battelle, who has been
primarily responsible for the day-to-day management of the Fund's portfolio
since the Fund's inception in August 1990. If the Proposed Advisory Agreement is
approved, it is intended that Mr. Battelle would serve as the Portfolio's
portfolio manager. During the past five years, Mr. Battelle has served as a
Director of the Adviser.
EXPENSES. Under the Proposed Advisory Agreement, the Portfolio bears
the expenses of its operations, including among other things legal and auditing
services, taxes and governmental fees, certain insurance premiums, costs of
notices and reports to interest holders, preparation and filing of registration
and financial statements, bookkeeping and share pricing expenses, fees and
disbursements of the Portfolio Trust's administrator and custodian, or interest
and other like expenses properly payable by the Portfolio Trust.
APPROVAL AND TERMINATION PROVISIONS. If approved by the affirmative
vote of a "majority of the outstanding voting securities" (as defined in
Proposal 1) of the Portfolio ("Majority Investor Vote"), the Proposed Advisory
Agreement will remain in full force and effect for two years from the date of
such Proposed Advisory Agreement and will continue in full force and effect
indefinitely thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the Trustees of the
Portfolio Trust cast in person at a meeting called for the purpose of voting on
such approval, or (ii) by a Majority Investor Vote. The Proposed Advisory
Agreement may be terminated at any time without penalty by a vote of a majority
of the Independent Trustees of the Portfolio Trust or by a Majority Investor
Vote or by the Adviser on 60 days' written notice to the other party. In
addition, the Proposed Advisory Agreement will terminate immediately and
automatically if assigned.
STANDARD OF CARE. The Proposed Advisory Agreement further provides that
the Adviser shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under the Proposed
Advisory Agreement in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses which may
be sustained in the acquisition, holding or disposition of any security or other
investment.
EXPENSES
Subject to the expense limitations discussed above, the Portfolio and the
Fund, as the case may be, will each be responsible for all of its respective
costs and expenses not expressly stated to be payable by Standish under the
Proposed Advisory Agreement with the Portfolio or the administration agreement
with the Fund. Among other expenses, the Portfolio
16
will pay investment advisory fees; bookkeeping, share pricing and custodian fees
and expenses; expenses of notices and reports to interest holders; and expenses
of the Portfolio Administrator. The Fund will pay fees and disbursements of the
Fund's transfer agent and dividend disbursing agent or registrar, shareholder
servicing fees and expenses; expenses of prospectuses, statements of additional
information and shareholder reports which are furnished to shareholders. Each of
the Fund and Portfolio will pay legal and auditing fees; registration and
reporting fees and expenses; and Trustees' fees and expenses. Expenses of the
Trust or the Portfolio Trust which relate to more than one of their respective
series are allocated among such series by the Adviser and SIMCO in an equitable
manner, primarily on the basis of relative net asset values. For the fiscal year
ended December 31, 1995, expenses borne by the Fund amounted to $1,100,300 which
represented 0.75% of the Fund's average net assets.
REQUIRED VOTE
Approval of the Portfolio Trust's Proposed Advisory Agreement with the
Adviser requires a Majority Investor Vote as defined above.
THE TRUSTEES OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE PROPOSAL
3(C).
In the event that the shareholders of the Fund fail to approve this
Proposal, the Trustees of the Trust will consider what further action should be
taken.
PROPOSAL 3: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN INVESTMENT COMPANIES
Unrelated to Proposals 1 and 2 above, the Trustees of the Trust
unanimously recommend that shareholders of the Fund approve the elimination of
the Fund's current fundamental investment restriction regarding investment in
investment companies.
The Fund's current fundamental investment restriction regarding
investment in investment companies states that the Fund may not:
purchase the securities of other investment companies,
provided that the Fund may make such a purchase as part of a merger,
consolidation, or acquisition of assets.
If eliminated as proposed, the Trustees of the Trust would adopt a new
nonfundamental investment restriction that would state that the Fund may not:
purchase the securities of other investment companies,
provided that the Fund may make such a purchase as part of a merger,
consolidation, or acquisition of assets, AND PROVIDED FURTHER THAT THE
FUND MAY MAKE SUCH A PURCHASE IN THE OPEN MARKET WHERE NO
17
COMMISSION OR PROFIT TO A SPONSOR OR DEALER RESULTS FROM THE PURCHASE OTHER
THAN CUSTOMARY BROKERS' COMMISSIONS AND THEN ONLY TO THE EXTENT PERMITTED BY THE
INVESTMENT COMPANY ACT OF 1940.
If Proposal 1 is also adopted, the restriction would also provide:
NOTWITHSTANDING THE FOREGOING, THE FUND MAY INVEST ALL OF ITS ASSETS (OTHER THAN
ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED IN THE 1940 ACT) OR ARE
EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
This change is being proposed to provide the Fund with additional
investment flexibility. The change would permit investment in investment
vehicles that would be attractive investments for the Fund but may technically
be (or be deemed to be) investment companies (as defined in the 1940 Act) and,
therefore, be prohibited by the Fund's current investment restriction. For
example, if this Proposal is approved by shareholders, the Fund would be able to
invest in Standard & Poor's depositary receipts, which are exchange-traded
shares of a closed-end investment company designed to replicate the price
performance and dividend yield of the Standard & Poor's 500 Composite Stock
Price Index.
Eliminating as fundamental the restriction regarding investment in
investment companies would allow the Trustees to modify the non-fundamental
investment restriction by a vote of Trustees should it become necessary as laws
and regulations are amended in the future, without incurring the significant
expense involved in soliciting proxies. Neither the 1940 Act nor any applicable
law or regulation requires that this investment restriction be fundamental. The
Fund is required to have a policy regarding investment in investment companies
(as stated above), which may be non-fundamental under the securities laws of
certain states. The Fund will indirectly bear its proportionate share of any
management fees and other expenses paid by investment companies in which it
invests in addition to the advisory fees paid by the Fund.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" (as
defined in Proposal 1) of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 3.
In the event the shareholders of the Fund fail to approve this Proposal,
the Fund will continue to adhere to the current fundamental investment
restriction regarding investment in investment companies, or if Proposal 1 is
adopted, to the restriction as amended in accordance with Proposal 1.
18
ADDITIONAL INFORMATION
BENEFICIAL OWNERS
At the close of business on February 1, 1996, no person owned, to the
knowledge of management, 5% or more of the outstanding shares of the Fund,
except as listed below:
Number (Percentage) of
Name and Address Shares Beneficially Owned
- ---------------- -------------------------
Bingham, Dana & Gould 255,183 (7.6%)
Trust Department
150 Federal Street
Boston, MA 02110
Rosemount Aerospace Profit 252,429 (7.5%)
Sharing Plan
Norwest Bank Minnesota, N.A. Trustee
Sixth Street and Marquette Avenue
Minneapolis, MN 55479
Lutheran Health Systems 183,105 (5.5%)
Employees Plan
Harris Trust & Savings Bank
4310 17th Avenue, SW
P.O. Box 6200
Fargo, ND 58106
PORTFOLIO TRANSACTIONS
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio.
Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of Fund shares may
also be considered factors in the selection of brokers and dealers that execute
orders to purchase and sell portfolio securities for the Portfolio.
OTHER MATTERS
The Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Standish, Ayer & Wood Investment Trust, One Financial
Center, Boston, Massachusetts 02111, c/o Richard S. Wood, President so that they
are received within a reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Fund. If shareholders
desire additional information about the matters proposed for action, the Trust's
management will be pleased to hear from them and provide further information.
PROXIES, QUORUM AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in the attached Notice.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present at the Meeting, or in the event that a quorum is
19
present at the Meeting but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting (with respect to all or some of the proposals) to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those Shares affected by the adjournment represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR all such
proposals in favor of such an adjournment, and will vote those proxies required
to be voted AGAINST any such proposal against any adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval.
Under the Declaration of Trust of the Trust, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the issued and
outstanding Shares of the Trust entitled to vote at the Meeting except that
where the holders of any series of Shares are to vote as a series, then the
presence in person or by proxy of the holders of a majority of the Shares of
such series issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of such business.
Shares of the Fund (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions from voting will be treated as shares that are present and entitled
to vote for purposes of determining the number of shares that are present and
entitled to vote with respect to a proposal, but will not be counted as a vote
in favor of that proposal. Accordingly, an abstention from voting has the same
effect as a vote against a proposal.
Adoption by the shareholders of the Fund of each proposal requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any proposal, those shares will not be
considered as present and entitled to vote as to that proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a proposal has been adopted pursuant to item (ii) above, because shares
are represented by a "broker non-vote" are considered outstanding shares, a
"broker non-vote" has the same effect as a vote against such proposal.
EXPENSES AND METHODS OF SOLICITATION
The costs of the Meeting, including the solicitation of proxies will be
paid by Standish. Persons holding shares as nominees will be reimbursed by
Standish, upon request, for their reasonable expenses of forwarding soliciting
material to the principals of the accounts. In addition to the mailing of these
proxy materials, proxies may be personally solicited by Trustees, officers and
20
employees of the Trust, by personnel of Standish and of the Fund's transfer
agent, Investors Bank & Trust Company, or by a professional solicitation
organization in person or by telephone.
Dated: February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
21
EXHIBIT A
INVESTMENT RESTRICTIONS
Proposed additions are highlighted and proposed deletions are struck
out.
AS A MATTER OF FUNDAMENTAL POLICY, THE FUND may not:
1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
Government securities.
2. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter under the Securities Act of 1933.
3. Purchase real estate or real estate mortgage loans.
4. Purchase securities on margin (except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities).
5. Purchase or sell commodities or commodity contracts except that the
Fund may purchase and sell financial futures contracts and options on
financial futures contracts and engage in foreign currency exchange
transactions.
6. With respect to at least 75% of its total assets, invest more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer
7. Issue senior securities, borrow money, enter into reverse repurchase
agreements or pledge or mortgage its assets, except that the Fund may
borrow from banks in an amount up to 15% of the current value of its
total assets as a temporary measure for extraordinary or emergency
purposes (but not investment purposes), and pledge its assets to an
extent not greater than 15% of the current value of its total assets to
secure such borrowings; however, the Fund may not make any additional
investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
8. Make loans of portfolio securities, except that the Fund may enter into
repurchase agreements with respect to 10% of the value of its net
assets.
9. Purchase the securities of other investment companies, provided that
the Fund may make such a purchase as part of a merger, consolidation,
or acquisition of assets. (IF PROPOSAL 3 IS APPROVED BY SHAREHOLDERS,
THIS RESTRICTION WILL BE ELIMINATED AND A NONFUNDAMENTAL POLICY
REGARDING INVESTMENTS IN OTHER INVESTMENT COMPANIES WILL BE ADOPTED BY
THE TRUST'S TRUSTEES. SEE PROPOSAL 3 ON PAGES 17 AND 18 ABOVE.)
NOTWITHSTANDING ANY FUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF ITS
ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED IN
THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT INVESTMENT
COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND).
22
The following restrictions are not fundamental policies and may be
changed by the Trustees of the Trust without shareholder approval in accordance
with applicable laws, regulations or regulatory policy. The Fund may not:
a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the FUND'S net assets or (b) at all
times during which a short position is open it owns an equal amount of
such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.
b. Purchase or write options, except as described under "Strategic
Transactions."
c. Invest in companies for the purpose of exercising control or
management.
d. Invest in interests in oil, gas or other exploration or development
programs.
e. Invest more than 5% of the assets of the Fund in the securities of any
issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than (a) obligations issued or guaranteed by the
U.S. Government or its agencies and (b) repurchase agreements fully
collateralized by such securities.
f. Invest in securities of any company if any officer or director
(Trustee) of the Trust or of the PORTFOLIO'S investment adviser owns
more than 1/2 of 1% of the outstanding securities of such company and
such officers and directors (Trustees) own in the aggregate more than
5% of the securities of such company.
g. Invest more than an aggregate of 15% of the net assets of the Fund in
(a) repurchase agreements which are not terminable within seven days,
(b) securities subject to legal or contractual restrictions on resale
or for which there are no readily available market quotations and (c)
other illiquid securities.
NOTWITHSTANDING ANY NONFUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF
ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED
IN THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
23
EXHIBIT B
The Trustees and officers of the Portfolio Trust who are also
directors, officers or employees of Standish are listed below. The address of
each such person is c/o Standish, Ayer & Wood, Inc., One Financial Center,
Boston, Massachusetts 02111.
POSITION HELD POSITION WITH
NAME WITH THE TRUST STANDISH
D. Barr Clayson Vice President Vice President and
and Trustee Managing Director
Edward H. Ladd Trustee and Chairman of the Board
Vice President and Managing Director
Richard S. Wood President Vice President,
and Trustee Secretary and Director
James E. Hollis III Executive Vice Vice President and
President Director
David W. Murray Treasurer and Vice President, Treasurer
Secretary and Director
Beverly E. Banfield Vice President Vice President and
Compliance Officer
Lavinia B. Chase Vice President Vice President
Anne P. Herrmann Vice President Mutual Fund
Administrator
Denise B. Kneeland Vice President Senior Operations Manager
24
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this day of , 1996, by and between Standish, Ayer &
Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish, Ayer & Wood, Inc., a
Massachusetts corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Small Capitalization Equity
Portfolio (the "Portfolio"), a separate fund of the Portfolio Trust, and the
Adviser is willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
I. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
II. DUTIES OF THE ADVISER. A. The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.
B. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums,
25
costs of notices and reports to interest-holders, typesetting and printing of
registration and financial statements for regulatory purposes and for
distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
III. COMPENSATION OF THE ADVISER. A. As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.60% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.
B. The compensation payable to the Adviser hereunder for any period less
than a full month during which this Agreement is in effect shall be prorated
according to the proportion which such period bears to a full month.
C. The Adviser agrees that if total expenses (excluding brokerage, taxes
and extraordinary expenses) of the Portfolio for any fiscal year of the
Portfolio exceed 1.50% of the Portfolio's average daily net assets, the
compensation due the Adviser for such fiscal year shall be proportionately
reduced by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month, subject
to readjustment during such fiscal year.
IV. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
V. TERM AND TERMINATION. A. This Agreement shall become effective on the
date hereof. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof and shall continue
in full force and effect for successive periods of one year thereafter, but only
so long as each such continuance is approved annually 1. by either the Trustees
of the Portfolio Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, and, in either event,
2. by vote of a majority of the Trustees of the Portfolio Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
B. This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.
26
C. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
VI. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
interest-holders of the Portfolio and this Agreement has been signed by an
authorized officer of the Portfolio Trust, acting as such, and neither such
authorization by such Trustees and interest-holders nor such execution and
delivery by such officer shall be deemed to have been made by any of them, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
STANDISH, AYER & WOOD MASTER
PORTFOLIO, on behalf of STANDISH
SMALL CAPITALIZATION EQUITY
PORTFOLIO
Attest:
By:
Its:
STANDISH, AYER & WOOD, INC.
Attest:
By:
Its:
27
PROXY BALLOT
STANDISH SMALL CAPITALIZATION EQUITY FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
PROXY PROXY
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, David W. Murray and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Small Capitalization Equity Fund
(the "Fund"), a series of Standish, Ayer & Wood Investment Trust (the "Trust"),
to be held at the offices of the Trust, One Financial Center, 26th Floor,
Boston, Massachusetts 02111, on March 29, 1996, at 10:00 a.m., or at any
adjournment thereof, notice of which meeting and the Proxy Statement
accompanying the same have been received by the undersigned, upon the following
matters as described in the Notice of Special Meeting and accompanying Proxy
Statement:
1) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT AND TO IMPLEMENT A NEW
INVESTMENT POLICY TO AUTHORIZE THE FUND TO INVEST SUBSTANTIALLY ALL
OF ITS ASSETS IN A PORTFOLIO (THE "PORTFOLIO"), A SERIES OF A
SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "PORTFOLIO
TRUST") HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES
AND RESTRICTIONS AS THE FUND, AND TO AMEND CERTAIN INVESTMENT
RESTRICTIONS TO PERMIT SUCH INVESTMENT.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
TO CONSIDER AND ACT UPON PROPOSALS TO AUTHORIZE THE TRUST TO VOTE AS A HOLDER OF
AN INTEREST IN THE PORTFOLIO TO:
2A) ELECT TRUSTEES OF THE PORTFOLIO TRUST;
---
--- FOR ALL NOMINEES LISTED BELOW
---
--- VOTE WITHHELD FOR ALL NOMINEES LISTED BELOW
---
--- FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY
BELOW BY STRIKING OUT THE NAME OF A NOMINEE)
D. BARR CLAYSON, SAMUEL C. FLEMING,
BENJAMIN M. FRIEDMAN, JOHN H. HEWITT,
EDWARD H. LADD, CALEB LORING III AND RICHARD S. WOOD
2B) RATIFY THE SELECTION OF COOPERS & LYBRAND AS THE INDEPENDENT
ACCOUNTANTS OF THE PORTFOLIO; AND
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
2C) APPROVE THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE PORTFOLIO AND ITS
INVESTMENT ADVISER, STANDISH, AYER & WOOD, INC.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
3) TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN INVESTMENT COMPANIES.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
4) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR PROPOSALS 1,
2B, 2C, AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN
THE MANNER PROVIDED.
Dated _______________________, 1996
__________________________________
__________________________________
__________________________________
Signature(s)
In signing, please write your name(s) exactly as your account is
registered. When signing as an attorney, executor, adiministrator or other
fiduciary, please give your full title as such. Joint owners should sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED.
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the Registrant
Check appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Solicitation material
Standish, Ayer & Wood Investment Trust (Name of Registrant as Specified in Its
Charter)
Board of Trustees of Standish, Ayer & Wood Investment Trust (Name of Person(s)
Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration number, or the form or
schedule and the date of its filing:
(1) Amount previously paid: $125
(2) Form, schedule or registration no.: PRE 14A
(3) Filing party: Standish, Ayer & Wood Investment Trust
(4) Date filed: 25-Jan-96
STANDISH EQUITY FUND
A Series of
STANDISH, AYER & WOOD INVESTMENT TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 29, 1996
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Standish Equity
Fund (the "Fund"), a series of Standish, Ayer & Wood Investment Trust (the
"Trust"), will be held on March 29, 1996, at 10:00 a.m., Eastern time, at the
offices of the Trust, One Financial Center, 26th Floor, Boston, MA 02111 for the
following purposes:
(1) To consider and act upon a proposal to adopt and to implement
a new investment policy to authorize the Fund to invest all of
its investable assets in a specific corresponding open-end
management investment company (the "Portfolio") having
substantially the same investment objective, policies and
restrictions as the Fund, and to amend certain investment
restrictions to permit such investment;
(2) To consider and act upon proposals to authorize the Trust to
vote as a holder of an interest in the Portfolio to (A) elect
Trustees of Standish, Ayer & Wood Master Portfolio; (B) ratify
the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and (C) approve the Investment
Advisory Agreement between the Portfolio and its investment
adviser, Standish, Ayer & Wood, Inc.;
(3) To consider and act upon a proposal to eliminate the Fund's
fundamental investment restriction regarding investment in
investment companies; and
(4) To consider and act upon any matters incidental to the
foregoing purposes or any of them, and any other matters which
may properly come before the Meeting or any adjourned session
thereof.
The subjects referred to above are discussed in the accompanying Proxy
Statement. Each shareholder is invited to attend the Meeting in person.
Shareholders of record at the close of business on February 1, 1996 have the
right to receive notice of and to vote at the Meeting. We urge you to complete,
date, sign and promptly return the enclosed proxy card in order that the Meeting
may be held and the Fund may avoid the additional expense of further
solicitation.
David W. Murray
SECRETARY
February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
STANDISH EQUITY FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
One Financial Center,
Boston, Massachusetts 02111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Trustees") of Standish, Ayer & Wood
Investment Trust (the "Trust"). The proxies will be voted at the Special Meeting
of Shareholders of Standish Equity Fund (the "Fund"), a series of the Trust, to
be held on March 29, 1996, at 10:00 a.m. (Boston time) at the offices of the
Trust, One Financial Center, 26th Floor, Boston, MA 02111 (such meeting and any
adjournment or postponement thereof are referred to as the "Meeting").
The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Meeting. Should other business properly be brought before the Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This Proxy Statement and the enclosed proxy card are expected to be
mailed on or about February 16, 1996 to shareholders of record at the close of
business on February 1, 1996 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. On the Record Date, there were 2,617,778 shares of beneficial
interest of the Fund outstanding and entitled to vote at the Meeting. (The
shares are referred to individually as a "Share" and collectively as the
"Shares".) Each Share is entitled to one vote, and fractional Shares are
entitled to proportionate shares of one vote.
The executive offices of the Trust are located at One Financial Center,
Boston, Massachusetts 02111. THE FUND'S ANNUAL REPORT TO SHAREHOLDERS FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995 MAY BE OBTAINED FREE OF CHARGE BY WRITING TO
THE TRUST AT THE ADDRESS SET FORTH ABOVE OR BY CALLING 1-800-221-4685 (TOLL
FREE).
IT IS ESSENTIAL THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD.
In order that your Shares may be represented at the Meeting, you are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which requires
no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received by 10:00 a.m.
on March 29, 1996.
PROPOSAL 1: TO APPROVE AND TO IMPLEMENT A NEW INVESTMENT POLICY AND TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
SUMMARY
The Trustees of the Trust have approved, and are submitting to the
shareholders of the Fund for approval, the adoption and implementation of a new
investment policy for the Fund and the amendment of certain of the Fund's
fundamental investment restrictions to permit the Fund to invest all of its
investable assets ("Investable Assets") in the Standish Equity Portfolio (the
"Portfolio"). The Portfolio, a series of Standish, Ayer & Wood Master Portfolio
(the "Portfolio Trust"), has substantially the same investment objective,
policies and restrictions as the Fund. The adoption and implementation of the
new investment policy and changes in the investment restrictions for the Fund
are subject to approval by the Fund's shareholders. If this Proposal is approved
by the Fund's shareholders, the Trustees intend to invest all the Fund's
Investable Assets in the Portfolio, thereby converting the Fund to the Hub and
Spoke(R) master-feeder fund structure.1
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe that the Fund's conversion to
the Hub and Spoke master-feeder fund structure will be advantageous to the
shareholders of the Fund in several respects. Please see "Recommendation of the
Board of Trustees" on page 7 of this Proxy Statement for a discussion of the
Trustees' recommendation.
NEW INVESTMENT POLICY
The Trustees recommend that the shareholders of the Fund approve the
adoption and implementation of a new investment policy for the Fund, I.E., to
invest all of the Fund's Investable Assets in the Portfolio. The Portfolio
is a series of the Portfolio Trust, a newly formed trust to be registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Portfolio has substantially the same investment
objective, policies and restrictions as the Fund. Standish, Ayer & Wood, Inc.
("Standish" or the "Adviser") serves as the Fund's investment adviser and,
subject to shareholder approval, will serve as the Portfolio's investment
adviser. By investing in the Portfolio, the Fund would seek its investment
objective through its investment in the Portfolio, rather than through direct
investments in securities. The Portfolio in turn would invest in securities in
accordance with its investment objective, policies and restrictions. Interests
in the Portfolio are not available for purchase directly by members of the
general public.
To the extent required by applicable law or the Trust's Declaration of
Trust, the approval by Fund shareholders of this Proposal will authorize the
Trustees of the Trust to implement the Fund's conversion to the Hub and Spoke
- --------
1 Hub and Spoke is a registered service mark of Signature Financial Group, Inc.
2
master-feeder fund structure. If this Proposal is approved by the shareholders
of the Fund and the Trustees are satisfied with certain tax matters discussed
below, the Trustees intend to convert the Fund to the Hub and Spoke
master-feeder fund structure on or about the close of business on March 29, 1996
or such later date as the Trustees may approve.
The Trustees expect to implement the Fund's conversion to the Hub and
Spoke master-feeder fund structure by causing the Fund to exchange all of its
Investable Assets (securities and cash) as well as certain other assets
(including receivables for securities sold and interest on securities) for an
interest in the Portfolio. The value of a shareholder's investment in the Fund
will be the same immediately after the Fund's investment in the Portfolio as
immediately before that investment. Of course, the value of a shareholder's
investment in the Fund may fluctuate thereafter.
THE INVESTMENT ADVISER AND ADMINISTRATOR
To the extent that the Fund invests all of its Investable Assets in the
Portfolio, the Fund would no longer directly require investment advisory
services. For this reason, if shareholders of the Fund approve the changes in
investment restrictions and adopt and authorize the implementation of the new
investment policy described in this Proposal, and the Fund invests all of its
Investable Assets in the Portfolio, the Fund will terminate its investment
advisory agreement with the Adviser. The investment advisory function will then
be performed by the Adviser under an investment advisory contract with the
Portfolio Trust. The Fund will, therefore, indirectly bear its proportionate
share of the advisory fees paid by the Portfolio pursuant to its investment
advisory agreement with the Adviser.
Pursuant to the Portfolio's investment advisory agreement, the Adviser
will be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund. For information about the Adviser, the
identity of its directors and its other contractual arrangements with the Trust,
see pages 13-16 of this Proxy Statement.
Upon exchange of its Investable Assets for an interest in the
Portfolio, the Fund will retain the services of Standish under an administration
agreement. Under the administration agreement, Standish would provide the Fund
with general office facilities, supervise the overall administration of the Fund
and allow the Fund to use the name "Standish." In addition, Standish has agreed
in the administration agreement to limit the Fund's aggregate annual operating
expenses (excluding brokerage commissions, taxes and extraordinary expenses) to
the
3
permissible limit applicable in any state in which shares of the Fund are then
qualified for sale. For these services, Standish currently will not receive any
additional compensation. The Trustees may, however, determine in the future to
compensate Standish for its services under the administration agreement.
COMPARATIVE EXPENSES
The following table shows estimated expenses based on actual expenses
of the Fund for the fiscal year ended December 31, 1995 and a pro forma
adjustment thereof assuming that the Fund had invested all of its Investable
Assets in the Portfolio for the entire period then ended. The pro forma
adjustment includes the estimated costs of operating the Fund in the Hub and
Spoke master-feeder fund structure. The pro forma adjustment assumes that there
were no holders of interests in the Portfolio other than the Fund.
AGGREGATE PRO FORMA
EXPENSES (ASSUMING THAT THE
AVERAGE DAILY NET ASSETS
INVESTED BY THE FUND IN THE
ESTIMATED PORTFOLIO WERE $79,501,209)
EXPENSES
ANNUAL FUND OPERATING EXPENSES
Investment advisory fees............ 0.50% 0.50%
12b-1 distribution expenses......... none none
Other expenses...................... 0.21% 0.21%*
----- -----
Total Operating Expenses............ 0.71% 0.71%*
===== =====
Example 1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
You would pay the following
expenses on a hypothetical
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period: $8 $35 $44 $98
THE INFORMATION IN THE HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
If the Fund is converted to the Hub and Spoke master-feeder fund
structure, actual Total Operating Expenses to be incurred may vary from the pro
forma Total Operating Expenses indicated above due to changes in the Fund's
expenses and net asset value between December 31, 1995 and the conversion date.
Assuming that the Fund was the only holder of an interest in the Portfolio and
that the Fund was fully invested therein, the net asset value per share,
distributions per share and net investment income per share of the Fund would
have been approximately the same on a pro forma basis as the actual net asset
value, distributions and net investment income per share of the Fund during the
period indicated.
*After expense limitation. Standish has voluntarily agreed to limit the
master- feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. In the absence of this agreement, Other Expenses and Total Operating
Expenses are estimated to be on a pro forma combined basis approximately 0.29%
and 0.79%, respectively. Standish may discontinue or modify such limitation in
the future at its discretion, although it has no current intention to do so.
4
TAX CONSIDERATIONS
The Trust will apply for a ruling from the Internal Revenue Service
("IRS") to the effect that its contribution of the Fund's Investable Assets to
the Portfolio in exchange for an interest in the Portfolio will not result in
the recognition of gain or loss to the Fund for federal income tax purposes.
Management of the Trust currently intends to proceed with the transfers only
upon the issuance of a favorable ruling by the IRS or the availability of an
opinion of tax counsel with respect to the matters requested in the Ruling.
There can be no assurance that such Ruling will be issued or such an opinion
will be available.
As a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), the Fund does not pay federal income or excise
taxes to the extent that it distributes to shareholders its net investment
income and net realized capital gains in accordance with the timing requirement
imposed by the Code. Under current law, so long as the Fund qualifies as a
regulated investment company for federal income tax purposes, the Fund itself is
not liable for any income, corporate excise or franchise taxes in the
Commonwealth of Massachusetts. The Portfolio is organized and intends to conduct
its operations in a manner such that it also will not be required to pay any
federal or Massachusetts income or excise taxes.
DESCRIPTION OF THE PORTFOLIO
The Portfolio Trust was organized as a master trust fund under New York
law on January 18, 1996. The investment objective of the Portfolio is the same
as the investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy. The
approval of the Portfolio's investors (I.E., the Fund and other holders of
interests in the Portfolio) would be required to change any of its fundamental
investment policies or restrictions; however, any change in nonfundamental
investment policies or restrictions would not require such approval.
Shareholders of the Fund will receive at least thirty days prior written notice
with respect to any change of the Portfolio's investment objective. As a
fundamental policy, the Fund's investment objective may not be changed without
shareholder vote. If the Portfolio proposed to change its investment objective,
the Fund would either obtain shareholder approval to make a corresponding change
to its investment objective or withdraw its investment in the Portfolio. The
Fund would be able to withdraw its investment in the Portfolio at any time if
the Trustees determine that it is in the best interests of the Fund to do so
(including if the Fund's and the Portfolio's investment objectives were not
substantially the same). Upon any such withdrawal, the Trustees would consider
what action might be taken, including investing all the Investable Assets of the
Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention of an investment adviser to
manage directly the Fund's assets in accordance with its investment objective
(as is presently the case).
Like the Fund, the Portfolio determines its net asset value on each day
on which the New York Stock Exchange is open. The net asset value is determined
as of the close of regular trading on the New York Stock Exchange (currently
4:00 p.m., New York City time). The Portfolio's net asset value is computed by
determining the value of the Portfolio's total assets (the securities it holds
plus any cash or other assets, including interest accrued but not yet received),
and subtracting all of the Portfolio's liabilities (including accrued expenses).
5
The Fund's net asset value is determined at the same time and on the
same days that the net asset value of the Portfolio is calculated. The Fund's
net asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting all
of the Fund's liabilities (including accrued expenses), and dividing the result
by the total number of shares outstanding at such time.
Interests in the Portfolio Trust have no preemptive or conversion
rights, and are fully paid and non-assessable. The Portfolio Trust normally will
not hold meetings of holders of such interests except as required under the 1940
Act. The Portfolio Trust would be required to hold a meeting of holders in the
event that at any time less than a majority of its Trustees holding office have
been elected by holders. The Trustees of the Portfolio Trust continue to hold
office until their successors are elected and have qualified. Holders holding a
specified percentage of interests in the Portfolio Trust may call a meeting of
holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the Portfolio Trust qualified to vote in the
election. The 1940 Act requires the Portfolio Trust to assist its holders in
calling such a meeting. Upon liquidation of the Portfolio, holders in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its shareholders and will cast its votes proportionately as
instructed by Fund shareholders that voted at the Fund meeting. Fund
shareholders who do not vote at the Fund meeting will not affect the Fund's
votes at the Portfolio meeting. The percentage of the Fund's votes representing
Fund shareholders not voting will be voted by the Trustees of the Trust in the
same proportion as the Fund shareholders who do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund
would not be required to request a vote of its shareholders with respect to (a)
any proposal relating to the Portfolio, which proposal, if made with respect to
the Fund, would not require the vote of the shareholders of the Fund, or (b) any
proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Fund. Any proposal submitted to holders in the Portfolio that is not required to
be voted on by shareholders of the Fund would nonetheless be voted on by the
Trustees of the Trust.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable for the
obligations of the Portfolio, up to the amount of its interest in the Portfolio.
In addition, holders in the Portfolio may be held personally liable as partners
for the Portfolio's obligations. However, because the Portfolio Trust's
declaration of trust disclaims holder liability and provides for indemnification
against such liability, the risk of a holder in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both
6
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. As such, it is unlikely that the Fund would experience liability
from the new investment structure itself. In any event, shareholders of the Fund
will continue to remain shareholders of a Massachusetts business trust, and the
risk of such a person incurring liability by reason of being a shareholder of
the Fund is remote.
The Portfolio has its own Board of Trustees, including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Portfolio (the "Independent Trustees"). The Trustees of the Portfolio Trust are
identical to the present Trustees of the Trust and are listed on page 10 of this
Proxy Statement.
PROPOSED AMENDMENT OF CERTAIN INVESTMENT RESTRICTIONS
The Trustees have approved, subject to a shareholder vote, the
amendment of the investment restrictions of the Fund to permit the Fund to
invest all of its Investable Assets in the Portfolio. The proposed amendments to
the Fund's fundamental investment restrictions are subject to approval by the
Fund's shareholders. Certain of the Fund's investment restrictions may be deemed
to prohibit the Fund from seeking its investment objective by investing all of
its Investable Assets in the Portfolio. (See Investment Restrictions 1, 2, 6,
and 9 in Exhibit A.)
The investment restrictions for the Fund would be amended to provide
that "NOTWITHSTANDING THE CURRENT INVESTMENT RESTRICTIONS, THE FUND MAY INVEST
SUBSTANTIALLY ALL OF ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT
SECURITIES," AS DEFINED IN THE 1940 ACT, OR ARE EXCEPTED BY THE SEC) IN AN OPEN-
END MANAGEMENT INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT
OBJECTIVE AS THE FUND".
Additional changes are necessary to certain non-fundamental investment
restrictions of the Fund in order to make the Fund's current restrictions
consistent with the foregoing exception. The complete list of proposed
investment restrictions with respect to the Fund is attached as Exhibit A. These
proposed investment restrictions have been marked to show changes from the
Fund's current investment restrictions. Proposed additions are highlighted and
proposed deletions are struck out.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe, based primarily on their
discussions with the Adviser, that the Hub and Spoke master-feeder fund
structure will permit other collective investment vehicles having different
distribution arrangements to invest in the Portfolio. Since these other vehicles
would not otherwise invest in the Fund, additional assets should be attracted to
the Portfolio, thus increasing the Portfolio's asset base. This anticipated
larger asset base will be advantageous to the shareholders of the Fund in
several respects. The following and other factors were considered by the Board
in approving the Fund's conversion to the Hub and Spoke master-feeder fund
structure.
7
First, because certain expenses of operating an investment portfolio
are relatively fixed, those expenses should decline as a percentage of net asset
value as a result of an increased asset base following the conversion to the Hub
and Spoke master-feeder fund structure. Currently, the Fund bears these expenses
alone. After the conversion, these expenses would be borne in whole or in part
by the Portfolio and shared pro rata by the Fund and other investors in the
Portfolio.
Second, to the extent that the Portfolio will have a larger asset base
than that of the Fund, greater diversification of its investment portfolio can
be achieved than is currently possible for the Fund. Greater diversification is
expected to be beneficial to shareholders of the Fund and other investors in the
Portfolio because it may reduce the negative effect which the adverse
performance of any one portfolio security may have on the performance of the
entire investment portfolio.
Third, the larger anticipated size of the Portfolio would permit the
purchase of investments in larger denominations than the Fund currently is able
to purchase.
Although these benefits could be realized by the direct growth of the
Fund's assets, the Trustees believe that growth is more likely to be achieved
through investments in the Portfolio by entities in addition to the Fund. There
can, however, be no assurance that either an increase in assets of the Portfolio
or the benefits described above will be realized and no such benefits are
anticipated until other investors invest their assets in the Portfolio.
The Trustees also recognized that the Adviser could benefit from the
proposed Hub and Spoke master-feeder fund structure because such structure could
enable the Adviser to increase its assets under management through the
development of new vehicles to attract investor assets to the Adviser. These
additional investors may include other investment companies or advisory accounts
advised by the Adviser. In addition, this structure could attract corollary
advisory and related fees to the Adviser with less economic risk of limited
success in early years.
The Trustees believe that over time the aggregate per share expenses of
the Fund and the Portfolio should not be more than the expenses that would be
incurred by the Fund if it continued to retain the services of an investment
adviser and invested directly in securities, although there can be no assurance
that any expense savings will be realized. The Trustees also considered risks
associated with an investment in the Portfolio. The Trustees believe that the
Portfolio's investment policies and restrictions involve substantially the same
risks as are associated with the Fund's direct investment in securities.
In recommending that the shareholders authorize the conversion of the
Fund to the Hub and Spoke master-feeder fund structure, the Trustees have taken
into account and evaluated the possible effects that increased assets in the
Portfolio may have on the expense ratio of the Fund and have considered the
expense limitation voluntarily agreed to by Standish. After carefully weighing
the costs involved against the anticipated benefits of converting the Fund to
the Hub and
8
Spoke master-feeder fund structure, the Trustees recommend that the shareholders
of the Fund vote to approve Proposal 1.
Based on their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant to this Proposal,
the Trustees (including the Trustees who are not "interested persons" as defined
in the 1940 Act ("Interested Persons") of the Trust) have concluded that it
would be in the best interests of the Fund and its shareholders to approve the
adoption and implementation of a new investment policy and the amendment of
certain investment restrictions to enable the Fund to invest all of its
Investable Assets in the Portfolio.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" of the
Fund. Under the 1940 Act, this means that to be approved, the Proposal must
receive the affirmative vote of the lesser of (a) 67% of the shares of the Fund
present at the Meeting if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy at the Meeting, or (b) more than
50% of the outstanding shares of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 1.
In the event the shareholders of the Fund fail to approve this
Proposal, the Trustees would continue to retain Standish, Ayer & Wood, Inc. as
the investment adviser for the Fund to manage the Fund's assets through directly
investing in securities, and the advisory agreement with Standish, Ayer & Wood,
Inc. would continue in effect in its current form.
PROPOSAL 2: AUTHORIZATION TO VOTE AS A PORTFOLIO INVESTOR
Shareholders of the Fund are being asked to vote on certain matters
with respect to the Portfolio because the Portfolio Trust is expected to ask the
Fund as an initial holder in the Portfolio to vote on such matters. Any vote is
expected to take place just after the Fund's investment in the Portfolio.
Specifically, it is expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement between the
Portfolio Trust, on behalf of the Portfolio, and its
investment adviser, Standish, Ayer & Wood, Inc.
The Trust on behalf of the Fund will cast its votes on each matter in
the same proportions as the votes cast by the Fund's shareholders. At the
present time it is anticipated that there will be at least two holders of
interests with
9
respect to the Portfolio. However, the Fund is expected initially to own
substantially all of the interests in the Portfolio.
PROPOSAL 2(A): AUTHORIZATION TO ELECT TRUSTEES OF THE PORTFOLIO TRUST
It is the present intention that the enclosed proxy will, unless marked
to the contrary, be used for the purpose of authorizing the Trust to vote FOR
the election of the seven nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Portfolio
Trust's Declaration of Trust. Please note that each of the nominees currently
serves as a Trustee of the Trust and has consented to serve as a Trustee of the
Portfolio Trust if elected at the Meeting. Pursuant to the Declaration of Trust
of the Portfolio Trust, the Trustees have the power to establish and alter the
number and the terms of office of the Trustees (subject to certain removal
procedures, including vote by holders of interests), to appoint successor
Trustees and to fill vacancies, including vacancies existing by reason of an
increase in the number of Trustees, provided that always at least a requisite
majority of the Trustees has been elected by the holders of interests.
Generally, there will not be meetings of holders of interests for the purpose of
electing Trustees.
Should any nominee withdraw from the election or otherwise be unable to
serve (an event not now anticipated), the Trust will vote FOR the election of
such substitute nominee as the Board of Trustees of the Portfolio Trust may
recommend (unless authority to vote for election of one or more nominees is
specifically withheld by executing the proxy in the manner stated thereon or a
decision is made to reduce the number of Trustees serving on the Board). The
following table sets forth certain information about the nominees:
BUSINESS EXPERIENCE
NAME AGE DURING PAST FIVE YEARS
D. Barr Clayson* 60 Vice President and Managing Director,
Standish, Ayer & Wood, Inc.; President,
Standish International Management Company,
L.P.
Samuel C. Fleming 55 Chairman of the Board and Chief Executive
Officer, Decision Resources, Inc.; through
1989, Senior V.P. Arthur D. Little
Benjamin M. Friedman 51 William Joseph Maier Professor of Political
Economy, Harvard University
John H. Hewitt 60 Trustee, The Peabody Foundation; Trustee,
Visiting Nurse Alliance of Vermont and New
Hampshire
10
Edward H. Ladd* 58 Chairman of the Board and Managing
Director, Standish, Ayer & Wood, Inc.;
formerly, President of Standish, Ayer &
Wood, Inc.
Caleb Loring III 52 Trustee, Essex Street Associates (family
investment trust office); Director, Holyoke
Mutual Insurance Company
Richard S. Wood* 41 Vice President, Secretary and Director,
Standish, Ayer & Wood, Inc.; Executive Vice
President, Standish International
Management Company, L.P.
*Interested Person of the Portfolio Trust by reason of his affiliation with the
Adviser.
Messrs. Fleming, Friedman, Hewitt and Loring, each of whom is an
Independent Trustee, are members of the Committee of the Independent Trustees of
the Portfolio Trust which is chaired by Mr. Fleming. The Portfolio Trust has not
yet held any meetings of this Committee. The Committee of the Independent
Trustees, among other things, (1) will serve as the liaison between the
independent auditors and the Portfolio Trust's management as their duties relate
to assuring the integrity of the Portfolio's financial reporting and the
safeguarding of each Portfolio's assets; (2) will seek to assure the
independence of the auditors, the integrity of management and the adequacy of
disclosures to holders of interests; and (3) will review the scope of the audit,
the financial results of each series of the Portfolio Trust for the year and the
auditors' evaluation of the overall adequacy of internal controls and thereby
will assist the Board of Trustees in fulfilling its fiduciary responsibilities
as to accounting policies and reporting practices.
As of January 15, 1996, no officer or Trustee or nominee for election
as Trustee of either the Trust or the Portfolio Trust, individually, directly or
indirectly beneficially owned more than 1% of the outstanding shares of the Fund
or the Portfolio. As a group, such individuals beneficially owned approximately
1.09% of the outstanding shares of the Fund as of January 15, 1996.
No fees have been paid by the Portfolio Trust to date to the nominees
for election as Trustees of the Portfolio Trust. The following table estimates
the amount of compensation to be paid to the Portfolio Trust's Trustees for the
fiscal year ending December 31, 1996. In addition, each Trustee will be
reimbursed for out-of-pocket expenses associated with attending Trustee
meetings.
11
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS FROM PORTFOLIO
COMPENSATION ACCRUED AS AND OTHER
FROM THE PART OF FUNDS IN
NAME OF TRUSTEE PORTFOLIO* PORTFOLIO'S EXPENSES COMPLEX**
- --------------- --------- -------------------- ----------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 650 0 41,750
Benjamin M. Friedman 574 0 36,750
John H. Hewitt 574 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 574 0 36,750
Richard S. Wood 0 0 0
- ------------
* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.
** As of the date of this Proxy Statement, there were 14 mutual funds
in the fund complex.
REQUIRED VOTE
Approval of the election of the Trustees of the Portfolio Trust
requires the affirmative vote of a majority of the outstanding interests in the
Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE PROPOSAL 2(A).
PROPOSAL 2(B): RATIFICATION OF SELECTION OF ACCOUNTANTS
The Trustees of the Portfolio Trust, including a majority of the
Independent Trustees, have selected Coopers & Lybrand, P.O. Box 219, Grand
Cayman, Cayman Islands, BWI as independent accountants for the fiscal year
ending December 31, 1996. The employment of such auditors is expressly
conditioned upon the right of the Portfolio by the "vote of a majority of the
outstanding voting securities" (as defined above in Proposal 1) of the Portfolio
at any meeting called for the purpose to terminate such employment forthwith
without any penalty. Such selection was made pursuant to provisions of Section
32(a) of the 1940 Act, and is subject to ratification or rejection by the
holders of interests in the Portfolio at the meeting of such holders. Coopers &
Lybrand, L.L.P., an affiliate of Coopers & Lybrand, currently serves as the
independent accountants of the Fund and for Standish. The Fund will be informed
that no member of Coopers & Lybrand has any direct or material indirect interest
in the Fund or the Portfolio.
The Portfolio Trust's independent accountants provide customary
professional services in connection with the audit function for a management
investment company such as the Portfolio Trust, and their fees for such services
include fees for work leading to the expression of opinions on the financial
12
statements included in annual reports to the holders of interests in the
Portfolio Trust, opinions on the financial statements and other data included in
each Portfolio's annual report to the Securities and Exchange Commission,
opinions on financial statements included in amendments to the Portfolio Trust's
registration statement, and preparation of the Portfolio's federal and state
income tax returns.
Representatives of Coopers & Lybrand are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
If the Trust receives a written request from any shareholder at least five days
prior to the Meeting stating that the shareholder will be present in person at
the Meeting and desires to ask questions of the accountants, the Trust will
arrange to have a representative of Coopers & Lybrand present at the Meeting who
will respond to appropriate questions and have an opportunity to make a
statement.
It is intended that proxies, unless marked to the contrary, will be
voted in favor of authorizing the Trust to ratify the selection of Coopers &
Lybrand as the independent accountants employed by the Portfolio Trust to sign
or certify financial statements required to be signed or certified by
independent accountants and filed with the Securities and Exchange Commission in
respect of all or part of the fiscal year ending December 31, 1996.
REQUIRED VOTE
Approval of the selection of Coopers & Lybrand as independent
accountants of the Portfolio Trust requires the affirmative vote of a majority
of the outstanding interests in the Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 2(B).
PROPOSAL 2(C): AUTHORIZE THE TRUST TO APPROVE AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO TRUST AND STANDISH, AYER & WOOD, INC.
Standish, Ayer & Wood, Inc. (the "Adviser" or "Standish"), One
Financial Center, Boston, Massachusetts 02111, is expected to serve as
investment adviser to the Portfolio pursuant to an investment advisory agreement
(the "Proposed Advisory Agreement") between the Adviser and the Portfolio Trust
and to manage the Portfolio's investments and affairs subject to the supervision
of the Trustees of the Portfolio Trust. The Adviser is a Massachusetts
corporation incorporated in 1933 and is a registered investment adviser under
the Investment Advisers Act of 1940.
Edward H. Ladd is the Chairman of the Board of Directors and Managing
Director of Standish. The following, constituting all of the Directors and all
of the shareholders of the Adviser, are the Adviser's controlling persons: Caleb
F. Aldrich, Nicholas S. Battelle, Walter M. Cabot, Sr., David H. Cameron, Karen
K. Chandor, D. Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A.
Flaherty, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
Ladd, Laurence A. Manchester, David W. Murray, George W. Noyes, Arthur H.
Parker,
13
Howard B. Rubin, Austin C. Smith, David C. Stuehr, James J. Sweeney, Ralph S.
Tate, and Richard S. Wood. Please see Exhibit B to this Proxy Statement for a
list of each officer and Trustee of the Portfolio Trust who is an officer,
employee or director of Standish.
The Adviser provides fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States. In addition to the Fund, the Adviser provides investment advisory
services to certain other funds within the Standish, Ayer & Wood family of
funds, acting as investment adviser to Standish Controlled Maturity Fund,
Standish Small Capitalization Equity Fund, Standish Fixed Income Fund, Standish
Fixed Income Fund II, Standish Short-Term Asset Reserve Fund, Standish
Intermediate Tax Exempt Bond Fund, Standish Massachusetts Intermediate Tax
Exempt Bond Fund, and Standish Securitized Fund, which had net assets of $8
million, $180 million, $2.3 billion, $8 million, $243 million, $33 million, $33
million, and $55 million, respectively, at December 31, 1995. Standish also
serves as the investment adviser to Standish Tax-Sensitive Equity Fund and
Standish Small Cap Tax-Sensitive Equity Fund, which commenced operations on
January 2, 1996. An affiliate of the Adviser, Standish International Management
Company, L.P. ("SIMCO"), acts as investment adviser to Standish International
Equity Fund, Standish International Fixed Income Fund and Standish Global Fixed
Income Fund, which had net assets of $59 million, $804 million and $138 million
at December 31, 1995. Corporate pension funds are the largest asset under active
management by the Adviser. The Adviser's clients also include charitable and
educational endowment funds, financial institutions, trusts and individual
investors. As of December 31, 1995, the Adviser managed approximately $29
billion of assets.
In order so that the Portfolio Trust not be deemed to be engaged in a
"trade or business within the United States" under Section 864 of the Code,
certain services must be performed on behalf of the Portfolio Trust outside the
United States. The Portfolio Trust's compliance with these requirements will not
subject investors in the Portfolio Trust that are not otherwise subject to
taxation in the United States to U.S. taxation solely by reason of being an
investor in the Portfolio Trust. In this regard, it is expected that IBT Trust
Company (Cayman) Ltd., P.O. Box 501, Grand Cayman, Cayman Islands, BWI ("IBT"),
will serve as the Portfolio Trust's administrator (the "Portfolio
Administrator") pursuant to an administration agreement. As Portfolio
Administrator, IBT will manage the affairs of the Portfolio Trust and will
currently receive a fee from the Portfolio in the amount of $7,500 annually.
Standish currently provides similar administrative services to the Fund without
additional compensation.
In recommending that the shareholders of the Fund authorize the Fund to
approve the Proposed Advisory Agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing the
Fund (as the equivalent of the Portfolio for this purpose) with other investment
companies of similar size and with similar investment objectives. Before making
this recommendation, the Trustees conducted a review of the various documents,
reports and other materials submitted to them by the Adviser, information that
they were familiar with as Trustees, and information obtained from independent
sources such as Lipper Analytical Services, Inc. The Trustees' review and
evaluation of certain of these materials was made with respect to the Fund in
November 1995.
TERMS OF THE PROPOSED ADVISORY AGREEMENT
The terms of the Proposed Advisory Agreement are substantially the same
as the terms of the current investment advisory agreement between the Adviser
and the Trust on behalf of the Fund (the "Current Advisory Agreement"), except:
(i) the date of
14
execution and the initial term; and (ii) as described above, administrative
services will be provided to the Portfolio by IBT under a separate
administrative services agreement, which services are currently performed by
Standish with respect to the Fund under the Current Advisory Agreement. The
approval by Fund shareholders of this proposal will not result in an increase in
the rate at which the advisory fee will be indirectly borne by the Fund after
the proposed conversion to the Hub and Spoke master-feeder fund structure.
The following description of the terms of the Proposed Advisory
Agreement is qualified in its entirety by reference to the copy of the Proposed
Advisory Agreement attached to this Proxy Statement as Exhibit C.
ADVISORY FEES AND EXPENSE LIMITATION. The rate at which the advisory
fee is payable by the Portfolio under the Proposed Advisory Agreement is the
same as the rate at which the advisory fee is payable by the Fund under the
Current Advisory Agreement. The advisory fee under the Current Advisory
Agreement and under the Proposed Advisory Agreement is payable by the Fund or
the Portfolio, as the case may be, at a rate equal on an annual basis to 0.50%
of the Fund's or the Portfolio's, as the case may be, average daily net assets.
Upon conversion of the Fund to the Hub and Spoke master-feeder fund structure,
the Current Advisory Agreement with the Fund will be terminated and the advisory
function will be performed by the Adviser under the Proposed Advisory Agreement.
As such, although the Fund will not directly pay any advisory fees to the
Adviser, it will indirectly bear its proportionate share of the advisory fees
paid by the Portfolio to the Adviser pursuant to the Proposed Advisory
Agreement.
As discussed in Proposal 1, Standish has voluntarily agreed to limit the
master-feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke(R) master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. Standish may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. In addition, Standish
has agreed to limit the Fund's aggregate annual operating expenses (excluding
brokerage commissions, taxes and extraordinary expenses) to the permissible
limit applicable in any state in which shares of the Fund are then qualified for
sale. For the Fund's fiscal year ended December 31, 1995, the advisory fee paid
by the Fund amounted to $557,342 which represented 0.50% of the Fund's average
daily net assets.
ADVISORY SERVICES. Pursuant to the Proposed Advisory Agreement and
subject to the supervision and approval of the Trustees of the Portfolio Trust,
Standish is responsible for providing continuously an investment program for the
Portfolio, consistent with the Portfolio's investment objective, policies and
restrictions. Specifically, Standish will be required to determine what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested and make
changes in the Portfolio's investments. Standish will also manage, supervise and
conduct the other affairs and business of the Portfolio and matters incidental
thereto, including supervision of the Portfolio Administrator except that
Standish will not perform such administrative services that would cause the
Portfolio to be engaged in a U.S. trade or business.
The Fund's portfolio managers are Ralph S. Tate and David C. Cameron. Mr.
Tate and Mr. Cameron have been primarily responsible for the day-to-day
management of the Fund's portfolio since the Fund's inception in January, 1991.
15
If the Proposed Advisory Agreement is approved, it is intended that
Messrs. Tate and Cameron would serve as the Portfolio's portfolio managers.
During the past five years, Mr. Tate has served as a Director and Vice President
of the Adviser. During the past five years, Mr. Cameron has also served as a
Director and Vice President of the Adviser.
EXPENSES. Under the Proposed Advisory Agreement, the Portfolio bears
the expenses of its operations, including among other things legal and auditing
services, taxes and governmental fees, certain insurance premiums, costs of
notices and reports to interest holders, preparation and filing of registration
and financial statements, bookkeeping and share pricing expenses, fees and
disbursements of the Portfolio Trust's administrator and custodian, or interest
and other like expenses properly payable by the Portfolio Trust.
APPROVAL AND TERMINATION PROVISIONS. If approved by the affirmative
vote of a "majority of the outstanding voting securities" (as defined in
Proposal 1) of the Portfolio ("Majority Investor Vote"), the Proposed Advisory
Agreement will remain in full force and effect for two years from the date of
such Proposed Advisory Agreement and will continue in full force and effect
indefinitely thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the Trustees of the
Portfolio Trust cast in person at a meeting called for the purpose of voting on
such approval, or (ii) by a Majority Investor Vote. The Proposed Advisory
Agreement may be terminated at any time without penalty by a vote of a majority
of the Independent Trustees of the Portfolio Trust or by a Majority Investor
Vote or by the Adviser on 60 days' written notice to the other party. In
addition, the Proposed Advisory Agreement will terminate immediately and
automatically if assigned.
STANDARD OF CARE. The Proposed Advisory Agreement further provides that
the Adviser shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under the Proposed
Advisory Agreement in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses which may
be sustained in the acquisition, holding or disposition of any security or other
investment.
EXPENSES
The Portfolio and the Fund, as the case may be, will each be
responsible for all of its respective costs and expenses not expressly stated to
be payable by Standish under the Proposed Advisory Agreement with the Portfolio
or the administration agreement with the Fund. Among other expenses, the
Portfolio will pay investment advisory fees; bookkeeping, share pricing and
custodian fees and expenses; expenses of notices and reports to interest
holders; and expenses of the Portfolio Administrator. The Fund will pay fees and
disbursements of the Fund's transfer agent and dividend disbursing agent or
registrar, shareholder servicing fees and expenses; expenses of prospectuses,
statements of additional information and shareholder reports which are furnished
to shareholders. Each of the Fund and Portfolio will pay legal and auditing
fees; registration and reporting fees and expenses; and Trustees' fees and
expenses. Expenses of the Trust or the Portfolio Trust which
16
relate to more than one of their respective series are allocated among such
series by the Adviser and SIMCO in an equitable manner, primarily on the basis
of relative net asset values. For the fiscal year ended December 31, 1995,
expenses borne by the Fund amounted to $745,243, which represented 0.67% of the
Fund's average net assets.
REQUIRED VOTE
Approval of the Portfolio Trust's Proposed Advisory Agreement with the
Adviser requires a Majority Investor Vote as defined above.
THE TRUSTEES OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE PROPOSAL
3(C).
In the event that the shareholders of the Fund fail to approve this
Proposal, the Trustees of the Trust will consider what further action should be
taken.
PROPOSAL 3: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN INVESTMENT COMPANIES
Unrelated to Proposals 1 and 2 above, the Trustees of the Trust
unanimously recommend that shareholders of the Fund approve the elimination of
the Fund's current fundamental investment restriction regarding investment in
investment companies.
The Fund's current fundamental investment restriction regarding
investment in investment companies states that the Fund may not:
purchase the securities of other investment companies,
provided that the Fund may make such a purchase as part of a merger,
consolidation, or acquisition of assets.
If eliminated as proposed, the Trustees of the Trust would adopt a new
non-fundamental investment restriction that would state that the Fund may not:
purchase the securities of other investment companies, provided that the
Fund may make such a purchase as part of a merger, consolidation, or acquisition
of assets, AND PROVIDED FURTHER THAT THE FUND MAY MAKE SUCH A PURCHASE IN THE
OPEN MARKET WHERE NO COMMISSION OR PROFIT TO A SPONSOR OR DEALER RESULTS FROM
THE PURCHASE OTHER THAN CUSTOMARY BROKERS' COMMISSIONS AND THEN ONLY TO THE
EXTENT PERMITTED BY THE INVESTMENT COMPANY ACT OF 1940.
If Proposal 1 is also adopted, the restriction would also provide:
NOTWITHSTANDING THE FOREGOING, THE FUND MAY INVEST ALL OF ITS ASSETS (OTHER THAN
ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED IN THE 1940 ACT) OR ARE
EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
17
[differences from the current fundamental investment restriction are
highlighted]
This change is being proposed to provide the Fund with additional
investment flexibility. The change would permit investment in investment
vehicles that would be attractive investments for the Fund but may technically
be (or be deemed to be) investment companies (as defined in the 1940 Act) and,
therefore, be prohibited by the Fund's current investment restriction. For
example, if this Proposal is approved by shareholders, the Fund would be able to
invest in Standard & Poor's depositary receipts, which are exchange-traded
shares of a closed-end investment company designed to replicate the price
performance and dividend yield of the Standard & Poor's 500 Composite Stock
Price Index.
Eliminating as fundamental the restriction regarding investment in
investment companies would allow the Trustees to modify the non-fundamental
investment restriction by a vote of Trustees should it become necessary as laws
and regulations are amended in the future, without incurring the significant
expense involved in soliciting proxies. Neither the 1940 Act nor any applicable
law or regulation requires that this investment restriction be fundamental. The
Fund is required to have a policy regarding investment in investment companies
(as stated above), which may be non-fundamental under the securities laws of
certain states. The Fund will indirectly bear its proportionate share of any
management fees and other expenses paid by investment companies in which it
invests in addition to the advisory fees paid by the Fund.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" (as
defined in Proposal 1) of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 3.
In the event the shareholders of the Fund fail to approve this Proposal,
the Fund will continue to adhere to the current fundamental investment
restriction regarding investment in investment companies, or if Proposal 1 is
adopted, to the restriction as amended in accordance with Proposal 1.
ADDITIONAL INFORMATION
BENEFICIAL OWNERS
At the close of business on February 1, 1996, no person owned, to the
knowledge of management, 5% or more of the outstanding shares of the Fund,
except as listed below:
Number (Percentage) of Shares
Name and Address Beneficially Owned
- ---------------- ------------------
The Boston Home 391,831 (14.9%)
c/o Saturn & Co.
P.O Box 1537
Boston, MA 02205
Bingham, Dana & Gould Managed 282,008 (10.7%)
c/o Bingham, Dana & Gould
150 Federal Street
Boston, MA 02110
Shipley Company Inc. ESOP 235,726 (9.0%)
500 Nickerson Road
Marlborough, MA 01752
Davis Educational Foundation 136,367 (5.2%)
c/o Saturn & Co.
P.O. Box 1537
Boston, MA 02205
PORTFOLIO TRANSACTIONS
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best
18
available price and most favorable execution with respect to all transactions
for the Portfolio.
Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of Fund shares may
also be considered factors in the selection of brokers and dealers that execute
orders to purchase and sell portfolio securities for the Portfolio.
OTHER MATTERS
The Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Standish, Ayer & Wood Investment Trust, One Financial
Center, Boston, Massachusetts 02111, c/o Richard S. Wood, President so that they
are received within a reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Fund. If shareholders
desire additional information about the matters proposed for action, the Trust's
management will be pleased to hear from them and provide further information.
PROXIES, QUORUM AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in the attached Notice.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present at the Meeting, or in the event that a quorum is
present at the Meeting but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting (with respect to all or some of the proposals) to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those Shares affected by the adjournment represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR all such
proposals in favor of such an adjournment, and will vote those proxies required
to be voted AGAINST any such proposal against any adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval.
Under the Declaration of Trust of the Trust, a quorum is constituted by the
19
presence in person or by proxy of the holders of a majority of the issued and
outstanding Shares of the Trust entitled to vote at the Meeting except that
where the holders of any series of Shares are to vote as a series, then the
presence in person or by proxy of the holders of a majority of the Shares of
such series issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of such business.
Shares of the Fund (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions from voting will be treated as shares that are present and entitled
to vote for purposes of determining the number of shares that are present and
entitled to vote with respect to a proposal, but will not be counted as a vote
in favor of that proposal. Accordingly, an abstention from voting has the same
effect as a vote against a proposal.
Adoption by the shareholders of the Fund of each proposal requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any proposal, those shares will not be
considered as present and entitled to vote as to that proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a proposal has been adopted pursuant to item (ii) above, because shares
are represented by a "broker non-vote" are considered outstanding shares, a
"broker non-vote" has the same effect as a vote against such proposal.
EXPENSES AND METHODS OF SOLICITATION
The costs of the Meeting, including the solicitation of proxies will be
paid by Standish. Persons holding shares as nominees will be reimbursed by
Standish, upon request, for their reasonable expenses of forwarding soliciting
material to the principals of the accounts. In addition to the mailing of these
proxy materials, proxies may be personally solicited by Trustees, officers and
employees of the Trust, by personnel of Standish and of the Fund's transfer
agent, Investors Bank & Trust Company, or by a professional solicitation
organization in person or by telephone.
Dated: February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
SAW0020C
20
EXHIBIT A
INVESTMENT RESTRICTIONS
Proposed additions are highlighted and proposed deletions are struck
out.
AS A MATTER OF FUNDAMENTAL POLICY, THE FUND may not:
1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
Government securities.
2. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter under the Securities Act of 1933.
3. Purchase real estate or real estate mortgage loans.
4. Purchase securities on margin (except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities).
5. Purchase or sell commodities or commodity contracts (except futures
contracts and options on such futures, contracts and foreign currency
exchange transactions).
6. With respect to at least 75% of its total assets, invest more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer
7. Issue senior securities, borrow money, enter into reverse repurchase
agreements or pledge or mortgage its assets, except that the Fund may
borrow from banks in an amount up to 15% of the current value of its
total assets as a temporary measure for extraordinary or emergency
purposes (but not investment purposes), and pledge its assets to an
extent not greater than 15% of the current value of its total assets to
secure such borrowings; however, the Fund may not make any additional
investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
8. Make loans of portfolio securities, except that the Fund may enter into
repurchase agreements with respect to 10% of the value of its net
assets.
21
9. Purchase the securities of other investment companies, provided that
the Fund may make such a purchase as part of a merger, consolidation, or
acquisition of assets. (IF PROPOSAL 3 IS APPROVED BY SHAREHOLDERS, THIS
RESTRICTION WILL BE ELIMINATED AND A NONFUNDAMENTAL POLICY REGARDING INVESTMENT
IN OTHER INVESTMENT COMPANIES WILL BE ADOPTED BY THE TRUST'S TRUSTEES. SEE
PROPOSAL 3 ON PAGES 17 AND 18 ABOVE.)
NOTWITHSTANDING ANY FUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF ITS
ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED IN
THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT INVESTMENT
COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
The following restrictions are not fundamental policies and may be
changed by the Trustees of the Trust without shareholder approval in accordance
with applicable laws, regulations or regulatory policy. The Fund may not:
a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the FUND'S net assets or (b) at all
times during which a short position is open it owns an equal amount of
such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.
b. Invest in companies for the purpose of exercising control or
management.
c. Invest in interests in oil, gas or other exploration or development
programs.
d. Invest more than 5% of the assets of the Fund in the securities of any
issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than (a) obligations issued or guaranteed by the
U.S. Government or its agencies and (b) repurchase agreements fully
collateralized by such securities.
e. Invest in securities of any company if any officer or director
(Trustee) of the Trust or of the PORTFOLIO'S investment adviser owns
more than 1/2 of 1% of the outstanding securities of such company and
such officers and directors (Trustees) own in the aggregate more than
5% of the securities of such company.
f. Purchase or write options, except pursuant to the limitations under
"Strategic Transactions."
g. Invest more than an aggregate of 15% of the net assets of the Fund in
(a) repurchase agreements which are not terminable within seven days,
(b) securities subject to legal or contractual restrictions on resale
or for which there are no readily available market quotations and (c)
other illiquid securities, unless such securities were received as
distributions on portfolio securities.
NOTWITHSTANDING ANY NONFUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF
ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED
IN THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
22
EXHIBIT B
The Trustees and officers of the Portfolio Trust who are also
directors, officers or employees of Standish are listed below. The address of
each such person is c/o Standish, Ayer & Wood, Inc., One Financial Center,
Boston, Massachusetts 02111.
POSITION HELD POSITION WITH
NAME WITH THE TRUST STANDISH
D. Barr Clayson Vice President Vice President and
and Trustee Managing Director
Edward H. Ladd Trustee and Chairman of the Board
Vice President and Managing Director
Richard S. Wood President Vice President,
and Trustee Secretary and Director
James E. Hollis III Executive Vice Vice President and
President Director
David W. Murray Treasurer and Vice President, Treasurer
Secretary and Director
Beverly E. Banfield Vice President Vice President and
Compliance Officer
Lavinia B. Chase Vice President Vice President
Anne P. Herrmann Vice President Mutual Fund
Administrator
Denise B. Kneeland Vice President Senior Operations Manager
23
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this day of , 1996, by and between Standish, Ayer &
Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish, Ayer & Wood, Inc., a
Massachusetts corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Equity Portfolio (the "Portfolio"),
a separate fund of the Portfolio Trust, and the Adviser is willing to furnish
such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
I. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
II. DUTIES OF THE ADVISER. A. The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.
B. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums,
24
costs of notices and reports to interest-holders, typesetting and printing of
registration and financial statements for regulatory purposes and for
distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
III. COMPENSATION OF THE ADVISER. A. As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.50% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.
B. The compensation payable to the Adviser hereunder for any period less
than a full month during which this Agreement is in effect shall be prorated
according to the proportion which such period bears to a full month.
IV. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
V. TERM AND TERMINATION. A. This Agreement shall become effective on the
date hereof. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof and shall continue
in full force and effect for successive periods of one year thereafter, but only
so long as each such continuance is approved annually 1. by either the Trustees
of the Portfolio Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, and, in either event,
2. by vote of a majority of the Trustees of the Portfolio Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
B. This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.
C. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
VI. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended.
25
It is expressly agreed that the obligations of the Portfolio Trust hereunder
shall not be binding upon any of the Trustees, interest-holders, nominees,
officers, agents or employees of the Portfolio Trust, personally, but shall bind
only the trust property of the Portfolio Trust as provided in the Agreement and
Declaration of Trust of the Portfolio Trust. The execution and delivery of this
Agreement have been authorized by the Trustees and interest-holders of the
Portfolio and this Agreement has been signed by an authorized officer of the
Portfolio Trust, acting as such, and neither such authorization by such Trustees
and interest-holders nor such execution and delivery by such officer shall be
deemed to have been made by any of them, but shall bind only the trust property
of the Portfolio Trust as provided in the Agreement and Declaration of Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
STANDISH, AYER & WOOD MASTER PORTFOLIO,
on behalf of STANDISH EQUITY PORTFOLIO
Attest:
By:
Its:
STANDISH, AYER & WOOD, INC.
Attest:
By:
Its:
26
PROXY BALLOT
STANDISH EQUITY FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
PROXY PROXY
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, David W. Murray and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Equity Fund (the "Fund"), a series
of Standish, Ayer & Wood Investment Trust (the "Trust"), to be held at the
offices of the Trust, One Financial Center, 26th Floor, Boston, Massachusetts
02111, on March 29, 1996, at 10:00 a.m., or at any adjournment thereof, notice
of which meeting and the Proxy Statement accompanying the same have been
received by the undersigned, upon the following matters as described in the
Notice of Special Meeting and accompanying Proxy Statement:
1) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT AND TO IMPLEMENT A NEW
INVESTMENT POLICY TO AUTHORIZE THE FUND TO INVEST SUBSTANTIALLY ALL
OF ITS ASSETS IN A PORTFOLIO (THE "PORTFOLIO"), A SERIES OF A
SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "PORTFOLIO
TRUST") HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES
AND RESTRICTIONS AS THE FUND, AND TO AMEND CERTAIN INVESTMENT
RESTRICTIONS TO PERMIT SUCH INVESTMENT.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
TO CONSIDER AND ACT UPON PROPOSALS TO AUTHORIZE THE TRUST TO VOTE AS A HOLDER OF
AN INTEREST IN THE PORTFOLIO TO:
2A) ELECT TRUSTEES OF THE PORTFOLIO TRUST;
---
--- FOR ALL NOMINEES LISTED BELOW
---
--- VOTE WITHHELD FOR ALL NOMINEES LISTED BELOW
---
--- FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY
BELOW BY STRIKING OUT THE NAME OF A NOMINEE)
D. BARR CLAYSON, SAMUEL C. FLEMING,
BENJAMIN M. FRIEDMAN, JOHN H. HEWITT,
EDWARD H. LADD, CALEB LORING III AND RICHARD S. WOOD
2B) RATIFY THE SELECTION OF COOPERS & LYBRAND AS THE INDEPENDENT
ACCOUNTANTS OF THE PORTFOLIO; AND
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
2C) APPROVE THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE PORTFOLIO AND
ITS INVESTMENT ADVISER, STANDISH, AYER & WOOD, INC.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
3) TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN INVESTMENT COMPANIES.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
4) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR PROPOSALS 1,
2B, 2C, AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN
THE MANNER PROVIDED.
Dated: __________________, 1996
_______________________________
_______________________________
_______________________________
Signature(s)
- -
In signing, please write name(s) exactly as your account is registered.
When signing as attorney, executor, administrator or other fiduciary, please
give your full title as such. Joint owners should each sign personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED.
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the Registrant
Check appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Solicitation material
Standish, Ayer & Wood Investment Trust (Name of Registrant as Specified in Its
Charter)
Board of Trustees of Standish, Ayer & Wood Investment Trust (Name of Person(s)
Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration number, or the form or
schedule and the date of its filing:
(1) Amount previously paid: $125
(2) Form, schedule or registration no.: PRE 14A
(3) Filing party: Standish, Ayer & Wood Investment Trust
(4) Date filed: 25-Jan-96
STANDISH GLOBAL FIXED INCOME FUND
A Series of
STANDISH, AYER & WOOD INVESTMENT TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 29, 1996
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Standish Global
Fixed Income Fund (the "Fund"), a series of Standish, Ayer & Wood Investment
Trust (the "Trust"), will be held on March 29, 1996, at 10:00 a.m., Eastern
time, at the offices of the Trust, One Financial Center, 26th Floor, Boston, MA
02111 for the following purposes:
(1) To consider and act upon a proposal to adopt and to implement
a new investment policy to authorize the Fund to invest all of
its investable assets in a specific corresponding open-end
management investment company (the "Portfolio") having
substantially the same investment objective, policies and
restrictions as the Fund, and to amend certain investment
restrictions to permit such investment;
(2) To consider and act upon proposals to authorize the Trust to
vote as a holder of an interest in the Portfolio to (A) elect
Trustees of Standish, Ayer & Wood Master Portfolio; (B) ratify
the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and (C) approve the Investment
Advisory Agreement between the Portfolio and its investment
adviser, Standish International Management Company, L.P.; and
(3) To consider and act upon any matters incidental to the
foregoing purposes or any of them, and any other matters which
may properly come before the Meeting or any adjourned session
thereof.
The subjects referred to above are discussed in the accompanying Proxy
Statement. Each shareholder is invited to attend the Meeting in person.
Shareholders of record at the close of business on February 1, 1996 have the
right to receive notice of and to vote at the Meeting. We urge you to complete,
date, sign and promptly return the enclosed proxy card in order that the Meeting
may be held and the Fund may avoid the additional expense of further
solicitation.
David W. Murray
SECRETARY
February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
STANDISH GLOBAL FIXED INCOME FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
One Financial Center
Boston, Massachusetts 02111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Trustees") of Standish, Ayer & Wood
Investment Trust (the "Trust"). The proxies will be voted at the Special Meeting
of Shareholders of Standish Global Fixed Income Fund (the "Fund"), a series of
the Trust, to be held on March 29, 1996, at 10:00 a.m. (Boston time) at the
offices of the Trust, One Financial Center, 26th Floor, Boston, MA 02111 (such
meeting and any adjournment or postponement thereof are referred to as the
"Meeting").
The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Meeting. Should other business properly be brought before the Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This Proxy Statement and the enclosed proxy card are expected to be
mailed on or about February 16, 1996 to shareholders of record at the close of
business on February 1, 1996 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. On the Record Date, there were 6,955,979 shares of beneficial
interest of the Fund outstanding and entitled to vote at the Meeting. (The
shares are referred to individually as a "Share" and collectively as the
"Shares".) Each Share is entitled to one vote, and fractional Shares are
entitled to proportionate shares of one vote.
The executive offices of the Trust are located at One Financial Center,
Boston, Massachusetts 02111. THE FUND'S ANNUAL REPORT TO SHAREHOLDERS FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995 MAY BE OBTAINED FREE OF CHARGE BY WRITING TO
THE TRUST AT THE ADDRESS SET FORTH ABOVE OR BY CALLING 1-800-221-4685 (TOLL
FREE).
IT IS ESSENTIAL THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD.
In order that your Shares may be represented at the Meeting, you are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which requires
no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received by 10:00 a.m.
on March 29, 1996.
PROPOSAL 1: TO APPROVE AND TO IMPLEMENT A NEW INVESTMENT POLICY AND TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
SUMMARY
The Trustees of the Trust have approved, and are submitting to the
shareholders of the Fund for approval, the adoption and implementation of a new
investment policy for the Fund and the amendment of certain of the Fund's
fundamental investment restrictions to permit the Fund to invest all of its
investable assets ("Investable Assets") in the Standish Global Fixed Income
Portfolio (the "Portfolio"). The Portfolio, a series of Standish, Ayer & Wood
Master Portfolio (the "Portfolio Trust"), has substantially the same investment
objective, policies and restrictions as the Fund. The adoption and
implementation of the new investment policy and changes in the Fund's investment
restrictions are subject to approval by the Fund's shareholders. If
this Proposal is approved by the Fund's shareholders, the Trustees intend to
invest all the Fund's Investable Assets in the Portfolio, thereby converting the
Fund to the Hub and Spoke(R) master-feeder fund structure.1
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe that the Fund's conversion to
the Hub and Spoke master-feeder fund structure will be advantageous to the
shareholders of the Fund in several respects. Please see "Recommendation of the
Board of Trustees" on page 7 of this Proxy Statement for a discussion of the
Trustees' recommendation.
NEW INVESTMENT POLICY
The Trustees recommend that the shareholders of the Fund approve the
adoption and implementation of a new investment policy for the Fund, I.E., to
invest all of the Fund's Investable Assets in the Portfolio. The Portfolio is a
series of the Portfolio Trust, a newly formed trust to be registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Portfolio has substantially the same investment
objective, policies and restrictions as the Fund. Standish International
Management Company, L.P. (the "Adviser") serves as the Fund's investment adviser
and, subject to shareholder approval, will serve as the Portfolio's investment
adviser. By investing in the Portfolio, the Fund would seek its investment
objective through its investment in the Portfolio, rather than through direct
investments in securities. The Portfolio in turn would invest in securities in
accordance with its investment objective, policies and restrictions. Interests
in the Portfolio are not available for purchase directly by members of the
general public.
To the extent required by applicable law or the Trust's Declaration of
Trust, the approval by Fund shareholders of this Proposal will authorize the
Trustees of the Trust to implement the Fund's conversion to the Hub and Spoke
- --------
1 Hub and Spoke is a registered service mark of Signature Financial Group, Inc.
2
master-feeder fund structure. If this Proposal is approved by the shareholders
of the Fund and the Trustees are satisfied with certain tax matters discussed
below, the Trustees intend to convert the Fund to the Hub and Spoke
master-feeder fund structure on or about the close of business on March 29, 1996
or such later date as the Trustees may approve.
The Trustees expect to implement the Fund's conversion to the Hub and
Spoke master-feeder fund structure by causing the Fund to exchange all of its
Investable Assets (securities and cash) as well as certain other assets
(including receivables for securities sold and interest on securities) for an
interest in the Portfolio. The value of a shareholder's investment in the Fund
will be the same immediately after the Fund's investment in the Portfolio as
immediately before that investment. Of course, the value of a shareholder's
investment in the Fund may fluctuate thereafter.
THE INVESTMENT ADVISER AND ADMINISTRATOR
To the extent that the Fund invests all of its Investable Assets in the
Portfolio, the Fund would no longer directly require investment advisory
services. For this reason, if shareholders of the Fund approve the changes in
investment restrictions and adopt and authorize the implementation of the new
investment policy described in this Proposal, and the Fund invests all of its
Investable Assets in the Portfolio, the Fund will terminate its investment
advisory agreement with the Adviser. The investment advisory function will then
be performed by the Adviser under an investment advisory contract with the
Portfolio Trust. The Fund will, therefore, indirectly bear its proportionate
share of the advisory fees paid by the Portfolio pursuant to its investment
advisory agreement with the Adviser.
Pursuant to the Portfolio's investment advisory agreement, the Adviser
will be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund. For information about the Adviser, the
identity of its directors and its other contractual arrangements with the Trust,
see pages 13-16 of this Proxy Statement.
Upon exchange of its Investable Assets for an interest in the
Portfolio, the Fund will retain the services of Standish, Ayer & Wood, Inc.
("Standish") under an administration agreement. Under the administration
agreement, Standish would provide the Fund with general office facilities,
supervise the overall administration of the Fund and allow the Fund to use the
name "Standish." In addition, Standish has agreed in the administration
agreement to limit the Fund's aggregate annual operating expenses (excluding
brokerage commissions, taxes and
3
extraordinary expenses) to the permissible limit applicable in any state in
which shares of the Fund are then qualified for sale. For these services,
Standish currently will not receive any additional compensation. The Trustees
may, however, determine in the future to compensate Standish for its services
under the administration agreement.
COMPARATIVE EXPENSES
The following table shows the actual expenses of the Fund for the
fiscal year ended December 31, 1995 and a pro forma adjustment thereof assuming
that the Fund had invested all of its Investable Assets in the Portfolio for the
entire period then ended. The pro forma adjustment includes the estimated costs
of operating the Fund in the Hub and Spoke master-feeder fund structure. The pro
forma adjustment assumes that: (i) there were no holders of interests in the
Portfolio other than the Fund; and (ii) the average daily net assets of the Fund
and the Portfolio were equal to the actual average daily net assets of the Fund
during the period.
AGGREGATE PRO FORMA EXPENSES
(ASSUMING THAT THE AVERAGE
DAILY NET ASSETS INVESTED
BY THE FUND IN THE PORTFOLIO
ACTUAL WERE $134,273,618)
EXPENSES
ANNUAL FUND OPERATING EXPENSES
Investment advisory fees............ 0.40% 0.40%
12b-1 distribution expenses......... none none
Other expenses...................... 0.23% 0.23%*
----- -----
Total Operating Expenses............ 0.63% 0.63%*
===== =====
Example 1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
You would pay the following
expenses on a hypothetical
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period: $6 $20 $35 $78
THE INFORMATION IN THE HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
If the Fund is converted to the Hub and Spoke master-feeder fund
structure, actual Total Operating Expenses to be incurred may vary from the pro
forma Total Operating Expenses indicated above due to changes in the Fund's
expenses and net asset value between December 31, 1995 and the conversion date.
Assuming that the Fund was the only holder of an interest in the Portfolio and
that the Fund was fully invested therein, the net asset value per share,
distributions per share and net investment income per share of the Fund would
have been approximately the same on a pro forma basis as the actual net asset
value, distributions and net investment income per share of the Fund during the
period indicated.
*After expense limitation. Standish has voluntarily agreed to limit the
master-feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. In the absence of this agreement, Other Expenses and Total Operating
Expenses are estimated to be on a pro forma combined basis approximately 0.28%
and 0.68%, respectively. Standish may discontinue or modify such limitation in
the future at its discretion, although it has no current intention to do so.
4
TAX CONSIDERATIONS
The Trust will apply for a ruling from the Internal Revenue Service
("IRS") to the effect that its contribution of the Fund's Investable Assets to
the Portfolio in exchange for an interest in the Portfolio will not result in
the recognition of gain or loss to the Fund for federal income tax purposes.
Management of the Trust currently intends to proceed with the transfers only
upon the issuance of a favorable ruling by the IRS or the availability of an
opinion of tax counsel with respect to the matters requested in the Ruling.
There can be no assurance that such Ruling will be issued or such an opinion
will be available.
As a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), the Fund does not pay federal income or excise
taxes to the extent that it distributes to shareholders its net investment
income and net realized capital gains in accordance with the timing requirement
imposed by the Code. Under current law, so long as the Fund qualifies as a
regulated investment company for federal income tax purposes, the Fund itself is
not liable for any income, corporate excise or franchise taxes in the
Commonwealth of Massachusetts. The Portfolio is organized and intends to conduct
its operations in a manner such that it also will not be required to pay any
federal or Massachusetts income or excise taxes.
DESCRIPTION OF THE PORTFOLIO
The Portfolio Trust was organized as a master trust fund under New York
law on January 18, 1996. The investment objective of the Portfolio is the same
as the investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy.
The approval of the Portfolio's investors (I.E., the Fund and other holders of
interests in the Portfolio) would be required to change any of its fundamental
investment policies or restrictions; however, any change in nonfundamental
investment policies or restrictions would not require such approval.
Shareholders of the Fund will receive at least thirty days prior written notice
with respect to any change of the Portfolio's investment objective. As a
fundamental policy, the Fund's investment objective may not be changed without
shareholder vote. If the Portfolio proposed to change its investment objective,
the Fund would either obtain shareholder approval to make a corresponding change
to its investment objective or withdraw its investment in the Portfolio. The
Fund would be able to withdraw its investment in the Portfolio at any time if
the Trustees determine that it is in the best interests of the Fund to do so
(including if the Fund's and the Portfolio's investment objectives were not
substantially the same). Upon any such withdrawal, the Trustees would consider
what action might be taken, including investing all the Investable Assets of the
Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention of an investment adviser to
manage directly the Fund's assets in accordance with its investment objective
(as is presently the case).
Like the Fund, the Portfolio determines its net asset value on each day
on which the New York Stock Exchange is open. The net asset value is determined
as of the close of regular trading on the New York Stock Exchange (currently
4:00 p.m., New York City time). The Portfolio's net asset value is computed by
determining the value of the Portfolio's total assets (the securities it holds
plus any cash or other assets, including interest accrued but not yet received),
and subtracting all of the Portfolio's liabilities (including accrued expenses).
5
The Fund's net asset value is determined at the same time and on the
same days that the net asset value of the Portfolio is calculated. The Fund's
net asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting all
of the Fund's liabilities (including accrued expenses), and dividing the result
by the total number of shares outstanding at such time.
Interests in the Portfolio Trust have no preemptive or conversion
rights, and are fully paid and non-assessable. The Portfolio Trust normally will
not hold meetings of holders of such interests except as required under the 1940
Act. The Portfolio Trust would be required to hold a meeting of holders in the
event that at any time less than a majority of its Trustees holding office have
been elected by holders. The Trustees of the Portfolio Trust continue to hold
office until their successors are elected and have qualified. Holders holding a
specified percentage of interests in the Portfolio Trust may call a meeting of
holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the Portfolio Trust qualified to vote in the
election. The 1940 Act requires the Portfolio Trust to assist its holders in
calling such a meeting. Upon liquidation of the Portfolio, holders in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its shareholders and will cast its votes proportionately as
instructed by Fund shareholders that voted at the Fund meeting. Fund
shareholders who do not vote at the Fund meeting will not affect the Fund's
votes at the Portfolio meeting. The percentage of the Fund's votes representing
Fund shareholders not voting will be voted by the Trustees of the Trust in the
same proportion as the Fund shareholders who do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund
would not be required to request a vote of its shareholders with respect to (a)
any proposal relating to the Portfolio, which proposal, if made with respect to
the Fund, would not require the vote of the shareholders of the Fund, or (b) any
proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Fund. Any proposal submitted to holders in the Portfolio that is not required to
be voted on by shareholders of the Fund would nonetheless be voted on by the
Trustees of the Trust.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable for the
obligations of the Portfolio up to the amount of its interest in the Portfolio.
In addition, holders in the Portfolio may be held personally liable as partners
for the Portfolio's obligations. However, because the Portfolio Trust's
declaration of trust disclaims holder liability and provides for indemnification
against such liability, the risk of a holder in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both
6
inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. As such, it is unlikely that the Fund would experience
liability from the new investment structure itself. In any event, shareholders
of the Fund will continue to remain shareholders of a Massachusetts business
trust, and the risk of such a person incurring liability by reason of being a
shareholder of the Fund is remote.
The Portfolio Trust has its own Board of Trustees, including a majority
of Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Portfolio Trust (the "Independent Trustees"). The Trustees of the Portfolio
Trust are identical to the present Trustees of the Trust and are listed on page
10 of this Proxy Statement.
PROPOSED AMENDMENT OF CERTAIN INVESTMENT RESTRICTIONS
The Trustees have approved, subject to a shareholder vote, the
amendment of the investment restrictions of the Fund to permit the Fund to
invest all of its Investable Assets in the Portfolio. The proposed amendments to
the Fund's fundamental investment restrictions are subject to approval by the
Fund's shareholders. Certain of the Fund's investment restrictions may be deemed
to prohibit the Fund from seeking its investment objective by investing all of
its Investable Assets in the Portfolio. (See Investment Restrictions 1, 2, and 6
in Exhibit A.)
The investment restrictions for the Fund would be amended to provide
that "NOTWITHSTANDING THE CURRENT INVESTMENT RESTRICTIONS, THE FUND MAY INVEST
SUBSTANTIALLY ALL OF ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT
SECURITIES," AS DEFINED IN THE 1940 ACT, OR ARE EXCEPTED BY THE SEC) IN AN OPEN-
END MANAGEMENT INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT
OBJECTIVE AS THE FUND".
Additional changes are necessary to certain non-fundamental investment
restrictions of the Fund in order to make the Fund's current restrictions
consistent with the foregoing exception. The complete list of proposed
investment restrictions with respect to the Fund is attached as Exhibit A. These
proposed investment restrictions have been marked to show changes from the
Fund's current investment restrictions. Proposed additions are highlighted and
proposed deletions are struck out.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe, based primarily on their
discussions with the Adviser, that the Hub and Spoke master-feeder fund
structure will permit other collective investment vehicles having different
distribution arrangements to invest in the Portfolio. Since certain of these
other vehicles would not otherwise invest in the Fund due to tax and other
reasons, additional assets should be attracted to the Portfolio, thus increasing
the Portfolio's asset base. This anticipated larger asset base will be
advantageous to the shareholders of the Fund in several respects. The following
and other factors were considered by the Board in approving the Fund's
conversion to the Hub and Spoke master-feeder fund structure.
7
First, because certain expenses of operating an investment portfolio
are relatively fixed, those expenses should decline as a percentage of net asset
value as a result of an increased asset base following the conversion to the Hub
and Spoke master-feeder fund structure. Currently, the Fund bears these expenses
alone. After the conversion, these expenses would be borne in whole or in part
by the Portfolio and shared pro rata by the Fund and other investors in the
Portfolio.
Second, to the extent that the Portfolio will have a larger asset base
than that of the Fund, greater diversification of its investment portfolio can
be achieved than is currently possible for the Fund. Greater diversification is
expected to be beneficial to shareholders of the Fund and other investors in the
Portfolio because it may reduce the negative effect which the adverse
performance of any one portfolio security may have on the performance of the
entire investment portfolio.
Third, the larger anticipated size of the Portfolio would permit the
purchase of investments in larger denominations than the Fund currently is able
to purchase.
Although these benefits could be realized by the direct growth of the
Fund's assets, the Trustees believe that growth is more likely to be achieved
through investments in the Portfolio by entities in addition to the Fund. There
can, however, be no assurance that either an increase in assets of the Portfolio
or the benefits described above will be realized and no such benefits are
anticipated until other investors invest their assets in the Portfolio.
The Trustees also recognized that the Adviser could benefit from the
proposed Hub and Spoke master-feeder fund structure because such structure could
enable the Adviser to increase its assets under management through the
development of new vehicles to attract investor assets to he Adviser. These
additional investors may include other investment companies or advisory accounts
advised by the Adviser. In addition, this structure could attract corollary
advisory and related fees to the Adviser with less economic risk of limited
success in early years.
The Trustees believe that over time the aggregate per share expenses of
the Fund and the Portfolio should not be more than the expenses that would be
incurred by the Fund if it continued to retain the services of an investment
adviser and invested directly in securities, although there can be no assurance
that any expense savings will be realized. The Trustees also considered risks
associated with an investment in the Portfolio. The Trustees believe that the
Portfolio's investment policies and restrictions involve substantially the same
risks as are associated with the Fund's direct investment in securities.
In recommending that the shareholders authorize the conversion of the
Fund to the Hub and Spoke master-feeder fund structure, the Trustees have taken
into account and evaluated the possible effects that increased assets in the
Portfolio may have on the expense ratio of the Fund and have considered the
expense limitation voluntarily agreed to by Standish. After carefully weighing
the costs involved against the anticipated benefits of converting the Fund to
the Hub and
8
Spoke master-feeder fund structure, the Trustees recommend that the shareholders
of the Fund vote to approve Proposal 1.
Based on their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant to this Proposal,
the Trustees (including the Trustees who are not "interested persons" as defined
in the 1940 Act ("Interested Persons") of the Trust) have concluded that it
would be in the best interests of the Fund and its shareholders to approve the
adoption and implementation of a new investment policy and the amendment of
certain investment restrictions to enable the Fund to invest all of its
Investable Assets in the Portfolio.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" of the
Fund. Under the 1940 Act, this means that to be approved, the Proposal must
receive the affirmative vote of the lesser of (a) 67% of the shares of the Fund
present at the Meeting if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy at the Meeting, or (b) more than
50% of the outstanding shares of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 1.
In the event the shareholders of the Fund fail to approve this
Proposal, the Trustees would continue to retain Standish International
Management Company, L.P. as the investment adviser for the Fund to manage the
Fund's assets through directly investing in securities, and the advisory
agreement with Standish International Management Company, L.P. would continue in
effect in its current form.
PROPOSAL 2: AUTHORIZATION TO VOTE AS A PORTFOLIO INVESTOR
Shareholders of the Fund are being asked to vote on certain matters
with respect to the Portfolio because the Portfolio Trust is expected to ask the
Fund as an initial holder in the Portfolio to vote on such matters. Any vote is
expected to take place just after the Fund's investment in the Portfolio.
Specifically, it is expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement between the
Portfolio Trust, on behalf of the Portfolio, and its
investment adviser, Standish International Management
Company, L.P.
The Trust on behalf of the Fund will cast its votes on each matter in
the same proportions as the votes cast by the Fund's shareholders. At the
present time it is anticipated that there will be at least two holders of
interests with
9
respect to the Portfolio. However, the Fund is expected initially to own
substantially all of the interests in the Portfolio.
PROPOSAL 2(A): AUTHORIZATION TO ELECT TRUSTEES OF THE PORTFOLIO TRUST
It is the present intention that the enclosed proxy will, unless marked
to the contrary, be used for the purpose of authorizing the Trust to vote FOR
the election of the seven nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Portfolio
Trust's Declaration of Trust. Please note that each of the nominees currently
serves as a Trustee of the Trust and has consented to serve as a Trustee of the
Portfolio Trust if elected at the Meeting. Pursuant to the Declaration of Trust
of the Portfolio Trust, the Trustees have the power to establish and alter the
number and the terms of office of the Trustees (subject to certain removal
procedures, including vote by holders of interests), to appoint successor
Trustees and to fill vacancies, including vacancies existing by reason of an
increase in the number of Trustees, provided that always at least a requisite
majority of the Trustees has been elected by the holders of interests.
Generally, there will not be meetings of holders of interests for the purpose of
electing Trustees.
Should any nominee withdraw from the election or otherwise be unable to
serve (an event not now anticipated), the Trust will vote FOR the election of
such substitute nominee as the Board of Trustees of the Portfolio Trust may
recommend (unless authority to vote for election of one or more nominees is
specifically withheld by executing the proxy in the manner stated thereon or a
decision is made to reduce the number of Trustees serving on the Board). The
following table sets forth certain information about the nominees:
BUSINESS EXPERIENCE
NAME AGE DURING PAST FIVE YEARS
D. Barr Clayson* 60 Vice President and Managing Director,
Standish, Ayer & Wood, Inc.; President,
Standish International Management Company,
L.P.
Samuel C. Fleming 55 Chairman of the Board and Chief Executive
Officer, Decision Resources, Inc.; through
1989, Senior V.P. Arthur D. Little
Benjamin M. Friedman 51 William Joseph Maier Professor of Political
Economy, Harvard University
John H. Hewitt 60 Trustee, The Peabody Foundation; Trustee,
Visiting Nurse Alliance of Vermont and New
Hampshire
10
Edward H. Ladd* 58 Chairman of the Board and Managing
Director, Standish, Ayer & Wood, Inc.;
formerly, President of Standish, Ayer &
Wood, Inc.
Caleb Loring III 52 Trustee, Essex Street Associates (family
investment trust office); Director, Holyoke
Mutual Insurance Company
Richard S. Wood* 41 Vice President, Secretary and Director,
Standish, Ayer & Wood, Inc.; Executive Vice
President, Standish International
Management Company, L.P.
*Interested Person of the Portfolio Trust by reason of his affiliation with the
Adviser.
Messrs. Fleming, Friedman, Hewitt and Loring, each of whom is an
Independent Trustee, are members of the Committee of the Independent Trustees of
the Portfolio Trust which is chaired by Mr. Fleming. The Portfolio Trust has not
yet held any meetings of this Committee. The Committee of the Independent
Trustees, among other things, (1) will serve as the liaison between the
independent auditors and the Portfolio Trust's management as their duties relate
to assuring the integrity of the Portfolio's financial reporting and the
safeguarding of each Portfolio's assets; (2) will seek to assure the
independence of the auditors, the integrity of management and the adequacy of
disclosures to holders of interests; and (3) will review the scope of the audit,
the financial results of each series of the Portfolio Trust for the year and the
auditors' evaluation of the overall adequacy of internal controls and thereby
will assist the Board of Trustees in fulfilling its fiduciary responsibilities
as to accounting policies and reporting practices.
As of January 15, 1996, no officer or Trustee or nominee for election
as Trustee of either the Trust or the Portfolio Trust, individually or as a
group, directly or indirectly beneficially owned more than 1% of the outstanding
shares of the Fund or the Portfolio.
No fees have been paid by the Portfolio Trust to date to the nominees
for election as Trustees of the Portfolio Trust. The following table estimates
the amount of compensation to be paid to the Portfolio Trust's Trustees for the
fiscal year ending December 31, 1996. In addition, each Trustee will be
reimbursed for out-of-pocket expenses associated with attending Trustee
meetings.
11
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS FROM PORTFOLIO
COMPENSATION ACCRUED AS AND OTHER
FROM THE PART OF FUNDS IN
NAME OF TRUSTEE PORTFOLIO* PORTFOLIO'S EXPENSES COMPLEX**
- --------------- --------- -------------------- ----------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 1,103 0 41,750
Benjamin M. Friedman 970 0 36,750
John H. Hewitt 970 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 970 0 36,750
Richard S. Wood 0 0 0
- ------------
* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.
** As of the date of this Proxy Statement, there were 14 mutual funds
in the fund complex.
REQUIRED VOTE
Approval of the election of the Trustees of the Portfolio Trust
requires the affirmative vote of a majority of the outstanding interests in the
Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE PROPOSAL 2(A).
PROPOSAL 2(B): RATIFICATION OF SELECTION OF ACCOUNTANTS
The Trustees of the Portfolio Trust, including a majority of the
Independent Trustees, have selected Coopers & Lybrand, P.O. Box 219, Grand
Cayman, Cayman Islands, BWI, as independent accountants for the fiscal year
ending December 31, 1996. The employment of such auditors is expressly
conditioned upon the right of the Portfolio by the "vote of a majority of the
outstanding voting securities" (as defined above in Proposal 1) of the Portfolio
at any meeting called for the purpose to terminate such employment forthwith
without any penalty. Such selection was made pursuant to provisions of Section
32(a) of the 1940 Act, and is subject to ratification or rejection by the
holders of interests in the Portfolio at the meeting of such holders. Coopers &
Lybrand, L.L.P., an affiliate of Coopers & Lybrand, currently serves as the
independent accountants of the Fund and for Standish and the Adviser. The Fund
will be informed that no member of Coopers & Lybrand has any direct or material
indirect interest in the Fund or the Portfolio.
The Portfolio Trust's independent accountants provide customary
professional services in connection with the audit function for a management
12
investment company such as the Portfolio Trust, and their fees for such services
include fees for work leading to the expression of opinions on the financial
statements included in annual reports to the holders of interests in the
Portfolio Trust, opinions on the financial statements and other data included in
each Portfolio's annual report to the Securities and Exchange Commission,
opinions on financial statements included in amendments to the Portfolio Trust's
registration statement, and preparation of the Portfolio's federal and state
income tax returns.
Representatives of Coopers & Lybrand are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
If the Trust receives a written request from any shareholder at least five days
prior to the Meeting stating that the shareholder will be present in person at
the Meeting and desires to ask questions of the accountants, the Trust will
arrange to have a representative of Coopers & Lybrand present at the Meeting who
will respond to appropriate questions and have an opportunity to make a
statement.
It is intended that proxies, unless marked to the contrary, will be
voted in favor of authorizing the Trust to ratify the selection of Coopers &
Lybrand as the independent accountants employed by the Portfolio Trust to sign
or certify financial statements required to be signed or certified by
independent accountants and filed with the Securities and Exchange Commission in
respect of all or part of the fiscal year ending December 31, 1996.
REQUIRED VOTE
Approval of the selection of Coopers & Lybrand as independent
accountants of the Portfolio Trust requires the affirmative vote of a majority
of the outstanding interests in the Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 2(B).
PROPOSAL 2(C): AUTHORIZE THE TRUST TO APPROVE AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO TRUST AND STANDISH INTERNATIONAL MANAGEMENT COMPANY, L.P.
Standish International Management Company, L.P. (the "Adviser"), One
Financial Center, Boston, Massachusetts 02111, is expected to serve as
investment adviser to the Portfolio pursuant to an investment advisory agreement
(the "Proposed Advisory Agreement") between the Adviser and the Portfolio Trust
and to manage the Portfolio's investments and affairs subject to the supervision
of the Trustees of the Portfolio Trust. The Adviser is a Delaware limited
partnership which was organized in 1991 and is a registered investment adviser
under the Investment Advisers Act of 1940. The general partner of the Adviser is
Standish, One Financial Center, Boston, MA 02111, which holds a 99.98%
partnership interest. The limited partners, who each hold a 0.01% interest in
the Adviser, are Walter M. Cabot, Sr., Chairman of the Board of the Adviser and
a Director and Senior Adviser of Standish, and D. Barr Clayson, the President of
the Adviser and a Managing Director of Standish.
13
Standish and the Adviser provide fully discretionary management
services and counseling and advisory services to a broad range of clients
throughout the United States. In addition to the Fund, the Adviser provides
investment advisory services to two other series of the Trust, Standish
International Equity Fund and Standish International Fixed Income Fund, which
had net assets of approximately $59 million and $804 million, respectively, at
December 31, 1995. Standish also provides investment advisory services to other
funds within the Standish, Ayer & Wood family of funds, acting as investment
adviser to Standish Controlled Maturity Fund, Standish Fixed Income Fund,
Standish Fixed Income Fund II, Standish Securitized Fund, Standish Equity Fund,
Standish Intermediate Tax Exempt Bond Fund, Standish Massachusetts Intermediate
Tax Exempt Bond Fund, Standish Small Capitalization Equity Fund and Standish
Short-Term Asset Reserve Fund, which had net assets of approximately $8 million,
$2.3 billion, $8 million, $55 million, $89 million, $33 million, $33 million,
$180 million and $243 million, respectively, at December 31, 1995. Standish also
serves as the investment adviser to Standish Tax-Sensitive Equity Fund and
Standish Small Cap Tax-Sensitive Equity Fund, which commenced operations on
January 2, 1996. Corporate pension funds are the largest asset under active
management by Standish and the Adviser. Standish's and the Adviser's clients
also include charitable and educational endowment funds, financial institutions,
trusts and individual investors. As of December 31, 1995, Standish and the
Adviser managed approximately $29 billion of assets.
In order so that the Portfolio Trust not be deemed to be engaged in a
"trade or business within the United States" under Section 864 of the Code,
certain services must be performed on behalf of the Portfolio Trust outside the
United States. The Portfolio Trust's compliance with these requirements will not
subject investors in the Portfolio Trust that are not otherwise subject to
taxation in the United States to U.S. taxation solely by reason of being an
investor in the Portfolio Trust. In this regard, it is expected that IBT Trust
Company (Cayman) Ltd., P.O. Box 501, Grand Cayman, Cayman Islands, BWI ("IBT"),
will serve as the Portfolio Trust's administrator (the "Portfolio
Administrator") pursuant to an administration agreement. As Portfolio
Administrator, IBT will manage the affairs of the Portfolio Trust and will
currently receive a fee from the Portfolio in the amount of $7,500 annually. The
Adviser currently provides similar administrative services to the Fund without
additional compensation.
In recommending that the shareholders of the Fund authorize the Fund to
approve the Proposed Advisory Agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing the
Fund (as the equivalent of the Portfolio for this purpose) with other investment
companies of similar size and with similar investment objectives. Before making
this recommendation, the Trustees conducted a review of the various documents,
reports and other materials submitted to them by the Adviser, information that
they were familiar with as Trustees, and information obtained from independent
sources such as Lipper Analytical Services, Inc. The Trustees' review and
evaluation of certain of these materials was made with respect to the Fund in
November 1995.
TERMS OF THE PROPOSED ADVISORY AGREEMENT
The terms of the Proposed Advisory Agreement are substantially the same
as the terms of the current investment advisory agreement between the Adviser
and the Trust on behalf of the Fund (the "Current Advisory Agreement"), except:
(i) the date of execution and the initial term; and (ii) administrative services
will be provided to the Portfolio under a separate administrative services
agreement, which services are currently performed by the Adviser with respect to
the Fund under
14
the Current Advisory Agreement. The approval by Fund shareholders of this
proposal will not result in an increase in the rate at which the advisory fee
will be indirectly borne by the Fund after the proposed conversion to the Hub
and Spoke master-feeder fund structure.
The following description of the terms of the Proposed Advisory
Agreement is qualified in its entirety by reference to the copy of the Proposed
Advisory Agreement attached to this Proxy Statement as Exhibit C.
ADVISORY FEES AND EXPENSE LIMITATION. The rate at which the advisory
fee is payable by the Portfolio under the Proposed Advisory Agreement is the
same as the rate at which the advisory fee is payable by the Fund under the
Current Advisory Agreement. The advisory fee under the Current Advisory
Agreement and under the Proposed Advisory Agreement is payable by the Fund or
the Portfolio, as the case may be, at a rate equal on an annual basis to 0.40%
of the Fund's or the Portfolio's, as the case may be, average daily net assets.
For the fiscal year end December 31, 1995, the Fund paid advisory fees of
$538,577, which represented 0.40% of the Fund's average daily net assets. Upon
conversion of the Fund to the Hub and Spoke master-feeder fund structure, the
Current Advisory Agreement with the Fund will be terminated and the advisory
function will be performed by the Adviser under the Proposed Advisory Agreement.
As such, although the Fund will not directly pay any advisory fees to the
Adviser, it will indirectly bear its proportionate share of the advisory fees
paid by the Portfolio to the Adviser pursuant to the Proposed Advisory
Agreement.
As discussed in Proposal 1, Standish has voluntarily agreed to limit
the master-feeder aggregate annual operating expenses of the Fund and the
Portfolio (excluding brokerage commissions, taxes and extraordinary expenses) to
the Fund's ratio of expenses to average net assets in effect immediately prior
to the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. Standish may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. In addition, Standish
has agreed to limit the Fund's aggregate annual operating expenses (excluding
brokerage commissions, taxes and extraordinary expenses) to the permissible
limit applicable in any state in which shares of the Fund are then qualified for
sale. As is the case with respect to the Fund in the Current Advisory Agreement,
the Adviser has agreed in the Proposed Advisory Agreement to limit the
Portfolio's total annual operating expenses (excluding brokerage commissions,
taxes and extraordinary expenses) to 0.65% of the Portfolio's average daily net
assets, the compensation due the Adviser for such fiscal year shall be
proportionately reduced by the amount of such excess by a reduction or refund
thereof at the time such compensation is payable after the end of each calendar
month, subject to readjustment during such fiscal year.
ADVISORY SERVICES. Pursuant to the Proposed Advisory Agreement and
subject to the supervision and approval of the Trustees of the Portfolio Trust,
the Adviser is responsible for providing continuously an investment program for
the Portfolio, consistent with the Portfolio's investment objective, policies
and restrictions. Specifically, the Adviser will be required to determine what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what
15
portion, if any, of the Portfolio's assets will be held uninvested and make
changes in the Portfolio's investments. The Adviser will also manage, supervise
and conduct the other affairs and business of the Portfolio and matters
incidental thereto, including supervision of the Portfolio Administrator except
that Standish will not perform such administrative services that would cause
the Portfolio to be engaged in a U.S. trade or business.
The Fund's portfolio manager is Richard S. Wood, who has been primarily
responsible for the day-to-day management of the Fund's portfolio since the
Fund's inception. If the Proposed Advisory Agreement is approved, it is intended
that Mr. Wood would serve as the Portfolio's portfolio manager. During the past
five years, Mr. Wood has served as a Vice President and Director of Standish,
President of the Trust and Executive Vice President of the Adviser.
EXPENSES. Under the Proposed Advisory Agreement, the Portfolio bears
the expenses of its operations, including among other things legal and auditing
services, taxes and governmental fees, certain insurance premiums, costs of
notices and reports to interest holders, preparatory and filing of registration
and financial statements, bookkeeping and share pricing expenses, fees and
disbursements of the Portfolio Trust's administrator and custodian, or interest
and other like expenses properly payable by the Portfolio Trust.
APPROVAL AND TERMINATION PROVISIONS. If approved by the affirmative
vote of a "majority of the outstanding voting securities" (as defined in
Proposal 1) of the Portfolio ("Majority Investor Vote"), the Proposed Advisory
Agreement will remain in full force and effect for two years from the date of
such Proposed Advisory Agreement and will continue in full force and effect
indefinitely thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the Trustees of the
Portfolio Trust cast in person at a meeting called for the purpose of voting on
such approval, or (ii) by a Majority Investor Vote. The Proposed Advisory
Agreement may be terminated at any time without penalty by a vote of a majority
of the Independent Trustees of the Portfolio Trust or by a Majority Investor
Vote or by the Adviser on 60 days' written notice to the other party. In
addition, the Proposed Advisory Agreement will terminate immediately and
automatically if assigned.
STANDARD OF CARE. The Proposed Advisory Agreement further provides that
the Adviser shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under the Proposed
Advisory Agreement in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses which may
be sustained in the acquisition, holding or disposition of any security or other
investment.
EXPENSES
The Portfolio and the Fund, as the case may be, will each be
responsible for all of its respective costs and expenses not expressly stated to
be payable by the Adviser under the Proposed Advisory Agreement with the
Portfolio or by Standish under the administration agreement with the Fund. Among
other expenses, the Portfolio will pay investment advisory fees; bookkeeping,
share pricing and custodian fees and expenses; expenses of notices and reports
to interest holders; and expenses of the Portfolio Administrator. The Fund will
pay fees and disbursements of the Fund's transfer agent and dividend disbursing
agent or registrar, shareholder servicing fees and
16
expenses; expenses of prospectuses, statements of additional information and
shareholder reports which are furnished to shareholders. Each of the Fund and
Portfolio will pay legal and auditing fees; registration and reporting fees and
expenses; and Trustees' fees and expenses. Expenses of the Trust or the
Portfolio Trust which relate to more than one of their respective series are
allocated among such series by the Adviser and SIMCO in an equitable manner,
primarily on the basis of relative net asset values. For the period fiscal year
ended December 31, 1995, total expenses of the Fund amounted to $850,423, which
represented 0.63% of the Fund's average daily net assets.
REQUIRED VOTE
Approval of the Portfolio Trust's Proposed Advisory Agreement with the
Adviser requires a Majority Investor Vote as defined above.
THE TRUSTEES OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE PROPOSAL
3(C).
In the event that the shareholders of the Fund fail to approve this
Proposal, the Trustees of the Trust will consider what further action should be
taken.
ADDITIONAL INFORMATION
BENEFICIAL OWNERS
At the close of business on February 1, 1996, no person owned, to the
knowledge of management, 5% or more of the outstanding shares of the Fund,
except as listed below:
Number (Percentage) of
Name and Address Shares Beneficially Owned
- ---------------- -------------------------
Brown University 1,305,861 (18.7%)
164 Angell Street
Investment Office - Box C
Providence, RI 02912
Children's Medical Center Corporation 1,123,594 (16.1%)
1295 Boylston Street
Suite 300
Boston, MA 02215
Lafayette College 1,015,392 (14.5%)
234 Markle Hall
Easton, PA 18042-1779
Wenner Gren Foundation 683,623 (9.8%)
220 Fifth Avenue
New York, NY 10001
Trustees of Boston College 593,259 (8.5%)
St. Thomas Moore Hall
Room 310
Chestnut Hill, MA 02167
Sisters of Mercy Health Systems 373,982 (5.4%)
2039 N. Geyer Road
St. Louis, MO 63131
Bingham, Dana & Gould Managed 367,396 (5.3%)
150 Federal Street
Boston, MA 02110
PORTFOLIO TRANSACTIONS
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio.
Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of Fund shares may
also be considered factors in the selection of brokers and dealers that execute
orders to purchase and sell portfolio securities for the Portfolio.
OTHER MATTERS
The Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Standish, Ayer & Wood Investment Trust, One Financial
Center, Boston, Massachusetts 02111, c/o Richard S. Wood, President so that they
are received within a reasonable time before any such meeting.
17
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Fund. If shareholders
desire additional information about the matters proposed for action, the Trust's
management will be pleased to hear from them and provide further information.
PROXIES, QUORUM AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in the attached Notice.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present at the Meeting, or in the event that a quorum is
present at the Meeting but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting (with respect to all or some of the proposals) to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those Shares affected by the adjournment represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR all such
proposals in favor of such an adjournment, and will vote those proxies required
to be voted AGAINST any such proposal against any adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval.
Under the Declaration of Trust of the Trust, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the issued and
outstanding Shares of the Trust entitled to vote at the Meeting except that
where the holders of any series of Shares are to vote as a series, then the
presence in person or by proxy of the holders of a majority of the Shares of
such series issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of such business.
Shares of the Fund (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions from voting will be treated as shares that are present and entitled
to vote for purposes of determining the number of shares that are present and
entitled to vote with respect to a proposal, but will not be counted as a vote
in favor of that proposal. Accordingly, an abstention from voting has the same
effect as a vote against a proposal.
18
Adoption by the shareholders of the Fund of each proposal requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any proposal, those shares will not be
considered as present and entitled to vote as to that proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a proposal has been adopted pursuant to item (ii) above, because shares
are represented by a "broker non-vote" are considered outstanding shares, a
"broker non-vote" has the same effect as a vote against such proposal.
EXPENSES AND METHODS OF SOLICITATION
The costs of the Meeting, including the solicitation of proxies will be
paid by Standish. Persons holding shares as nominees will be reimbursed by
Standish, upon request, for their reasonable expenses of forwarding soliciting
material to the principals of the accounts. In addition to the mailing of these
proxy materials, proxies may be personally solicited by Trustees, officers and
employees of the Trust, by personnel of Standish and of the Fund's transfer
agent, Investors Bank & Trust Company, or by a professional solicitation
organization in person or by telephone.
Dated: February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
SAW0022C
19
EXHIBIT A
INVESTMENT RESTRICTIONS
Proposed additions are highlighted and proposed deletions are struck
out.
AS A MATTER OF FUNDAMENTAL POLICY, THE FUND may not:
1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to debt
securities issued or guaranteed by the United States Government or its
agencies or instrumentalities.
2. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter under the Securities Act of 1933.
3. Purchase real estate or real estate mortgage loans, although the Fund
may purchase marketable securities of companies which deal in real
estate, real estate mortgage loans or interests therein.
4. Purchase securities on margin (except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities).
5. Purchase or sell commodities or commodity contracts except that the
Fund may purchase and sell financial futures contracts and options on
financial futures contracts and engage in foreign currency exchange
transactions.
6. With respect to at least 50% of its total assets, invest more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer
7. Issue senior securities, borrow money, enter into reverse repurchase
agreements or pledge or mortgage its assets, except that the Fund may
(a) borrow from banks as a temporary measure for extraordinary or
emergency purposes (but not investment purposes) in an amount up to 15%
of the current value of its total assets to secure such borrowings, (b)
enter into forward roll transactions, and (c) pledge its assets to an
extent not greater than 15% of the current value of its total assets to
secure such borrowings; however, the Fund may not make any additional
investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
8. Lend portfolio securities, except that the Fund may lend its portfolio
securities with a value up to 20% of its total assets (with a 10% limit
20
for any borrower) and may enter into repurchase agreements with respect
to 25% of the value of its net assets.
NOTWITHSTANDING ANY FUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF
ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED
IN THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
The following restrictions are not fundamental policies and may be
changed by the Trustees of the Trust without shareholder approval in accordance
with applicable laws, regulations or regulatory policy. The Fund may not:
a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the FUND'S net assets or (b) at all
times during which a short position is open it owns an equal amount of
such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.
b. Invest in companies for the purpose of exercising control or
management.
c. Purchase the securities of other investment companies, provided that
the Portfolio (Fund) may make a purchase (a) in the open market
involving no commission or profit to a sponsor or dealer (other than
the customary broker's commission), provided that immediately
thereafter (i) not more than 10% of the Portfolio's (Fund's) total
assets would be invested in such securities, (ii) not more than 5% of
the Portfolio's (Fund's) total assets would be invested in the
securities of any one investment company and (iii) not more than 3% of
the voting stock of any one investment company would be owned by the
Portfolio (Fund), or (b) as part of a merger, consolidation, or
acquisition of assets.
d. Purchase or write options, except as described under "Strategic
Transactions."
e. Invest in interests in oil, gas or other exploration or development
programs.
f. Invest more than 5% of the assets of the Fund in the securities of any
issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than debt securities issued or guaranteed by
U.S. or foreign national, provincial, state or other governments with
taxing authority or by their agencies or by supranational entities, and
securities fully collateralized by such securities.
g. Invest in securities of any company if any officer or director
(trustee) of the Trust or of the PORTFOLIO'S investment adviser owns
more than 1/2 of 1% of the outstanding securities of such company and
such officers and directors (trustees) own in the aggregate more than
5% of the securities of such company.
21
h. Invest more than an aggregate of 15% of the net assets of the Fund in
(a) repurchase agreements which are not terminable within seven days,
(b) securities subject to legal or contractual restrictions on resale
or for which there are no readily available market quotations and (c)
other illiquid securities, including nonnegotiable fixed time deposits.
NOTWITHSTANDING ANY NONFUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF
ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED
IN THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
22
EXHIBIT B
The Trustees and officers of the Portfolio Trust who are also
directors, officers or employees of Standish are listed below. The address of
each such person is c/o Standish, Ayer & Wood, Inc., One Financial Center,
Boston, Massachusetts 02111.
POSITION HELD POSITION WITH
NAME WITH THE TRUST STANDISH
D. Barr Clayson Vice President Vice President and
and Trustee Managing Director
Edward H. Ladd Trustee and Chairman of the Board
Vice President and Managing Director
Richard S. Wood President Vice President,
and Trustee Secretary and Director
James E. Hollis III Executive Vice Vice President and
President Director
David W. Murray Treasurer and Vice President, Treasurer
Secretary and Director
Beverly E. Banfield Vice President Vice President and
Compliance Officer
Lavinia B. Chase Vice President Vice President
Anne P. Herrmann Vice President Mutual Fund
Administrator
Denise B. Kneeland Vice President Senior Operations Manager
23
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this day of , 1996, by and between Standish, Ayer &
Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish International Management
Company, L.P., a Delaware limited partnership (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Global Fixed Income Portfolio (the
"Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is willing
to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
I. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
II. DUTIES OF THE ADVISER. A. The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.
24
B. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of notices and reports to interest-holders, typesetting and
printing of registration and financial statements for regulatory purposes and
for distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
III. COMPENSATION OF THE ADVISER. A. As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.40% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.
B. The compensation payable to the Adviser hereunder for any period less
than a full month during which this Agreement is in effect shall be prorated
according to the proportion which such period bears to a full month.
C. The Adviser agrees that if total expenses (excluding brokerage, taxes
and extraordinary expenses) of the Portfolio for any fiscal year of the
Portfolio exceed 0.65% of the Portfolio's average daily net assets, the
compensation due the Adviser for such fiscal year shall be proportionately
reduced by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month, subject
to readjustment during such fiscal year.
IV. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
V. TERM AND TERMINATION. A. This Agreement shall become effective on the
date hereof. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof and shall continue
in full force and effect for successive periods of one year thereafter, but only
so long as each such continuance is approved annually 1. by either the Trustees
of the Portfolio Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, and, in either event,
2. by vote of a majority of the Trustees of the Portfolio Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
B. This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of
25
the outstanding voting securities (as defined in the 1940 Act) of the Portfolio
or by the Adviser, on sixty days' written notice to the other party.
C. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
VI. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
interest-holders of the Portfolio and this Agreement has been signed by an
authorized officer of the Portfolio Trust, acting as such, and neither such
authorization by such Trustees and interest-holders nor such execution and
delivery by such officer shall be deemed to have been made by any of them, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
STANDISH, AYER & WOOD MASTER
PORTFOLIO, on behalf of STANDISH
GLOBAL FIXED INCOME PORTFOLIO
Attest:
By:
Its:
STANDISH INTERNATIONAL
MANAGEMENT COMPANY, L.P.
By: Standish, Ayer & Wood, Inc.
Its: General Partner
Attest:
By:
Its:
26
PROXY BALLOT
STANDISH GLOBAL FIXED INCOME FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
PROXY PROXY
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, David W. Murray and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Global Fixed Income Fund (the
"Fund"), a series of Standish, Ayer & Wood Investment Trust (the "Trust"), to be
held at the offices of the Trust, One Financial Center, 26th Floor, Boston,
Massachusetts 02111, on March 29, 1996, at 10:00 a.m., or at any adjournment
thereof, notice of which meeting and the Proxy Statement accompanying the same
have been received by the undersigned, upon the following matters as described
in the Notice of Special Meeting and accompanying Proxy Statement:
1) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT AND TO IMPLEMENT A NEW
INVESTMENT POLICY TO AUTHORIZE THE FUND TO INVEST SUBSTANTIALLY ALL
OF ITS ASSETS IN A PORTFOLIO (THE "PORTFOLIO"), A SERIES OF A
SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "PORTFOLIO
TRUST") HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES
AND RESTRICTIONS AS THE FUND, AND TO AMEND CERTAIN INVESTMENT
RESTRICTIONS TO PERMIT SUCH INVESTMENT.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
TO CONSIDER AND ACT UPON PROPOSALS TO AUTHORIZE THE TRUST TO VOTE AS A HOLDER OF
AN INTEREST IN THE PORTFOLIO TO:
2A) ELECT TRUSTEES OF THE PORTFOLIO TRUST;
---
--- FOR ALL NOMINEES LISTED BELOW
---
--- VOTE WITHHELD FOR ALL NOMINEES LISTED BELOW
---
--- FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY
BELOW BY STRIKING OUT THE NAME OF A NOMINEE)
D. BARR CLAYSON, SAMUEL C. FLEMING,
BENJAMIN M. FRIEDMAN, JOHN H. HEWITT,
EDWARD H. LADD, CALEB LORING III AND RICHARD S. WOOD
2B) RATIFY THE SELECTION OF COOPERS & LYBRAND AS THE INDEPENDENT
ACCOUNTANTS OF THE PORTFOLIO; AND
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
2C) APPROVE THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE PORTFOLIO AND
ITS INVESTMENT ADVISER, STANDISH INTERNATIONAL MANAGEMENT COMPANY,
L.P.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR PROPOSALS 1,
2B, 2C, AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN
THE MANNER PROVIDED.
Dated ________________________, 1996
___________________________________
___________________________________
___________________________________
Signature(s)
In signing, please write your name(s) exactly as your account is
registered. When signing as attorney, executor, administrator or other
fiduciary, please give your full title as such. Joint owners should each sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED.
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the Registrant
Check appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Solicitation material
Standish, Ayer & Wood Investment Trust (Name of Registrant as Specified in Its
Charter)
Board of Trustees of Standish, Ayer & Wood Investment Trust (Name of Person(s)
Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration number, or the form or
schedule and the date of its filing:
(1) Amount previously paid: $125
(2) Form, schedule or registration no.: PRE 14A
(3) Filing party: Standish, Ayer & Wood Investment Trust
(4) Date filed: 25-Jan-96
STANDISH FIXED INCOME FUND
A Series of
STANDISH, AYER & WOOD INVESTMENT TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 29, 1996
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Standish Fixed
Income Fund (the "Fund"), a series of Standish, Ayer & Wood Investment Trust
(the "Trust"), will be held on March 29, 1996, at 10:00 a.m., Eastern time, at
the offices of the Trust, One Financial Center, 26th Floor, Boston, MA 02111 for
the following purposes:
(1) To consider and act upon a proposal to adopt and to implement
a new investment policy to authorize the Fund to invest all of
its investable assets in a specific corresponding open-end
management investment company (the "Portfolio") having
substantially the same investment objective, policies and
restrictions as the Fund, and to amend certain investment
restrictions to permit such investment;
(2) To consider and act upon proposals to authorize the Trust to
vote as a holder of an interest in the Portfolio to (A) elect
Trustees of Standish, Ayer & Wood Master Portfolio; (B) ratify
the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and (C) approve the Investment
Advisory Agreement between the Portfolio and its investment
adviser, Standish, Ayer & Wood, Inc.; and
(3) To consider and act upon any matters incidental to the
foregoing purposes or any of them, and any other matters which
may properly come before the Meeting or any adjourned session
thereof.
The subjects referred to above are discussed in the accompanying Proxy
Statement. Each shareholder is invited to attend the Meeting in person.
Shareholders of record at the close of business on February 1, 1996 have the
right to receive notice of and to vote at the Meeting. We urge you to complete,
date, sign and promptly return the enclosed proxy card in order that the Meeting
may be held and the Fund may avoid the additional expense of further
solicitation.
David W. Murray
SECRETARY
February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
STANDISH FIXED INCOME FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
One Financial Center
Boston, Massachusetts 02111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Trustees") of Standish, Ayer & Wood
Investment Trust (the "Trust"). The proxies will be voted at the Special Meeting
of Shareholders of Standish Fixed Income Fund (the "Fund"), a series of the
Trust, to be held on March 29, 1996, at 10:00 a.m. (Boston time) at the offices
of the Trust, One Financial Center, 26th Floor, Boston, MA 02111 (such meeting
and any adjournment or postponement thereof are referred to as the "Meeting").
The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Meeting. Should other business properly be brought before the Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This Proxy Statement and the enclosed proxy card are expected to be
mailed on or about February 16, 1996 to shareholders of record at the close of
business on February 1, 1996 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. On the Record Date, there were 108,814,442 shares of beneficial
interest of the Fund outstanding and entitled to vote at the Meeting. (The
shares are referred to individually as a "Share" and collectively as the
"Shares".) Each Share is entitled to one vote, and fractional Shares are
entitled to proportionate shares of one vote.
The executive offices of the Trust are located at One Financial Center,
Boston, Massachusetts 02111. THE FUND'S ANNUAL REPORT TO SHAREHOLDERS FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995 MAY BE OBTAINED FREE OF CHARGE BY WRITING TO
THE TRUST AT THE ADDRESS SET FORTH ABOVE OR BY CALLING 1-800-221-4685 (TOLL
FREE).
IT IS ESSENTIAL THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD.
In order that your Shares may be represented at the Meeting, you are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which requires
no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received by 10:00 a.m.
on March 29, 1996.
PROPOSAL 1: TO APPROVE AND TO IMPLEMENT A NEW INVESTMENT POLICY AND TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
SUMMARY
The Trustees of the Trust have approved, and are submitting to the
shareholders of the Fund for approval, the adoption and implementation of a new
investment policy for the Fund and the amendment of certain of the Fund's
fundamental investment restrictions to permit the Fund to invest all of its
investable assets ("Investable Assets") in the Fixed Income Portfolio (the
"Portfolio"). The Portfolio, a series of Standish, Ayer & Wood Master Portfolio
(the "Portfolio Trust"), has substantially the same investment objective,
policies and restrictions as the Fund. The adoption and implementation of the
new investment policy and changes in the Fund's investment restrictions for the
Fund are subject to approval by the Fund's shareholders. If this Proposal is
approved by the Fund's shareholders, the Trustees intend to invest all the
Fund's Investable Assets in the Portfolio, thereby converting the Fund to the
Hub and Spoke(R) master-feeder fund structure.1
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe that the Fund's conversion to
the Hub and Spoke master-feeder fund structure will be advantageous to the
shareholders of the Fund in several respects. Please see "Recommendation of the
Board of Trustees" on page 7 of this Proxy Statement for a discussion of the
Trustees' recommendation.
NEW INVESTMENT POLICY
The Trustees recommend that the shareholders of the Fund approve the
adoption and implementation of a new investment policy for the Fund, I.E., to
invest all of the Fund's Investable Assets in the Portfolio. The Portfolio
is a series of the Portfolio Trust, a newly formed trust to be registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Portfolio has substantially the same investment
objective, policies and restrictions as the Fund. Standish, Ayer & Wood, Inc.
("Standish" or the "Adviser") serves as the Fund's investment adviser and,
subject to shareholder approval, will serve as the Portfolio's investment
adviser. By investing in the Portfolio, the Fund would seek its investment
objective through its investment in the Portfolio, rather than through direct
investments in securities. The Portfolio in turn would invest in securities in
accordance with its investment objective, policies and restrictions. Interests
in the Portfolio are not available for purchase directly by members of the
general public.
To the extent required by applicable law or the Trust's Declaration of
Trust, the approval by Fund shareholders of this Proposal will authorize the
Trustees of the Trust to implement the Fund's conversion to the Hub and Spoke
- --------
1 Hub and Spoke is a registered service mark of Signature Financial Group, Inc.
2
master-feeder fund structure. If this Proposal is approved by the shareholders
of the Fund and the Trustees are satisfied with certain tax matters discussed
below, the Trustees intend to convert the Fund to the Hub and Spoke
master-feeder fund structure on or about the close of business on March 29, 1996
or such later date as the Trustees may approve.
The Trustees expect to implement the Fund's conversion to the Hub and
Spoke master-feeder fund structure by causing the Fund to exchange all of its
Investable Assets (securities and cash) as well as certain other assets
(including receivables for securities sold and interest on securities) for an
interest in the Portfolio. The value of a shareholder's investment in the Fund
will be the same immediately after the Fund's investment in the Portfolio as
immediately before that investment. Of course, the value of a shareholder's
investment in the Fund may fluctuate thereafter.
THE INVESTMENT ADVISER AND ADMINISTRATOR
To the extent that the Fund invests all of its Investable Assets in the
Portfolio, the Fund would no longer directly require investment advisory
services. For this reason, if shareholders of the Fund approve the changes in
investment restrictions and adopt and authorize the implementation of the new
investment policy described in this Proposal, and the Fund invests all of its
Investable Assets in the Portfolio, the Fund will terminate its investment
advisory agreement with the Adviser. The investment advisory function will then
be performed by the Adviser under an investment advisory contract with the
Portfolio Trust. The Fund will, therefore, indirectly bear its proportionate
share of the advisory fees paid by the Portfolio pursuant to its investment
advisory agreement with the Adviser.
Pursuant to the Portfolio's investment advisory agreement, the Adviser
will be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund. For information about the Adviser, the
identity of its directors and its other contractual arrangements with the Trust,
see pages 13-16 of this Proxy Statement.
Upon exchange of its Investable Assets for an interest in the
Portfolio, the Fund will retain the services of Standish under an administration
agreement. Under the administration agreement, Standish would provide the Fund
with general office facilities, supervise the overall administration of the Fund
and allow the Fund to use the name "Standish." In addition, Standish has agreed
in the administration agreement to limit the Fund's aggregate annual operating
expenses (excluding brokerage commissions, taxes and extraordinary expenses) to
the
3
permissible limit applicable in any state in which shares of the Fund are then
qualified for sale. For these services, Standish currently will not receive any
additional compensation. The Trustees may, however, determine in the future to
compensate Standish for its services under the administration agreement.
COMPARATIVE EXPENSES
The following table shows the actual expenses of the Fund for the
fiscal year ended December 31, 1995 and a pro forma adjustment thereof assuming
that the Fund had invested all of its Investable Assets in the Portfolio for the
entire period then ended. The pro forma adjustment includes the estimated costs
of operating the Fund in the Hub and Spoke master-feeder fund structure. The pro
forma adjustment assumes that: (i) there were no holders of interests in the
Portfolio other than the Fund; and (ii) the average daily net assets of the Fund
and the Portfolio were equal to the actual average daily net assets of the Fund
during the period.
AGGREGATE PRO FORMA EXPENSES
(ASSUMING THAT THE
AVERAGE DAILY NET ASSETS
INVESTED BY THE FUND IN THE
ACTUAL PORTFOLIO WERE $1,990,153,768)
EXPENSES
ANNUAL FUND OPERATING EXPENSES
Investment advisory fees............ 0.32% 0.32%
12b-1 distribution expenses......... none none
Other expenses...................... 0.05% 0.05%*
----- -----
Total Operating Expenses............ 0.37% 0.37%*
===== =====
Example 1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
You would pay the following
expenses on a hypothetical
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period: $4 $12 $21 $47
THE INFORMATION IN THE HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
If the Fund is converted to the Hub and Spoke master-feeder fund
structure, actual Total Operating Expenses to be incurred may vary from the pro
forma Total Operating Expenses indicated above due to changes in the Fund's
expenses and net asset value between December 31, 1995 and the conversion date.
Assuming that the Fund was the only holder of an interest in the Portfolio and
that the Fund was fully invested therein, the net asset value per share,
distributions per share and net investment income per share of the Fund would
have been approximately the same on a pro forma basis as the actual net asset
value, distributions and net investment income per share of the Fund during the
period indicated.
*After expense limitation. Standish has voluntarily agreed to limit the
master- feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. In the absence of this agreement, Other Expenses and Total Operating
Expenses are estimated to be on a pro forma combined basis approximately 0.06%
and 0.38%, respectively. Standish may discontinue or modify such limitation in
the future at its discretion, although it has no current intention to do so.
4
TAX CONSIDERATIONS
The Trust will apply for a ruling from the Internal Revenue Service
("IRS") to the effect that its contribution of the Fund's Investable Assets to
the Portfolio in exchange for an interest in the Portfolio will not result in
the recognition of gain or loss to the Fund for federal income tax purposes.
Management of the Trust currently intends to proceed with the transfers only
upon the issuance of a favorable ruling by the IRS or the availability of an
opinion of tax counsel with respect to the matters requested in the Ruling.
There can be no assurance that such Ruling will be issued or such an opinion
will be available.
As a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), the Fund does not pay federal income or excise
taxes to the extent that it distributes to shareholders its net investment
income and net realized capital gains in accordance with the timing requirement
imposed by the Code. Under current law, so long as the Fund qualifies as a
regulated investment company for federal income tax purposes, the Fund itself is
not liable for any income, corporate excise or franchise taxes in the
Commonwealth of Massachusetts. The Portfolio is organized and intends to conduct
its operations in a manner such that it also will not be required to pay any
federal or Massachusetts income or excise taxes.
DESCRIPTION OF THE PORTFOLIO
The Portfolio Trust was organized as a master trust fund under New York
law on January 18, 1996. The investment objective of the Portfolio is the same
as the investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy.
The approval of the Portfolio's investors (I.E., the Fund and other holders of
interests in the Portfolio) would be required to change any of its fundamental
investment policies or restrictions; however, any change in nonfundamental
investment policies or restrictions would not require such approval.
Shareholders of the Fund will receive at least thirty days prior written notice
with respect to any change of the Portfolio's investment objective. As a
fundamental policy, the Fund's investment objective may not be changed without
shareholder vote. If the Portfolio proposed to change its investment objective,
the Fund would either obtain shareholder approval to make a corresponding change
to its investment objective or withdraw its investment in the Portfolio. The
Fund would be able to withdraw its investment in the Portfolio at any time if
the Trustees determine that it is in the best interests of the Fund to do so
(including if the Fund's and the Portfolio's investment objectives were not
substantially the same). Upon any such withdrawal, the Trustees would consider
what action might be taken, including investing all the Investable Assets of the
Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention of an investment adviser to
manage directly the Fund's assets in accordance with its investment objective
(as is presently the case).
Like the Fund, the Portfolio determines its net asset value on each day
on which the New York Stock Exchange is open. The net asset value is determined
as of the close of regular trading on the New York Stock Exchange (currently
4:00 p.m., New York City time). The Portfolio's net asset value is computed by
determining the value of the Portfolio's total assets (the securities it holds
plus any cash or other assets, including interest accrued but not yet received),
and subtracting all of the Portfolio's liabilities (including accrued expenses).
5
The Fund's net asset value is determined at the same time and on the
same days that the net asset value of the Portfolio is calculated. The Fund's
net asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting all
of the Fund's liabilities (including accrued expenses), and dividing the result
by the total number of shares outstanding at such time.
Interests in the Portfolio Trust have no preemptive or conversion
rights, and are fully paid and non-assessable. The Portfolio Trust normally will
not hold meetings of holders of such interests except as required under the 1940
Act. The Portfolio Trust would be required to hold a meeting of holders in the
event that at any time less than a majority of its Trustees holding office have
been elected by holders. The Trustees of the Portfolio Trust continue to hold
office until their successors are elected and have qualified. Holders holding a
specified percentage of interests in the Portfolio Trust may call a meeting of
holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the Portfolio Trust qualified to vote in the
election. The 1940 Act requires the Portfolio Trust to assist its holders in
calling such a meeting. Upon liquidation of the Portfolio, holders in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its shareholders and will cast its votes proportionately as
instructed by Fund shareholders that voted at the Fund meeting. Fund
shareholders who do not vote at the Fund meeting will not affect the Fund's
votes at the Portfolio meeting. The percentage of the Fund's votes representing
Fund shareholders not voting will be voted by the Trustees of the Trust in the
same proportion as the Fund shareholders who do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund
would not be required to request a vote of its shareholders with respect to (a)
any proposal relating to the Portfolio, which proposal, if made with respect to
the Fund, would not require the vote of the shareholders of the Fund, or (b) any
proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Fund. Any proposal submitted to holders in the Portfolio that is not required to
be voted on by shareholders of the Fund would nonetheless be voted on by the
Trustees of the Trust.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable for the
obligations of the Portfolio up to the amount of its interest in the Portfolio.
In addition, holders in the Portfolio may be held personally liable as partners
for the Portfolio's obligations. However, because the Portfolio Trust's
declaration of trust disclaims holder liability and provides for indemnification
against such liability, the risk of a holder in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both
6
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. As such, it is unlikely that the Fund would experience liability
from the new investment structure itself. In any event, shareholders of the Fund
will continue to remain shareholders of a Massachusetts business trust, and the
risk of such a person incurring liability by reason of being a shareholder of
the Fund is remote.
The Portfolio has its own Board of Trustees, including a majority of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Portfolio (the "Independent Trustees"). The Trustees of the Portfolio Trust are
identical to the present Trustees of the Trust and are listed on page 10 of this
Proxy Statement.
PROPOSED AMENDMENT OF CERTAIN INVESTMENT RESTRICTIONS
The Trustees have approved, subject to a shareholder vote, the
amendment of the investment restrictions of the Fund to permit the Fund to
invest all of its Investable Assets in the Portfolio. The proposed amendments to
the Fund's fundamental investment restrictions are subject to approval by the
Fund's shareholders. Certain of the Fund's investment restrictions may be deemed
to prohibit the Fund from seeking its investment objective by investing all of
its Investable Assets in the Portfolio. (See Investment Restrictions 1, 4, and
5 in Exhibit A.)
The investment restrictions for the Fund would be amended to provide
that "NOTWITHSTANDING THE CURRENT INVESTMENT RESTRICTIONS, THE FUND MAY INVEST
SUBSTANTIALLY ALL OF ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT
SECURITIES," AS DEFINED IN THE 1940 ACT, OR ARE EXCEPTED BY THE SEC) IN AN OPEN-
END MANAGEMENT INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT
OBJECTIVE AS THE FUND".
Additional changes are necessary to certain non-fundamental investment
restrictions of the Fund in order to make the Fund's current restrictions
consistent with the foregoing exception. The complete list of proposed
investment restrictions with respect to the Fund is attached as Exhibit A. These
proposed investment restrictions have been marked to show changes from the
Fund's current investment restrictions. Proposed additions are highlighted and
proposed deletions are struck out.
RECOMMENDATION OF THE BOARD OF TRUSTEES
The Trustees of the Trust recommend that shareholders of the Fund vote
to approve this Proposal 1. The Trustees believe, based primarily on their
discussions with the Adviser, that the Hub and Spoke master-feeder fund
structure will permit other collective investment vehicles having different
distribution arrangements to invest in the Portfolio. Since certain of these
other vehicles would not otherwise invest in the Fund due to tax and other
reasons, additional assets should be attracted to the Portfolio, thus increasing
the Portfolio's asset base. This anticipated larger asset base will be
advantageous to the shareholders of the Fund in several respects. The following
and other factors were considered by the Board in approving the Fund's
conversion to the Hub and Spoke master-feeder fund structure.
7
First, because certain expenses of operating an investment portfolio
are relatively fixed, those expenses should decline as a percentage of net asset
value as a result of an increased asset base following the conversion to the Hub
and Spoke master-feeder fund structure. Currently, the Fund bears these expenses
alone. After the conversion, these expenses would be borne in whole or in part
by the Portfolio and shared pro rata by the Fund and other investors in the
Portfolio.
Second, to the extent that the Portfolio will have a larger asset base
than that of the Fund, greater diversification of its investment portfolio can
be achieved than is currently possible for the Fund. Greater diversification is
expected to be beneficial to shareholders of the Fund and other investors in the
Portfolio because it may reduce the negative effect which the adverse
performance of any one portfolio security may have on the performance of the
entire investment portfolio.
Third, the larger anticipated size of the Portfolio would permit the
purchase of investments in larger denominations than the Fund currently is able
to purchase.
Although these benefits could be realized by the direct growth of the
Fund's assets, the Trustees believe that growth is more likely to be achieved
through investments in the Portfolio by entities in addition to the Fund. There
can, however, be no assurance that either an increase in assets of the Portfolio
or the benefits described above will be realized and no such benefits are
anticipated until other investors invest their assets in the Portfolio.
The Trustees also recognized that the Adviser could benefit from the
proposed Hub and Spoke master-feeder fund structure because such structure could
enable the Adviser to increase its assets under management through the
development of new vehicles to attract investor assets to the Adviser. These
additional investors may include other investment companies or advisory accounts
advised by the Adviser. In addition, this structure could attract corollary
advisory and related fees to the Adviser with less economic risk of limited
success in early years.
The Trustees believe that over time the aggregate per share expenses of
the Fund and the Portfolio should not be more than the expenses that would be
incurred by the Fund if it continued to retain the services of an investment
adviser and invested directly in securities, although there can be no assurance
that any expense savings will be realized. The Trustees also considered risks
associated with an investment in the Portfolio. The Trustees believe that the
Portfolio's investment policies and restrictions involve substantially the same
risks as are associated with the Fund's direct investment in securities.
In recommending that the shareholders authorize the conversion of the
Fund to the Hub and Spoke master-feeder fund structure, the Trustees have taken
into account and evaluated the possible effects that increased assets in the
Portfolio may have on the expense ratio of the Fund and have considered the
expense limitation voluntarily agreed to by Standish. After carefully weighing
the costs involved against the anticipated benefits of converting the Fund to
the Hub and
8
Spoke master-feeder fund structure, the Trustees recommend that the shareholders
of the Fund vote to approve Proposal 1.
Based on their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant to this Proposal,
the Trustees (including the Trustees who are not "interested persons" as defined
in the 1940 Act ("Interested Persons") of the Trust) have concluded that it
would be in the best interests of the Fund and its shareholders to approve the
adoption and implementation of a new investment policy and the amendment of
certain investment restrictions to enable the Fund to invest all of its
Investable Assets in the Portfolio.
REQUIRED VOTE
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" of the
Fund. Under the 1940 Act, this means that to be approved, the Proposal must
receive the affirmative vote of the lesser of (a) 67% of the shares of the Fund
present at the Meeting if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy at the Meeting, or (b) more than
50% of the outstanding shares of the Fund.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 1.
In the event the shareholders of the Fund fail to approve this
Proposal, the Trustees would continue to retain Standish, Ayer & Wood, Inc. as
the investment adviser for the Fund to manage the Fund's assets through directly
investing in securities, and the advisory agreement with Standish, Ayer & Wood,
Inc. would continue in effect in its current form.
PROPOSAL 2: AUTHORIZATION TO VOTE AS A PORTFOLIO INVESTOR
Shareholders of the Fund are being asked to vote on certain matters
with respect to the Portfolio because the Portfolio Trust is expected to ask the
Fund as an initial holder in the Portfolio to vote on such matters. Any vote is
expected to take place just after the Fund's investment in the Portfolio.
Specifically, it is expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of Coopers & Lybrand as the independent
accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement between the
Portfolio Trust, on behalf of the Portfolio, and its
investment adviser, Standish, Ayer & Wood, Inc.
The Trust on behalf of the Fund will cast its votes on each matter in
the same proportions as the votes cast by the Fund's shareholders. At the
present time it is anticipated that there will be at least two holders of
interests with
9
respect to the Portfolio. However, the Fund is expected initially to own
substantially all of the interests in the Portfolio.
PROPOSAL 2(A): AUTHORIZATION TO ELECT TRUSTEES OF THE PORTFOLIO TRUST
It is the present intention that the enclosed proxy will, unless marked
to the contrary, be used for the purpose of authorizing the Trust to vote FOR
the election of the seven nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Portfolio
Trust's Declaration of Trust. Please note that each of the nominees currently
serves as a Trustee of the Trust and has consented to serve as a Trustee of the
Portfolio Trust if elected at the Meeting. Pursuant to the Declaration of Trust
of the Portfolio Trust, the Trustees have the power to establish and alter the
number and the terms of office of the Trustees (subject to certain removal
procedures, including vote by holders of interests), to appoint successor
Trustees and to fill vacancies, including vacancies existing by reason of an
increase in the number of Trustees, provided that always at least a requisite
majority of the Trustees has been elected by the holders of interests.
Generally, there will not be meetings of holders of interests for the purpose of
electing Trustees.
Should any nominee withdraw from the election or otherwise be unable to
serve (an event not now anticipated), the Trust will vote FOR the election of
such substitute nominee as the Board of Trustees of the Portfolio Trust may
recommend (unless authority to vote for election of one or more nominees is
specifically withheld by executing the proxy in the manner stated thereon or a
decision is made to reduce the number of Trustees serving on the Board). The
following table sets forth certain information about the nominees:
BUSINESS EXPERIENCE
NAME AGE DURING PAST FIVE YEARS
D. Barr Clayson* 60 Vice President and Managing Director,
Standish, Ayer & Wood, Inc.; President,
Standish International Management Company,
L.P.
Samuel C. Fleming 55 Chairman of the Board and Chief Executive
Officer, Decision Resources, Inc.; through
1989, Senior V.P. Arthur D. Little
Benjamin M. Friedman 51 William Joseph Maier Professor of Political
Economy, Harvard University
John H. Hewitt 60 Trustee, The Peabody Foundation; Trustee,
Visiting Nurse Alliance of Vermont and New
Hampshire
10
Edward H. Ladd* 58 Chairman of the Board and Managing
Director, Standish, Ayer & Wood, Inc.;
formerly, President of Standish, Ayer &
Wood, Inc.
Caleb Loring III 52 Trustee, Essex Street Associates (family
investment trust office); Director, Holyoke
Mutual Insurance Company
Richard S. Wood* 41 Vice President, Secretary and Director,
Standish, Ayer & Wood, Inc.; Executive Vice
President, Standish International
Management Company, L.P.
*Interested Person of the Portfolio Trust by reason of his affiliation with the
Adviser.
Messrs. Fleming, Friedman, Hewitt and Loring, each of whom is an
Independent Trustee, are members of the Committee of the Independent Trustees of
the Portfolio Trust which is chaired by Mr. Fleming. The Portfolio Trust has not
yet held any meetings of this Committee. The Committee of the Independent
Trustees, among other things, (1) will serve as the liaison between the
independent auditors and the Portfolio Trust's management as their duties relate
to assuring the integrity of the Portfolio's financial reporting and the
safeguarding of each Portfolio's assets; (2) will seek to assure the
independence of the auditors, the integrity of management and the adequacy of
disclosures to holders of interests; and (3) will review the scope of the audit,
the financial results of each series of the Portfolio Trust for the year and the
auditors' evaluation of the overall adequacy of internal controls and thereby
will assist the Board of Trustees in fulfilling its fiduciary responsibilities
as to accounting policies and reporting practices.
As of January 15, 1996, no officer or Trustee or nominee for election
as Trustee of either the Trust or the Portfolio Trust, individually or as a
group, directly or indirectly beneficially owned more than 1% of the outstanding
shares of the Fund or the Portfolio.
No fees have been paid by the Portfolio Trust to date to the nominees
for election as Trustees of the Portfolio Trust. The following table estimates
the amount of compensation to be paid to the Portfolio Trust's Trustees for the
fiscal year ending December 31, 1996. In addition, each Trustee will be
reimbursed for out-of-pocket expenses associated with attending Trustee
meetings.
11
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS FROM PORTFOLIO
COMPENSATION ACCRUED AS AND OTHER
FROM THE PART OF FUNDS IN
NAME OF TRUSTEE PORTFOLIO* PORTFOLIO'S EXPENSES COMPLEX**
- --------------- --------- -------------------- ----------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 18,001 0 41,750
Benjamin M. Friedman 15,855 0 36,750
John H. Hewitt 15,855 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 15,855 0 36,750
Richard S. Wood 0 0 0
- ------------
* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.
** As of the date of this Proxy Statement, there were 14 mutual funds
in the fund complex.
REQUIRED VOTE
Approval of the election of the Trustees of the Portfolio Trust
requires the affirmative vote of a majority of the outstanding interests in the
Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE PROPOSAL 2(A).
PROPOSAL 2(B): RATIFICATION OF SELECTION OF ACCOUNTANTS
The Trustees of the Portfolio Trust, including a majority of the
Independent Trustees, have selected Coopers & Lybrand, P.O. Box 219, Grand
Cayman, Cayman Islands, BWI, as independent accountants for the fiscal year
ending December 31, 1996. The employment of such auditors is expressly
conditioned upon the right of the Portfolio by the "vote of a majority of the
outstanding voting securities" (as defined above in Proposal 1) of the Portfolio
at any meeting called for the purpose to terminate such employment forthwith
without any penalty. Such selection was made pursuant to provisions of Section
32(a) of the 1940 Act, and is subject to ratification or rejection by the
holders of interests in the Portfolio at the meeting of such holders. Coopers &
Lybrand, L.L.P., an affiliate of Coopers & Lybrand, currently serves as the
independent accountants of the Fund and for Standish. The Fund will be informed
that no member of Coopers & Lybrand has any direct or material indirect interest
in the Fund or the Portfolio.
The Portfolio Trust's independent accountants provide customary
professional services in connection with the audit function for a management
investment company such as the Portfolio Trust, and their fees for such services
12
include fees for work leading to the expression of opinions on the financial
statements included in annual reports to the holders of interests in the
Portfolio Trust, opinions on the financial statements and other data included in
each Portfolio's annual report to the Securities and Exchange Commission,
opinions on financial statements included in amendments to the Portfolio Trust's
registration statement, and preparation of the Portfolio's federal and state
income tax returns.
Representatives of Coopers & Lybrand are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
If the Trust receives a written request from any shareholder at least five days
prior to the Meeting stating that the shareholder will be present in person at
the Meeting and desires to ask questions of the accountants, the Trust will
arrange to have a representative of Coopers & Lybrand present at the Meeting who
will respond to appropriate questions and have an opportunity to make a
statement.
It is intended that proxies, unless marked to the contrary, will be
voted in favor of authorizing the Trust to ratify the selection of Coopers &
Lybrand as the independent accountants employed by the Portfolio Trust to sign
or certify financial statements required to be signed or certified by
independent accountants and filed with the Securities and Exchange Commission in
respect of all or part of the fiscal year ending December 31, 1996.
REQUIRED VOTE
Approval of the selection of Coopers & Lybrand as independent
accountants of the Portfolio Trust requires the affirmative vote of a majority
of the outstanding interests in the Portfolio Trust.
THE TRUSTEES OF THE TRUST RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
VOTE TO APPROVE PROPOSAL 2(B).
PROPOSAL 2(C): AUTHORIZE THE TRUST TO APPROVE AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO TRUST AND STANDISH, AYER & WOOD, INC.
Standish, Ayer & Wood, Inc. (the "Adviser" or "Standish"), One
Financial Center, Boston, Massachusetts 02111, is expected to serve as
investment adviser to the Portfolio pursuant to an investment advisory agreement
(the "Proposed Advisory Agreement") between the Adviser and the Portfolio Trust
and to manage the Portfolio's investments and affairs subject to the supervision
of the Trustees of the Portfolio Trust. The Adviser is a Massachusetts
corporation incorporated in 1933 and is a registered investment adviser under
the Investment Advisers Act of 1940.
Edward H. Ladd is the Chairman of the Board of Directors and Managing
Director of Standish. The following, constituting all of the Directors and all
of the shareholders of the Adviser, are the Adviser's controlling persons: Caleb
F. Aldrich, Nicholas S. Battelle, Walter M. Cabot, Sr., David H. Cameron, Karen
K. Chandor, D. Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A.
Flaherty, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
13
Ladd, Laurence A. Manchester, David W. Murray, George W. Noyes, Arthur H.
Parker, Howard B. Rubin, Austin C. Smith, David C. Stuehr, James J. Sweeney,
Ralph S. Tate, and Richard S. Wood. Please see Exhibit B to this Proxy Statement
for a list of each officer and Trustee of the Portfolio Trust who is an officer,
employee or director of Standish.
The Adviser provides fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States. In addition to the Fund, the Adviser provides investment advisory
services to certain other funds within the Standish, Ayer & Wood family of
funds, acting as investment adviser to Standish Controlled Maturity Fund,
Standish Equity Fund, Standish Fixed Income Fund II, Standish Intermediate Tax
Exempt Bond Fund, Standish Massachusetts Intermediate Tax Exempt Bond Fund,
Standish Securitized Fund, Standish Short-Term Asset Reserve Fund and Standish
Small Capitalization Equity Fund, which had net assets of $8 million, $89
million, $8 million, $33 million, $33 million, $55 million, $243 million and
$180 million respectively, at December 31, 1995. Standish also serves as the
investment adviser to Standish Tax-Sensitive Equity Fund and Standish Small Cap
Tax-Sensitive Equity Fund, which commenced operations on January 2, 1996. An
affiliate of the Adviser, Standish International Management Company, L.P.
("SIMCO"), acts as investment adviser to Standish International Equity Fund,
Standish International Fixed Income Fund and Standish Global Fixed Income Fund,
which had net assets of $59 million, $804 million and $138 million at December
31, 1995. Corporate pension funds are the largest asset under active management
by the Adviser. The Adviser's clients also include charitable and educational
endowment funds, financial institutions, trusts and individual investors. As of
December 31, 1995, the Adviser managed approximately $29 billion of assets.
In order so that the Portfolio Trust not be deemed to be engaged in a
"trade or business within the United States" under Section 864 of the Code,
certain services must be performed on behalf of the Portfolio Trust outside the
United States. The Portfolio Trust's compliance with these requirements will not
subject investors in the Portfolio Trust that are not otherwise subject to
taxation in the United States to U.S. taxation solely by reason of being an
investor in the Portfolio Trust. In this regard, it is expected that IBT Trust
Company (Cayman) Ltd., P.O. Box 501, Grand Cayman, Cayman Islands, BWI ("IBT"),
will serve as the Portfolio Trust's administrator (the "Portfolio
Administrator") pursuant to an administration agreement. As Portfolio
Administrator, IBT will manage the affairs of the Portfolio Trust and will
currently receive a fee from the Portfolio in the amount of $7,500 annually.
Standish currently provides similar administrative services to the Fund without
additional compensation.
In recommending that the shareholders of the Fund authorize the Fund to
approve the Proposed Advisory Agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing the
Fund (as the equivalent of the Portfolio for this purpose) with other investment
companies of similar size and with similar investment objectives. Before making
this recommendation, the Trustees conducted a review of the various documents,
reports and other materials submitted to them by the Adviser, information that
they were familiar with as Trustees, and information obtained from independent
sources such as Lipper Analytical Services, Inc. The Trustees' review and
evaluation of certain of these materials was made with respect to the Fund in
November 1995.
TERMS OF THE PROPOSED ADVISORY AGREEMENT
The terms of the Proposed Advisory Agreement are substantially the same
as the terms of the current investment advisory agreement between the Adviser
and the Trust on
14
behalf of the Fund (the "Current Advisory Agreement"), except: (i) the date of
execution and the initial term; and (ii) as described above administrative
services will be provided to the Portfolio by IBT under a separate
administrative services agreement, which services are currently performed by
Standish with respect to the Fund under the Current Advisory Agreement. The
approval by Fund shareholders of this proposal will not result in an increase in
the rate at which the advisory fee will be indirectly borne by the Fund after
the proposed conversion to the Hub and Spoke master-feeder fund structure.
The following description of the terms of the Proposed Advisory
Agreement is qualified in its entirety by reference to the copy of the Proposed
Advisory Agreement attached to this Proxy Statement as Exhibit C.
ADVISORY FEES AND EXPENSE LIMITATION. The rate at which the advisory
fee is payable by the Portfolio under the Proposed Advisory Agreement is the
same as the rate at which the advisory fee is payable by the Fund under the
Current Advisory Agreement. The advisory fee under the Current Advisory
Agreement is payable by the Fund at a rate equal on an annual basis to 0.40%
of the first $250 million of average daily net assets and 0.35% of net assets in
excess of $250 million. Effective April 17, 1991, the Adviser voluntarily
undertook to reduce the fee on average daily net assets in excess of $500
million to 0.30% of average daily net assets. The fee is computed daily and paid
monthly. For the fiscal year ended December 31, 1995, the advisory fee paid by
the Fund amounted to $6,360,151, which represented 0.32% of the Fund's average
daily net assets. No other amounts were paid by the Fund to Standish during the
last fiscal year.
The advisory fee under the Proposed Advisory Agreement will be payable
monthly by the Portfolio at a rate equal on an annual basis to 0.40% of the
first $250 million of average daily net assets, 0.35% of the next $250 million
of average daily net assets and 0.30% of net assets in excess of $250 million.
Upon conversion of the Fund to the Hub and Spoke master-feeder fund structure,
the Current Advisory Agreement with the Fund will be terminated and the advisory
function will be performed by the Adviser under the Proposed Advisory Agreement.
As such, although the Fund will not directly pay any advisory fees to the
Adviser, it will indirectly bear its proportionate share of the advisory fees
paid by the Portfolio to the Adviser pursuant to the Proposed Advisory
Agreement.
As discussed in Proposal 1, Standish has voluntarily agreed to limit the
master-feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the Hub and Spoke master-feeder fund structure. The
expense ratio considered to be in effect immediately prior to the conversion for
this purpose will be calculated using the actual expenses incurred by the Fund
during the three months immediately prior to conversion and annualizing this
amount. Standish may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. In addition, Standish
has agreed to limit the Fund's aggregate annual operating expenses (excluding
brokerage commissions, taxes and extraordinary expenses) to the permissible
limit applicable in any state in which shares of the Fund are then qualified for
sale.
ADVISORY SERVICES. Pursuant to the Proposed Advisory Agreement and
subject to the supervision and approval of the Trustees of the Portfolio Trust,
Standish is responsible for providing continuously an investment program for the
15
Portfolio, consistent with the Portfolio's investment objective, policies
and restrictions. Specifically, Standish will be required to determine what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested and make
changes in the Portfolio's investments. Standish will also manage, supervise and
conduct the other affairs and business of the Portfolio and matters incidental
thereto, including supervision of the Portfolio Administrator except that
Standish will not perform such administrative services that would cause the
Portfolio to be engaged in a U.S. trade or business.
The Fund's portfolio manager is Caleb F. Aldrich, who has been
primarily responsible for the day-to-day management of the Fund's portfolio
since January, 1993. If the Proposed Advisory Agreement is approved, it is
intended that Mr. Aldrich would serve as the Portfolio's portfolio manager.
During the past five years, Mr. Aldrich has served as a Director (since 1992)
and Vice President of the Adviser.
EXPENSES. Under the Proposed Advisory Agreement, the Portfolio bears
the expenses of its operations, including among other things legal and auditing
services, taxes and governmental fees, certain insurance premiums, costs of
notices and reports to interest holders, preparation and filing of registration
and financial statements, bookkeeping and share pricing expenses, fees and
disbursements of the Portfolio Trust's administrator and custodian, or interest
and other like expenses properly payable by the Portfolio Trust.
APPROVAL AND TERMINATION PROVISIONS. If approved by the affirmative
vote of a "majority of the outstanding voting securities" (as defined in
Proposal 1) of the Portfolio ("Majority Investor Vote"), the Proposed Advisory
Agreement will remain in full force and effect for two years from the date of
such Proposed Advisory Agreement and will continue in full force and effect
indefinitely thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the Trustees of the
Portfolio Trust cast in person at a meeting called for the purpose of voting on
such approval, or (ii) by a Majority Investor Vote. The Proposed Advisory
Agreement may be terminated at any time without penalty by a vote of a majority
of the Independent Trustees of the Portfolio Trust or by a Majority Investor
Vote or by the Adviser on 60 days' written notice to the other party. In
addition, the Proposed Advisory Agreement will terminate immediately and
automatically if assigned.
STANDARD OF CARE. The Proposed Advisory Agreement further provides that
the Adviser shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under the Proposed
Advisory Agreement in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses which may
be sustained in the acquisition, holding or disposition of any security or other
investment.
EXPENSES
The Portfolio and the Fund, as the case may be, will each be
responsible for all of its respective costs and expenses not expressly stated to
be payable by Standish under the Proposed Advisory Agreement with the Portfolio
or the administration agreement with the Fund. Among other expenses, the
Portfolio will
16
pay investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; expenses of notices and reports to interest holders; and expenses of
the Portfolio Administrator. The Fund will pay fees and disbursements of the
Fund's transfer agent and dividend disbursing agent or registrar, shareholder
servicing fees and expenses; expenses of prospectuses, statements of additional
information and shareholder reports which are furnished to shareholders. Each of
the Fund and Portfolio will pay legal and auditing fees; registration and
reporting fees and expenses; and Trustees' fees and expenses. Expenses of the
Trust or the Portfolio Trust which relate to more than one of this respective
series are allocated among such series by the Adviser and SIMCO in an equitable
manner, primarily on the basis of relative net asset values. For the fiscal year
ended December 31, 1995, expenses borne by the Fund amounted to $7,455,661,
which represented 0.37% of the Fund's average net assets.
REQUIRED VOTE
Approval of the Portfolio Trust's Proposed Advisory Agreement with the
Adviser requires a Majority Investor Vote as defined above.
THE TRUSTEES OF THE TRUST, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE PROPOSAL
3(C).
In the event that the shareholders of the Fund fail to approve this
Proposal, the Trustees of the Trust will consider what further action should be
taken.
ADDITIONAL INFORMATION
BENEFICIAL OWNERS
At the close of business on February 1, 1996, no person owned, to the
knowledge of management, 5% or more of the outstanding shares of the Fund.
PORTFOLIO TRANSACTIONS
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio.
Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of Fund shares may
also be considered factors in the selection of brokers and dealers that execute
orders to purchase and sell portfolio securities for the Portfolio.
OTHER MATTERS
The Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Standish, Ayer & Wood Investment Trust, One Financial
17
Center, Boston, Massachusetts 02111, c/o Richard S. Wood, President so that they
are received within a reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Fund. If shareholders
desire additional information about the matters proposed for action, the Trust's
management will be pleased to hear from them and provide further information.
PROXIES, QUORUM AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in the attached Notice.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present at the Meeting, or in the event that a quorum is
present at the Meeting but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting (with respect to all or some of the proposals) to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those Shares affected by the adjournment represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR all such
proposals in favor of such an adjournment, and will vote those proxies required
to be voted AGAINST any such proposal against any adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval.
Under the Declaration of Trust of the Trust, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the issued and
outstanding Shares of the Trust entitled to vote at the Meeting except that
where the holders of any series of Shares are to vote as a series, then the
presence in person or by proxy of the holders of a majority of the Shares of
such series issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of such business.
Shares of the Fund (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions from voting will be treated as shares that are present and entitled
to vote for purposes of determining the number of shares that are present and
entitled to vote with respect to a proposal, but will not be counted as a vote
18
in favor of that proposal. Accordingly, an abstention from voting has the same
effect as a vote against a proposal.
Adoption by the shareholders of the Fund of each proposal requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any proposal, those shares will not be
considered as present and entitled to vote as to that proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a proposal has been adopted pursuant to item (ii) above, because shares
are represented by a "broker non-vote" are considered outstanding shares, a
"broker non-vote" has the same effect as a vote against such proposal.
EXPENSES AND METHODS OF SOLICITATION
The costs of the Meeting, including the solicitation of proxies will be
paid by Standish. Persons holding shares as nominees will be reimbursed by
Standish, upon request, for their reasonable expenses of forwarding soliciting
material to the principals of the accounts. In addition to the mailing of these
proxy materials, proxies may be personally solicited by Trustees, officers and
employees of the Trust, by personnel of Standish and of the Fund's transfer
agent, Investors Bank & Trust Company, or by a professional solicitation
organization in person or by telephone.
Dated: February 16, 1996
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
19
EXHIBIT A
INVESTMENT RESTRICTIONS
Proposed additions are highlighted and proposed deletions are struck
out.
AS A MATTER OF FUNDAMENTAL POLICY, THE FUND may not:
1. Invest, with respect to at least 75% of its total assets, more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer.
2. Issue senior securities, borrow money or securities or pledge or
mortgage its assets, except that the Fund may (a) borrow money from
banks as a temporary measure for extraordinary or emergency purposes
(but not for investment purposes) in an amount up to 15% of the current
value of its total assets, (b) enter into forward roll transactions,
and (c) pledge its assets to an extent not greater than 15% of the
current value of its total assets to secure such borrowings; however,
the Fund may not make any additional investments while its outstanding
bank borrowings exceed 5% of the current value of its total assets.
3. Lend portfolio securities except that the Fund may enter into
repurchase agreements with respect to 5% of its net assets.
4. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
Government securities, including mortgage pass-through securities
(GNMAs).
5. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter under the Securities Act of 1933.
6. Purchase real estate or real estate mortgage loans, although the Fund
may purchase marketable securities of companies which deal in real
estate, real estate mortgage loans or interests therein.
7. Purchase securities on margin (except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities).
8. Purchase or sell commodities or commodity contracts except that the
Fund may purchase and sell financial futures contracts and options on
financial futures contracts and engage in foreign currency exchange
transactions.
NOTWITHSTANDING ANY FUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF ITS
ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED IN
THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT INVESTMENT
COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
20
The following restrictions are not fundamental policies and may be
changed by the Trustees of the Trust without shareholder approval in accordance
with applicable laws, regulations or regulatory policy. The Fund may not:
a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the FUND'S net assets or (b) at all
times during which a short position is open it owns an equal amount of
such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.
b. Invest in companies for the purpose of exercising control or
management.
c. Purchase securities of any other investment company except as part of
a
merger, consolidation or acquisition of assets.
d. Purchase or write options, except as described under "Strategic
Transactions."
e. Invest in interests in oil, gas or other exploration or development
programs.
f. Invest more than 5% of the assets of the Fund in the securities of any
issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than obligations issued or guaranteed by the
U.S. Government or its agencies, and securities fully collateralized by
such securities.
g. Invest in securities of any company if any officer or director
(Trustee) of the Trust or of the PORTFOLIO'S investment adviser owns
more than 1/2 of 1% of the outstanding securities of such company and
such officers and directors (Trustees) own in the aggregate more than
5% of the securities of such company.
h. Invest more than an aggregate of 15% of the net assets of the Fund in
(a) repurchase agreements which are not terminable within seven days,
(b) securities subject to legal or contractual restrictions on resale
or for which there are no readily available market quotations and (c)
other illiquid securities, including nonnegotiable fixed time deposits.
NOTWITHSTANDING ANY N0NFUNDAMENTAL POLICY, THE FUND MAY INVEST ALL OF
ITS ASSETS (OTHER THAN ASSETS WHICH ARE NOT "INVESTMENT SECURITIES" (AS DEFINED
IN THE 1940 ACT) OR ARE EXCEPTED BY THE SEC) IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
21
EXHIBIT B
The Trustees and officers of the Portfolio Trust who are also
directors, officers or employees of Standish are listed below. The address of
each such person is c/o Standish, Ayer & Wood, Inc., One Financial Center,
Boston, Massachusetts 02111.
POSITION HELD POSITION WITH
NAME WITH THE TRUST STANDISH
D. Barr Clayson Vice President Vice President and
and Trustee Managing Director
Edward H. Ladd Trustee and Chairman of the Board
Vice President and Managing Director
Richard S. Wood President Vice President,
and Trustee Secretary and Director
James E. Hollis III Executive Vice Vice President and
President Director
David W. Murray Treasurer and Vice President, Treasurer
Secretary and Director
Beverly E. Banfield Vice President Vice President and
Compliance Officer
Lavinia B. Chase Vice President Vice President
Anne P. Herrmann Vice President Mutual Fund
Administrator
Denise B. Kneeland Vice President Senior Operations Manager
22
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this day of , 1996, by and between Standish, Ayer
& Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish, Ayer & Wood, Inc., a
Massachusetts corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Fixed Income Portfolio (the
"Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is willing
to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
I. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
II. DUTIES OF THE ADVISER. A. The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.
B. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums,
23
costs of notices and reports to interest-holders, typesetting and printing of
registration and financial statements for regulatory purposes and for
distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
III. COMPENSATION OF THE ADVISER. A. As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.40% of the Portfolio's first $250 million of average daily net assets, 0.35%
of the Portfolio's next $250 million of average daily net assets, and 0.30% of
the Portfolio's average daily net assets in excess of $500 million. Such fees
shall be accrued when computed and payable monthly. For purposes of calculating
such fee, the Portfolio's average daily net asset value shall be determined by
taking the average of all determinations of net asset value made in the manner
provided in the Portfolio's current prospectus and statement of additional
information.
B. The compensation payable to the Adviser hereunder for any period less
than a full month during which this Agreement is in effect shall be prorated
according to the proportion which such period bears to a full month.
IV. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
V. TERM AND TERMINATION. A. This Agreement shall become effective on the
date hereof. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof and shall continue
in full force and effect for successive periods of one year thereafter, but only
so long as each such continuance is approved annually 1. by either the Trustees
of the Portfolio Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, and, in either event,
2. by vote of a majority of the Trustees of the Portfolio Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
B. This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.
C. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
VI. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
24
Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
interest-holders of the Portfolio and this Agreement has been signed by an
authorized officer of the Portfolio Trust, acting as such, and neither such
authorization by such Trustees and interest-holders nor such execution and
delivery by such officer shall be deemed to have been made by any of them, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
STANDISH, AYER & WOOD MASTER
PORTFOLIO, on behalf of STANDISH
FIXED INCOME PORTFOLIO
Attest:
By:
Its:
STANDISH, AYER & WOOD, INC.
Attest:
By:
Its:
25
PROXY BALLOT
STANDISH FIXED INCOME FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
PROXY PROXY
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, David W. Murray and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Fixed Income Fund (the "Fund"), a
series of Standish, Ayer & Wood Investment Trust (the "Trust"), to be held at
the offices of the Trust, One Financial Center, 26th Floor, Boston,
Massachusetts 02111, on March 29, 1996, at 10:00 a.m., or at any adjournment
thereof, notice of which meeting and the Proxy Statement accompanying the same
have been received by the undersigned, upon the following matters as described
in the Notice of Special Meeting and accompanying Proxy Statement:
1) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT AND TO IMPLEMENT A NEW
INVESTMENT POLICY TO AUTHORIZE THE FUND TO INVEST SUBSTANTIALLY ALL
OF ITS ASSETS IN A PORTFOLIO (THE "PORTFOLIO"), A SERIES OF A
SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY (THE "PORTFOLIO
TRUST") HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES
AND RESTRICTIONS AS THE FUND, AND TO AMEND CERTAIN INVESTMENT
RESTRICTIONS TO PERMIT SUCH INVESTMENT.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
TO CONSIDER AND ACT UPON PROPOSALS TO AUTHORIZE THE TRUST TO VOTE AS A HOLDER OF
AN INTEREST IN THE PORTFOLIO TO:
2A) ELECT TRUSTEES OF THE PORTFOLIO TRUST;
---
--- FOR ALL NOMINEES LISTED BELOW
---
--- VOTE WITHHELD FOR ALL NOMINEES LISTED BELOW
---
--- FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY
BELOW BY STRIKING OUT THE NAME OF A NOMINEE)
D. BARR CLAYSON, SAMUEL C. FLEMING,
BENJAMIN M. FRIEDMAN, JOHN H. HEWITT,
EDWARD H. LADD, CALEB LORING III AND RICHARD S. WOOD
2B) RATIFY THE SELECTION OF COOPERS & LYBRAND AS THE INDEPENDENT
ACCOUNTANTS OF THE PORTFOLIO; AND
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
2C) APPROVE THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE PORTFOLIO AND
ITS INVESTMENT ADVISER, STANDISH, AYER & WOOD, INC.
--- --- ---
--- FOR --- AGAINST --- ABSTAIN
3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR PROPOSALS 1,
2B, 2C, AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN
THE MANNER PROVIDED.
Dated: ___________________, 1996
________________________________
________________________________
________________________________
Signature(s)
In signing, please write name(s) exactly as your account is registered.
When signing as attorney, executor, administrator or other fiduciary, please
give your full title as such. Joint owners should each sign personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED.