INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
STANDISH, AYER & WOOD INVESTMENT TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
STANDISH, AYER & WOOD INVESTMENT TRUST
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Standish International Equity Fund
Standish International Small Cap Fund
Standish Small Cap Value Fund
One Financial Center, Boston, Massachusetts 02111
1-800-221-4795
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NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
To be held on October 10, 2002
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A Special Meeting of Shareholders (the "Meeting") of Standish International
Equity Fund, Standish International Small Cap Fund and Standish Small Cap Value
Fund (each, a "Fund", and collectively, the "Funds") will be held on Thursday,
October 10, 2002 at 2:00 p.m. (Eastern time) at the offices of Hale and Dorr
LLP, 60 State Street, 26th Floor, Boston, Massachusetts 02109, to consider and
act upon the following proposals, and to transact such other business as may
properly come before the Meeting.
1. To approve and implement a new investment policy allowing each
Fund to convert to the master-feeder structure whereby each Fund
would invest all of its investable assets in the corresponding
master portfolio listed in the table below (each, a
"Portfolio"). Each Portfolio has substantially the same
investment objective, policies and restrictions as the
corresponding Fund;
Fund Corresponding Portfolio
---- -----------------------
Standish International Equity Fund Standish International Equity Portfolio
Standish International Small Cap Fund Standish International Small Cap Portfolio
Standish Small Cap Value Fund Standish Small Cap Value Portfolio
2. To authorize each Fund to vote as a holder of an interest in the
corresponding Portfolio to approve an investment advisory
agreement between the corresponding Portfolio and Standish
Mellon Asset Management Company LLC, each Fund's investment
adviser;
3(a) & (b) To amend certain fundamental investment restrictions of Standish
International Equity Fund to (a) permit the Fund to implement
the proposed new master-feeder conversion described in Proposal
1 above and (b) to engage in securities lending to the extent
permitted under the Investment Company Act of 1940; and
4. To consider any other business that may properly come before the
meeting.
The Board of Trustees of the Standish, Ayer & Wood Investment Trust
unanimously recommends that you vote in favor of all of the proposals. Approval
of the
proposals will not result in an increase in the advisory fee rate paid directly
or indirectly by any of the Funds.
Shareholders of record of each Fund at the close of business on July 29,
2002 (the "Record Date") will be entitled to vote at the Meeting and at any
adjournment(s). The Proxy Statement and Proxy Card are being mailed to
shareholders of record on or about August 20, 2002.
By Order of the Board of Trustees,
Richard S. Wood, President and Trustee
Boston, Massachusetts
August 19, 2002
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING.
2
STANDISH, AYER & WOOD INVESTMENT TRUST
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Standish International Equity Fund
Standish International Small Cap Fund
Standish Small Cap Value Fund
One Financial Center
Boston, Massachusetts 02111
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PROXY STATEMENT
This Proxy Statement contains the information you should know before voting
on the proposals summarized below.
INTRODUCTION
This Proxy Statement is being used by the Board of Trustees of the
Standish, Ayer & Wood Investment Trust (the "Trust") to solicit proxies to be
voted at a Special Meeting of Shareholders of each of the Standish International
Equity Fund, Standish International Small Cap Fund and Standish Small Cap Value
Fund (each, a "Fund", and collectively, the "Funds") and at any adjournments
thereof (the "Meeting"). The Meeting will be held at the offices of Hale and
Dorr LLP, 60 State Street, 26th Floor, Boston, Massachusetts 02109 at 2:00 p.m.
(Eastern time) on Thursday, October 10, 2002, for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders.
This Proxy Statement and the enclosed Proxy Card are being mailed to
shareholders on or about August 20, 2002. Each Fund will furnish, without
charge, a copy of its most recent annual report and any more recent semi-annual
report to any shareholder upon request. Shareholders may request a copy of these
reports by writing to the Standish Funds, P.O. Box 51407, Boston, Massachusetts
02205-1407, by calling 1-800-221-4795 or by visiting our web site at
www.standishmellon.com. The annual report for each Fund for its most recently
completed fiscal year was previously mailed to shareholders.
The Trustees of the Trust 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.
Who is eligible to vote
Shareholders of record of a Fund as of the close of business on July 29,
2002 (the "record date") are entitled to vote on all of that Fund's business at
the Meeting and any adjournments thereof. Each share is entitled to one vote. A
fractional share is entitled to the corresponding fraction of one vote. Shares
represented by properly executed proxies will be voted according to the
shareholder's instructions unless revoked before or at the Meeting. If you sign
a proxy, but do not fill in a vote, your shares will be voted FOR each Proposal,
as applicable. If any other business comes before the Meeting, your shares will
be voted at the discretion of the persons named as proxies.
The following table summarizes each proposal to be voted on at the Meeting
and the Funds whose shareholders are being solicited with respect to each
Proposal:
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SUMMARY OF VOTING ON PROPOSALS
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Proposal Affected Funds
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1. To approve and implement a new investment policy allowing each Fund to Each Fund
convert to the master-feeder structure whereby each Fund would invest
all of its investable assets in the corresponding master portfolio
listed in the table below (each, a "Portfolio"). Each Portfolio has
substantially the same investment objective, policies and restrictions
as the corresponding Fund;
Fund Corresponding Portfolio
---- -----------------------
Standish International Equity Fund Standish International Equity Portfolio
Standish International Small Cap Fund Standish International Small Cap Portfolio
Standish Small Cap Value Fund Standish Small Cap Value Portfolio
2. To authorize the Trust to vote as a holder of an interest in the Each Fund
Portfolio to approve an investment advisory agreement between
each Portfolio and Standish Mellon Asset Management Company LLC,
currently the investment adviser for each Fund; and
3(a)-(b) To amend certain fundamental investment restrictions of Standish Standish
International Equity Fund (a) to permit the Fund to implement the International
proposed master-feeder conversion described in Proposal 1 above and (b) Equity Fund
to engage in securities lending to the extent permitted under the only
Investment Company Act of 1940.
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2
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PROPOSAL 1
TO APPROVE AND IMPLEMENT A NEW INVESTMENT POLICY ALLOWING
EACH FUND TO CONVERT TO THE MASTER-FEEDER STRUCTURE
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Summary
The Trustees of the Trust have approved, and are submitting to the
shareholders of each Fund for approval, the adoption and implementation of a new
investment policy to permit each Fund to invest all of its investable assets in
a corresponding open-end management investment company (each, a "Portfolio" and
collectively, the "Portfolios") which has substantially the same investment
objective, policies and restrictions as the corresponding Fund. The Portfolios
are newly formed series of the Standish, Ayer & Wood Master Portfolio (the
"Portfolio Trust").
This structure, in which one fund (the feeder fund) invests all of its
investable assets in a corresponding portfolio (the master portfolio) with
substantially the same investment objective, policies and restrictions, is
referred to herein as the 'master-feeder' structure. If each Fund's shareholders
approve this Proposal, the Trustees intend to invest all of the investable
assets of each Fund in its corresponding Portfolio, thereby converting each Fund
from a stand-alone fund into a feeder fund in the master-feeder structure. Each
'feeder' Fund and its corresponding 'master' Portfolio are listed in the table
below:
Fund Corresponding Portfolio
---- -----------------------
Standish International Equity Fund Standish International Equity Portfolio
Standish International Small Cap Fund Standish International Small Cap Portfolio
Standish Small Cap Value Fund Standish Small Cap Value Portfolio
In order for International Small Cap Fund and Small Cap Value Fund to
convert to the master-feeder structure, shareholders must approve both this
Proposal 1 and Proposal 2 below. In order for the International Equity Fund to
convert to the master-feeder structure, shareholders must approve both this
Proposal 1 and Proposals 2 and 3(a) below. Approval of Proposal 3(a) is also
required for International Equity Fund because that Fund has certain additional
fundamental investment restrictions which International Small Cap Fund and Small
Cap Value Fund do not have which also need to be amended to permit the
master-feeder conversion to occur. Accordingly, shareholders who support
converting to the new master-feeder structure for all three Funds should vote in
favor of Proposals 1, 2 and 3(a).
The Trustees of the Trust unanimously recommend that shareholders of each
Fund vote to approve this Proposal 1. The Trustees believe that the Funds'
conversion to the master-feeder fund structure will be advantageous to the
shareholders of the Funds in several respects. Please see "Factors Considered by
the Trustees and their Recommendation" below for a discussion of the Trustees'
recommendation.
3
New Investment Policy
The Trustees recommend that the shareholders of the Fund approve the
adoption and implementation of a new investment policy allowing each Fund to
convert to the master-feeder structure by investing all of the Fund's investable
assets in the corresponding Portfolio. Each Portfolio is a newly formed series
of the Portfolio Trust, which is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
Interests in the Portfolio are not available for purchase directly by members of
the general public.
Each Portfolio has substantially the same investment objective, policies
and restrictions as the corresponding Fund. By investing in the corresponding
Portfolio, each Fund would seek its investment objective through its investment
in the corresponding Portfolio, rather than through direct investments in
securities. Each Portfolio in turn would invest in securities in accordance with
its investment objective, policies and restrictions. Standish Mellon Asset
Management Company LLC ("Standish Mellon" or the "Adviser"), which serves as
each Fund's investment adviser, would, subject to shareholder approval, serve as
each Portfolio's investment adviser. Standish Mellon would receive compensation
at the same advisory fee rates from the Portfolios as it does from the
corresponding Funds. Because the Funds would only be investing directly in the
corresponding Portfolios after the conversion, Standish Mellon would stop
serving as the investment adviser to the Funds. As a result, shareholders of the
Funds would not pay, either directly or indirectly, a higher advisory fee rate
if this Proposal is approved.
The approval by shareholders of each Fund of this Proposal and Proposal 2
(and Proposal 3(a) for the Standish International Equity Fund) will authorize
each Fund to convert to the master-feeder fund structure. If these Proposals are
approved by the shareholders of the Funds and the Trustees are satisfied with
certain tax matters discussed below, each Fund expects to convert to the
master-feeder fund structure on or about the close of business on November 1,
2002 or such later date as the Trustees may approve. When converting to a
master-feeder fund, each Fund will 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 corresponding
Portfolio. The value of a shareholder's investment in each Fund will be the same
immediately after the Fund's investment in the corresponding Portfolio as
immediately before that investment. Of course, the value of a shareholder's
investment in each Fund may fluctuate thereafter.
Factors Considered by the Trustees and their Recommendation
The Trustees of the Trust have unanimously recommended that shareholders of
each Fund vote to approve this Proposal 1. The Trustees believe, based primarily
on their discussions with the Adviser, that additional assets could be attracted
to the Portfolios as a result of the proposed master-feeder conversion, thus
increasing the Portfolios' asset base. In particular, the Adviser told the
Trustees that if the proposed master-feeder structure were implemented, The
Dreyfus Corporation, an affiliate of the Adviser, intends to establish, subject
to the approval of the board of trustees of the Dreyfus feeder funds, a new
feeder fund for each of the Portfolios and to distribute the shares of those
Portfolios to retail investors. The Trustees considered that this anticipated
larger asset base may be advantageous to the shareholders of the Funds in
several respects:
o 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 master-feeder structure. Currently, the Funds bear
these expenses alone. After the conversion, these expenses would be
borne in whole or in part by each Portfolio and shared pro rata by the
corresponding Fund and other investors in the Portfolio.
4
o To the extent a Portfolio will have a larger asset base than that of
the corresponding Fund, greater diversification of its investment
portfolio can be achieved than is currently possible for each Fund.
Greater diversification is expected to be beneficial to shareholders
of the Funds and other investors in the Portfolios 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.
o The larger anticipated size of each Portfolio would permit the
purchase of investments in larger denominations than the corresponding
Fund currently is able to purchase which may permit the Adviser to
negotiate more favorable terms on such purchases than otherwise would
be the case.
Although these benefits could be realized by the direct growth of the
Funds' assets, the Trustees believe that growth is more likely to be achieved
through investments in the Portfolios by entities in addition to the Funds. It
is believed that these entities would not otherwise invest directly in the Funds
because of the regulatory, tax and other considerations. There can, however, be
no assurance that either an increase in assets of a Portfolio or the benefits
described above will be realized, and no such benefits are anticipated until
other investors invest their assets in the Portfolios.
The Trustees also recognized that the Adviser could benefit from the
proposed 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 or
distributed by the Adviser or affiliates of the Adviser. In addition, this
structure could attract corollary advisory, distribution and related fees to the
Adviser or affiliates of the Adviser with less economic risk of limited success
in early years.
The Trustees believe that over time the aggregate per share expenses of
each Fund and the corresponding 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 Adviser has agreed to
limit the total annual expense ratios (excluding brokerage commissions, taxes
and extraordinary expenses) of the International Equity Fund, International
Small Cap Fund and Small Cap Value Fund such that they will not exceed 1.00%,
1.25% and 1.00%, respectively, through March 1, 2003. After that date, the
Adviser has agreed to continue to limit the total annual expense ratios
(excluding brokerage commissions, taxes and extraordinary expenses) of
International Equity Fund, International Small Cap Fund and Small Cap Value Fund
such that they will not exceed 1.25%, 1.50% and 1.25%, respectively. While the
Adviser has no current intention to discontinue these expense caps after March
1, 2003, the caps are voluntary and may be discontinued at any time by the
Adviser after March 1, 2003.
In addition to the expense caps described in the preceding paragraph, the
Adviser has also agreed to limit the master-feeder aggregate annual operating
expenses of each Fund and the corresponding Portfolio (excluding brokerage
commissions, taxes and extraordinary expenses) to the respective Fund's total
uncapped annual expense ratio in effect immediately prior to the Fund's
conversion to the master-feeder 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 each Fund (excluding any one-time charges
relating to the conversion or other extraordinary expenses and without taking
into account any expense cap) during the three months immediately prior to the
conversion and annualizing this amount. This means that shareholders of the
Funds should not become subject to a higher total expense ratio as shareholders
of feeder funds in the master-feeder structure than they would if the Funds were
to remain as stand alone funds.
5
The Trustees also considered risks associated with an investment in the
Portfolios. The Trustees believe that each Portfolio's investment policies and
restrictions involve substantially the same risks as are associated with the
corresponding Fund's direct investment in securities. The Trustees also noted
that six of the other funds in the Trust are currently operating in the
master-feeder structure.
In recommending that the shareholders authorize the conversion of each Fund
to the master-feeder fund structure, the Trustees have taken into account and
evaluated the possible effects that increased assets in the Portfolios may have
on the expense ratio of the corresponding Fund. After carefully weighing the
costs involved against the anticipated benefits of converting each Fund to the
master-feeder fund structure, the Trustees recommend that the shareholders of
each 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 of the Trust (the "Independent Trustees")) have concluded that it
would be in the best interests of each Fund and its shareholders to approve the
adoption and implementation of a new investment policy to enable each Fund to
convert to the master-feeder structure.
The Investment Adviser and the Administrator
To the extent that each Fund invests all of its investable assets in the
corresponding Portfolio, the Fund would no longer directly require investment
advisory services. For this reason, if shareholders of each Fund approve and
authorize the implementation of the new investment policy described in this
Proposal and also approve Proposal 2 (and Proposal 3(a) for the International
Equity Fund), and the Funds implement the master-feeder structure, each Fund
would terminate its investment advisory agreement with the Adviser. The
investment advisory function would then be performed by the Adviser under
separate investment advisory agreements with the Portfolio Trust on behalf of
each Portfolio. The Funds would, therefore, indirectly bear their proportionate
share of the advisory fees paid by the Portfolios pursuant to their investment
advisory agreements with the Adviser.
Pursuant to each Portfolio's investment advisory agreement, the Adviser
would 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 Board of Managers and the investment advisory agreements, see
Proposal 2 below.
Upon exchange of its investable assets for an interest in the corresponding
Portfolio, each Fund would retain the services of Standish Mellon under separate
administration agreements. Under each administration agreement, Standish Mellon
would provide the Funds with general office facilities, supervise the overall
administration of the Funds and allow the Funds to use the name "Standish." For
these services, Standish Mellon currently would not receive any additional
compensation. The Trustees may, however, determine in the future to compensate
Standish Mellon for its services under the administration agreement.
Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
Massachusetts 02116, would serve as the administrator to the Portfolios pursuant
to separate administration agreements with the Portfolio Trust on behalf of each
Portfolio. Under each agreement, IBT would manage the affairs of each Portfolio,
provide all necessary office space and services of executive personnel for
administering the affairs of the Portfolios. For these services, IBT receives an
aggregate fee of $15,833 per month from all of the series in the Portfolio
Trust, which would also include the Portfolios, and all of the non-feeder funds
in the Trust. This fee is allocated among each portfolio and non-feeder fund
based upon the relative asset sizes of the portfolios and non-feeder funds. IBT
receives an aggregate fee of $2,500 per year from
6
each of the feeder funds in the Trust, which would include the Funds following
the master-feeder conversion. In addition, IBT receives a fee based upon the
aggregate assets of all feeder and non-feeder funds in the Trust according to
the following formula: 0.0105% up to first $1 billion; 0.0034% on the next $500
million; and 0.0017% on assets over $1.5 billion. This fee is allocated among
each feeder and non-feeder fund based upon their relative asset sizes.
Comparative Expenses
The following table shows the actual expenses of each Fund for the fiscal
year ended September 30, 2001 and a pro forma adjustment thereof assuming that
each Fund had invested all of its investable assets in its corresponding
Portfolio for the entire period then ended. The pro forma adjustment includes
the estimated costs of operating each Fund in the master-feeder fund structure.
The pro forma adjustment assumes that: (i) there were no holders of interests in
the each Portfolio other than the Fund; and (ii) the average daily net assets of
each Fund and each Portfolio were equal to the actual average daily net assets
of each Fund during the period.
Standish International Equity Fund
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Annual Fund Operating Expenses Based Actual Expenses Aggregate Pro Forma Expenses
on Fiscal Year Ended 9/30/01 (1) (Assuming that the average daily net
assets invested by the Fund in the
Portfolio were $41,489,000)
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Management Fee 0.80% 0.80%
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12b-1 distribution Expenses None None
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Other expenses 0.57% 0.67%
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Total Operating Expenses 1.37% 1.47%
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(1) These fees and expenses are set forth without regard to any expense cap.
Because Standish Mellon has agreed voluntarily and temporarily to cap the
Fund's operating expenses, the Fund's actual expenses were (or would have
been, if the Fund were operating in the master-feeder structure):
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Management Fee 0.43% 0.33%
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Other Expenses 0.57% 0.67%
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Total Expenses 1.00% 1.00%
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The following examples help you compare the costs of investing in the Fund as a
stand alone fund and assuming the Fund converts to the master-feeder structure
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 have not been capped and remain the same and
e) you redeem at the end of each period.
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Number of years you own your shares As a stand alone fund As a feeder fund
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1 year $139 $150
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3 years $434 $465
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5 years $750 $803
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10 years $1,646 $1,757
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7
Standish International Small Cap Fund
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Annual Fund Operating Expenses(1) Actual Expenses Aggregate Pro Forma Expenses
(Assuming that the average daily net
assets invested by the Fund in the
Portfolio were $22,894,000)
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Management Fee 1.00% 1.00%
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12b-1 distribution Expenses None None
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Other expenses 0.98% 1.16%
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Total Operating Expenses 1.98% 2.16%
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(1) These fees and expenses are set forth without regard to any expense cap.
Because Standish Mellon has agreed voluntarily and temporarily to cap the
Fund's operating expenses, the Fund's actual expenses were (or would have
been, if the Fund were operating in the master-feeder structure):
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Management Fee 0.27% 0.09%
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Other Expenses 0.98% 1.16%
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Total Expenses 1.25% 1.25%
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The following examples help you compare the costs of investing in the Fund as a
stand alone fund and assuming the Fund converts to the master-feeder structure
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 have not been capped and remain the same and
e) you redeem at the end of each period.
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Number of years you own your shares As a stand alone fund As a feeder fund
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1 year $201 $219
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3 years $621 $676
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5 years $1,068 $1,159
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10 years $2,306 $2,493
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Standish Small Cap Value Fund
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Annual Fund Operating Expenses(1) Actual Expenses Aggregate Pro Forma Expenses
(Assuming that the average daily net
assets invested by the Fund in the
Portfolio were $21,697,000)
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Management Fee 0.80% 0.80%
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12b-1 distribution Expenses None None
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Other expenses 0.57% 0.76%
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Total Operating Expenses 1.37% 1.56%
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(1) These fees and expenses are set forth without regard to any expense cap.
Because Standish Mellon has agreed voluntarily and temporarily to cap the
Fund's operating expenses, the Fund's actual expenses were (or would have
been, if the Fund were operating in the master-feeder structure):
8
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Management Fee 0.43% 0.24%
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Other Expenses 0.57% 0.76%
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Total Expenses 1.00% 1.00%
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The following examples help you compare the costs of investing in the Fund as a
stand alone fund and assuming the Fund converts to the master-feeder structure
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 have not been capped and remain the same and
e) you redeem at the end of each period.
- ----------------------------------------------------------------------------------------------------------------
Number of years you own your shares As a stand alone fund As a feeder fund
- ----------------------------------------------------------------------------------------------------------------
1 year $139 $159
- ----------------------------------------------------------------------------------------------------------------
3 years $434 $493
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5 years $750 $850
- ----------------------------------------------------------------------------------------------------------------
10 years $1,646 $1,856
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The information in these hypothetical examples above should not be
considered a representation of past or future expenses and actual expenses may
be greater or lesser than those shown. Moreover, while the example assumes a 5%
annual return, the Funds' actual performance will vary and may result in an
actual return greater or lesser than 5%.
If a Fund is converted to the 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 September 30, 2001 and the conversion date.
Assuming that each Fund was the only holder of an interest in its
corresponding Portfolio and that each 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.
Tax Considerations
The Funds anticipate that the conversion to the master-feeder structure
through the contribution of each Fund's investable assets to the corresponding
Portfolios in exchange for interests in that Portfolio will not result in the
recognition of gain or loss to the Funds for federal income tax purposes. It is
expected that any other investors in the Portfolios will transfer a diversified
portfolio consisting of either cash and/or securities.
As a regulated investment company under the Internal Revenue Code of 1986,
as amended (the "Code"), each 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 requirements imposed by
the Code. Each Portfolio is organized and intends to conduct its operations in a
manner such that (a) it will not be required to pay any federal income or excise
taxes and (b) the Funds, by investing all of their investable assets in the
corresponding Portfolios, will be able to continue to qualify as regulated
investment companies under the Code.
9
Description of the Portfolios and the Portfolio Trust
Organization and Investment Policies. The Portfolio Trust was organized as
a master trust fund under New York law on January 18, 1996. The investment
objective of each Portfolio is the same as the investment objective of its
corresponding Fund. Each Portfolio seeks to achieve its investment objective
through investments limited to the types of securities in which its
corresponding Fund is authorized to invest. The investment restrictions and
policies of each 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 its corresponding Fund if the Fund were
to invest directly in such a security or engage directly in such a transaction.
The investment objective of each 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 the Portfolio's
fundamental investment restrictions. Any change in the Portfolios
non-fundamental investment policies or restrictions would not require such
approval. Shareholders of each Fund will receive at least sixty days prior
written notice with respect to any change of its corresponding Portfolio's
investment objective.
As opposed to the Portfolios and the other Funds, the investment objective
of the International Equity Fund is a fundamental policy and may not be changed
without shareholder vote. If the International Equity Portfolio proposed to
change its investment objective, the International Equity Fund would either
obtain shareholder approval to make a corresponding change to its investment
objective or withdraw its investment in the Portfolio. Each Fund would be able
to withdraw its investment in the corresponding 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 are no longer
substantially the same). Upon any such withdrawal, the Trustees would consider
what action might be taken, including investing all the investable assets of
each 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).
Investments in each Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Interests in the Portfolio Trust have no preemptive or conversion rights, and
are fully paid and non-assessable.
Trustees of the Portfolio Trust. 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 Exhibit B to this Proxy Statement.
Net Asset Value Determination. Like the Funds, the Portfolios determine
their net asset values 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 (generally 4:00 p.m., New York City time). Each Portfolio's
net asset value is computed by determining the value of the Portfolio's total
assets (i.e., 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).
Each Fund's net asset value is determined at the same time and on the same
days that the net asset value of the corresponding Portfolio is calculated. Each
Fund's net asset value per share is calculated by determining the value of the
Fund's assets (i.e., 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.
10
Voting by Interest Holders in the Portfolio Trust. 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 a 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 how the Fund
votes at the Portfolio meeting. Instead, 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, each Fund
would not be required to request a vote of its shareholders with respect to (a)
any proposal relating to the a Portfolio, which proposal, if made with respect
to the corresponding Fund, would not require the vote of the shareholders of the
Fund, or (b) any proposal with respect to a Portfolio that is identical in all
material respects to a proposal that has previously been approved by
shareholders of the corresponding 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.
Liability and Indemnification. Each holder in a Portfolio, including the
corresponding Fund, will be liable for the obligations of the Portfolio, up to
the amount of its interest in the Portfolio. In addition, holders in each
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 inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
As such, it is unlikely that any of the Funds would experience liability from
the new investment structure itself. In any event, shareholders of each 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.
Required Vote
As provided under the Investment Company Act, approval of this Proposal 1
will require the vote of a majority of the outstanding voting securities of the
applicable Fund. In accordance with the Investment Company Act and as used in
this Proposal 1, a "majority of the outstanding voting securities" of a Fund
means the lesser of (a) 67% or more of the shares of the Fund present at a
shareholder meeting if the owners of more than 50% of the shares of the Fund
then outstanding are present in person or by proxy, or (b) more than 50% of the
outstanding shares of the Fund entitled to vote at the Meeting.
11
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF
EACH FUND VOTE IN FAVOR OF PROPOSAL 1.
- --------------------------------------------------------------------------------
PROPOSAL 2
TO AUTHORIZE THE TRUST TO VOTE AS A HOLDER OF AN INTEREST IN EACH
PORTFOLIO TO APPROVE THE INVESTMENT ADVISORY AGREEMENT
BETWEEN EACH PORTFOLIO AND STANDISH MELLON
- --------------------------------------------------------------------------------
Shareholders of each Fund are being asked to vote to approve an investment
advisory agreement between the Portfolio Trust, on behalf of each Portfolio, and
Standish Mellon. Shareholders of the Funds are being asked to vote on this
matter because the Portfolio Trust is expected to ask each Fund as an initial
holder in the corresponding Portfolio to vote on that matter. The 1940 Act
requires the interest holders of each Portfolio to approve their respective
investment advisory agreements before the agreements can become effective. This
vote by the interest holders of each Portfolio is expected to take place
immediately after each Fund invests all of its investable assets in the
corresponding Portfolio.
The Trust, on behalf of each Fund, will cast its votes in favor or against
approval of the investment advisory agreements in the same proportions as the
votes cast by each Fund's shareholders. For example, if 80% of the outstanding
shares of the International Equity Fund vote to approve the investment advisory
agreement between the Portfolio Trust, on behalf of the International Equity
Portfolio, and Standish Mellon and 20% of the outstanding shares vote against
approval of the agreement, the International Equity Fund will vote 80% of its
interests in the International Equity Portfolio to approve the investment
advisory agreement and 20% of its interests against approval.
At the present time it is anticipated that there will be at least one other
holder of interests in each Portfolio in additional to each Fund. However,
because each Fund is expected initially to own substantially all of the
interests in the corresponding Portfolio, the votes cast by the Funds will
likely determine whether the investment advisory agreements are approved or not.
Factors Considered by the Trustees and their Recommendation
The Trustees of the Trust have unanimously recommended that shareholders of
each Fund authorize the Fund to approve separate investment advisory agreements
(the "Proposed Advisory Agreement") between the Adviser and the Portfolio Trust
on behalf of each Portfolio. In making this recommendation, the Trustees
considered the fact that but for certain minor differences the Proposed Advisory
Agreements are substantially identical to the corresponding current investment
advisory agreement between the Adviser and the Trust on behalf of each Fund (the
"Current Advisory Agreement"), including that there would be no change in the
advisory fee rates between each Proposed Advisory Agreement and the
corresponding Current Advisory Agreement. The Trustees also considered the fact
that there would be no change in the investment adviser, and that Standish
Mellon would manage the assets of each Portfolio in the same manner according to
the same investment objective, policies and strategies as it does managing the
assets of the corresponding Fund currently.
The Trustees noted that they were provided with substantial information
regarding Standish Mellon, each Fund and the Current Advisory Agreements when
they initially approved the Current Advisory Agreements at a meeting of the
Board of Trustees on May 23, 2001. The Trustees received updated comparative
information at the June 21, 2002 Board meeting covering each Fund's performance,
12
advisory fee, total expense ratio, asset size and net asset growth within its
respective peer group of mutual funds which the Trustees also considered.
Information about Standish Mellon.
Standish Mellon (or its predecessor entity Standish, Ayer & Wood, Inc. or
its affiliates) has served as the investment adviser to each Fund since each
Fund's inception. If the master-feeder conversion is approved, Standish Mellon
is expected to serve as investment adviser to each Portfolio pursuant to the
Proposed Advisory Agreement between the Adviser and the Portfolio Trust on
behalf of each Portfolio and to manage each Portfolio's investments and affairs
subject to the supervision of the Trustees of the Portfolio Trust. Standish
Mellon would then stop serving as investment adviser to each Fund.
The Adviser, a Delaware limited liability company, was formed in 2001 as a
result of the acquisition by Mellon Financial Corporation ("Mellon") of
Standish, Ayer & Wood, Inc. and is registered as an investment adviser under the
Investment Advisers Act of 1940. The principal executive offices of Standish
Mellon are located at One Financial Center, Boston, Massachusetts 02111.
Standish Mellon is a wholly owned subsidiary of Standish Mellon Asset Management
Holdings LLC ("SMAMH"), a Delaware limited liability company, also located at
One Financial Center, Boston, Massachusetts 02111. SMAMH serves as the holding
company for the ownership interests of Standish Mellon. SMAMH is a wholly owned
subsidiary of Mellon, a global financial services company incorporated under
Pennsylvania law in 1971 with approximately $2.8 trillion of assets under
management, administration or custody, including approximately $330 billion
under management. The principal executive offices of Mellon are located at One
Mellon Center, Pittsburgh, Pennsylvania 15258.
The names, business addresses and principal occupations of the current
members of the Board of Managers and principal executive officer of Standish
Mellon are set forth below. Except as set forth below, the business address of
the individuals named below is One Financial Center, Boston, Massachusetts 02111
and their positions at Standish Mellon constitute their principal occupation.
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 Mellon.
Name and Address Principal Occupation
---------------- --------------------
Edward H. Ladd Chairman, Managing Director and Manager,
Standish Mellon.
Stephen R. Burke Vice Chairman and Manager, Standish Mellon.
James M. Gockley Assistant General Counsel, Mellon
Mellon Financial Corporation
One Mellon Center, 19th Floor
Pittsburgh, PA 15258
John J. Nagorniak Chairman and Director, Franklin Portfolio Holdings
1600 Boston Providence Hwy.
Walpole, MA 02081
Ronald P. O'Hanley Vice Chairman, The Dreyfus Corporation, and Chairman
Mellon Financial Corporation and Director, The Boston Company Asset Management
Mellon Financial Center Company
One Boston Place
Boston, MA 02108
13
Thomas P. Sorbo Vice Chairman, Managing Director and Manager,
Standish Mellon.
Richard S. Wood Vice Chairman, President, Chief Investment Officer,
Managing Director and Manager, Standish Mellon.
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 Funds, the Adviser provides investment advisory services to
certain other funds within the Standish Mellon family of funds, including other
series of the Portfolio Trust.
Standish Fund Distributors, L.P. ("SFD") serves as the principal
distributor of the shares of each series of the Trust, including the Funds.
Standish Mellon serves as the general partner of SFD. The principal executive
offices of SFD are at One Financial Center, Boston, Massachusetts 02111
Terms of the Proposed Advisory Agreement
The terms of each Proposed Advisory Agreement are substantially the same as
the terms of the corresponding Current Advisory Agreement, except: (i) the dates
of execution and the initial term; and (ii) as described above administrative
services will be provided to each Portfolio by IBT under a separate
administrative services agreement. These administrative services are currently
performed by Standish Mellon with respect to each Fund under the Current
Advisory Agreements. The approval by shareholders of each Fund of this proposal
will not result in an increase in the rate at which the advisory fee will be
indirectly borne by each Fund after the proposed conversion to the master-feeder
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 A. Because the terms of
the Proposed Advisory Agreement for each Portfolio are identical, only one copy
is attached as Exhibit A.
Advisory Fees and Expense Limitations.
The rate at which the advisory fee is payable by each Portfolio under the
Proposed Advisory Agreements is the same as the rate at which the advisory fee
is payable by the corresponding Funds under the Current Advisory Agreement. The
advisory fee under the Current Advisory Agreement and under the Proposed
Advisory Agreement is payable by each of the Fund or the Portfolio, as the case
may be, at the following rates as a percentage of each Fund's or Portfolio's
average daily net assets:
Fund Advisory Fee Rate
---- -----------------
Standish International Equity Fund/ 0.80%
Portfolio
Standish International Small Cap Fund/ 1.00%
Portfolio
Standish Small Cap Value Fund/ 0.80%
Portfolio
14
Upon conversion of each Fund to the master-feeder structure, the Current
Advisory Agreement with each Fund will be terminated and the advisory function
will be performed by the Adviser at the Portfolio level pursuant to the Proposed
Advisory Agreements. Accordingly, although each Fund will no longer directly pay
any advisory fees to the Adviser, each Fund will indirectly bear its
proportionate share of the advisory fees paid by the each Portfolio to the
Adviser pursuant to the Proposed Advisory Agreements. Because the advisory fee
rates are not changing, shareholders of the Funds would indirectly pay advisory
fees at rates which are no higher than what the shareholders currently pay
directly.
Standish Mellon has agreed to limit the total annual expense ratios
(excluding brokerage commissions, taxes and extraordinary expenses) of the
International Equity Fund, International Small Cap Fund and Small Cap Value Fund
such that they will not exceed 1.00%, 1.25% and 1.00%, respectively, through
March 1, 2003. After that date, the Adviser has agreed to continue to limit the
total annual expense ratios (excluding brokerage commissions, taxes and
extraordinary expenses) of International Equity Fund, International Small Cap
Fund and Small Cap Value Fund such that they will not exceed 1.25%, 1.50% and
1.25%, respectively. While the Adviser has no current intention to discontinue
these expense caps after March 1, 2003, the caps are voluntary and may be
discontinued at any time by the Adviser after March 1, 2003. Standish Mellon has
also agreed to limit the master-feeder aggregate annual operating expenses of
each Fund and the corresponding Portfolio (excluding brokerage commissions,
taxes and extraordinary expenses) to the respective Fund's total uncapped annual
expense ratio in effect immediately prior to the Fund's conversion to the
master-feeder 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 each Fund (excluding any one-time charges
relating to the conversion or other extraordinary expenses and without taking
into account any expense cap) during the three months immediately prior to the
conversion and annualizing this amount.
For fiscal year ended September 30, 2001, the advisory fee paid by each
Fund to Standish Mellon and the amount of the fee waived by Standish Mellon
pursuant to the expense limitation agreement are as follows:
Net amount of advisory fee
paid (after giving effect to
Fund the amount fees waived) Amount of advisory fee waived
---- ----------------------- -----------------------------
Standish International Equity Fund $179,989 $152,193
Standish International Small Cap Fund $61,858 $166,911
Standish Small Cap Value Fund $92,254 $80,781
Advisory Services.
Pursuant to the Proposed Advisory Agreements and subject to the supervision
and approval of the Trustees of the Portfolio Trust, Standish Mellon is
responsible for providing continuously an investment program for each Portfolio,
consistent with the Portfolio's investment objective, policies and restrictions.
Specifically, Standish Mellon will be required to determine what investments
shall be purchased, held, sold or exchanged by each Portfolio and what portion,
if any, of the Portfolio's assets will be held uninvested and make changes in
the Portfolio's investments. Standish Mellon will also manage, supervise and
conduct the other affairs and business of each Portfolio and matters incidental
15
thereto, including supervision of the Portfolio Administrator except that
Standish Mellon will not perform such administrative services that would cause
the Portfolios to be engaged in a U.S. trade or business.
Expenses.
Under the Proposed Advisory Agreements, each 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 each Portfolio ("Majority
Investor Vote"), the Proposed Advisory Agreements 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 Agreements 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 in the event of its assignment as defined in the 1940 Act.
The Current Advisory Agreements were initially approved by the Board of
Trustees of the Trust on May 23, 2001 and were approved by shareholders of the
respective Funds at special meetings of shareholders held on July 30, 2001.
Shareholder approval of the Current Advisory Agreements was required in 2001
because of the acquisition by Mellon of Standish, Ayer & Wood, Inc., the
predecessor adviser to Standish Mellon, in 2001. The acquisition constituted an
"assignment" (as defined in the 1940 Act) of each Fund's prior advisory
agreement with Standish, Ayer & Wood, Inc. resulting in its termination.
Standard of Care.
The Proposed Advisory Agreements further provide 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 Portfolios and the
corresponding Funds, 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
Mellon under the Proposed Advisory Agreements with the Portfolios or the
administration agreement with the Funds. Among other expenses, the Portfolios
will pay investment advisory fees; bookkeeping, share pricing and custodian fees
and expenses; expenses of notices and
16
reports to interest holders; and expenses of the Portfolio Administrator. The
Funds 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 Funds and Portfolios 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 in an equitable manner, primarily on the basis of relative
net asset values.
Required Vote.
The Trustees of the Trust, including all of the Independent Trustees,
recommend that the shareholders of each Fund approve the Proposed Advisory
Agreements by voting in favor of this Proposal 2. Approval of the Portfolio
Trust's Proposed Advisory Agreements with the Adviser on behalf of each Fund
requires a Majority Investor Vote as defined above. In order for each Fund to be
able to convert to the master-feeder structure, shareholders must approve this
Proposal 2 in addition to Proposal 1 above (and Proposal 3(a) in the case of the
International Equity Fund).
FOR THE REASONS SET FORTH ABOVE, THE TRUSTEES OF THE TRUST
UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE IN FAVOR
OF THIS PROPOSAL 2.
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PROPOSALS 3(A) and (B)
TO AMEND CERTAIN FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Proposal 3(a): To amend certain fundamental investment restrictions to permit
the International Equity Fund to implement the proposed master-feeder
conversion.
Certain of the International Equity Fund's existing fundamental investment
restrictions, such as those limiting investments by the Fund in a single issuer,
presently prevent the Fund from using the master-feeder structure. To provide
the International Equity Fund with the flexibility to use the master-feeder
structure as described in Proposal 1 above, the Board of Trustees has approved,
subject to a shareholder vote, an amendment of the investment restrictions of
the International Equity Fund to permit the Fund to invest all of its investable
assets in a corresponding Portfolio having substantially the same investment
objective, restrictions and policies as the Fund. The proposed amendment to the
Fund's fundamental investment restrictions are subject to approval by the Fund's
shareholders
The current set of fundamental restrictions for the International Equity
Fund provides that the Fund may not:
1. 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.
17
2. Issue senior securities, borrow money or pledge or mortgage its assets,
except that the fund may 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, 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.
3. Make loans, except that the fund may purchase or hold a portion of an
issue of publicly distributed debt instruments, purchase negotiable certificates
of deposit and bankers' acceptances, and enter into repurchase agreements.
4. Invest more than 25% of the current value of its total assets in any
single industry (not including obligations of the U.S. Government or its
agencies and instrumentalities).
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.
If this Proposal 3(a) is approved, investment restriction number one for
the International Equity Fund as shown above would be amended to provide that:
"Notwithstanding the current investment restrictions, Standish
International Equity Fund may invest all of its assets in the securities of a
single open-end registered investment company with substantially the same
investment objective, restrictions and policies as the Fund".
This additional investment policy would also apply to any non-fundamental
investment policies or restrictions of the International Equity Fund, which
would otherwise preclude the Fund from being part of a master-feeder structure.
Proposal 3(b): To amend the International Equity Fund's fundamental investment
restriction to permit the lending of portfolio securities within the limits of
the 1940 Act.
The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on loans by the fund of
portfolio securities. The International Equity Fund's current investment policy
is more restrictive than required by the 1940 Act in that, among other things,
it does not permit the Fund to lend its portfolio securities. Most of the other
funds in the Trust are currently permitted to engage in securities lending.
Under the 1940 Act, an investment company may make loans, including of its
portfolio securities, in amounts up to 33 1/3% of its total assets. If this
Proposal 3(b) is approved by shareholders, the International Equity Fund's
investment restriction number 3 would be revised to provide as follows:
18
"The Fund may not make loans, except that the Fund (1) may lend portfolio
securities in accordance with the Fund's investment policies up to 33 1/3%
of the Fund's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue of debt
securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or
not the purchase is made upon the original issuance of the securities."
By engaging in securities lending, the International Equity Fund would seek
to generate additional income through the interest earned on the loans of
portfolio securities. Under present regulatory policies, loans of portfolio
securities may be made to financial institutions, such as broker-dealers, and
would be required to be secured continuously by collateral maintained on a
current basis at an amount at least equal to the market value of the securities
loaned. However, as with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. Standish Mellon seeks to minimize that risk by
restricting the counter parties to the loans to firms deemed by Standish Mellon
to be of good standing, and then engage in lending only when, in the judgment of
Standish Mellon, the consideration which can be earned from the securities loans
justifies the attendant risk.
Factors Considered by the Trustees and their Recommendation
As the approval of Proposal 3(a) is required for International Equity Fund
to convert to the master-feeder structure, the factors considered by the
Trustees in connection with the proposed master-feeder conversion discussed
under Proposal 1 above are also relevant for this Proposal 3(a).
In recommending that shareholders vote to permit the International Equity
Fund to engage in securities lending, the Trustees considered that they had
authorized all funds of the Trust and series of the Portfolio Trust which were
permitted by their fundamental investment restrictions to engage in securities
lending to the extent permitted by the 1940 Act at the February 2002 Board
meeting. At that meeting, the Trustees considered information regarding
securities lending, including information indicating that securities lending
could be an attractive strategy for earning incremental income for the funds and
the portfolios, information concerning IBT's qualifications to serve as
securities lending agent, and other relevant information. The Trustees noted
that the International Equity Fund was precluded from lending portfolio
securities as a result of one of its fundamental investment restrictions.
Because the Fund would already be soliciting proxies from shareholders on the
master-feeder conversion, the Trustees determined that it would be efficient and
cost effective to also ask shareholders to approve an amendment to the Fund's
fundamental investment restriction to permit securities lending by the Fund.
Required Vote.
The Trustees of the Trust, including all of the Independent Trustees,
recommend that the shareholders of International Equity Fund approve the
amendments to the Fund's fundamental investment restrictions set forth in
Proposals 3(a) and 3(b). Approval of each Proposal requires a Majority Investor
Vote as defined above. In order for the Fund to be able to convert to the
master-feeder structure, shareholders must approve this Proposal 3(a) in
addition to Proposals 1 and 2 above.
FOR THE REASONS SET FORTH ABOVE, THE TRUSTEES OF THE TRUST
UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF INTERNATIONAL EQUITY
FUND VOTE IN FAVOR OF PROPOSALS 3(A) AND 3(B).
19
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INFORMATION CONCERNING THE MEETING
- --------------------------------------------------------------------------------
Outstanding Shares and Quorum
See Exhibit C to this Proxy Statement for the number of shares of
beneficial interest of each Fund that are outstanding as of the record date.
Only shareholders of record as of the record date are entitled to notice of and
to vote at the Meeting. A majority of the outstanding shares of each Fund that
are entitled to vote will be considered a quorum for the transaction of business
by that Fund.
Ownership of Shares of the Funds
Each person that, to the knowledge of the Funds, owned of record or
beneficially 5% or more of the outstanding shares of any Fund as of July 29,
2002 is listed in Exhibit C to this Proxy Statement. No trustee or executive
officer of the Trust, individually or as a group, owns 1% or more of the
outstanding shares of any Fund as of the record date, except for those Funds and
in the amounts listed in Exhibit C to this Proxy Statement.
Shareholder Proposals
The Funds are not required to hold annual meetings of shareholders and do
not currently intend to hold an annual meeting of shareholders in 2002.
Shareholder proposals to be presented at the next meeting of shareholders of a
Fund, whenever held, must be received at the Funds' principal executive offices,
One Financial Center, Boston, Massachusetts 02111, a reasonable time prior to
the Trustees' solicitation of proxies for the meeting. The submission by a
shareholder of a proposal for inclusion in a proxy statement does not guarantee
that it will be included. Shareholder proposals are subject to certain
regulations under the federal securities laws.
Proxies, Quorum and Voting at the Meeting
Shareholders may use the enclosed Proxy Card if they are unable to attend
the Meeting in person or wish to have their shares voted by a proxy even if they
do attend the meeting. Any shareholder that 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 superseding 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 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 each
Proposal described above and will use their best judgment in connection with the
transaction to vote on such other business as may properly come before the
Meeting or any adjournment thereof.
With respect to each Fund, a majority of the shares entitled to vote,
present in person or represented by Proxy, constitutes a quorum for the
transaction of business with respect to each Proposal (unless otherwise noted in
this Proxy Statement). In the event that, at the time any session of the Meeting
for a Fund 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 with respect to that Fund to a later date. In the event that
a quorum is present but sufficient votes in favor of any of the proposals have
20
not been received, the persons named as proxies may propose one or more
adjournments of the Meeting with respect to that Fund to permit further
solicitation of Proxies with respect to such proposal. Any such adjournment will
require the affirmative vote of more than one half of the shares of the
applicable Fund present in person or by Proxy and voting on that particular
proposal 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 in this Proxy
Statement 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 each 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 67% or more of a Fund's shares present at
the Meeting, if more than 50% of the outstanding shares (excluding the "broker
non-votes") of that Fund are present or represented. However, for purposes of
determining whether a proposal has been adopted by more than 50% of the
outstanding shares of a 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.
The Meeting is scheduled as a joint meeting of the Funds' shareholders
because the shareholders of each Fund are expected to consider and vote on
similar matters. In the event that a shareholder of any Fund present at the
Meeting objects to the holding of a joint meeting and moves for an adjournment
of the Meeting of such Fund to a time immediately after the Meeting so that such
Fund's Meeting may be held separately, the persons named as proxies will vote in
favor of the adjournment. Shareholders of each Fund will vote separately on each
proposal relating to their Fund and, except as otherwise noted in this Proxy
Statement, an unfavorable vote on a proposal by the shareholders of one Fund
will not affect the implementation of such proposal approved by the shareholders
of another Fund.
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
are those matters stated in the attached Notice of a Special Meeting of
Shareholders. 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 and the
attached Notice of a Special Meeting of Shareholders and the accompanying Proxy
Card, as well as the costs associated with the proxy solicitation, will be borne
by Standish Mellon. In addition to soliciting proxies by mail, Standish Mellon
may have one or more of Standish Mellon's or the Funds' 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. Standish Mellon has retained Management Information Services Corp.
("MIS") to assist in the solicitation of
21
proxies. The estimated cost for MIS's proxy solicitation services is
approximately $4,000. Shareholders who have not voted their proxies in a timely
manner may receive a telephone call from an officer or employee of Standish
Mellon, the Funds or MIS in an effort to urge them to vote.
Persons holding shares as nominees will be reimbursed by Standish Mellon,
upon request, for the reasonable expenses of mailing soliciting materials to the
principals of the accounts.
August 19, 2002
22
- --------------------------------------------------------------------------------
EXHIBIT A
Form of Proposed Advisory Agreement
- --------------------------------------------------------------------------------
Standish International Equity Portfolio
Standish International Small Cap Portfolio
Standish Small Cap Value Portfolio
- --------------------------------------------------------------------------------
AGREEMENT made as of this __ day of ________, 2002, between Standish, Ayer
& Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Trust"), and Standish Mellon Asset Management Company
LLC, a Delaware limited liability company (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 portfolios, 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 [Name of Portfolio] (the "Portfolio"), 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
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.
2. Duties of the Adviser.
A-1
(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 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 Trust,
make changes in the investments of the Portfolio. 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
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 Trust, cause the Portfolio
to be engaged in a "trade or business within the United States," as such term is
defined in Section 864 of the Internal Revenue Code of 1986, or any successor
statute. 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 Portfolio 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
registration and financial statements for regulatory purposes and for
distribution to shareholders, bookkeeping and share/interest pricing expenses,
fees and disbursements of the Trust's custodian, administrator, transfer and
dividend disbursing agent or registrar, or interest and other like expenses
properly payable by the Trust.
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 [___]% [same as existing fee rate or fee rate schedule] of
the Portfolio'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/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 Fund's/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.
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 Portfolio 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
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 until October 31, 2002 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
A-2
the outstanding voting securities (as defined in the 1940 Act) of the Portfolio,
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 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.
6. Limitation of Liability.
The term "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 Trust dated January 18, 1996, 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, interestholders, 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 the
interestholders of the Portfolio and this Agreement has been signed by an
authorized officer of the Trust, acting as such, and neither such authorization
by such Trustees and interestholders 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.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
[--------------------------------------]
Attest:
By:
- ------------------------------------ ------------------------------------
Its:
-----------------------------------
STANDISH MELLON ASSET MANAGEMENT
COMPANY LLC
Attest:
By:
- ------------------------------------ ------------------------------------
Its:
-----------------------------------
A-3
- --------------------------------------------------------------------------------
EXHIBIT B
List of Trustees and Officers of the Trust and Portfolio Trust
- --------------------------------------------------------------------------------
The trustees and officers of the Portfolio Trust are identical to the
trustees and officers of the Trust. All officers of the Trust and the Portfolio
Trust are affiliates of Standish Mellon.
- --------------------------------------------------------------------------------------------------------------------
Name, Address and (Age) Term of Principal Occupation(s) Number of Other Directorships
Position with the Trust or Office and During Past 5 Years Portfolios Held by Trustees
Portfolio Trust Length of in Fund
Time Served* Complex
Overseen by
Trustee
- --------------------------------------------------------------------------------------------------------------------
Independent Trustees
- --------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (61) Since 1986 Chairman of the Board 23 Director, Port
Trustee and Chief Executive Officer, Financial Corp;
c/o Decision Resources, Decision Resources, Inc.; Cambridgeport Bank;
Inc. Trustee, Cornell University; and Charles Bridge
1100 Winter Street Director, CareGroup, Inc. Publishing
Waltham, MA 02451
Benjamin M. Friedman (57) Since 1989 William Joseph Maier, 23 Director, Private
Trustee Professor of Political Export Funding
c/o Harvard University Economy, Corp.;
Cambridge, MA 02138 Harvard University Britanica.com;
Harvard Magazine;
and Harvard Hillel
John H. Hewitt (67), Since 1986 Trustee, The Peabody 23
Trustee Foundation;
P.O. Box 233 Trustee, Mertens House,
New London, NH 03257 Inc.; Trustee and Chairman
of the Board, Visiting Nurse
Alliance of Vermont & New
Hampshire
Caleb Loring III (58) Since 1986 Trustee, Essex Street 23
Trustee Associates (family investment
c/o Essex Street trust office);
Associates Director, Holyoke Mutual
400 Essex Street Insurance Company;
Beverly, MA 01915 Director, Carter Family
Corporation;
Board Member, Gordon-Conwell
Theological Seminary; Chairman
of the Advisory Board,
Salvation
Army; Chairman, Vision New
England
B-1
- --------------------------------------------------------------------------------------------------------------------
Interested Trustees
- --------------------------------------------------------------------------------------------------------------------
**Richard S. Wood (47) Since 1989 President, Managing Director, 23
President and Trustee Manager, Vice Chairman and
c/o Standish Mellon Asset Chief Investment Officer of
Management Company LLC, Standish Mellon Asset
One Financial Center Management Company LLC since
Boston, MA 02111 July 2001; formerly President
and Managing Director,
Standish, Ayer & Wood, Inc.;
Executive Vice President and
Director, Standish
International
Management Company, LLC
- --------------------------------------------------------------------------------------------------------------------
Interested Principal Officers who are not Trustees
- --------------------------------------------------------------------------------------------------------------------
Beverly E. Banfield (45) Since 2002 Senior Vice President and
Vice President and Chief Compliance Officer
Secretary since July 2001, Standish
c/o Standish Mellon Asset Mellon Asset Management
Management Company LLC, Company LLC; formerly
One Financial Center Director and Compliance
Boston, MA 02111 Officer, Standish, Ayer &
Wood, Inc.
Steven M. Anderson (37) Since 2002 Assistant Vice President,
Vice President and Standish Mellon Asset
Treasurer Management Company LLC since
c/o Standish Mellon Asset July 2001; formerly Assistant
Management Company LLC, Vice President and Mutual
One Financial Center Funds Controller, Standish,
Boston, MA 02111 Ayer & Wood, Inc. since April
1, 1998; formerly Independent
Consultant for Banking and
Financial Services
Denise B. Kneeland (50) Since 1996 Vice President, Standish
Assistant Vice President Mellon Asset Management
c/o Standish Mellon Asset Company LLC since July 2001;
Management Company LLC, formerly Vice President and
One Financial Center Manager, Mutual Funds
Boston, MA 02111 Operations, Standish, Ayer &
Wood, Inc.
Lisa Kane (31) Since 2000 Assistant Vice President,
Assistant Vice President Standish Mellon Asset
c/o Standish Mellon Asset Management Company LLC since
Management Company LLC, July 2001; formerly Assistant
One Financial Center Vice President and Client
Boston, MA 02111 Service Professional,
Standish, Ayer & Wood, Inc.
Cara E. Hultgren (31) Since 2002 Assistant Vice President and
Assistant Vice President Supervisor, Mutual Fund
c/o Standish Mellon Asset Operations, Standish Mellon
Management Company LLC, Asset Management Company LLC
One Financial Center since July 2001; formerly
Boston, MA 02111 Supervisor, Mutual Fund
Operations, Standish, Ayer &
Wood, Inc.
B-2
Jonathan M. Windham (27) Since 2002 Performance Analyst, Standish
Assistant Vice President Mellon Asset Management
c/o Standish Mellon Asset Company LLC since July 2001;
Management Company LLC, formerly Performance Analyst,
One Financial Center Standish, Ayer & Wood, Inc.
Boston, MA 02111 since 2000; formerly Fund
Pricing Specialist/Analyst,
PFPC, Inc. since 1997; prior
to 1997, student
Scott B. Simonds (41) Since 2002 Compliance Analyst since
Assistant Vice President September 2002; formerly
c/o Standish Mellon Asset Accountant, The Boston
Management Company LLC, Company since October 1998;
One Financial Center prior to 1998,
Boston, MA 02111 Compliance Analyst, Boston
Partners.
* Each Trustee serves for an indefinite term, until his successor is elected.
** Mr. Wood is an "interested Trustee," as defined in the 1940 Act due to his
position as President of Standish Mellon.
B-3
- --------------------------------------------------------------------------------
EXHIBIT C
Record Date Ownership Information
- --------------------------------------------------------------------------------
As of the record date of July 29, 2002, there were 3,662,126.517 shares of
the International Fund outstanding, 2,811,357.882 shares of the International
Small Cap Fund outstanding and 2,282,909.634 shares of the Small Cap Value Fund
outstanding.
As of July 29, 2002, no person owned beneficially or of record 5% of more
of the then outstanding shares of any of the Funds except:
International Equity Fund
Name and Address Percentage of Outstanding Shares
- ---------------- --------------------------------
Pearlreef & Co. 22.54%
Town of Wellesley
Town Hall
P.O. Box 534005
Wellesley. MA 02482
Mac & Co. Omnibus Account 12.72%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
Factory Mutual Insurance Company 8.49%
225 Wyman Street
P.O. Box 9198
Waltham, MA 02254-9198
Mac & Co. Omnibus Reinvestment Account 7.56%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
International Small Cap Fund
Name and Address Percentage of Outstanding Shares
- ---------------- --------------------------------
Mac & Co. Omnibus Account 12.38%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
Charles Schwab & Co., Inc. - Special Custody 10.32%
Account for Exclusive Benefit of Customers
9601 E. Panorama Circle
Mailstop: Den2-02-052
Englewood, CO 80112
Mac & Co. Omnibus Cash Account 9.63%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
Factory Mutual Insurance Company 9.52%
225 Wyman Street
P.O. Box 9198
Waltham, MA 02254-9198
C-1
Fleet National Bank, FBO Trust 5.51%
P.O. Box 92800
Rochester, NY14692
Small Cap Value Fund
Name and Address Percentage of Outstanding Shares
- ---------------- --------------------------------
Mac & Co. Omnibus Account 15.74%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
Mac & Co. Omnibus Reinvestment Account 12.39%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
Fleet National Bank, FBO Trust 7.95%
P.O. Box 92800
Rochester, NY14692
Mac & Co. A/c #108447A8240 5.55%
Mellon Private Asset Management
P.O. Box 534005
Pittsburgh, PA 15253-4005
- -------------------------
As of July 29, 2002, the Trustees and officers owned in the aggregate 0.55%,
2.50% and 2.65% of the outstanding shares of beneficial interest of
International Equity Fund, International Small Cap Fund and Small Cap Value
Fund.
C-2
STANDISH, AYER & WOOD INVESTMENT TRUST
\/ Please fold and detach card at perforation before mailing. \/
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
FUND NAME PRINTS HERE To be held October 10, 2002
This proxy is solicited on behalf of the Board of Trustees of the Standish,
Ayer & Wood Investment Trust. The undersigned, revoking all prior proxies,
hereby appoints Beverly E. Banfield, Denise B. Kneeland and Steven M. Anderson,
or any of them individually, as proxies, with full powers of substitution, to
vote for the undersigned at the Special Meeting of Shareholders of the above
named series of Standish, Ayer & Wood Investment Trust (each, a "Fund"), to be
held on October 10, 2002 at 2:00 p.m. (Eastern time) at the offices of Hale
and Dorr LLP, 60 State Street, 26th Floor, Boston, Massachusetts, or at any
adjournment thereof, notice of which meeting and the Proxy Statement
accompanying the same have been received by the undersigned, upon the matters
set forth on the other side of this proxy card as described in the Notice of
Special Meeting and accompanying Proxy Statement.
The proxies will vote this proxy as directed by the undersigned or, if no
direction is indicated, the proxies will vote this proxy "FOR" all of the
proposals unless authority to do so is specifically withheld. This proxy also
grants discretionary authority to the proxies to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
[Down arrow] Date ___________, 2002
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD, IN THE ENCLOSED ENVELOPE,
WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING.
----------------------------------------
| |
| |
| |
----------------------------------------
Signature(s) and Title(s),
Please sign exactly as your name appear
hereon. If stock is held in the name of
joint owners, each must sign.
Attorneys-in-fact, executors,
administrators, etc., should so
indicate. If shareholder is a
corporation or partnership, please sign
in full corporate or partnership name by
authorized person.
\/ Please fold and detach card at perforation before mailing. \/
[Down arrow] Please fill in box(es) as shown using black or [X] [Down arrow]
blue ink or number 2 pencil. PLEASE DO NOT USE
FINE POINT PENS.
THE BOARD OF TRUSTEES OF THE STANDISH, AYER & WOOD INVESTMENT TRUST UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS SET FORTH BELOW. APPROVAL OF THE
PROPOSALS WILL NOT RESULT IN AN INCREASE IN THE ADVISORY FEE RATE PAYABLE
DIRECTLY OR INDIRECTLY BY ANY FUND. Unless otherwise specified in the squares
provided, the undersigned's vote will be cast FOR each numbered item below.
If you own shares of International Equity Fund, International Small Cap Fund or
Small Cap Value Fund, please vote on Proposal 1:
1. To approve and implement a new investment policy FOR AGAINST ABSTAIN
allowing each Fund to convert to the master-feeder [_] [_] [_]
structure whereby each Fund would invest all of its
investable assets in the corresponding master portfolio
(each, a "Portfolio"). Each Portfolio has substantially
the same investment objective, policies and
restrictions as the corresponding Fund.
If you own shares of International Equity Fund, International Small Cap Fund or
Small Cap Value Fund, please vote on Proposal 2:
2. To authorize each Fund to vote as a holder of an FOR AGAINST ABSTAIN
interest in the corresponding Portfolio to approve an [_] [_] [_]
investment advisory agreement between the corresponding
Portfolio and Standish Mellon Asset Management Company
LLC, each Fund's investment adviser
If you own shares of International Equity Fund, please vote on Proposals 3(a)
and (b).
3(a). To amend certain fundamental investment FOR AGAINST ABSTAIN
restrictions of Standish International Equity Fund to [_] [_] [_]
permit the Fund to implement the proposed new
master-feeder conversion described in Proposal 1 above.
3(b). To amend certain fundamental investment FOR AGAINST ABSTAIN
restrictions of Standish International Equity Fund to [_] [_] [_]
engage in securities lending to the extent permitted
under the Investment Company Act of 1940
4. To consider any other business that may properly
come before the meeting.
IMPORTANT NOTICE
Although we urge you to read the complete Proxy Statement, for your convenience,
we have provided a brief overview of the proposals to be voted on.
QUESTIONS & ANSWERS
Q. What has happened to require a shareholder vote?
A. At meetings held in June, the Board of Trustees of your Funds
unanimously approved a new investment policy to authorize the
International Equity Fund, International Small Cap Fund and Small Cap
Value Fund to convert to the master-feeder structure by investing all
of their investable assets in a specific corresponding series of an
open-end management investment company (each, a "Portfolio"). Each
Portfolio would have the same investment objective, policies and
restrictions as the corresponding Fund. A shareholder vote is required
to approve this new investment policy and, in the case of the
International Equity Fund, to amend certain fundamental investment
restrictions to permit the implementation of the policy and to permit
the International Equity Fund to engage in securities lending.
Please refer to the Proxy Statement for a detailed explanation of each
proposal.
Q. Why am I being asked to approve new investment advisory agreements for the
Portfolios?
A. In the master-feeder structure, each Fund would seek to achieve its
investment objective through its investment in the corresponding
Portfolio, rather than through direct investments in securities.
Because the Portfolios will invest their assets directly in
securities, all of the investment advisory services will be moved from
the Fund level to the Portfolio level. Therefore, while the Funds will
no longer need advisory agreements, the Portfolios will. The
provisions of the agreements will remain substantially the same,
except for the dates of execution, the initial term and that certain
administrative services will be provided to each Portfolio under a
separate administration agreement. There will be no change in the
advisory fee rate payable directly or indirectly by the Funds if this
proposal is approved.
Q: How Do The Trustees of My Fund Suggest That I Vote?
A: After careful consideration, the Trustees, including the independent
Trustees who comprise a majority of each fund's Board of Trustees,
unanimously recommend that you vote "FOR" each proposal. In making
this recommendation, the Trustees considered a number of factors,
including the possibility that the new structure could attract
additional assets to the Portfolios which may be advantageous to
shareholders of the Funds in several ways. The Trustees also
considered the fact
that Standish Mellon would continue to be providing the same level of
services to the Portfolios as it currently does for the Funds at the
same advisory fee rates.
Please refer to the proxy statement for a more detailed description of
the factors considered by the Trustees.
Q: Will My Vote Make a Difference?
A: Your vote is needed to ensure that the proposal can be acted upon.
Additionally, your immediate response on the enclosed proxy card(s)
will help save the costs of any further solicitations for a
shareholder vote. We encourage all shareholders to participate in the
governance of their fund(s). The funds have retained Management
Information Services Corp. ("MIS") to assist in the solicitation of
proxies. Shareholders who have not voted their proxies in a timely
manner may receive a telephone call from Standish or MIS in an effort
to urge them to vote.
Q: Whom Do I Call If I Have Questions?
A: We will be happy to answer your questions about the proxy
solicitation. Please call us at 1-800-221-4795 between 9:00 a.m. and
5:00 p.m. Eastern Time, Monday through Friday.
Q: Where Do I Mail My Proxy Card(s)?
A: You may use the enclosed postage-paid envelope.