INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
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Standish, Ayer & Wood Investment Trust
________________________________________________________________________________
(Name of Registrant as Specified in its Charter)
________________________________________________________________________________
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if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Standish, Ayer & Wood Investment Trust
One Financial Center
Boston, MA 02111
(800) 221-4795
July 5, 2000
Re. Standish Small Capitalization Equity Fund
Dear Shareholder:
I am writing to ask for your vote on a proposal to approve a new investment
advisory agreement between your fund (Standish Small Capitalization Equity Fund)
and Standish, Ayer & Wood, Inc. ("Standish"), your fund's investment adviser,
increasing the rate at which investment advisory fees are payable to Standish
from 0.60% to 0.80% of the fund's average daily net assets.
The increased fee rate is proposed only after a great deal of thought and
analysis on the part of Standish and your fund's Board of Trustees. Standish and
the Board of Trustees have carefully examined the investment advisory fee,
investment performance and expense ratio of your fund compared with those of
similar funds. Your fund has had above average performance for its most recent
one-year, three-year, five-year and since-inception periods, and has
outperformed its benchmark index, the Russell 2000 Growth Index, by a
significant margin in each of those periods. Nevertheless, the investment
advisory fee rate payable to Standish by the fund is significantly lower than
that payable by the majority of similar funds.
The importance of increasing the fund's investment advisory fee rate is
underscored by the increased complexity in recent years of the domestic small
capitalization equity market, and increased competition among small cap
institutional funds. In this environment, Standish must be able to attract and
retain quality investment personnel and to capitalize on advances in technology
and research. Standish believes that the fee rate increase is necessary in order
for your fund to maintain and enhance the resources needed to permit the fund to
compete effectively with other funds in its peer group. Standish and your fund's
Board of Trustees recommend that you vote in favor of this proposal.
The enclosed proxy statement, therefore, solicits your vote in favor of the new
investment advisory fee rate, which Standish and your fund's Board of Trustees
believe is fair and reasonable compared to the fees paid by similar funds to
high quality fund managers. In fact, if you approve the proposed investment
advisory agreement, the new investment advisory fee rate payable to Standish
(0.80% of average daily net assets) would still be lower than the median fee
rate payable to the mutual funds included in the Lipper Small Cap Institutional
Funds universe (0.81% of average daily net assets).
We urge you to read carefully the more detailed explanation of this proposal in
the enclosed proxy statement. In addition, we would be happy to talk with you
about the proposal. Please call your investment manager at Standish or Michael
Fechter, Vice President of Client Service, or Lavinia Chase, Director of Client
Service for the Standish Mutual Funds, at (800) 221-4795.
Your vote is important to us. In order for us to obtain a quorum at the meeting,
it is important that your shares be represented. Therefore, I urge you to cast
your vote on the proposal contained in the Proxy Statement and return a
completed proxy card promptly in the enclosed self-addressed return envelope.
Sincerely,
Richard S. Wood
President
Standish, Ayer & Wood Investment Trust
STANDISH SMALL CAPITALIZATION EQUITY FUND
a series of
Standish Ayer & Wood Investment Trust
One Financial Center
Boston, Massachusetts 02111
1-800-221-4795
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR AUGUST 17, 2000
This is the formal agenda for your fund's shareholder meeting. It tells
you the matters that you will be asked to vote on and the time and place of the
meeting, in case you want to attend in person.
To the shareholders of Standish Small Capitalization Equity Fund:
A meeting of shareholders of your fund will be held at the offices of
Standish, Ayer & Wood, Inc., One Financial Center, 26th Floor, Boston,
Massachusetts 02111, on August 17, 2000, at 2:00 p.m., Boston time, to consider
the following:
1. A proposal to approve a new investment advisory agreement between the
fund and Standish, Ayer & Wood, Inc., your fund's investment adviser
("Standish"), increasing the rate at which investment advisory fees are payable
to Standish; and
2. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on June 9, 2000 are
entitled to vote at the meeting and any related follow-up meetings.
By order of the Board of Trustees,
Anne P. Herrmann, Secretary
Boston, Massachusetts
July 5, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD.
PROXY STATEMENT
OF
STANDISH SMALL CAPITALIZATION EQUITY FUND
a series of
Standish Ayer & Wood Investment Trust
One Financial Center
Boston, Massachusetts 02111
1-800-221-4795
SPECIAL MEETING OF SHAREHOLDERS
This proxy statement contains the information that you should have before
voting on the proposals as summarized below.
INTRODUCTION
This proxy statement is being used by the board of trustees of Standish,
Ayer & Wood Investment Trust (the "Trust") to solicit proxies to be voted at a
special meeting of shareholders of your fund. This meeting will be held at the
offices of Standish, Ayer & Wood, Inc., One Financial Center, 26th Floor,
Boston, Massachusetts 02111, at 2:00 p.m., Boston time on August 17, 2000, and
at any adjournments of the meeting to a later date. The purposes of this meeting
are to consider:
1. A proposal to approve a new investment advisory agreement between the
fund and Standish, Ayer & Wood, Inc., your fund's investment adviser
("Standish"), increasing the rate at which investment advisory fees are payable
to Standish; and
2. Any other business that may properly come before the meeting.
This proxy statement and enclosed proxy are being mailed to shareholders
on or about July 5, 2000. The fund's annual report for the fiscal year ended
September 30, 1999 and semi-annual report for the six months ended March 31,
2000 were previously mailed to shareholders. Standish Small Capitalization
Equity Fund will furnish without charge an additional copy of its annual report
or semiannual report to any shareholder upon request. Shareholders who want to
obtain a copy of these reports should direct all written requests to the
attention of the fund, at the address listed above, or should call
1-800-221-4795.
Who is eligible to vote?
Shareholders of record as of the close of business on June 9, 2000 (the
"record date") are entitled to notice of and to vote on all of the fund's
business at the meeting and any adjournments thereof. Each share is entitled to
one vote and each fractional share is entitled to a corresponding fractional
vote. Shares represented by properly executed proxies, unless revoked before or
at the meeting, will be voted according to shareholders' instructions. If you
sign a proxy, but do not fill in a vote, your shares will be voted to approve
the proposals. If any other business comes before the meeting, your shares will
be voted at the discretion of the persons named as proxies.
1
PROPOSAL 1
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
Summary
Standish, Ayer & Wood, Inc. ("Standish"), One Financial Center, Boston,
Massachusetts 02111, serves as investment adviser to the fund pursuant to an
investment advisory agreement dated December 31, 1999 (the "existing contract").
Standish has provided investment advisory services to the fund directly or
indirectly (through a Standish master portfolio) since the fund's inception on
September 1, 1990. Standish provided investment advisory services to the fund
directly by serving as the fund's investment adviser from September 1, 1990 to
March 29, 1996 and again since December 31, 1999. For the period March 29, 1996
through December 30, 1999, Standish indirectly provided investment advisory
services to the fund by serving as investment adviser to a Standish master
portfolio in which the fund invested all of its investable assets. Standish is a
Massachusetts corporation incorporated in 1933 and is registered as an
investment adviser under the Investment Advisers Act of 1940.
Standish provides fully discretionary management services and counseling
and advisory services to a broad range of clients throughout the United States,
including mutual funds, pension plans, endowments, foundations, and high net
worth individuals. Together with its affiliate, Standish International
Management Company, LLC, Standish has over $45 billion in assets under
management for clients. Standish is independently owned and operated by
twenty-five investment and other professionals employed by the firm. See the
Appendix to this proxy statement for more information concerning the ownership
and control of Standish.
At a meeting of the board of trustees held on June 2 and 3, 2000, the
trustees, including all of the trustees who are not "interested persons" of the
fund or Standish, unanimously approved and voted to recommend that the
shareholders of the fund approve a proposal to adopt a new investment advisory
agreement between Standish and the fund (the "proposed contract"). Under the
proposed contract, there would be an increase in the rate of investment advisory
fees paid by the fund to Standish. Specifically, the fee payable by Standish
would be increased from 0.60% to 0.80% of the fund's average daily net assets or
20 cents per $100 invested in the fund.
Standish believes the proposed investment advisory fee is appropriate for
the following reasons:
o the fund has significantly outperformed both its benchmark and the
median comparable mutual fund since its inception;
o the fund's existing advisory fee of 0.60% of the fund's average
daily net assets is well below the 0.81% median fee paid by
comparable mutual funds;
o the proposed fee of 0.80%, and the resulting total expense ratio of
the funds would also be lower than the median fee and median total
expense ratio of comparable mutual funds;
o there has been a significant increase in the complexity,
competitiveness and costs involved in managing a mutual fund
focusing on domestic small capitalization stocks; and
o the proposed fee will provide Standish with the resources necessary
to attract and retain high quality investment professionals and to
invest in the advanced technology and systems needed to maintain and
enhance the present level of service to the fund's shareholders; and
o the proposed fee will provide Standish with additional resources
without having to reopen the fund to new investors of record.
Standish believes that keeping the fund closed to new investors
continues to be in the best interests of the fund and its
shareholders.
2
Discussion
Rationale for the Increase in Investment Advisory Fee
Strong Performance. Standish believes the proposed increase in investment
advisory fee is justified in part by the fund's strong historical performance.
The following table compares the total return of the fund for the periods ended
May 31, 2000 to the total return during the same periods for the Russell 2000
Growth Index, the fund's benchmark, and for the mutual funds in the Lipper
Institutional Small Cap Funds universe, which consists of funds that have a
small capitalization growth orientation similar to that of the fund. As
indicated below the fund has significantly outperformed both its benchmark and
the median fund in its competitive universe.
Average Annual Total Returns
Standish Small
Capitalization Russell 2000
Equity Fund* Growth Index Lipper Universe
------------ ------------ ---------------
One year 54.42% 19.69% 45.10%
Three years 25.80% 12.96% 22.08%
Five years 23.45% 14.54% 19.33%
Since Inception (9/1/90) 22.20% 14.57% 18.48%
----------------------
*Standish did not impose all or a portion of its fee and reimbursed the
fund for a portion of its expenses for various periods since the fund's
inception. Had Standish not taken these actions, the fund's performance
would be lower.
Below Average Advisory Fee and Expense Ratio. Standish also believes the
proposed fee increase is reasonable and appropriate in light of the fees and
expenses incurred by other funds. The fund pays Standish an advisory fee that is
significantly lower than the median fee paid by similar funds. Under the
existing contract, the fund pays Standish an investment advisory fee at an
annual rate of 0.60% of average daily net assets. The median investment advisory
fee for mutual funds in the Lipper Small Cap Institutional Funds group universe
is 0.81% of average daily net assets. If the proposed increase in the fund's
investment advisory fee is approved, the fund would pay Standish a fee of 0.80%
annually of average daily net assets. Consequently, the fund currently pays
Standish a fee at a rate that is substantially below the median for its peer
group and, if the proposed contract is approved, the fund would pay Standish a
fee that is still below the median fee for the fund's peer group.
Further, the fund's gross total expense ratio of 0.78% of the fund's
average daily net assets as of May 31, 2000 (0.74% of the fund's average daily
net assets as of the end of the fund's most recent fiscal year on September 30,
1999) is also well below the 1.11% median expense ratio of funds in the Lipper
universe. If the fee increase is approved, the resulting expense ratio of 0.98%
would still be below the Lipper universe median.
Increased Complexity, Competition and Costs. Standish also believes the
proposed increase is necessary in light of the increased complexity, competition
and costs involved in managing a mutual fund focusing on domestic small cap
stocks.
The complexity arises in part from the growth in the number of issues in
the small cap sector, including significant growth in the number of initial
public offerings. This complexity is heightened by the need for Standish to
search continually for new investment opportunities as many such companies
appreciate beyond the small cap sector. Finally, the small capitalization sector
is increasingly dominated by companies offering technologically complex products
and services. Investing successfully in this sector requires a thorough
understanding of the industries in which these companies compete, and the often
highly technical factors relating to product or service design and supply and
demand, making some companies more likely to outperform their competitors. The
growth of the small cap sector has in turn led to a significant increase in the
number of funds focusing on this market.
3
These factors have in turn resulted in greater costs to Standish of
managing the fund. Standish must increasingly invest in technology and personnel
to analyze individual companies and industry trends in this growing and rapidly
changing high-technology oriented market. The growth in the number of funds has
also placed upward pressure on compensation levels for qualified portfolio
managers and analysts in this area. To retain and continue to attract high
quality professionals, Standish must remain competitive in its compensation and
benefits structure. Partly as a result of these cost-related pressures and the
fact that the fund is closed to new investors, Standish has seen its profit
margin (advisory fee revenues less operations expenses) in managing the fund
decline significantly in recent years. Standish receives no revenues from the
fund other than its advisory fee. Accordingly, the advisory fee alone
compensates Standish for providing the personnel, equipment and office space
necessary for the management of the fund's investments, compliance with
regulatory requirements, and a variety of administrative functions. (See
"Portfolio Transactions" below for a discussion of Standish's receipt of
soft-dollar benefits.)
Standish does not believe the existing fee will over time provide for the
appropriate resources to enable it to retain and continue to attract the quality
personnel and to provide the advanced technology and systems necessary to
maintain and enhance the present level of performance by the fund and service to
the fund's shareholders. Standish believes the proposed increase in fee would
provide the resources necessary to better enable Standish to address these
challenges.
Standish recognizes that if it were to reopen the fund to new investors,
the fund's assets could grow, significantly resulting in increased advisory fee
revenues from the fund. Standish does not believe that reopening the fund
currently would be in the best interests of the fund's shareholders. Standish
decided to close the fund to new investors on December 20, 1996 because Standish
believed that continued significant asset growth would adversely effect its
ability to generate superior performance for fund shareholders. Standish
believed then and continues to believe today that the fund's smaller size allows
Standish to better position the fund to take advantage of opportunities in the
fast moving and rapidly changing small cap sector of the equities market.
Standish believes that the best approach for shareholders would be to preserve
the fund's smaller size by keeping the fund closed to new investors while
increasing the resources available to Standish through the proposed fee
increase.
The fee increase is proposed only after careful consideration by Standish
and your board of trustees. Standish and your fund's board of trustees,
including the trustees who are not interested persons of the fund or Standish,
have determined that the proposed fee increase is fair and reasonable. (For a
discussion of the deliberations of the board, see "Factors considered by the
trustees" below.) Standish and your board recommend that you vote in favor of
this proposal.
Terms of existing and proposed contracts
Except for the different advisory fee rates, effective dates and renewal
dates, the terms of the existing and proposed contracts are substantially
identical. The form of the proposed contract is attached to this proxy statement
as Exhibit A. The following summary of the terms of the proposed contract is
qualified in its entirety by reference to the attached form of the proposed
contract.
Advisory services. Under the terms of both the existing and proposed
contracts Standish is responsible for providing continuously an investment
program for the fund, consistent with the fund's investment objective, policies
and restrictions and subject to the supervision and approval of the trustees.
Specifically, Standish is required to determine what investments shall be
purchased, held, sold or exchanged by the fund and what portion, if any, of the
fund's assets will be held uninvested and to make changes in the fund's
investments. Standish also manages, supervises and conducts the other affairs
and business of the fund.
The fund's portfolio managers are Nicholas S. Battelle and Jonathan Stone.
Mr. Battelle has been primarily responsible for the day-to-day management of the
fund's portfolio since the fund's inception in September 1990 and has shared
those responsibilities with Mr. Stone beginning in January, 2000. Whether or not
the proposed contract is approved, it is intended that Mr. Battelle and Mr.
Stone would continue to serve as the fund's portfolio managers. During the past
five years, Mr. Battelle has served as vice president and director of Standish.
Mr. Stone has served as an associate director and senior portfolio manager of
Standish since 1997. Previously, he served as a vice president of equity
research at Adams, Harkness & Hill.
4
Standard of care. Under each contract, Standish is not liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under the contract or for any losses which may be sustained in the
acquisition, holding or disposition of any security or other investment unless
resulting from Standish's 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 under the contract.
Expenses. Under the terms of both the existing and proposed contract, the
fund 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 fund's custodian, and interest and other like
expenses properly payable by the fund.
Standish may from time to time voluntarily agree not to impose all or a
portion of its fee or otherwise take action to reduce expenses of the fund. Any
such fee voluntary limitation or expense reduction may be discontinued or
modified by Standish at any time.
Standish has temporarily and voluntarily agreed to limit the fund's
expenses to 0.74% of the fund's average daily net assets. In the event the
proposed contract is approved, Standish anticipates that it would raise its
voluntary expense limit to 1.00% of the fund's average daily net assets.
Advisory fees: Existing contract. As noted above, as compensation for its
services under the existing contract and the assumption of certain expenses
which Standish incurs on behalf of the fund, the fund pays Standish an annual
investment advisory fee under the existing contract equal to 0.60% of the fund's
average daily net assets. This fee is computed daily and paid monthly.
Advisory fees: Proposed contract. Under the proposed contract, as
compensation for its management services and the assumption of certain expenses
which Standish incurs on behalf of the fund, the fund would pay Standish an
annual investment advisory fee equal to 0.80% of the fund's average daily net
assets. The fee would be computed daily and paid monthly. Accordingly, this fee
represents an increase in the investment advisory fee rate payable to Standish
of 0.20% of the fund's average daily net assets annually over the rate under the
existing contract. For information on investment advisory fees paid by other
funds managed by Standish with similar objectives, see the Appendix to this
proxy statement.
If approved by the fund's shareholders, the effective date of the proposed
contract is expected to be August 18, 2000 (the "effective date").
Effect of the new advisory fee
Set forth below is a table showing the dollar amount of actual investment
advisory fees paid by the fund during the one year period ended May 31, 2000
under the existing contract (and prior to December 31, 1999 under the advisory
contract between Standish and the Standish Small Capitalization Equity
Portfolio) (the "predecessor contract") and the dollar amount of fees that would
have been paid under the proposed contract. The table also shows the differences
(expressed as a percentage of the existing fee and in dollar terms) between the
amount that would have been paid under the proposed contract and the amount
actually paid under the existing contract. Also set forth below is a comparative
fee table showing the amount of fees and expenses paid by the fund as a
percentage of average daily net assets during the fiscal year ended September
30, 1999 and the amount of fees and expenses shareholders would have paid if the
proposed contract had been in effect. The figures shown for the new fee
represent the amounts that actually would have been paid under the proposed
contract during the 12 months ended September 30, 1999. At May 31, 2000, the
fund had net assets of approximately $157,286,886.
5
DOLLAR AMOUNT OF INVESTMENT ADVISORY FEES PAID
(one year ended May 31, 2000)
Difference from amount paid under
existing and predecessor contracts
----------------------------------
Existing and
Predecessor Proposed as a percentage of
Contracts Contract the existing fee in dollars
------------ ----------- ------------------ ----------
Amount of fees paid or that would have $1,092,242* $1,456,322* +33.3% +$364,080
been paid
Amount of fees paid or that would have $1,032,174* $1,456,322* +38.8% +$424,148
been paid (After waiver)**
The increase would amount to 20 cents on each $100 invested in the fund.
- -----------------
*The figures shown represent investment advisory fees paid indirectly by the
fund through its investment in the Standish Small Capitalization Equity
Portfolio for the period May 1, 1999 through December 30, 1999 under the
predecessor contract and by the fund for the period December 31, 1999 through
May 31, 2000 under the existing contract. On December 31, 1999, the fund
withdrew all of its investable assets from the Portfolio and resumed investing
in securities directly. For the fiscal year ended September 30, 1999, the
Standish Small Capitalization Equity Portfolio paid Standish investment advisory
fees of $1,009,227, of which $16,107 were waived by Standish. The fund did not
pay any investment advisory fees during the fiscal year ending September 30,
1999.
** Due to voluntary expense limitations, Standish reduced its advisory fee
payable by the Portfolio.
COMPARATIVE FEE TABLE
(fiscal year ended September 30, 1999)
Annual Fund Operating Expenses(1)
(as a percentage of average net assets)
Predecessor Proposed
contract contract
------------ ------------
Management fee 0.60% 0.80%
Distribution and service (12b-1) fee 0.00% 0.00%
Other expenses 0.20% 0.20%
------------ ------------
Total annual fund operating expenses 0.80% 1.00%
(1) These fees and expenses are set forth without regard to any expense
cap. Because Standish has agreed voluntarily and temporarily to cap the
fund's operating expenses, the fund's actual expenses were (or would have
been, in the case of the proposed contract):
6
Management fees 0.59 0.80
Other expenses 0.15 0.18
Total annual fund operating expenses 0.74 0.98
If the fee increase is approved, Standish expects to increase the expense
cap to 1.00% from 0.74%. Accordingly, the fund's actual expenses under the
proposed contract shown in the above footnote are estimated assuming the
1.00% cap was in effect.
Examples
The following examples help you compare the costs of investing in the fund
under the existing contract and after giving effect to the fee increase
reflected in the proposed contract with the cost of investing in other mutual
funds. They assume that: a) you invest $10,000 in the fund for the time periods
shown, b) you reinvest all dividends and distributions, c) your investment has a
5% return each year, d) the fund's operating expenses remain the same and e) you
redeem at the end of each period.
Number of years you
own your shares Existing contract Proposed contract
------------------- ----------------- -----------------
1 year $82 $101
3 years $255 $315
5 years $444 $547
10 years $990 $1,213
Other provisions of the existing and proposed contracts
Miscellaneous
The existing contract was first approved by your fund's board on October
12, 1999 and entered into on December 31, 1999. As noted above, prior to
December 31, 1999, the fund had invested all of its investable assets in the
Standish Small Capitalization Equity Portfolio. During the period that the fund
invested all of its investable assets in the Portfolio, the Portfolio invested
those assets in securities and Standish served as investment adviser to the
Portfolio rather than the fund pursuant to the predecessor contract which was
approved by the fund's shareholders on March 29, 1996. The existing contract is
substantially identical to the Portfolio's advisory contract and, according to
an interpretive position of the staff of the Securities and Exchange Commission,
did not have to be approved by the shareholders of the fund. The existing
contract is renewable annually by the vote of a majority of the fund's board,
including a majority of the trustees who are not "interested persons" (as
defined in the 1940 Act) of the fund or Standish, cast in person at a meeting
called for the purpose of voting on such renewal.
If approved, the proposed contract will become effective on August 18,
2000 (or if approved after that date, on the first day of the first month
following the approval date) and will continue in effect for a period of two
years after its effective date and thereafter will continue from year to year
subject to annual approval by the board of trustees in the same manner as the
existing contract. The existing contract and the proposed contract terminate if
assigned (as defined in the 1940 Act) and may be terminated without penalty by
either party (in the case of the fund by vote of its board or by a vote of a
majority of the outstanding voting securities of the fund), upon 60 days'
written notice.
Additional information pertaining to Standish
For additional information concerning the management, ownership structure,
affiliations, brokerage policies and certain other matters pertaining to
Standish, see the Appendix to this proxy statement.
Factors considered by the trustees
The trustees determined that the terms of the proposed contract are fair
and reasonable and that approval of
7
the proposed contract on behalf of the fund is in the best interests of the fund
and its shareholders. In their discussions, the trustees who are not
"interested" persons of the fund or Standish were advised by their own legal
counsel. At their June 2-3, 2000 meeting, the trustees who are not "interested"
persons of the fund or Standish met privately with their own legal counsel to
discuss the matter prior to approving the proposed contract. These trustees and
the other members of the board approved the proposed contract on June 3, 2000.
In connection with their deliberations, the trustees requested and were
furnished with substantial information to assist in their evaluation. This
information included a comparison of the fund's present and proposed investment
advisory fees and expense ratios with those of other mutual funds in its peer
group. This information indicated that the fund's present advisory fee and
expense ratio were well below the median among mutual funds in its competitive
universe and that, after giving effect to the proposed fee increase, the fund's
investment advisory fee and its expense ratio would still be somewhat below the
median. Standish also provided information comparing the fund's investment
performance with the fund's benchmark, the Russell 2000 Growth Index, and with
competitive mutual funds, which indicated that the fund had generally
outperformed the benchmark and the median fund in its competitive universe.
In addition, Standish provided, and the trustees reviewed, information
concerning Standish's profitability in managing the fund at the current fee
level and that the current domestic small capitalization equity market is marked
by various factors which tend to increase Standish's costs. These factors
include: (i) growing complexity (both in the increasing number of issuers
Standish must follow, including significant growth in the number of initial
public offerings, and the highly technical nature of products and services most
of these companies provide); (ii) a high level of competition among a growing
number of funds in this category for assets, top performance rankings and
quality investment personnel; and (iii) steeply rising costs related to the
employment of additional quality investment consultants, investments in
information technology and the effect of competition on compensation packages
necessary to attract and retain quality personnel. The trustees also considered
the fact that the fund is currently closed to new investors and the merits of
reopening the fund to new investors in lieu of a fee increase.
As a result of their deliberations, and taking into consideration the
information provided, the trustees determined that Standish's request for a fee
increase was reasonable.
Trustees' recommendation
At the meeting held on June 3, 2000, your board of trustees, including all
of the trustees who are not "interested persons" of the fund or Standish,
unanimously concluded that the fee was fair and reasonable and in the best
interests of the fund's shareholders, and by a vote cast at the meeting,
unanimously approved and voted to recommend to the shareholders of the fund that
they approve the proposal to adopt the proposed contract.
Required vote
Adoption of this Proposal requires the approval of a majority of the
outstanding voting securities of the fund, which under the 1940 Act, means the
affirmative vote of the lesser of (i) 67% or more of the shares of the fund
represented at the meeting, if at least 50% of all outstanding shares of the
fund are represented at the meeting, or (ii) 50% or more of the outstanding
shares of the fund entitled to vote at the meeting (a "1940 Act majority vote").
If this Proposal is not approved by the shareholders of the fund, the
existing contract will continue in effect.
For the reasons set forth above, the trustees of your fund recommend that
shareholders vote in favor of the proposed contract.
8
INFORMATION CONCERNING THE MEETING
Outstanding shares and quorum
As of June 9, 2000, 2,327,174.531 shares of beneficial interest of the
fund were outstanding. Only shareholders of record on June 9, 2000 are entitled
to notice of and to vote at the meeting. A majority of the outstanding shares of
the fund that are entitled to vote will constitute a quorum for the transaction
of business.
Ownership of shares of the fund
To the knowledge of the fund, as of June 9, 2000, the following persons
owned of record or beneficially 5% or more of the outstanding shares of the
fund.
Number of shares owned and
Shareholder percentage of total shares outstanding
- ----------- --------------------------------------
Factory Mutual Insurance Company 427,827.549 18.4%
P.O. Box 9198
225 Wyman Street
Waltham, MA 02454
Brown Printing Company Profit Sharing 243,452.652 10.5%
Norwest Bank Minnesota, N.A.
P.O. Box 1533
Minneapolis, MN 55480
Hendrix College 231,537.886 9.9%
1601 Harkrider Street
Conway, AR 72032
Allendale Mutual Retirement Equity Income 125,764.476 5.4%
c/o FM Global Pension Plan
P.O. Box 9198
225 Wyman Street
Waltham, MA 02454
Bingham, Dana & Gould 123,832.742 5.3%
150 Federal Street
Boston, MA 02110
Shareholder proposals
Your fund is not required to hold annual meetings of shareholders and does
not currently intend to hold a meeting of shareholders in 2000. A shareholder
proposal intended to be presented at a future annual meeting must be received by
the fund a reasonable time before the fund prepares proxy materials relating to
such a meeting.
Proxies, quorum and voting at the meeting
Any shareholder who has given his or her proxy to someone has the power to
revoke that proxy at any time prior to its exercise by executing a superceding
proxy or by submitting a 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 vote in person and, by voting in person,
shall be deemed to have revoked any previously granted proxy. 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 proposal described above and will use their best judgment in
connection
9
with the transaction of such other business as may properly come before the
meeting or any adjournment thereof.
In the event that at the time any session of the meeting is called to
order a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the meeting
to a later date. In the event that a quorum is present but sufficient votes in
favor of the proposal have not been received, the persons named as proxies may
propose one or more adjournments of the meeting to permit further solicitation
of proxies with respect to the proposal. Any such adjournment will require the
affirmative vote of more than one half of the shares of the fund present in
person or by proxy at the session of the meeting to be adjourned. The persons
named as proxies will vote those proxies which they are entitled to vote in
favor of any such proposal in favor of such an adjournment and will vote those
proxies required to be voted against any such proposal against any such
adjournment. A shareholder vote may be taken on one or more of the proposals
brought before the meeting prior to such adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate. Such vote will be
considered final regardless of whether the meeting is adjourned to permit
additional solicitation with respect to any other proposal.
Shares of your fund represented in person or by proxy, including shares
which abstain or do not vote with respect to a proposal, will be counted for
purposes of determining whether there is a quorum at the meeting. Accordingly,
an abstention from voting has the same effect as a vote against a proposal.
However, if a broker or nominee holding shares in "street name" indicates on the
proxy card that it does not have discretionary authority to vote on a proposal,
those shares will not be considered present and entitled to vote on that
proposal. Thus, a "broker non-vote" has no effect on the voting in determining
whether a proposal has been adopted by at least 67% of the shares of the fund
present at the shareholders' meeting, if more than 50% of the outstanding shares
(excluding the "broker non-votes") are present or represented at the meeting.
However, for purposes of determining whether a proposal has been adopted in
accordance with a vote that requires approval by holders of at least a majority
of the outstanding shares of the fund, a "broker non-vote" has the same effect
as a vote against that proposal because shares represented by a "broker
non-vote" are considered to be outstanding shares.
Other business
While the meeting has been called to transact any business that may
properly come before it, the only matters that the trustees intend to present is
the investment advisory agreement proposal stated in the attached notice of
special meeting of shareholders and described in this proxy statement. However,
if any additional matters properly come before the meeting, and on all matters
incidental to the conduct of the meeting, it is the intention of the persons
named in the enclosed proxy to vote the proxy in accordance with their judgment
on such matters unless instructed to the contrary.
Method of solicitation and expenses
The cost of preparing, assembling and mailing this proxy statement, the
attached notice and the accompanying proxy card will be borne by Standish. In
addition to soliciting proxies by mail, Standish may, at Standish's expense,
have one or more of the fund's officers, representatives or compensated
third-party agents, aid in the solicitation of proxies by personal interview or
telephone and telegraph and may request brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of the shares held of record by such persons.
Persons holding shares as nominees will be reimbursed by Standish, upon
request, for the reasonable expenses of mailing soliciting materials to the
principals of the accounts.
10
APPENDIX
Additional information pertaining to Standish
Ownership and Control of Standish. Edward H. Ladd is the Chairman of the
Board of Directors and a Managing Director of Standish. George W. Noyes is the
Vice Chairman, President, Chief Executive Officer and a Managing Director of
Standish. Austin C. Smith is the Treasurer of Standish. The following constitute
all of the Directors of Standish: Caleb F. Aldrich, David H. Cameron, Maria D.
Furman, Raymond J. Kubiak, George W. Noyes, Howard B. Rubin, Thomas P. Sorbo,
Ralph S. Tate and Richard S. Wood. All of the outstanding stock of Standish is
owned by SAW Trust, a Massachusetts business trust. SAW Trust is owned entirely
by its twenty-three trustees, all of whom are officers of Standish. Nine of the
twenty-three trustees are the Directors of Standish listed above. The remaining
fourteen trustee/shareholders are: Nicholas Battelle, Karen K. Chandor, Lavinia
B. Chase, W. Charles Cook, Joseph M. Corrado, Richard C. Doll, Dolores S.
Driscoll, James E. Hollis III, Edward H. Ladd, Laurence A. Manchester, Catherine
A. Powers, Austin C. Smith, David C. Stuehr and Michael W. Thompson. All of the
trustee/shareholders of SAW Trust are Standish controlling persons.
The trustees and officers of the fund who are also directors, trustees,
officers or employees of Standish or SAW Trust are listed below. The address of
each such person, and of each person who is an officer, director or trustee of
Standish or SAW Trust, is c/o Standish, Ayer & Wood, Inc., One Financial Center,
Boston, Massachusetts 02111.
Directors, officers and employees of Standish or SAW Trust who are also trustees
and officers of the fund:
Name Position held With the Fund Position with Standish
- ---- --------------------------- ----------------------
D. Barr Clayson Vice President and Trustee Vice President
Edward H. Ladd Vice President and Trustee Chairman of the Board and Managing
Director
Richard S. Wood President and Trustee Vice President and Managing Director
James E. Hollis III Executive Vice President Vice President and Director
Paul G. Martins Vice President and Treasurer Vice President and Chief Financial
Officer
Anne P. Herrmann Vice President and Secretary Assistant Vice President and Senior
Fund Administration Manager
Beverly E. Banfield Vice President Vice President, Associate Director
and Chief Compliance Officer
Denise B. Kneeland Vice President Vice President and Manager, Mutual
Fund Operations
Tami M. Pester Vice President Assistant Vice President, Assistant
Compliance Manager and Compliance
Officer
Rosalind J. Lillo Vice President Broker/Dealer Administrator
Deborah Rafferty-Maple Vice President Assistant Vice President, Financial
Planner and Registered Investment
Networks Marketing Manager
Lisa A. Kane Vice President Jr. Client Service Professional
Steven M. Anderson Vice President Mutual Funds Controller
The principal occupation of each principal executive officer and director of
Standish is as an employee of Standish.
11
Services provided to the fund by affiliates of Standish
Standish Funds Distributor, L.P. ("SFD") serves as the fund's principal
underwriter. SFD receives no compensation for these services. SFD is expected to
continue to serve as the fund's principal underwriter regardless of whether the
proposed contract is approved. The address of SFD is One Financial Center,
Boston, Massachusetts 02111.
Administrator to the fund
Investors Bank & Trust Company ("IBT") serves as the fund's administrator.
The address of IBT is 200 Clarendon Street, Boston, Massachusetts 02116.
Similar funds advised by Standish
Standish serves as the investment adviser to the following funds with
investment objectives similar to your fund's objective:
Annual advisory fee
Net Assets (as a % of average
Name of fund (as of May 31, 2000) daily net assets) Fee after waivers
- ------------ -------------------- ----------------- -----------------
Small Cap Tax Sensitive Equity Fund $235,801,064 0.80%* 0.80%
Small Cap Growth Portfolio $140,820,801 0.80%** 0.80%
- ------------------
*On January 14, 2000, the shareholders of Small Cap Tax Sensitive Equity
Fund approved an increase in this fee from 0.60% to 0.80%.
**On December 20, 1999, the shareholders of Standish Small Cap Growth Fund
approved an increase in this fee from 0.60% to 0.80%
Portfolio Transactions. All orders for the purchase or sale of portfolio
securities are placed on behalf of the fund by Standish pursuant to authority
contained in the existing contract. In selecting brokers or dealers, Standish
considers factors relating to execution on the best overall terms available,
including, but not limited to, the size and type of the transaction; the nature
and character of the markets of the security to be purchased or sold; the
execution efficiency, settlement capability and financial condition of the
dealer; the dealer's execution services rendered on a continuing basis; and the
reasonableness of any dealer spreads.
Standish may select broker-dealers which provide brokerage and/or research
services to the fund and/or other investment companies or institutional or other
accounts advised by Standish. Such research services must provide lawful and
appropriate assistance to Standish in the performance of its investment
decision-making responsibilities and could include advice concerning the value
of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analysis, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement).
In circumstances in which two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the fund. This policy does not imply a commitment to execute all
portfolio transactions through all broker-dealers that sell shares of the fund.
In addition, if Standish determines in good faith that the amount of commissions
charged by a broker-dealer is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, the fund may pay
commissions to such broker-dealer in an amount greater than the amount another
firm may charge. This information might be useful to Standish in providing
services to the fund as well as to other investment companies or accounts
advised by Standish, although not all of such research may be useful to the
fund. Conversely, such information provided to Standish by brokers and dealers
through whom other clients of Standish effect securities transactions might be
useful to Standish
12
in providing services to the fund. The receipt of such research is not expected
to reduce Standish's normal independent research activities; however, it enables
Standish to avoid the additional expense which might otherwise be incurred if it
were to attempt to develop comparable information through its own staff.
13
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
Standish Small Capitalization Equity Fund
AGREEMENT made as of this ___ day of ______, 2000, between Standish, Ayer
& Wood Investment Trust, an unincorporated business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), and Standish, Ayer &
Wood, Inc., a Massachusetts corporation (the "Adviser").
WITNESSETH:
WHEREAS, the 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 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 Trust desires to retain the Adviser to furnish investment
advisory services to Standish Small Capitalization Equity Fund (the "Fund"), a
separate fund of the Trust, and the Adviser is willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of the Adviser. The Trust hereby appoints the Adviser to
act as investment adviser of the Fund 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 Fund
in any way nor shall otherwise be deemed an agent of the Fund.
2. Duties of the Adviser.
(a) The Adviser, at its expense, will furnish continuously an
investment program for the Fund, will determine, subject to the overall
supervision and review of the Trustees of the Trust, what investments shall be
purchased, held, sold or exchanged by the Fund and what portion, if any, of the
assets of the Fund will be held uninvested, and shall, on behalf of the Trust,
make changes in the investments of the Fund. Subject always to the supervision
of the Trustees of the Trust and to the provisions of the 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 Fund and
matters incidental thereto. The Adviser, and any affiliates 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 Adviser shall provide, without cost to the Trust, all
necessary office space and the services of executive personnel for administering
the affairs of the Fund.
(c) The Fund shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of shareholder notices and reports, typesetting and printing of
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders, bookkeeping and share pricing expenses,
fees and disbursements of the Trust's custodian, transfer and dividend
disbursing agent or registrar, or interest and other like expenses properly
payable by the Trust.
A-1
3. Compensation of the Adviser.
(a) As full compensation for the services and facilities furnished
by the Adviser under this Agreement, the Trust agrees to pay to the Adviser a
fee at the annual rate of 0.80% of the Fund's average daily net asset value.
Such fees shall be accrued when computed and payable monthly. For purposes of
calculating such fees, the Fund'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 Fund'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.
4. Limitation of Liability of the Adviser. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
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 Fund 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.
5. 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 (i) by either the Trustees of the Trust or
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, and, in either event, (ii) by vote of a majority of the
Trustees of the 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 Trust or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Fund or by
the Adviser, on sixty days' written notice to the other parties.
(c) This Agreement shall automatically and immediately terminate in
the event of its assignment as defined in the 1940 Act.
6. Limitation of Liability. The term "Standish, Ayer & Wood Investment
Trust" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Trust dated August 13, 1986, as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the trust property of
the Trust as provided in the Agreement and Declaration of Trust of the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and this Agreement has been signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees 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 Trust as
provided in the Agreement and Declaration of Trust.
A-2
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
STANDISH, AYER & WOOD INVESTMENT TRUST
on behalf of Standish Small Capitalization Equity Fund
Attest:
By: __________________________________________________
Its: _________________________________________________
STANDISH, AYER & WOOD, INC.
Attest:
By: __________________________________________________
Its: _________________________________________________
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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, Edward H. Ladd 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 Standish, Ayer & Wood, Inc., One Financial Center,
26th Floor, Boston, Massachusetts 02111, on August 17, 2000, at 2:00 p.m.,
Boston time, 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:
(a) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN STANDISH, AYER & WOOD INVESTMENT TRUST, ON BEHALF OF
ITS SERIES, STANDISH SMALL CAPITALIZATION EQUITY FUND, AND STANDISH, AYER &
WOOD, INC., INCREASING THE RATE AT WHICH FEES ARE PAID TO STANDISH.
|_| FOR |_| AGAINST |_| ABSTAIN
(b) 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 the proposal unless authority to do so is specifically withheld in the
manner provided.
Dated:____________________, 2000
___________________________________
___________________________________
[Label identifying shareholder account] ___________________________________
___________________________________
Signature(s)
___________________________________
Print name, title
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
A-4