STANDISH AVER & WOOD MASTER PORTFOLIOS/ FA, N-1A, 1996-04-25

STANDISH AVER & WOOD MASTER PORTFOLIOS/ FA
N-1A, 1996-04-25

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 1996
File No. 811-

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO.

STANDISH, AYER & WOOD MASTER PORTFOLIO
(Exact Name of Registrant as Specified in Charter)

P.O. Box 501
George Town, Grand Cayman
Cayman Island, B.W.I.
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (809) 949-2001

Richard S. Wood
Standish, Ayer & Wood, Inc.
One Financial Center
Boston, Massachusetts 02109
(Name and Address of Agent for Service)

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EXPLANATORY NOTE

This Registration Statement on Form N-1A (the "Registration Statement")
has been filed by the Registrant pursuant to Section 8(b) of the Investment
Company Act of 1940, as amended. However, beneficial interests in the series of
the Registrant are not being registered under the Securities Act of 1933, as
amended (the "1933 Act"), because such interests will be issued solely in
transactions that are exempt from registration under the 1933 Act. Investments
in the Registrant's series may only be made by investment companies, insurance
company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. The Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in any series of the Registrant.

SAW0029B

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH FIXED INCOME PORTFOLIO

PART A

THIS PART A DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH FIXED INCOME PORTFOLIO.

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.

Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") is a
no-load, open-end management investment company which was organized as a master
trust fund under the laws of the State of New York on January 18, 1996.
Beneficial interests in the Portfolio Trust are divided into separate sub-trust
or series, each having distinct investment objectives and policies, one of
which, Standish Fixed Income Portfolio, (the "Portfolio") is described herein.
Beneficial interests in each Portfolio are issued solely in transactions that
are exempt from registration under the Securities Act of 1933 (the "1933 Act").
Investments in the Portfolio Trust may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.

The Portfolio's investment objective is primarily to achieve a high
level of current income, consistent with conserving principal and liquidity, and
secondarily to seek capital appreciation when changes in interest rates or other
economic conditions indicate that capital appreciation may be available without
significant risk to principal. Such capital appreciation may result from an
improvement in the credit standing of an issuer whose securities are held by the
Portfolio or from a decline in interest rates or from a combination of both
factors. The Portfolio will seek to achieve its investment objective primarily
through investing in a diversified portfolio of fixed-income securities,
generally of investment grade, with an average dollar-weighted maturity of five
to thirteen years. Because of the uncertainty inherent in all investments, no
assurance can be given that the Portfolio will achieve its investment objective.

The investment objective of the Portfolio is not a fundamental policy
and may be changed upon notice to but without the approval of the Portfolio's
investors. Investment policies which are not fundamental policies may be changed
by the Trustees of the Portfolio Trust without the approval of the Portfolio's
investors. The Portfolio's investment policies are described further in Part B.

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A-2

INVESTMENT POLICIES
The Portfolio may invest in a broad range of fixed-income securities,
including bonds, notes, mortgage-backed and asset-backed securities, preferred
stock and convertible debt securities. The Portfolio may purchase securities
that pay interest on a fixed, variable, floating (including inverse floating),
contingent, in-kind or deferred basis. Under normal market conditions, at least
65% of the Portfolio's total assets will be invested in such securities. Because
the Portfolio is seeking a high level of current income, the possibility that it
will exercise the conversion options of any high yield convertible debt
securities it acquires is remote. Investors should be aware that investing in
mortgage-backed securities involves risks of fluctuation in yields and market
prices and of early prepayments on the underlying mortgages.

The Portfolio will normally invest in U.S. dollar denominated
securities, but may invest up to 20% of its total assets in securities
denominated in foreign currencies; provided, however, that at any particular
time, no more than 10% of the Portfolio's total assets will be invested in
foreign securities which are not subject to currency hedging transactions back
into U.S. dollars. See "Risk Factors" for a description of the risks associated
with investments in foreign securities.

The Portfolio may invest up to 10% of its total assets in tax-exempt
securities, such as state and municipal bonds, if Standish, Ayer & Wood, Inc.,
the Portfolio's investment adviser ("Standish" or the "Adviser"), believes they
will provide competitive returns. The Portfolio may adopt a temporary defensive
position during adverse market conditions by investing without limit in high
quality money market instruments, including short-term U.S. Government
securities, negotiable certificates of deposit, non-negotiable fixed time
deposits, bankers' acceptances, floating-rate notes and repurchase agreements.

The Portfolio will not have more than 25% of the current value of its
total assets invested in any single industry, provided that this restriction
shall not apply to U.S. Government securities, including mortgage pass-through
securities (GNMAs). Rather, the Portfolio will invest in a broad range of bond
market sectors, especially those deemed by the Adviser to be undervalued and
consequently underpriced and offering higher yields relative to the market as a
whole. Such sectors include mortgage pass-throughs, electric, telephone and gas
utilities, industrials, bank holding companies, Eurodollar bonds and original
issue discount bonds (i.e., bonds which are offered by an issuer at a discount
from their stated par value and which, because of uncertainty about their
quality, are potentially more volatile). In order to achieve its investment
objective, the Portfolio will seek to add value by selecting undervalued
investments, thus taking advantage of lower prices and higher yields, rather
than by varying the maturities of its portfolio investments to reflect interest
rate forecasts. Investments in bonds with maturities of five to fifteen years
will be emphasized, and it is expected that the average dollar-weighted maturity
of the Portfolio's portfolio will vary from five to thirteen years.

Fixed Income - Part A

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A-3

RATINGS
The Portfolio will generally invest in investment grade fixed-income
securities, i.e., securities which, at the date of investment, are rated within
the four highest grades as determined by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A or Baa) or by Standard & Poor's Ratings Group ("Standard
& Poor's") (AAA, AA, A or BBB) or their respective equivalent ratings or, if not
rated, judged by the Adviser to be of equivalent credit quality to securities so
rated. Securities rated Baa by Moody's or BBB by Standard & Poor's and unrated
securities of equivalent credit quality are considered medium grade obligations
with speculative characteristics. Adverse changes in economic conditions or
other circumstances are more likely to weaken the issuer's capacity to pay
interest and repay principal on these securities than is the case for issuers of
higher rated securities.

The Portfolio may invest up to 15% of its net assets in securities
rated either Ba by Moody's or BB by Standard & Poor's or, if not rated, are
judged by the Adviser to be of equivalent credit quality to securities so rated
("BB Rated Securities"). Securities rated Ba by Moody's or BB by Standard &
Poor's, are classified in the highest category of non-investment grade
securities. Such securities may be considered to be high-yield securities ("junk
bonds"), carry a high degree of risk and are considered speculative by the major
credit rating agencies. The Portfolio intends to avoid what it perceives to be
the most speculative areas of the BB Rated Securities universe. See "Risk
Factors" for a description of the risks associated with investments in BB Rated
Securities.

It is anticipated that the average dollar-weighted rated credit quality
of the securities in the Portfolio's portfolio will be Aa or AA according to
Moody's and Standard & Poor's ratings, respectively, or of comparable credit
quality as determined by the Adviser. In the case of a security that is rated
differently by the two rating services, the higher rating is used in computing
the Portfolio's average dollar-weighted credit quality and in connection with
the Portfolio's policy regarding BB Rated Securities. In the event that the
rating on a security held in the Portfolio's portfolio is downgraded by a rating
service, such action will be considered by the Adviser in its evaluation of the
overall investment merits of that security, but will not necessarily result in
the sale of the security. In determining whether securities are of equivalent
credit quality, the Adviser may take into account, but will not rely entirely
on, ratings assigned by foreign rating agencies. In the case of unrated
sovereign, subnational and sovereign related debt of foreign countries, the
Adviser may take into account, but will not rely entirely on, the ratings
assigned to the issuers of such securities. Excerpts from the descriptions of
ratings of corporate debt securities and sovereign, subnational and sovereign
related debt of foreign countries are set forth under "Additional Information."

MORTGAGE-BACKED PASS-THROUGH SECURITIES
Mortgage-backed "pass-through securities" are subject to regular
payments of principal and early prepayments of principal, which will affect the
Portfolio's investment returns. It is not possible to predict accurately the
life of a particular issue of mortgage-backed "pass-through securities" held by
the Portfolio. The actual life of any mortgage-backed "pass-through security"

Fixed Income - Part A

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A-4

is likely to be substantially shorter than the original average maturity of the
mortgage pool underlying the security because unscheduled early prepayments of
principal on the security owned by the Portfolio will result from the
prepayment, refinancing or foreclosure of the underlying mortgage loans in the
mortgage pool. For example, mortgagors may increase the rate at which they
prepay their mortgages when interest rates decline sufficiently to encourage
refinancing. The Portfolio, when the monthly payments (which may include
unscheduled prepayments) on a security are passed-through to it, may be able to
reinvest them only at a lower rate of interest. Because of the regular scheduled
payments of principal and the early unscheduled prepayments of principal, the
mortgage-backed "pass-through security" is less effective than other types of
obligations as a means of locking in attractive long-term interest rates. As a
result, this type of security may have less potential for capital appreciation
during periods of declining interest rates than other U.S. Government securities
of comparable maturities, although many issues of mortgage-backed "pass-through
securities" may have a comparable risk of decline in market value during periods
of rising interest rates. Although a security purchased at a premium above its
par value may carry a higher stated rate of return, both a scheduled payment of
principal, which will be made at par, and an unscheduled prepayment of principal
generally will decrease investment returns and will accelerate the recognition
of income.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
The issuer of a CMO effectively transforms a mortgage pool into
obligations comprised of several different maturities, thus creating mortgage
securities that appeal to short-term and intermediate-term investors as well as
the more traditional long-term mortgage investor. CMOs are debt securities
issued by Federal Home Loan Mortgage Corporation, Federal National Mortgage
Corporation and by non-governmental financial institutions and other mortgage
lenders and are generally fully collateralized by a pool of mortgages held under
an indenture. CMOs are issued in a number of classes or series which have
different maturities and are generally retired in sequence. CMOs are designed to
be retired as the underlying mortgage loans in the mortgage pool are repaid. In
the event of sufficient early prepayments on such mortgages, the class or series
of CMO first to mature generally will be retired prior to its maturity. Thus the
early retirement of a particular class or series of a CMO held by the Portfolio
would affect the Portfolio's investment returns in the manner indicated above.

In making investments in CMOs, the Adviser will take into account the
following considerations: the total return on CMOs will vary with interest
rates, which cannot be predicted; the maturity of the CMOs is variable and is
not known at the time of purchase; prepayments on the CMOs will depend upon
prevailing interest rates and the CMOs may have a shorter life than expected;
and, because CMOs are relatively new securities and have not been in existence
through all market cycles, the risks of investing in CMOs are not fully known.

Fixed Income - Part A

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A-5

securities, or to enhance potential gain. Such strategies are generally accepted
as part of modern portfolio management and are regularly utilized by many mutual
funds and other institutional investors. Techniques and instruments used by the
Portfolio may change over time as new instruments and strategies are developed
or regulatory changes occur.

In the course of pursuing its investment objective, the Portfolio may
purchase and sell (write) exchange-listed and over-the-counter put and call
options on securities, equity and fixed-income indices and other financial
instruments; purchase and sell financial futures contracts and options thereon;
enter into various interest rate transactions such as swaps, caps, floors or
collars; and enter into various currency transactions such as currency forward
contracts, currency futures contracts, currency swaps or options on currencies
or currency futures (collectively, all the above are called "Strategic
Transactions"). Strategic Transactions may be used in an attempt to protect
against possible changes in the market value of securities held in or to be
purchased for the Portfolio's portfolio resulting from securities markets or
currency exchange rate fluctuations, to protect the Portfolio's unrealized gains
in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or duration
of the Portfolio's portfolio, or to establish a position in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities. In addition to the hedging transactions referred to in the preceding
sentence, Strategic Transactions may also be used to enhance potential gain in
circumstances where hedging is not involved although the Portfolio will attempt
to limit its net loss exposure resulting from Strategic Transactions entered
into for such purposes to not more than 3% of the Portfolio's net assets at any
one time and, to the extent necessary, the Portfolio will close out transactions
in order to comply with this limitation. (Transactions such as writing covered
call options are considered to involve hedging for the purposes of this
limitation.) In calculating the Portfolio's net loss exposure from such
Strategic Transactions, an unrealized gain from a particular Strategic
Transaction position would be netted against an unrealized loss from a related
Strategic Transaction position. For example, if the Adviser anticipates that the
Belgian franc will appreciate relative to the French franc, the Portfolio may
take a long forward currency position in the Belgian franc and a short foreign
currency position in the French franc. Under such circumstances, any unrealized
loss in the Belgian franc position would be netted against any unrealized gain
in the French franc position (and vice versa) for purposes of calculating the
Portfolio's net loss exposure. The ability of the Portfolio to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Portfolio will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Portfolio's activities involving
Strategic Transactions may be limited to enable certain of its investors to
comply with the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), for qualification as a regulated investment
company.

Strategic Transactions have risks associated with them including
possible default by the other party to the transaction, illiquidity and, to the
extent the

Fixed Income - Part A

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A-6

Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. The writing of put and call options may result in losses to
the Portfolio, force the purchase or sale, respectively, of portfolio securities
at inopportune times or for prices higher than (in the case of purchases due to
the exercise of put options) or lower than (in the case of sales due to the
exercise of call options) current market values, limit the amount of
appreciation the Portfolio can realize on its investments or cause the Portfolio
to hold a security it might otherwise sell. The use of currency transactions can
result in the Portfolio incurring losses as a result of a number of factors
including the imposition of exchange controls, suspension of settlements, or the
inability to deliver or receive a specified currency. The use of options and
futures transactions entails certain other risks. In particular, the variable
degree of correlation between price movements of futures contracts and price
movements in the related portfolio position of the Portfolio creates the
possibility that losses on the hedging instrument may be greater than gains in
the value of the Portfolio's position. The writing of options could
significantly increase the Portfolio's portfolio turnover rate and, therefore,
associated brokerage commissions or spreads. In addition, futures and options
markets may not be liquid in all circumstances and certain over-the-counter
options may have no markets. As a result, in certain markets, the Portfolio
might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time, in certain circumstances, these
transactions tend to limit any potential gain which might result from an
increase in value of such position. The loss incurred by the Portfolio in
writing options on futures and entering into futures transactions is potentially
unlimited; however, as described above, the Portfolio will attempt to limit its
net loss exposure resulting from Strategic Transactions entered into for
non-hedging purposes to not more than 3% of its net assets at any one time.
Futures markets are highly volatile and the use of futures may increase the
volatility of the Portfolio's net asset value. Finally, entering into futures
contracts would create a greater ongoing potential financial risk than would
purchases of options where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value and the net result may be less favorable than if the Strategic
Transactions had not been utilized. Further information concerning the
Portfolio's Strategic Transactions is set forth in Part B.

WHEN-ISSUED SECURITIES AND "DELAYED DELIVERY" SECURITIES
The Portfolio may commit up to 15% of its net assets to purchase
securities on a "when-issued" or "delayed delivery" basis. Although the
Portfolio would generally purchase securities on a when-issued or delayed
delivery basis with the intention of actually acquiring the securities, the
Portfolio may dispose of a when-issued or delayed delivery security prior to
settlement if the Adviser deems it appropriate to do so. The payment obligation
and the interest rate on these securities will be fixed at the time the
Portfolio enters into the commitment, but no income will accrue to the Portfolio
until they are delivered and paid for. Unless the Portfolio has entered into an
offsetting agreement to sell the

Fixed Income - Part A

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A-7

securities, cash or liquid, high grade debt securities equal to the amount of
the Portfolio's commitment will be segregated and maintained with the custodian
for the Portfolio to secure the Portfolio's obligation and to ensure that it is
not leveraged. The market value of the securities when they are delivered may be
less than the amount paid by the Portfolio.

REPURCHASE AGREEMENTS
The Portfolio may invest up to 5% of its net assets in repurchase
agreements under normal circumstances. Repurchase agreements acquired by the
Portfolio will always be fully collateralized as to principal and interest by
money market instruments or a letter of credit and will be entered into only
with commercial banks, brokers and dealers considered creditworthy by the
Adviser. If the other party or "seller" of a repurchase agreement defaults, the
Portfolio might suffer a loss to the extent that the proceeds from the sale of
the underlying securities and other collateral held by the Portfolio in
connection with the related repurchase agreement are less than the repurchase
price. In addition, in the event of bankruptcy of the seller or failure of the
seller to repurchase the securities as agreed, the Portfolio could suffer
losses, including loss of interest on or principal of the security and costs
associated with delay and enforcement of the repurchase agreement.

SHORT-SELLING
The Portfolio may make short sales, which are transactions in which the
Portfolio sells a security it does not own in anticipation of a decline in the
market value of that security. To complete such a transaction, the Portfolio
must borrow the security to make delivery to the buyer. The Portfolio then is
obligated to replace the security borrowed by purchasing it at the market price
at the time of replacement. The price at such time may be more or less than the
price at which the security was sold by the Portfolio. Until the security is
replaced, the Portfolio is required to pay to the lender amounts equal to any
dividends or interest which accrue during the period of the loan. To borrow the
security, the Portfolio also may be required to pay a premium, which would
increase the cost of the security sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed out.

Until the Portfolio replaces a borrowed security in connection with a
short sale, the Portfolio will: (a) maintain daily a segregated account not with
the broker, containing cash or U.S. Government securities, at such a level that
the amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short; or (b)
otherwise cover its short position.

The Portfolio will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Portfolio replaces the borrowed security. The Portfolio will
realize a gain if the security declines in price between those dates by an
amount greater than premium and transaction costs. This result is the opposite
of what one would expect from a cash purchase of a long position in a security.
The amount of any gain will be decreased, and the amount of any loss increased,
by the

Fixed Income - Part A

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A-8

amount of any premium or amounts in lieu of dividends or interest the Portfolio
may be required to pay in connection with a short sale.

The Portfolio's loss on a short sale as a result of an increase in the
price of a security sold short is potentially unlimited. The Portfolio may
purchase call options to provide a hedge against an increase in the price of a
security sold short by the Portfolio. When the Portfolio purchases a call option
it must pay a premium to the person writing the option and a commission to the
broker selling the option. If the option is exercised by the Portfolio, the
premium and the commission paid may be more than the amount of the brokerage
commission charged if the security were to be purchased directly. See "Strategic
Transactions" above.

The Portfolio anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any specified
portion of its assets, as a matter of practice, will be in short sales. However,
no securities will be sold short if, after effect is given to any such short
sale, the total market value of all securities sold short would exceed 5% of the
value of the Portfolio's net assets.

In addition to the short sales discussed above, the Portfolio may make
short sales "against the box," a transaction in which the Portfolio enters into
a short sale of a security which the Portfolio owns. The proceeds of the short
sale are held by a broker until the settlement date at which time the Portfolio
delivers the security to close the short position. The Portfolio receives the
net proceeds from the short sale.

FORWARD ROLL TRANSACTIONS
In an attempt to enhance current income, the Portfolio may enter into
forward roll transactions with respect to mortgage-backed securities to the
extent of 10% of its net assets. In a forward roll transaction, the Portfolio
sells a mortgage-backed security to a financial institution, such as a bank or
broker-dealer, and simultaneously agrees to repurchase a similar security from
the institution at a later date at an agreed-upon price. The mortgage-backed
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories than those sold. During the period between the
sale and repurchase, the Portfolio will not be entitled to receive interest and
principal payments on the securities sold. Proceeds of the sale will be invested
in short-term instruments, such as repurchase agreements or other short-term
securities, and the income from these investments, together with any additional
fee income received on the sale and the amount gained by repurchasing the
securities in the future at a lower purchase price, will generate income and
gain for the Portfolio which is intended to exceed the yield on the securities
sold. Forward roll transactions involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of those
securities. At the time the Portfolio enters into a forward roll transaction, it
will place in a segregated custodial account cash or liquid, high quality debt
obligations having a value equal to the repurchase price (including accrued
interest) and will subsequently monitor the account to insure that the
equivalent

Fixed Income - Part A

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A-9

value is maintained. The use of forward roll transactions involves leverage,
which allows any investment gains made with additional monies received (in
excess of the cost of the roll transaction) to increase the net asset value of
the Portfolio's interests faster than would otherwise be the case. On the other
had, if the additional monies received are invested in ways that do not fully
recover the costs of such transactions to the Portfolio, the net asset value of
the Portfolio would fall faster than would otherwise be the case.

ILLIQUID AND RESTRICTED SECURITIES
The Portfolio may not invest more than 15% of its net assets in
illiquid investments and securities that are subject to restrictions on resale
(i.e., private placements) under the Securities Act of 1933 (the "1993 Act"),
including securities eligible for resale in reliance on Rule 144A under the 1933
Act ("restricted securities"). Illiquid investments include securities that are
not readily marketable, repurchase agreements maturing in more than seven days,
time deposits with a notice or demand period of more than seven days, certain
over-the-counter options, and restricted securities, unless it is determined,
based upon continuing review of the trading markets for the specific restricted
security, that such restricted security is eligible for resale under Rule 144A
and is liquid. The Board of Trustees of the Portfolio Trust has adopted
guidelines and delegated to the Adviser the daily function of determining and
monitoring the liquidity of restricted securities. The Board of Trustees,
however, retains oversight focusing on factors such as valuation, liquidity and
availability of information and is ultimately responsible for such
determinations. Investing in restricted securities eligible for resale pursuant
to Rule 144A could have the effect of increasing the level of illiquidity in the
Portfolio to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities. The purchase price and
subsequent valuation of restricted and illiquid securities normally reflect a
discount, which may be significant, from the market price of comparable
securities for which a liquid market exists.

PORTFOLIO TURNOVER
Portfolio turnover is not expected to exceed 200% on an annual basis. A
rate of turnover of 100% would occur if the value of the lesser of purchases and
sales of portfolio securities for a particular year equaled the average monthly
value of portfolio securities owned during the year (excluding short-term
securities). A high rate of portfolio turnover (100% or more) involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by the Portfolio and thus indirectly by its investors.

INVESTMENT RESTRICTIONS
The Portfolio has adopted certain fundamental policies which may not be
changed without the approval of the Portfolio's investors.

Fixed Income - Part A

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A-10

or mortgage its assets, except that the Portfolio may (a) borrow money from
banks as a temporary measure for extraordinary or emergency purposes (but not
for investment purposes) in an amount up to 15% of the current value of its
total assets, (b) enter into forward roll transactions, and (c) pledge its
assets to an extent not greater than 15% of the current value of its total
assets to secure such borrowings; however, the Portfolio may not make any
additional investments while its outstanding bank borrowings exceed 5% of the
current value of its total assets; or (iii) lend portfolio securities.

If any percentage restriction described above is adhered to at the time
of investment, a subsequent increase or decrease in the percentage resulting
from a change in the value of the Portfolio's assets will not constitute a
violation of the restriction. Certain non-fundamental policies and additional
fundamental policies adopted by the Portfolio are described in Part B.

RISK FACTORS
Although the value of an interest in the Portfolio may fluctuate more
than short-term money market instruments, the Portfolio will seek to keep such
volatility below that of longer-term debt securities by limiting the average
term of securities in its Portfolio. The Portfolio is not intended to provide an
investment program meeting all the requirements of an investor. Additionally,
notwithstanding the Portfolio's ability to diversify an spread risk by holding
securities of a number of Portfolio companies, investors of the Portfolio should
be able and prepared to bear the risk of investment losses which may accompany
the investment contemplated by the Portfolio.

Yields on debt securities depend on a variety of factors, such as
general conditions in the money and bond markets, and the size, maturity and
rating of a particular issue. Debt securities with longer maturities tend to
produce higher yields and are generally subject to greater potential capital
appreciation and depreciation. The market prices of debt securities usually vary
depending upon available yields, rising when interest rates decline and
declining when interest rates rise.

FOREIGN SECURITIES
Investing in securities of foreign issuers and securities denominated
in foreign currencies or utilizing foreign currency transactions involves
certain risks of political, economic and legal conditions and developments not
typically associated with investing in United States companies. Such conditions
or developments might include unfavorable changes in currency exchange rates,
exchange control regulations (including currency blockage), expropriation of
assets of companies in which the Portfolio invests, nationalization of such
companies, imposition of withholding taxes on dividend or interest payments, and
possible difficulty in obtaining and enforcing judgments against a foreign
issuer. Also, foreign securities may not be as liquid and may be more volatile
than comparable domestic securities. Furthermore, issuers of foreign securities
are subject to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The Portfolio, in connection with
its purchases and sales of foreign securities, other than those denominated in
U.S. dollars, will incur transaction costs in converting currencies. Also,

Fixed Income - Part A

<PAGE>

A-11

brokerage costs in purchasing and selling corporate securities in foreign
securities markets are sometimes higher than such costs in comparable
transactions in domestic securities markets, and foreign custodial costs
relating to the Portfolio's portfolio securities are higher than domestic
custodial costs.

BB RATED SECURITIES
Investing in BB Rated Securities involves a higher degree of credit
risk (the risk that the issuer will not make interest or principal payments when
due) than investing in higher rated securities. In the event of an unanticipated
default, the Portfolio will experience a reduction in its income, and could
expect a decline in the market value of the securities so affected. More careful
analysis of the financial condition of each issuer of BB Rated Securities is
therefore necessary. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals and to obtain additional
financing. Periods of economic or political uncertainty and change can be
expected to result in volatility in prices of these securities.

BB Rated Securities generally offer a higher yield, but may be subject
to a higher risk of default in interest or principal payments than higher rated
securities. The market prices of BB Rated Securities are generally less
sensitive to interest rate changes than higher rated securities, but are
generally more sensitive to adverse economic or political changes or, in the
case of corporate issuers, to individual company developments. BB Rated
Securities also may have less liquid markets than higher rated securities, and
their liquidity, as well as their value, may be more severely affected by
adverse economic conditions. Adverse publicity and investor perceptions of the
market, as well as newly enacted or proposed legislation, may also have a
negative impact on the market for BB Rated Securities.

ITEM 5. MANAGEMENT OF THE FUND.

TRUSTEES
The Portfolio is a separate investment series of Standish, Ayer & Wood
Master Portfolio, a master trust fund organized under the laws of the State of
New York. Under the terms of the Declaration of Trust, the affairs of the
Portfolio are managed under the supervision of the Trustees of the Portfolio
Trust.

A majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) of the Portfolio Trust, as the case may be, have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interest arising from the fact that the same individuals are trustees of the
Portfolio Trust and an investor in the Portfolio Trust, up to and including
creating separate boards of trustees. See "Management of the Portfolio" in Part
B for more information about the Trustees and officers of the Portfolio Trust.

Fixed Income - Part A

<PAGE>

A-12

INVESTMENT ADVISER
Standish, One Financial Center, Boston, Massachusetts 02111, serves as
investment adviser to the Portfolio pursuant to an investment advisory agreement
and manages the Portfolio's investments and affairs subject to the supervision
of the Trustees of the Portfolio Trust. The Adviser is a Massachusetts
corporation incorporated in 1933 and is a registered investment adviser under
the Investment Advisers Act of 1940.

The Adviser provides fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States and abroad. As of February 29, 1996, Standish or its affiliate,
Standish International Management Company, L.P., served as the investment
adviser to each of the following fourteen funds in the Standish, Ayer & Wood
family of funds:
<TABLE>
<CAPTION>
Net Assets
(FEBRUARY 29, 1996)
<S> <C>

Standish Controlled Maturity Fund $ 9,206,532
Standish Equity Fund 95,832,592
Standish Fixed Income Fund 2,274,975,978
Standish Fixed Income Fund II 10,046,446
Standish Global Fixed Income Fund 147,989,501
Standish Intermediate Tax Exempt Bond Fund 13,338,929
Standish International Equity Fund 55,691,972
Standish International Fixed Income Fund 792,817,998
Standish Massachusetts Intermediate
Tax Exempt Bond Fund 32,170,126
Standish Securitized Fund 55,002,171
Standish Short-Term Asset Reserve Fund 298,685,235
Standish Small Capitalization Equity Fund 188,411,176
Standish Small Cap Tax-Sensitive Equity Fund 1,278,405
Standish Tax-Sensitive Equity Fund 1,232,170
</TABLE>

Corporate pension funds are the largest asset under active management
by the Adviser. The Adviser's clients also include charitable and educational
endowment funds, financial institutions, trusts and individual investors. As of
February 29, 1996, the Adviser managed approximately $29 billion of assets.

The Portfolio's portfolio manager is Caleb F. Aldrich. Mr. Aldrich has
been primarily responsible for the day-to-day management of the Standish Fixed
Income Fund, a series of Standish, Ayer & Wood Investment Trust (the "Fund"),
since January 1, 1993 and of the Portfolio's portfolio since the Fund's
conversion to the Hub and Spoke master-feeder fund structure on April 25, 1996.
During the past five years, Mr. Aldrich has served as a Director (1992) and Vice
President of the Adviser.

Subject to the supervision and direction of the Trustees of the
Portfolio Trust, the Adviser manages the Portfolio in accordance with its stated
investment objective and policies, recommends investment decisions for the
Portfolio, places orders to purchase and sell securities on behalf of the
Portfolio and permits the Portfolio to use the name "Standish." For its services
to the Portfolio, the

Fixed Income - Part A

<PAGE>

A-13

Adviser receives a monthly fee equal on an annual basis to 0.40% of the first
$250 million of average daily net assets, 0.35% of the next $250 million of
average daily net assets and 0.30% of average daily net assets in excess of $250
million.

ADMINISTRATOR OF THE PORTFOLIO
IBT Trust Company (Cayman) Ltd., P.O. Box 501, Grand Cayman, Cayman
Islands, BWI, serves as the administrator to the Portfolio (the "Portfolio
Administrator") pursuant to a written administration agreement with the
Portfolio Trust on behalf of the Portfolio. The Portfolio Administrator provides
the Portfolio Trust with office space for managing its affairs, and with certain
clerical services and facilities. For its services to the Portfolio Trust, the
Portfolio Administrator currently receives a fee from the Portfolio in the
amount of $7,500 annually.

EXPENSES
The Portfolio is responsible for all of its costs and expenses not
expressly stated to be payable by Standish under the investment advisory
agreement with the Portfolio. Among other expenses, the Portfolio pays
investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; expenses of notices and reports to interest holders; and expenses of
the Portfolio's administrator. The Portfolio will also pay legal and auditing
fees; any registration and reporting fees and expenses; and Trustees' fees and
expenses. Expenses of the Portfolio Trust which relate to more than one of its
series are allocated among such series by the Adviser and SIMCO in an equitable
manner, primarily on the basis of relative net asset values.

PORTFOLIO TRANSACTIONS
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio.

Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of shares of an
investor in the Portfolio may also be considered factors in the selection of
brokers and dealers that execute orders to purchase and sell portfolio
securities for the Portfolio.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

Fixed Income - Part A

<PAGE>

A-14

funds) will not be liable for the obligations of the Portfolio although they
will bear the risk of loss of their entire respective interests in the
Portfolio. However, there is a risk that interest-holders in the Portfolio may
be held personally liable as partners for the Portfolio's obligations. Because
the Portfolio Trust's declaration of trust disclaims interest-holder liability
and provides for indemnification against such liability, the risk of an investor
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.

The Portfolio Trust reserves the right to create and issue any number
of series, in which case investments in each series would participate equally in
earnings and assets of the particular series. Currently, the Portfolio Trust has
four series: Standish Fixed Income Portfolio, Standish Equity Portfolio,
Standish Small Capitalization Equity Portfolio and Standish Global Fixed Income
Portfolio.

Investments in the Portfolio have no pre-emptive or conversion rights
and are fully paid and non-assessable, except as set forth above. The Portfolio
Trust is not required and has no current intention to hold annual meetings of
investors, but the Portfolio Trust will hold special meetings of investors when
in the judgment of the Trustees it is necessary or desirable to submit matters
for an investor vote. Changes in fundamental policies will be submitted to
investors for approval. Investors have under certain circumstances (E.G. upon
application and submission of certain specified documents to the Trustees by a
specified percentage of the aggregate value of the Portfolio Trust's outstanding
interests) the right to communicate with other investors in connection with
requesting a meeting of investors for the purpose of removing one or more
Trustees. Investors also have the right to remove one or more Trustees without a
meeting by a declaration in writing by a specified number of investors. Upon
liquidation of a Portfolio, investors would be entitled to share PRO RATA in the
net assets of the Portfolio available for distribution to investors.

At April 25, 1996, Standish Fixed Income Fund, One Financial Center,
Boston, Massachusetts, 02111, had sole voting and investment power with respect
to more than 25% of the then outstanding interests of the Portfolio, and was
deemed to beneficially own such interest on behalf of its shareholders and to
control the Portfolio.

Inquiries concerning the Portfolio should be made by contacting the
Portfolio at the Portfolio Trust's registered office in care of the Portfolio
Administrator, P.O. Box 501, Cardinal Avenue, George Town, Grand Cayman, Cayman
Islands, British West Indies.

Please see Item 7 for a discussion of the Portfolio's dividend policy.

ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.

Beneficial interests in the Portfolio are issued solely in transactions
that are exempt from registration under the 1933 Act. See "General Description
of Registrant" above.

Fixed Income - Part A

<PAGE>

A-15

An investment in the Portfolio may be made without a sales load by
certain eligible investors. All investments are made at the net asset value next
determined after an order and payment for the investment is received by the
Portfolio or its agent by the designated cutoff time for each investor.

There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (I.E., monies credited to the account
of the Portfolio Trust's custodian bank by a Federal Reserve Bank).

The Portfolio Trust reserves the right to cease accepting investments
in the Portfolio at any time or to reject any investment order.

For purpose of calculating the Portfolio's net asset value, fixed
income securities (other than money market instruments) for which accurate
market prices are readily available are valued at their current market value on
the basis of quotations, which may be furnished by a pricing service or provided
by dealers in such securities. Fixed income securities for which accurate market
prices are not readily available and other assets are valued at fair value as
determined in good faith by the Adviser in accordance with procedures approved
by the Trustees, which may include the use of yield equivalents or matrix
pricing. Money market instruments with less than sixty days remaining to
maturity when acquired by the Portfolio are valued on an amortized cost basis
unless the Portfolio Trust's Board of Trustees determines that amortized cost
does not represent fair value. If the Portfolio acquires a money market
instrument with more than sixty days remaining to its maturity, it is valued at
current market value until the sixtieth day prior to maturity and will then be
valued at amortized cost based upon the value on such date unless the Trustees
of the Portfolio Trust determine during such sixty-day period that amortized
cost does not represent fair value. Additional information concerning the
Portfolio's valuation policies is contained in Part B.

The net asset value of the Portfolio is determined in U.S. dollars each
Day on which the New York Stock Exchange (the "NYSE") is open for trading
("Business Day") (and on such other days as are deemed necessary in order to
comply with Rule 22c-1 under the 1940 Act). This determination is made as of the
close of regular trading on the NYSE which is currently 4:00 p.m., New York time
(the "Valuation Time").

Fixed Income - Part A

<PAGE>

A-16

Business Day plus or minus, as the case may be, the amount of any additions to
or withdrawals from the investor's investment in the Portfolio effected on such
Business Day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of the Valuation Time, on such Business Day plus or minus,
as the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the Valuation Time, on the following
Business Day.

The net income of the Portfolio shall consist of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles ("Net Income").
Interest income includes discount earned (including both original issue and
market discount) on discount paper accrued ratably to the date of maturity and
any net realized gains or losses on the assets of the Portfolio. All the Net
Income of the Portfolio is allocated PRO RATA among the investors in the
Portfolio. The Net Income is accrued daily and reflected in each investor's
interest in the Portfolio.

Under the anticipated method of operation of the Portfolio, it is
expected that the Portfolio will not be subject to any U.S. federal or state
income tax. However, any investor in the Portfolio that is subject to U.S.
federal income taxation will take into account its share (as determined in
accordance with the governing instruments of the Portfolio) of the Portfolio's
ordinary income and capital gain in determining its income tax liability, if
any. The determination of such share will be made in accordance with the Code.

It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that any investor in the Portfolio that may be
otherwise eligible to be treated as a regulated investment company will be able
to satisfy the requirements of Subchapter M of the Code, assuming that the
investor invested all of its investment securities (as such phrase is used in
the 1940 Act) in the Portfolio.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value next determined after receipt by the Portfolio
or its agent, by the close of trading (currently 4:00 p.m. Eastern Time) on the
NYSE or as of such earlier times at which the Portfolio's net asset value is
calculated on each Business Day, that is otherwise eligible to be treated as a
regulated investment company of a withdrawal request in proper form. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the Business Day the withdrawal is effected, but in any event within five
Business Days following receipt of the request. The Portfolio reserves the right
to pay redemptions in kind. Investments in the Portfolio may not be transferred.

Fixed Income - Part A

<PAGE>

A-17

The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the NYSE is closed (other than weekends or holidays)
or trading on such exchange is restricted, or, to the extent otherwise permitted
by the 1940 Act, if an emergency exists.

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

Fixed Income - Part A

<PAGE>

A-18

ADDITIONAL INFORMATION.

KEY TO MOODY'S CORPORATE BOND RATINGS AND FOR SOVEREIGN, SUBNATIONAL AND
SOVEREIGN RELATED ISSUES

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.

Ba - Bonds which are rated Ba are judged to have speculative elements.
Their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

STANDARD & POOR'S RATINGS DEFINITIONS

AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small
degree.

Fixed Income - Part A

<PAGE>

A-19

A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.

BB - Debt rated BB is regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such debt will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.

STANDARD & POOR'S CHARACTERISTICS OF
SOVEREIGN DEBT OF FOREIGN COUNTRIES

AAA - Stable, predictable governments with demonstrated track record of
responding flexibly to changing economic and political circumstances

KEY PLAYERS IN THE GLOBAL TRADE AND FINANCIAL SYSTEM:

- Prosperous and resilient economies, high per capita incomes

- Low fiscal deficits and government debt, low inflation

- Low external debt

AA - Stable, predictable governments with demonstrated track record of
responding to changing economic and political circumstances

- Tightly integrated into global trade and financial system

- Differ from AAAs only to a small degree because:

- Economies are smaller, less prosperous and generally more vulnerable
to adverse external influences (e.g., protection and terms of trade
shocks)

- More variable fiscal deficits, government debt and inflation

- Moderate to high external debt.

A - Politics evolving toward more open, predictable forms of governance
in environment of rapid economic and social change

- Established trend of integration into global trade and financial
system

Fixed Income - Part A

<PAGE>

A-20

- Economies are smaller, less prosperous and generally more vulnerable
to adverse external influences (e.g., protection and terms of trade
shocks), but

- Usually rapid growth in output and per capita incomes

- Manageable through variable fiscal deficits, government debt and
inflation

- Usually low but variable debt.

- Integration into global trade and financial system growing but
untested

- Low to moderate income developing economies but variable performance
and quite vulnerable to adverse external influences

- Variable to high fiscal deficits, government debt and inflation

- Very high and variable debt, often graduates of Brady plan but track
record not well established.

BBB -- Political factors a source of significant uncertainty, either
because system is in transition or due to external threats, or both,
often in environment of rapid economic and social change - Integration
into global trade and financial system growing but untested

- Economies less prosperous and often more vulnerable to adverse
external influences

- Variable to high fiscal deficits, government debt and inflation

- High and variable external debt.

BB -- Political factors a source of major uncertainty, either because
system is in transition or due to external threats, or both, often in
environment of rapid economic and social change

- Integration into global trade and financial system growing but
untested

- Low to moderate income developing economies, but variable performance
and quite vulnerable to adverse external influences

- Variable to high fiscal deficits, government debt and inflation

- Very high and variable debt, often graduates of Brady Plan but track
record not well established

BB - Political factors a source of major uncertainty, either because
system is in transition or due to external threats, or both, often in
environment of rapid economic and social change

Fixed Income - Part A

<PAGE>

A-21

In the case of sovereign, subnational and sovereign related issuers,
the Portfolio uses the foreign currency or domestic (local) currency rating
depending upon how a security in the portfolio is denominated. In the case where
the Portfolio holds a security denominated in a domestic (local) currency and
one of the rating services does not provide a domestic (local) currency rating
for the issuer, the Portfolio will use the foreign currency rating for the
issuer; in the case where the Portfolio holds a security denominated in a
foreign currency and one of the rating services does not provide a foreign
currency rating for the issuer, the Portfolio will treat the security as being
unrated.

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO

PART A

THIS PART A DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH EQUITY PORTFOLIO.

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.

Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") is a
no-load, open-end management investment company which was organized as a master
trust fund under the laws of the State of New York on January 18, 1996.
Beneficial interests in the Portfolio Trust are divided into separate sub-trust
or series, each having distinct investment objectives and policies, one of
which, Standish Equity Portfolio, (the "Portfolio") is described herein.
Beneficial interests in each Portfolio are issued solely in transactions that
are exempt from registration under the Securities Act of 1933 (the "1933 Act").
Investments in the Portfolio Trust may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.

The Portfolio's investment objective is to achieve long-term growth of
capital through investment primarily in equity and equity-related securities of
companies which appear to be undervalued. Under normal circumstances, at least
80% of the Portfolio's total assets will be invested in such securities. (Equity
and equity-related securities include common stocks, preferred stocks,
securities convertible into common stocks and options, futures and other
strategic transactions based on common stocks.) The Portfolio may invest in
equity securities of foreign issuers that are listed on a United States
securities exchange or traded in the U.S. over-the-counter market, and may
invest up to 10% of its assets in such securities which are not so listed or
traded. Because of the uncertainty inherent in all investment, no assurance can
be given that the Portfolio will achieve its investment objective.

The Portfolio may also invest in debt securities and preferred stocks
which are convertible into, or exchangeable for, common stocks. Such securities
will be rated Aaa, Aa or A by Moody's Investors Service, Inc. ("Moody's"), or
AAA, AA or A by Standard & Poor's Ratings Group ("Standard & Poor's") or if not
rated, are determined to be of comparable credit quality by Standish, Ayer &
Wood, Inc., the Portfolio's investment adviser ("Standish" or the "Adviser"). Up
to 5% of the Portfolio's total assets invested in convertible debt securities
and preferred stocks may be rated Baa by Moody's or BBB by Standard & Poor's or,
if

<PAGE>

A-2

not rated, determined to be of comparable credit quality by the Adviser. In the
case of a security that is rated differently by the two rating services, the
higher rating is used in connection with the foregoing policy. In the event the
rating on a security held by the Portfolio is downgraded by a rating service,
such action will be considered by the Adviser in its evaluation of the overall
investment merits of that security, but will not necessarily result in the sale
of the security. Securities rated Baa by Moody's or BBB by Standard & Poor's and
unrated securities of equivalent credit quality are considered medium grade
obligations with speculative characteristics. Adverse changes in economic
conditions or other circumstances are more likely to weaken the issuer's
capacity to pay interest and repay principal on these securities than is the
case for issuers of higher rated securities.

The Portfolio may write and purchase put and call options on its
portfolio securities and invest in financial futures contracts on U.S. equity
indices and purchase and sell options on such futures contracts. Although the
Portfolio does not normally invest in equity securities which are restricted as
to disposition by federal securities laws or are otherwise illiquid, the
Portfolio may do so to a limited extent under certain circumstances. Because of
the uncertainty inherent in all investments, no assurance can be given that the
Portfolio will achieve its investment objective.

INVESTMENT POLICIES
The Portfolio will follow a disciplined investment strategy,
emphasizing stocks which the Adviser believes to offer above average potential
for capital growth. Although the precise application of the discipline will vary
according to market conditions, the Adviser intends to use statistical modeling
techniques that utilize stock specific factors, such as current price earnings
ratios, stability of earnings growth, forecasted changes in earnings growth,
trends in consensus analysts' estimates, and measures of earnings results
relative to expectations, to identify equity securities that are attractive as
purchase candidates. Once identified, these securities will be subject to
further fundamental analysis by the Adviser's professional staff before they are
included in the Portfolio's holdings. Securities selected for inclusion in the
Portfolio's holdings will represent various industries and sectors.

SHORT-TERM DEBT SECURITIES
The Portfolio may establish and maintain cash balances for temporary
purposes in order to maintain liquidity to meet shareholder redemptions. The
Portfolio may also establish and maintain cash balances for temporary defensive
purposes without limitation to hedge against potential stock market declines.
The Portfolio's cash balances, including uncommitted cash balances, may be
invested in investment grade money market instruments and short-term
interest-bearing securities. The securities consist of U.S. Government

Equity - Part A

<PAGE>

A-3

obligations and obligations issued or guaranteed by any U.S. Government agencies
or instrumentalities, instruments of U.S. and foreign banks (including
negotiable certificates of deposit, non-negotiable fixed time deposits and
bankers' acceptances), repurchase agreements, prime commercial paper of U.S. and
foreign companies, debt securities that make periodic interest payments at
variable or floating rates and other money market securities and investments.

The Portfolio's investments in money market securities (i.e.,
securities with maturities of less than one year) will be rated, at the time of
investment, P-1 by Moody's or A-1 by Standard & Poor's. At least 95% of the
Portfolio's assets invested in short-term interest-bearing securities (i.e.,
securities with maturities of one to three years) will be rated, at the time of
investment, Aaa, Aa, or A by Moody's or AAA, AA, or A by Standard & Poor's or,
if not rated, determined to be of comparable credit quality by the Adviser. Up
to 5% of assets invested in such short-term securities may be invested in
securities which are rated Baa by Moody's or BBB by Standard & Poor's or, if not
rated, determined to be of comparable credit quality by the Adviser. Yields on
debt securities depend on a variety of factors, such as general conditions in
the money and bond markets, and the size, maturity and rating of a particular
issue. Debt securities with longer maturities tend to produce higher yields and
are generally subject to greater potential capital appreciation and
depreciation. The market prices of debt securities usually vary depending upon
available yields, rising when interest rates decline and declining when interest
rates rise.

FOREIGN SECURITIES
Although the Portfolio intends to invest primarily in equity securities
of U.S. issuers, the Portfolio may invest (without limitation) in equity
securities of foreign issuers that are listed on a United States exchange or
traded in the U.S. over-the-counter market, and may invest up to 10% of its
assets in foreign equity securities which are not so listed or traded. Foreign
securities will be selected for investment by the Portfolio if the Adviser
believes these securities will offer above average capital growth potential.
Investing in securities of foreign companies and securities denominated in
foreign currencies or utilizing foreign currency transactions involve certain
risks. See "Risk Factors."

STRATEGIC TRANSACTIONS
The Portfolio may, but is not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity market
movements), or to enhance potential gain. Such strategies are generally accepted
as part of modern portfolio management and are regularly utilized by many mutual
funds and other institutional investors. Techniques and instruments used by the
Portfolio may change over time as new instruments and strategies are developed
or regulatory changes occur.

Equity - Part A

<PAGE>

A-4

various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions"). Strategic
Transactions may be used in an attempt to protect against possible changes in
the market value of securities held in or to be purchased for the Portfolio's
portfolio resulting from securities market or currency exchange rate
fluctuations, to protect the Portfolio's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, or to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. In addition to the
hedging transactions referred to in the preceding sentence, Strategic
Transactions may also be used to enhance potential gain in circumstances where
hedging is not involved although the Portfolio will attempt to limit net loss
exposure resulting from Strategic Transactions entered into for such purposes to
not more than 3% of the Portfolio's net assets at any one time and, to the
extent necessary, the Portfolio will close out transactions in order to comply
with this limitation. (Transactions such as writing covered call options are
considered to involve hedging for the purposes of this limitation.) In
calculating the Portfolio's net loss exposure from such Strategic Transactions,
an unrealized gain from a particular Strategic Transaction position would be
netted against an unrealized loss from a related Strategic Transaction position.
For example, if the Adviser believes that the Portfolio is underweighted in
cyclical stocks and overweighted in consumer stocks, the Portfolio may buy a
cyclical index call option and sell a cyclical index put option and sell a
consumer index call option and buy a consumer index put option. Under such
circumstances, any unrealized loss in the cyclical position would be netted
against any unrealized gain in the consumer position (and vice versa) for
purposes of calculating the Portfolio's net loss exposure. The ability of the
Portfolio to utilize these Strategic Transactions successfully will depend on
the Adviser's ability to predict pertinent market movements, which cannot be
assured. The Portfolio will comply with applicable regulatory requirements when
implementing these strategies, techniques and instruments. The Portfolio's
activities involving Strategic Transactions may be limited to enable certain of
its investors to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company.

Equity - Part A

<PAGE>

A-5

transactions entails certain other risks. In particular, the variable degree of
correlation between price movements of futures contracts and price movements in
the related portfolio position of the Portfolio creates the possibility that
losses on the hedging instrument may be greater than gains in the value of the
Portfolio's position. The writing of options could significantly increase the
Portfolio's portfolio turnover rate and, therefore, associated brokerage
commissions or spreads. In addition, futures and options markets may not be
liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Portfolio might not be able to
close out a transaction without incurring substantial losses, if at all.
Although the use of futures and options transactions for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
at the same time, in certain circumstances, these transactions tend to limit any
potential gain which might result from an increase in value of such position.
The loss incurred by the Portfolio in writing options on futures and entering
into futures transactions is potentially unlimited; however, as described above,
the Portfolio will attempt to limit its net loss exposure resulting from
Strategic Transactions entered into for non-hedging purposes to not more than 3%
of its net assets at any one time. Futures markets are highly volatile and the
use of futures may increase the volatility of the Portfolio's net asset value.
Finally, entering into futures contracts would create a greater ongoing
potential financial risk than would purchases of options where the exposure is
limited to the cost of the initial premium. Losses resulting from the use of
Strategic Transactions would reduce net asset value and the net result may be
less favorable than if the Strategic Transactions had not been utilized. Further
information concerning the Portfolio's Strategic Transactions is set forth in
Part B.

Equity - Part A

<PAGE>

A-6

The Portfolio will incur a loss as a result of the short sale if the
price of the security increases between the date of the short sale and the date
on which the Portfolio replaces the borrowed security. The Portfolio will
realize a gain if the security declines in price between those dates by an
amount greater than the premium and transaction costs. This result is the
opposite of what one would expect from a cash purchase of a long position in a
security. The amount of any gain will be decreased, and the amount of any loss
increased, by the amount of any premium or amounts in lieu of dividends or
interest the Portfolio may be required to pay in connection with a short sale.

The Portfolio anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any specified
portion of its assets, as a matter of practice, will be in short sales. However,
no securities will be sold short if, after giving effect to any such short sale,
the total market value of all securities sold short would exceed 5% of the value
of the Portfolio's net assets.

REPURCHASE AGREEMENTS
The Portfolio may invest up to 10% of its net assets in repurchase
agreements under normal circumstances. Repurchase agreements acquired by the
Portfolio will always be fully collateralized as to principal and interest by
money market instruments and will be entered into with commercial banks, brokers
and dealers considered creditworthy by the Adviser. If the other party or
"seller" of a repurchase agreement defaults, the Portfolio might suffer a loss
to the extent that the proceeds from the sale of the underlying securities and
other collateral held by the Portfolio in connection with the related repurchase
agreement are less than the repurchase price. In addition, in the event of
bankruptcy of the seller or failure of the seller to repurchase the securities
as agreed, the Portfolio could suffer losses, including loss of interest on or
principal of the security and costs associated with delay and enforcement of the
repurchase agreement.

Equity - Part A

<PAGE>

A-7

PORTFOLIO TURNOVER
It is not the policy of the Portfolio to purchase or sell securities
for trading purposes. However, the Portfolio places no restrictions on portfolio
turnover and it may sell any portfolio security without regard to the period of
time it has been held. The Portfolio may therefore generally change its
portfolio investments at any time in accordance with the Adviser's appraisal of
factors affecting any particular issuer or market, or the economy in general. A
rate of turnover of 100% would occur, for example, if the value of the lesser of
purchases and sales of portfolio securities for a particular year equaled the
average monthly value of portfolio securities owned during the year (excluding
securities with a maturity date of one year or less at the date of acquisition).
A high rate of portfolio turnover involves a correspondingly greater amount of
transaction costs which must be borne directly by the Portfolio and thus by
investors in the Portfolio and their shareholders.

INVESTMENT RESTRICTIONS
The Portfolio have adopted certain fundamental policies which may not
be changed without the approval of the Portfolio's investors.

These policies provide, among other things, that the Portfolio may not:
(i) 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; (ii) issue senior securities, borrow money, enter into reverse
repurchase agreements or pledge or mortgage its assets, except that the
Portfolio may borrow from banks in an amount up to 15% of the current value of
its total assets as a temporary measure for extraordinary or emergency purposes
(but not investment purposes), and pledge its assets to an extent not greater
than 15% of the current value of its total assets to secure such borrowings;
however, the Portfolio may not make any additional investments while its
outstanding borrowings exceed 5% of the current value of its total assets; (iii)
make loans of portfolio securities, except that the Portfolio may enter into
repurchase agreements with respect to 10% of the value of its net assets; or
(iv) invest more than 25% of its total assets in a single industry except that
this restriction shall not apply to U.S. Government securities.

RISK FACTORS
The Portfolio is not intended to provide an investment program meeting
all the requirements of an investor. Additionally, notwithstanding the
Portfolio's ability to diversify and spread risk by holding securities of a
number of Portfolio companies, investors of the Portfolio should be able and
prepared to bear the risk of investment losses which may accompany the
investments contemplated by the Portfolio.

Equity - Part A

<PAGE>

A-8

The Portfolio will not emphasize current income unless this income will
have a favorable influence on the market value of a portfolio security.

FOREIGN SECURITIES
Investing in securities of foreign companies and securities denominated
in foreign currencies or utilizing foreign currency transactions involve certain
risks of political, economic and legal conditions and developments not typically
associated with investing in securities of U.S. companies. Such conditions or
developments might include unfavorable changes in currency exchange rates,
exchange control regulations (including currency blockage), expropriation of
assets of companies in which the Portfolio invests, nationalization of such
companies, imposition of withholding taxes on dividend or interest payments, and
possible difficulty in obtaining and enforcing judgments against a foreign
issuer. Also, foreign securities may not be as liquid and may be more volatile
than comparable domestic securities. Furthermore, issuers of foreign securities
are subject to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The Portfolio, in connection with
its purchases and sales of foreign securities, other than securities denominated
in United States dollars, will incur transaction costs in converting currencies.
Brokerage commissions in foreign countries are generally fixed, and other
transaction costs related to securities exchanges are generally higher than in
the United States. Most foreign securities of the Portfolio are held by foreign
subcustodians that satisfy certain eligibility requirements. However, foreign
subcustodian arrangements are significantly more expensive than domestic
custody. In addition, foreign settlement of securities transactions is subject
to local law and custom that is not, generally, as well established or as
reliable as U.S. regulation and custom applicable to settlements of securities
transactions and, accordingly, there is generally perceived to be a greater risk
of loss in connection with securities transactions in many foreign countries.
The Portfolio's policy of investing no more than 10% of its total assets in
foreign securities that are not listed on a U.S. stock exchange or traded in the
U.S. over-the-counter market is intended to limit the Portfolio's exposure to
the risks associated with investments in foreign securities.

ITEM 5. MANAGEMENT OF THE FUND.

Equity - Part A

<PAGE>

A-9

The Portfolio's portfolio managers are Ralph S. Tate and David C.
Cameron. Mr. Tate and Mr. Cameron have been primarily responsible for the
day-to-day management of the Standish Equity Fund, a series of Standish, Ayer &
Wood Investment Trust (the "Fund") since its inception in January, 1991 and of
the Portfolio's portfolio since the Fund's conversion to the Hub and Spoke
master- feeder fund structure on April 25, 1996. During the past five years,
Messrs. Tate and Cameron have each served as a Director and Vice President of
the Adviser.

Equity - Part A

<PAGE>

A-10

orders to purchase and sell securities on behalf of the Portfolio and permits
the Portfolio to use the name "Standish." For its services to the Portfolio, the
Adviser receives a monthly fee equal on an annual basis to 0.50% of the
Portfolio's average daily net assets.

EXPENSES
The Portfolio is responsible for all of its costs and expenses not
expressly stated to be payable by Standish under the investment advisory
agreement with the Portfolio. Among other expenses, the Portfolio pays
investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; expenses of notices and reports to interest-holders; and expenses of
the Portfolio's administrator. The Portfolio will pay legal and auditing fees;
any registration and reporting fees and expenses; and Trustees' fees and
expenses. Expenses of the Portfolio Trust which relate to more than one of its
series are allocated among such series by the Adviser and SIMCO in an equitable
manner, primarily on the basis of relative net asset values.

Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of shares of investors
in the Portfolio may also be considered factors in the selection of brokers and
dealers that execute orders to purchase and sell portfolio securities for the
Portfolio.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

Equity - Part A

<PAGE>

A-11

At April 25, 1996, Standish Equity Fund, One Financial Center, Boston,
Massachusetts, 02111, had sole voting and investment power with respect to more
than 25% of the then outstanding interests of the Portfolio, and was deemed to
beneficially own such interests on behalf of its shareholders and to control the
Portfolio.

Please see Item 7 for a discussion of the Portfolio's dividend policy.

ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.

Beneficial interests in the Portfolio are issued solely in transactions
that are exempt from registration under the 1933 Act. See "General Description
of Registrant" above.

Equity - Part A

<PAGE>

A-12

The Portfolio Trust reserves the right to cease accepting investments
in the Portfolio at any time or to reject any investment order.

The Portfolio's portfolio securities are valued at the last sale
prices, on the valuation day, on the exchange or national securities market on
which they are primarily traded. Securities not listed on an exchange or
national securities market, or securities for which there were no reported
transactions, are valued at the last quoted bid prices. Securities for which
quotations are not readily available and all other assets are valued at fair
value as determined in good faith by the Adviser in accordance with procedures
approved by the Trustees of the Portfolio Trust. Money market instruments with
less than sixty days remaining to maturity when acquired by the Portfolio are
valued on an amortized cost basis unless the Portfolio Trust's Board of Trustees
determines that amortized cost does not represent fair value. If the Portfolio
acquires a money market instrument with more than sixty days remaining to its
maturity, it is valued at current market value until the sixtieth day prior to
maturity and will then be valued at amortized cost based upon the value on such
date unless the Trustees of the Portfolio Trust determine during such sixty-day
period that amortized cost does not represent fair value. Additional information
concerning the Portfolio's valuation policies is contained in Part B.

The net asset value of the Portfolio is determined in U.S. dollars each
day on which the New York Stock Exchange (the "NYSE") is open for trading
("Business Day") (and on such other days as are deemed necessary in order to
comply with Rule 22c-1 under the 1940 Act). This determination is made as of the
close of regular trading on the NYSE which is currently 4:00 p.m., New York time
(the "Valuation Time").

Equity - Part A

<PAGE>

A-13

It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that any investor in the Portfolio that is
otherwise eligible to be treated as a regulated investment company will be able
to satisfy the requirements of Subchapter M of the Code, assuming that the
investor invested all of its investment securities (as such terms are used in
the 1940 Act) in the Portfolio.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value next determined after receipt by the Portfolio
or its agent, by the close of trading (currently 4:00 p.m. Eastern Time) on the
NYSE or as of such earlier times at which the Portfolio's net asset value is
calculated on each Business Day, of a withdrawal request in proper form. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the Business Day the withdrawal is effected, but in any event within five
Business Days following receipt of the request. The Portfolio reserves the right
to pay redemptions in kind. Investments in the Portfolio may not be transferred.

The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any

Equity - Part A

<PAGE>

A-14

period in which the NYSE is closed (other than weekends or holidays) or trading
on such exchange is restricted, or, to the extent otherwise permitted by the
1940 Act, if an emergency exists.

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SMALL CAPITALIZATION EQUITY PORTFOLIO

PART A

THIS PART A DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH SMALL CAPITALIZATION EQUITY
PORTFOLIO.

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.

Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") is a
no-load, open-end management investment company which was organized as a master
trust fund under the laws of the State of New York on January 18, 1996.
Beneficial interests in the Portfolio Trust are divided into separate sub-trust
or series, each having distinct investment objectives and policies, one of
which, Standish Small Capitalization Equity Portfolio, (the "Portfolio") is
described herein. Beneficial interests in each Portfolio are issued solely in
transactions that are exempt from registration under the Securities Act of 1933
(the "1933 Act"). Investments in the Portfolio Trust may only be made by
investment companies, insurance company separate accounts, common or commingled
trust funds or similar organizations or entities that are "accredited investors"
within the meaning of Regulation D under the 1933 Act. This Registration
Statement does not constitute an offer to sell, or the solicitation of an offer
to buy, any "security" within the meaning of the 1933 Act.

The Portfolio's investment objective is to achieve long-term growth of
capital through investment primarily in equity and equity-related securities of
small capitalization companies. Under normal circumstances, at least 80% of the
Portfolio's assets will be invested in such securities. Equity and equity-
related securities include common stocks, preferred stocks, securities
convertible into common stocks and options, futures and other strategic
transactions based on common stocks. The Portfolio invests in publicly traded
securities, including securities issued in initial public offerings. The
Portfolio does not normally invest in equity securities which are restricted as
to disposition by federal securities laws or are otherwise illiquid but may do
so to a limited extent under certain circumstances. As a temporary matter and
for defensive purposes, the Portfolio may purchase investment grade short-term
interest-bearing securities, the amount of which will depend on market
conditions and the needs of the Portfolio. Because of the uncertainty inherent
in all investments, no assurance can be given that the Portfolio will achieve
its investment objective.

<PAGE>

A-2

by the Trustees of the Portfolio Trust without the approval of the Portfolio's
investors. The Portfolio's investment policies are described further in Part B.

INVESTMENT POLICIES
The common stocks of small capitalization companies in which the
Portfolio invests have market capitalizations up to and including $700 million.
Market capitalization is determined by multiplying the number of fully diluted
equity shares by the current market price per share. Morningstar Mutual Funds, a
leading mutual fund monitoring service, includes in the small-cap category all
funds that invest in companies with median market capitalizations of less than
$1 billion. The Portfolio expects to emphasize investments in companies involved
with value added products or services in expanding industries. At times,
particularly when Standish, Ayer & Wood, Inc., the Portfolio's investment
adviser ("Standish" or the "Adviser"), believes that securities of small
capitalization companies are overvalued, the Portfolio's portfolio may include
securities of larger, more mature companies, provided that the value of the
securities of such larger, more mature companies shall not exceed 20% of the
Portfolio's total assets. As a temporary matter and for defensive purposes, the
Portfolio may invest all or a portion of its assets in short-term debt
securities or cash equivalents. The Portfolio will attempt to reduce risk by
diversifying its investments within the investment policy set forth above. The
Portfolio will invest in publicly traded equity securities and, excluding equity
securities received as distributions on portfolio securities, will not normally
hold equity securities which are restricted as to disposition under federal
securities laws or are otherwise illiquid or not readily marketable but may do
so to a limited extent under certain circumstances. The Portfolio may
participate in initial public offerings for previously privately held companies
which are expected to have market capitalizations of up to $700 million after
the consummation of the offering and whose securities are expected to be liquid
after the offering. Such companies may have a more limited operating history
and/or less experienced management than other companies in which the Portfolio
invests, which may pose additional risks. See "Risk Factors."

FOREIGN SECURITIES
The Portfolio may invest up to 15% of its net assets in foreign equity
securities, including securities of foreign issuers that are listed on a United
States exchange or traded in the U.S. over-the-counter market and sponsored and
unsponsored American Depositary Receipts (ADRs). Securities of foreign issuers,
including emerging markets companies, will be selected for investment by the
Portfolio if the Adviser believes these securities will offer above average
capital growth potential. Investing in securities of foreign companies which are
generally denominated in foreign currencies and utilizing foreign currency
transactions involve certain risks of political, economic and legal conditions
and developments not typically associated with investing in United States
companies. Such conditions or developments might include favorable or
unfavorable changes in currency exchange rates, exchange control regulations
(including currency blockage), civil disorder, expropriation of assets of
companies in which the Portfolio invests, nationalization of such companies,
imposition of withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against a foreign issuer. Also,

Small Cap - Part A

<PAGE>

A-3

foreign securities may not be as liquid as, and may be more volatile than,
comparable domestic securities. Furthermore, issuers of foreign securities are
subject to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The Portfolio, in connection with
its purchases and sales of foreign securities, other than securities denominated
in United States dollars, will incur transaction costs in converting currencies.
Also, foreign custodial costs relating to the Portfolio's portfolio securities
are higher than domestic custodial costs. Fixed commissions on foreign stock
exchanges are generally higher than negotiated commissions on United States
exchanges. Finally, transactions in equity securities effected on some foreign
stock exchanges, and consequently the Portfolio's investments on such exchanges,
may not be settled promptly and therefore such investments may be less liquid
and subject to the risk of fluctuating currency exchange rates pending
settlement.

Investments by the Portfolio in securities of issuers in emerging
markets involves risks in addition to those discussed above. Many emerging
market countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have negative effects on the
economies and securities markets of certain emerging market countries. Moreover,
the economies of individual emerging market countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.

SHORT TERM DEBT SECURITIES; MONEY MARKET INSTRUMENTS
The Portfolio may invest uncommitted cash and cash needed to maintain
liquidity for redemptions in short-term debt securities and cash equivalents,
including short-term U.S. Government securities (direct obligations of the U.S.
Government backed by the full faith and credit of the United States and
securities issued by agencies and instrumentalities of the U.S. Government),
U.S. and foreign commercial paper, negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances, repurchase agreements
and other money market securities and instruments.

When the Adviser deems it advisable because of market conditions, the
Portfolio may temporarily invest in short-term debt securities or retain cash or
cash equivalents without limit. Such investments will be limited to 20% of total
assets unless the Portfolio is in a temporary defensive position.

The Portfolio's investments in money market securities (i.e.,
securities with maturities of less than one year) will be limited to securities
which are rated P-1 by Moody's Investors Service, Inc. (Moody's) or A-1 by
Standard & Poor's Ratings Group ("Standard & Poor's"). The Portfolio will invest
at least 95% of its assets which are invested in short-term interest-bearing
securities (i.e., securities with maturities of one to three years) in
securities which are rated at the time of investment Aaa, Aa or A by Moody's or
AAA, AA, or A by Standard & Poor's, or which, if not rated, are of comparable
investment quality in the opinion of the Adviser. Up to 5% of assets invested in
such short-term securities may be invested in securities which are rated Baa by
Moody's or BBB

Small Cap - Part A

<PAGE>

A-4

by Standard & Poor's, or which, if not rated, are of comparable investment
quality in the opinion of the Adviser. In the case of a security rated
differently by the two rating services the higher rating is used in applying the
5% limit.

In the event that the rating on a security held in the Portfolio's
portfolio is lowered by a rating service, such action will be considered by the
Adviser in its evaluation of the overall investment merits of that security, but
will not necessarily result in the sale of the security. Securities rated Baa by
Moody's and BBB by Standard & Poor's may have some speculative characteristics
and changes in economic conditions and other circumstances are more likely to
lead to weakened capacity to make principal and interest payments than is the
case with higher rated securities.

Small Cap - Part A

<PAGE>

A-5

fluctuations, to protect the Portfolio's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, or to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. In addition to the
hedging transactions referred to in the preceding sentence, Strategic
Transactions may also be used to enhance potential gain in circumstances where
hedging is not involved although the Portfolio will attempt to limit its net
loss exposure resulting from Strategic Transactions entered into for such
purposes to not more than 3% of the Portfolio's net assets at any one time and,
to the extent necessary, the Portfolio will close out transactions in order to
comply with this limitation. (Transactions such as writing covered call options
are considered to involve hedging for the purposes of this limitation.) In
calculating the Portfolio's net loss exposure from such Strategic Transactions,
an unrealized gain from a particular Strategic Transaction position would be
netted against an unrealized loss from a related Strategic Transaction position.
For example, if the Adviser believes that the Portfolio is underweighted in
cyclical stocks and overweighted in consumer stocks, the Portfolio may buy a
cyclical index call option and sell a cyclical index put option and sell a
consumer index call option and buy a consumer index put option. Under such
circumstances, any unrealized loss in the cyclical position would be netted
against any unrealized gain in the consumer position (and vice versa) for
purposes of calculating the Portfolio's net loss exposure. The ability of the
Portfolio to utilize these Strategic Transactions successfully will depend on
the Adviser's ability to predict pertinent market movements, which cannot be
assured. The Portfolio will comply with applicable regulatory requirements when
implementing these strategies, techniques and instruments. The Portfolio's
activities involving Strategic Transactions may be limited to enable certain of
its investors to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company.

Small Cap - Part A

<PAGE>

A-6

commissions or spreads. In addition, futures and options markets may not be
liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Portfolio might not be able to
close out a transaction without incurring substantial losses, if at all.
Although the use of futures and options transactions for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
at the same time, in certain circumstances, these transactions tend to limit any
potential gain which might result from an increase in value of such position.
The loss incurred by the Portfolio in writing options on futures and entering
into futures transactions is potentially unlimited; however, as described above,
the Portfolio will attempt to limit its net loss exposure resulting from
Strategic Transactions entered into for non-hedging purposes to not more than 3%
of its net assets at any one time. Futures markets are highly volatile and the
use of futures may increase the volatility of the Portfolio's net asset value.
Finally, entering into futures contracts would create a greater ongoing
potential financial risk than would purchases of options where the exposure is
limited to the cost of the initial premium. Losses resulting from the use of
Strategic Transactions would reduce net asset value and the net result may be
less favorable than if the Strategic Transactions had not been utilized. Further
information concerning the Portfolio's Strategic Transactions is set forth in
Part B.

Small Cap - Part A

<PAGE>

A-7

of any gain will be decreased, and the amount of any loss increased, by the
amount of any premium or amounts in lieu of dividends or interest the Portfolio
may be required to pay in connection with a short sale.

The Portfolio's loss on a short sale as a result of an increase in the
price of the security sold short is potentially unlimited. The Portfolio may
purchase call options to provide a hedge against an increase in the price of a
security sold short by the Portfolio. When the Portfolio purchases a call option
it must pay a premium to the person writing the option and a commission to the
broker selling the option. If the option is exercised by the Portfolio, the
premium and the commission paid may be more than the amount of the brokerage
commission charged if the security were to be purchased directly. See "Strategic
Transactions" above.

OTHER INVESTMENT COMPANIES
The Portfolio may invest up to 10% of its total assets in the
securities of other investment companies but may not invest more than 5% of its
total assets in the securities of any one investment company or acquire more
than 3% of the voting securities of any other investment company. For example,
the Portfolio may invest in Standard & Poor's Depositary Receipts (commonly
referred to as "Spiders"), which are exchange-traded shares of a closed-end
investment company that are designed to replicate the price performance and
dividend yield of the Standard & Poor's 500 Composite Stock Price Index. The
Portfolio will indirectly bear its proportionate share of any management fees
and other expenses paid by investment companies in which it invests in addition
to the advisory and administration fees paid by the Portfolio. However, to the
extent that the Portfolio invests in a registered open-end investment company,
the Adviser will waive its advisory fees on the portion of the Portfolio's
assets so invested.

Small Cap - Part A

<PAGE>

A-8

Portfolio turnover is not expected to exceed 150% on an annual basis. A rate of
turnover of 100% would occur, for example, if the value of the lesser of
purchases or sales of portfolio securities for a particular year equaled the
average monthly value of portfolio securities owned during the year (excluding
securities with a maturity date of one year or less at the date of acquisition).
A high rate of portfolio turnover involves a correspondingly greater amount of
transaction costs which must be borne directly by the Portfolio and thus
indirectly by the Portfolio's investors and their shareholders.

INVESTMENT RESTRICTIONS
The Portfolio has adopted certain fundamental policies which may not be
changed without the approval of the Portfolio's investors.

These policies provide, among other things, that the Portfolio may not:
(i) invest, with respect to at least 75% of its total assets, more than 5% in
the securities of any one issuer (other than the U.S. Government, its agencies
or instrumentalities) or acquire more than 10% of the outstanding voting
securities of any issuer; (ii) issue senior securities, borrow money, enter into
reverse repurchase agreements or pledge or mortgage its assets, except that the
Portfolio may borrow from banks in an amount up to 15% of the current value of
its total assets as a temporary measure for extraordinary or emergency purposes
(but not investment purposes), and pledge its assets to an extent not greater
than 15% of the current value of its total assets to secure such borrowings;
however, the Portfolio may not make any additional investments while its
outstanding borrowings exceed 5% of the current value of its total assets; (iii)
make loans of portfolio securities; or (iv) invest 25% or more of its total
assets in a single industry except that this restriction shall not apply to U.S.
Government securities.

If any percentage restriction described above is adhered to at the time
of investment, a subsequent increase or decrease in the percentage resulting
from a change in the value of the Portfolio's assets will not constitute a
violation of the restriction. Additional fundamental policies adopted by the
Portfolio are described in Part B.

The companies in which the Portfolio invests generally reinvest their
earnings, and dividend income should not be expected.

Although investments in small capitalization companies may present
greater opportunities for growth, they also involve greater risks than are
customarily associated with investments in larger, more established companies.
The

Small Cap - Part A

<PAGE>

A-9

securities of small capitalization companies may be subject to more volatile
market movements than securities of larger, more established companies. Smaller
companies may have limited product lines, markets or financial resources, and
they may depend upon a limited or less experienced management group. The
securities of small capitalization companies may be traded only on the
over-the-counter market or on a regional securities exchange and may not be
traded daily or in the volume typical of trading on a national securities
exchange. As a result, the disposition by the Portfolio of portfolio securities
in order to meet redemptions or otherwise may require the Portfolio to sell
securities at a discount from market prices, over a longer period of time or
during periods when disposition is not desirable.

The Portfolio's investments in foreign securities and its utilization
of Strategic Transactions and short sales also involve special risks, as
discussed above in the correspondingly captioned sections.

ITEM 5. MANAGEMENT OF THE FUND.

The Adviser provides fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States and abroad.

As of February 29, 1996, Standish or its affiliate, Standish
International Management Company, L.P., served as the investment adviser to each
of the following fourteen funds in the Standish, Ayer & Wood family of funds:

Small Cap - Part A

<PAGE>

A-10
<TABLE>
<CAPTION>

Net Assets
(FEBRUARY 29, 1996)
<S> <C>

Corporate pension funds are the largest asset under active management by the
Adviser. The Adviser's clients also include charitable and educational endowment
funds, financial institutions, trusts and individual investors. As of February
29, 1996, the Adviser managed approximately $29 billion of assets.

The Portfolio's portfolio manager is Nicholas S. Battelle. Mr. Battelle
has been primarily responsible for the day-to-day management of the Standish
Small Capitalization Equity Fund, a series of Standish, Ayer & Wood Investment
Trust (the "Fund"), since its inception as a registered investment company in
August, 1990 and of the Portfolio's portfolio since the Fund's conversion to the
Hub and Spoke master-feeder fund structure on April 25, 1996. During the past
five years, Mr. Battelle has served as a Vice President as well as a Director of
the Adviser.

ADMINISTRATOR OF THE PORTFOLIO

IBT Trust Company (Cayman) Ltd., P.O. Box 501, Grand Cayman, Cayman
Islands, BWI, serves as the administrator to the Portfolio (the "Portfolio
Administrator") pursuant to a written administration agreement with the
Portfolio Trust on behalf of the Portfolio. The Portfolio Administrator provides
the Portfolio Trust with office space for managing its affairs, and with certain
clerical services and facilities. For its services to the Portfolio Trust, the
Portfolio Administrator currently receives a fee from the Portfolio in the
amount of $7,500 annually.

Small Cap - Part A

<PAGE>

A-11

EXPENSES

The Portfolio is responsible for all of its costs and expenses not
expressly stated to be payable by Standish under the investment advisory
agreement with the Portfolio. Among other expenses, the Portfolio pays
investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; expenses of notices and reports to interest-holders; and expenses of
the Portfolio's administrator. The Portfolio will pay legal and auditing fees;
any registration and reporting fees and expenses; and Trustees' fees and
expenses. Expenses of the Portfolio Trust which relate to more than one of its
series are allocated among such series by the Adviser and SIMCO in an equitable
manner, primarily on the basis of relative net asset values.

Standish has agreed in the investment advisory agreement to limit the
Portfolio's total annual operating expenses (excluding brokerage commissions,
taxes and extraordinary expenses) to 1.50% of the Portfolio's average daily net
assets. If the expense limit is exceeded, the compensation due Standish for such
fiscal year shall be proportionately reduced by the amount of such excess by a
reduction or refund thereof at the time such compensation is payable after the
end of each calendar month, subject to readjustment during such fiscal year.

PORTFOLIO TRANSACTIONS

Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio.

Subject to the consideration of best price and execution and to
applicable regulations, the receipt of research and sales of shares of an
investor in the Portfolio may also be considered factors in the selection of
brokers that execute orders to purchase and sell portfolio securities for the
Portfolio.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

The Portfolio Trust was organized as a trust under the laws of the
State of New York on January 18, 1996. Under the Declaration of Trust, the
Trustees are authorized to issue beneficial interests in separate series of the
Portfolio Trust. Each investor is entitled to a vote in proportion to the amount
of its investment in the Portfolio. Investments in the Portfolio may not be
transferred, but an investor may withdraw all or any portion of his investment
at any time at net asset value. Investors in the Portfolio (E.G., investment
companies, insurance company separate accounts and common and commingled trust
funds) will not be liable for the obligations of the Portfolio although they
will bear the risk of loss of their entire respective interests in the
Portfolio. However, there is a risk that interest-holders in the Portfolio may
be held personally liable as partners for the Portfolio's obligations. Because
the Portfolio Trust's declaration of trust disclaims interest-holder liability
and

Small Cap - Part A

<PAGE>

A-12

provides for indemnification against such liability, the risk of an investor 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.

At April 25, 1996, Standish Small Capitalization Equity Fund, One
Financial Center, Boston, Massachusetts, 02111, had sole voting and investment
power with respect to more than 25% of the then outstanding interests of the
Portfolio, and was deemed to beneficially own such interests on behalf of its
shareholders and to control the Portfolio.

Please see Item 7 for a discussion of the Portfolio's dividend policy.

ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.

Beneficial interests in the Portfolio are issued solely in transactions
that are exempt from registration under the 1933 Act. See "General Description
of Registrant" above.

Small Cap - Part A

<PAGE>

A-13

Portfolio or its agent by the designated cutoff time for each accredited
investor.

The Portfolio Trust reserves the right to cease accepting investments
in the Portfolio at any time or to reject any investment order.

The net asset value of the Portfolio is determined in U.S. dollars each
day on which the New York Stock Exchange ("NYSE") is open for trading ("Business
Day") (and on such other days as are deemed necessary in order to comply with
Rule 22c-1 under the 1940 Act). This determination is made as of the close of
regular trading on the NYSE which is currently 4:00 p.m., New York time (the
"Valuation Time").

Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each Business Day. At each Valuation Time on each such Business
Day, the value of each investor's beneficial interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, that represents that investor's share of the
aggregate beneficial interests in the Portfolio. Any additions or withdrawals,
which are to be effected on that day, will then be effected. The investor's
percentage of the aggregate beneficial interests in the Portfolio will then be
recomputed as the percentage equal to the fraction (i) the numerator of which is
the value of such investor's investment in the Portfolio as of the Valuation
Time, on such Business Day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in the Portfolio
effected on such Business Day, and (ii) the denominator of which is the
aggregate net asset value

Small Cap - Part A

<PAGE>

A-14

of the Portfolio as of the Valuation Time, on such Business Day plus or minus,
as the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the Valuation Time, on the following
Business Day.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value next determined after receipt by the Portfolio
or its agent, by the close of trading (currently 4:00 p.m. Eastern Time) on the
NYSE or as of such earlier times at which the Portfolio's net asset value is
calculated on each Business Day, of a withdrawal request in proper form. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the Business Day the withdrawal is effected, but in any event within five
Business Days following receipt of the request. The Portfolio reserves the right
to pay redemptions in kind. Investments in the Portfolio may not be transferred.

Small Cap - Part A

<PAGE>

A-15

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH GLOBAL FIXED INCOME PORTFOLIO

PART A

THIS PART A DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH GLOBAL FIXED INCOME
PORTFOLIO.

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.

Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") is a
no-load, open-end management investment company which was organized as a master
trust fund under the laws of the State of New York on January 18, 1996.
Beneficial interests in the Portfolio Trust are divided into separate sub-trust
or series, each having a distinct investment objectives and policies, one of
which, Standish Global Fixed Income Portfolio, (the "Portfolio") is described
herein. Beneficial interests in each Portfolio are issued solely in transactions
that are exempt from registration under the Securities Act of 1933 (the "1933
Act"). Investments in the Portfolio Trust may only be made by investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.

The Portfolio's investment objective is to maximize total return while
realizing a market level of income, consistent with preserving principal and
liquidity. The Portfolio will seek to achieve its investment objective primarily
through investing in a portfolio of investment grade fixed-income securities
denominated in foreign currencies and the U.S. dollar. Because some of the
Portfolio's investments will be denominated in foreign currencies, including
bonds denominated in the European Currency Unit ("ECU"), exchange rates may have
a significant impact on the performance of the Portfolio. Because of the
uncertainty inherent in all investments, no assurance can be given that the
Portfolio will achieve its investment objective.

The investment objective of the Portfolio is not a fundamental policy
and may be changed upon notice to but without the approval of the Portfolio's
investors. Investment policies which are not fundamental policies may be changed
by the Trustees of the Portfolio Trust, without the approval of the Portfolio's
investors. The Portfolio's investment policies are described further in Part B.

INVESTMENT POLICIES
The Portfolio may invest in a broad range of fixed-income securities
denominated in foreign currencies and U.S. dollars, including bonds, notes,
mortgage-backed and asset-backed, convertible debt securities, preferred stock

<PAGE>

A-2

(including convertible preferred stock), structured notes and debt securities
issued or guaranteed by national, provincial, state or other governments with
taxing authority or by their agencies or by supranational entities. Other types
of fixed income securities can be expected to be developed in the future, and
the Portfolio will invest in them if Standish International Management Company,
L.P., the Portfolio's investment adviser (the "Adviser"), determines that such
investment is consistent with the Portfolio's investment objective and policies.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development, and international banking institutions and related government
agencies. Examples of supranational entities are the International Bank for
Reconstruction and Development (the World Bank), the European Steel and Coal
Community, the Asian Development Bank and the Inter-American Development Bank.
The Portfolio expects to emphasize foreign government and agency securities,
securities of U.S. companies denominated in foreign currencies, U.S. Government
and agency securities, mortgage-backed and asset-backed securities and
securities of foreign companies denominated in U.S. dollars or foreign
currencies. Investors should be aware that investing in mortgage-backed
securities involves risks of fluctuation in yields and market prices and of
early prepayments on the underlying mortgages. The Portfolio may invest in
securities that pay interest on a fixed, variable, floating (including inverse
floating), contingent, in-kind or deferred basis. The Portfolio may also invest
in unlisted warrants to purchase fixed income securities. (Warrants are
substantially the same as call options in their nature, use and effect, except
that warrants are generally of a longer term and are issued by the issuer of the
underlying security, rather than by an option writer. See "General
Characteristics of Options" in Part B.)

RATINGS
The Portfolio will generally invest in investment grade fixed-income
securities, i.e., securities which, at the date of investment, are rated within
the four highest grades as determined by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A or Baa) or by Standard & Poor's Ratings Group ("Standard
& Poor's"), Duff & Phelps, Inc. ("Duff & Phelps") or IBAC, Inc. ("IBAC") (AAA,
AA, A or BBB) or their respective equivalent ratings or, if not rated, judged by
the Adviser to be of equivalent credit quality to securities so rated.
Securities rated Baa by Moody's or BBB by Standard & Poor's, Duff & Phelps or
IBAC and unrated securities of equivalent credit quality are considered medium
grade obligations with speculative characteristics. Adverse changes in economic
conditions or other circumstances are more likely to weaken the issuer's
capacity to pay interest and repay principal on these securities than is the
case for issuers of higher rated securities.

The Portfolio may invest up to 15% of its net assets in securities
rated, at the date of investment, either Ba by Moody's or BB by Standard &
Poor's, Duff & Phelps or IBAC or, if not rated, judged by the Adviser to be of
equivalent credit quality to securities so rated ("BB Rated Securities").
Securities rated Ba by Moody's or BB by Standard & Poor's, Duff & Phelps or IBAC
are classified in the highest category of non-investment grade securities. Such
securities may be considered to be high-yield securities, carry a high degree of
risk and are considered speculative by the major credit rating agencies. The
Portfolio

Global Fixed Income - Part A

<PAGE>

A-3

intends to avoid what it perceives to be the most speculative areas of the BB
Rated Securities universe. See "Risk Factors" for a description of risks
associated with investments in BB Rated Securities.

It is anticipated that the average dollar-weighted rated credit quality
of the securities in the Portfolio's portfolio will be in a range of Aa to A
according to the ratings of Moody's or AA to A according to the ratings of
Standard & Poor's, Duff & Phelps or IBAC, or comparable credit quality as
determined by the Adviser. In the case of a security that is rated differently
by the rating services, the highest rating is used in computing the Portfolio's
average dollar-weighted credit quality and in connection with the Portfolio's
policy regarding BB Rated Securities. In the event that the rating on a security
held in the Portfolio's portfolio is downgraded by a rating service, such action
will be considered by the Adviser in its evaluation of the overall investment
merits of that security, but will not necessarily result in the sale of the
security. In determining whether securities are of equivalent credit quality,
the Adviser may take into account, but will not rely entirely on, ratings
assigned by foreign rating agencies. In the case of unrated sovereign,
subnational and sovereign related debt of foreign countries, the Adviser may
take into account, but will not rely entirely on, the ratings assigned to the
issuers of such securities. "Additional Information" sets forth excerpts from
the descriptions of ratings of corporate debt securities and sovereign,
subnational and sovereign related debt of foreign countries.

While under normal circumstances, at least 65% of the Portfolio's total
assets will be invested in the fixed-income securities of issuers located or
primarily doing business in at least three different countries, the Portfolio
intends to make investments among countries and to include securities of no
fewer than eight different countries. The Portfolio may invest a substantial
portion of its assets in one or more of those eight countries. See "Risk
Factors" for a description of the risks associated with investments in foreign
securities.

The Portfolio may establish and maintain cash balances for liquidity
purposes. The Adviser may also establish and maintain cash balances in the
Portfolio for temporary defensive purposes without limitation in the event of,
or in anticipation of, a general decline in the market prices of the securities
in which it invests. The Portfolio's cash balances may be invested in high
quality short-term money-market instruments denominated in the U.S. dollar or
foreign currencies, including, but not limited to, government obligations,
certificates of deposit, bankers' acceptances, commercial paper, short-term
corporate debt securities and repurchase agreements.

In pursuing the Portfolio's investment objective, the Adviser intends
to emphasize intermediate-term economic fundamentals relating to various
countries in the international economy, rather than evaluate day-to-day
fluctuations in particular currency and bond markets. The Adviser will review
the economic conditions and prospects relating to various countries in the
international economy and evaluate the available yield differentials with a view
toward maximizing total return.

Global Fixed Income - Part A

<PAGE>

A-4

NON-DIVERSIFIED PORTFOLIO
The Portfolio is a "non-diversified" investment company so that with
respect to 50% of the Portfolio's assets, it will be able to invest more than 5%
of its assets in obligations of one or more issuers, while being limited with
respect to the other half of its assets to investments not exceeding 5% of the
Portfolio's total assets. (A "diversified" investment company would be required
under the Investment Company Act of 1940, as amended (the "1940 Act"), to
maintain at least 75% of its assets in cash (including foreign currency), cash
items, U.S. Government securities, and other securities limited per issuer to
not more than 5% of the investment company's total assets.) In order to enable
certain of its investors to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), the Portfolio, among
other things, may not invest more than 25% of its total assets, at the close of
each quarter of the taxable year, in obligations of any one issuer (other than
U.S. Government securities). In any event, the Portfolio does not intend to
invest more than 5% of its assets in the securities of any one issuer unless
such securities are issued or guaranteed by a national government or are deemed
by the Adviser to be of comparable credit quality. The Portfolio does not
believe that the credit risk inherent in the obligations of stable foreign
governments is significantly greater than that of U.S. Government obligations.
As a "non-diversified" investment company, the Portfolio may invest a greater
proportion of its assets in the securities of a smaller number of issuers and
therefore may be subject to greater market and credit risk than a more broadly
diversified fund.

The Portfolio will not have more than 25% of the current value of its
total assets invested in any single industry, provided that this restriction
shall not apply to debt securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities.

ILLIQUID AND RESTRICTED SECURITIES
The Portfolio may not invest more than 15% of its net assets in
illiquid investments and securities that are subject to restrictions on resale
(i.e., private placements) under the Securities Act of 1933, as amended ("1933
Act"), including securities eligible for resale in reliance on Rule 144A under
the 1933 Act ("restricted securities"). Illiquid investments include securities
that are not readily marketable, repurchase agreements maturing in more than
seven days, time deposits with a notice or demand period of more than seven
days, certain over-the-counter options, and restricted securities, unless it is
determined, based upon continuing review of the trading markets for the specific
restricted security, that such restricted security is eligible for resale under
Rule 144A and is liquid. The Board of Trustees of the Portfolio Trust has
adopted guidelines and delegated to the Adviser the daily function of
determining and monitoring the liquidity of restricted securities. The Board of
Trustees, however, retains oversight focusing on factors such as valuation,
liquidity and availability of information and is ultimately responsible for such
determinations. Investing in restricted securities eligible for resale pursuant
to Rule 144A could have the effect of increasing the level of illiquidity in the
Portfolio to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities. The purchase price and

Global Fixed Income - Part A

<PAGE>

A-5

subsequent valuation of restricted and illiquid securities normally reflect a
discount, which may be significant, from the market price of comparable
securities for which a liquid market exists.

PORTFOLIO TURNOVER
Portfolio turnover is not expected to be in excess of 250% on an annual
basis. A rate of turnover of 100% would occur, for example, if the value of the
lesser of purchases and sales of portfolio securities for a particular year
equaled the average monthly value of portfolio securities owned during the year
(excluding short-term securities). A high rate of portfolio turnover involves a
correspondingly greater amount of transaction costs which must be borne directly
by the Portfolio and thus indirectly by its investors and their shareholders.

STRATEGIC TRANSACTIONS
The Portfolio may, but is not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements), to manage the effective maturity or duration of
fixed-income securities, or to enhance potential gain. Such strategies are
generally accepted as part of modern portfolio management and are regularly
utilized by many mutual funds and other institutional investors. Techniques and
instruments used by the Portfolio may change over time as new instruments and
strategies are developed or regulatory changes occur.

Global Fixed Income - Part A

<PAGE>

A-6

Transactions, an unrealized gain from a particular Strategic Transaction
position would be netted against an unrealized loss from a related Strategic
Transaction position. For example, if the Adviser anticipates that the Belgian
franc will appreciate relative to the French franc, the Portfolio may take a
long forward currency position in the Belgian franc and a short foreign currency
position in the French franc. Under such circumstances, any unrealized loss in
the Belgian franc position would be netted against any unrealized gain in the
French franc position (and vice versa) for purposes of calculating the
Portfolio's net loss exposure. The ability of the Portfolio to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Portfolio will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Portfolio's activities involving
Strategic Transactions may be limited to enable an investor in the Portfolio to
comply with the requirements of Subchapter M of the Code for qualification as a
regulated investment company.

Strategic Transactions have risks associated with them including
possible default by the other party to the transaction, illiquidity and, to the
extent the Adviser's view as to certain market movements is incorrect, the risk
that the use of such Strategic Transactions could result in losses greater than
if they had not been used. The writing of put and call options may result in
losses to the Portfolio, force the purchase or sale, respectively, of portfolio
securities at inopportune times or for prices higher than (in the case of
purchases due to the exercise of put options) or lower than (in the case of
sales due to the exercise of call options) current market values, limit the
amount of appreciation the Portfolio can realize on its investments or cause the
Portfolio to hold a security it might otherwise sell. The use of currency
transactions can result in the Portfolio incurring losses as a result of a
number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Portfolio's position. The writing of
options could significantly increase the Portfolio's portfolio turnover rate
and, therefore, associated brokerage commissions or spreads. In addition,
futures and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time, in certain
circumstances, these transactions tend to limit any potential gain which might
result from an increase in value of such position. The loss incurred by the
Portfolio in writing options on futures and entering into futures transactions
is potentially unlimited; however, as described above, the Portfolio will
attempt to limit its net loss exposure resulting from Strategic Transactions
entered into for non-hedging purposes to not more than 3% of its net assets at
any one time. Futures markets are highly volatile and the use of futures may
increase the volatility of the Portfolio's net asset value.

Global Fixed Income - Part A

<PAGE>

A-7

Finally, entering into futures contracts would create a greater ongoing
potential financial risk than would purchases of options where the exposure is
limited to the cost of the initial premium. Losses resulting from the use of
Strategic Transactions would reduce net asset value and the net result may be
less favorable than if the Strategic Transactions had not been utilized. Further
information concerning the Portfolio's Strategic Transactions is set forth in
Part B.

Global Fixed Income - Part A

<PAGE>

A-8

The Portfolio anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any specified
portion of its assets, as a matter of practice, will be in short sales. However,
no securities will be sold short if, after giving effect to any such short sale,
the total market value of all securities sold short would exceed 5% of the value
of the Portfolio's net assets.

FORWARD ROLL TRANSACTIONS
In an attempt to enhance current income, the Portfolio may enter into
forward roll transactions with respect to mortgage-backed securities to the
extent of 5% of its total assets. In a forward roll transaction, the Portfolio
sells a mortgage-backed security to a financial institution, such as a bank or
broker-dealer, and simultaneously agrees to repurchase a similar security from
the institution at a later date at an agreed-upon price. The mortgage-backed
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories than those sold. During the period between the
sale and repurchase, the Portfolio will not be entitled to receive interest and
principal payments on the securities sold. Proceeds of the sale will be invested
in short-term instruments, such as repurchase agreements or other short term
securities, and the income from these investments, together with any additional
fee income received on the sale and the amount gained by repurchasing the
securities in the future at a lower purchase price, will generate income and
gain for the Portfolio exceeding the yield on the securities sold. Forward roll
transactions involve the risk that the market value of the securities sold by
the Portfolio may decline below the repurchase price of those securities. At the
time the Portfolio enters into a forward roll transaction, it will place in a
segregated custodial account cash or liquid, high grade debt obligations having
a value equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to insure that the equivalent value is
maintained.

WHEN-ISSUED AND "DELAYED DELIVERY" SECURITIES
The Portfolio may commit up to 25% of its net assets to purchase
securities on a "when-issued" or "delayed delivery" basis, but will only do so
with the intention of actually acquiring the securities. The payment obligation
and the interest rate on these securities will be fixed at the time the
Portfolio enters into the commitment, but no income will accrue to the Portfolio
until they are delivered and paid for. Unless the Portfolio has entered into an
offsetting agreement to sell the securities, cash or liquid, high-grade debt
securities equal to the amount of the Portfolio's commitment will be segregated
with the custodian for the Portfolio, to secure the Portfolio's obligation and
to ensure that it is not leveraged.

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<PAGE>

A-9

Securities purchased on a "when-issued" basis may have a market value
on delivery which is less than the amount paid by the Portfolio. Changes in
market value may be based upon the public's perception of the creditworthiness
of the issuer or changes in the level of interest rates. Generally, the value of
"when-issued" securities will fluctuate inversely to changes in interest rates,
i.e., they will appreciate in value when interest rates fall and will depreciate
in value when interest rates rise.

REPURCHASE AGREEMENTS
The Portfolio may invest up to 25% of its net assets in repurchase
agreements under normal circumstances. In no event will the Portfolio invest
more than an aggregate of 15% of its assets in repurchase agreements that are
not terminable within seven days. Repurchase agreements acquired by the
Portfolio will always be fully collateralized as to principal and interest by
money market instruments and will be entered into only with commercial banks,
brokers and dealers considered creditworthy by the Adviser. If the other party
or "seller" of a repurchase agreement defaults, the Portfolio might suffer a
loss to the extent that the proceeds from the sale of the underlying securities
and other collateral held by the Portfolio in connection with the related
repurchase agreement are less than the repurchase price. In addition, in the
event of bankruptcy of the seller or failure of the seller to repurchase the
securities as agreed, the Portfolio could suffer losses, including loss of
interest on or principal of the security and costs associated with delay and
enforcement of the repurchase agreement.

SECURITIES LOANS
In order to realize additional income, the Portfolio may lend a portion
of the securities in its portfolio to broker-dealers and financial institutions,
who from time to time may wish to borrow securities, generally to carry out
transactions for which they have contracted. The market value of securities
loaned by the Portfolio may not exceed 20% of the value of the Portfolio's total
assets, with a 10% limit for any single borrower.

In order to secure their obligations to return securities borrowed from
the Portfolio, borrowers will deposit collateral with the Portfolio's custodian
equal to at least 100% of the market value of the borrowed securities, and the
collateral will be "marked to market" daily. As is the case with any extension
of credit, portfolio securities loans involve certain risks in the event a
borrower should fail financially, including delays or inability to recover the
loaned securities or foreclose against the collateral. The Adviser, under the
supervision of the Portfolio's Board of Trustees, monitors the creditworthiness
of the parties to whom the Portfolio makes securities loans.

INVESTMENT RESTRICTIONS
The Portfolio has adopted certain fundamental policies which may not be
changed without the approval of the Portfolio's investors.

These policies provide, among other things, that the Portfolio may not:
(i) invest, with respect to at least 50% of its total assets, more than 5% in
the

Global Fixed Income - Part A

<PAGE>

A-10

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; (ii) issue senior securities, borrow money or securities or
pledge or mortgage its assets, except that the Portfolio may (a) borrow money
from banks as a temporary measure for extraordinary or emergency purposes (but
not for investment purposes) in an amount up to 15% of the current value of its
total assets, (b) enter into forward roll transactions, and (c) pledge its
assets to an extent not greater than 15% of the current value of its total
assets to secure such borrowings; however, the Portfolio may not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets; or (iii) lend portfolio securities, except that the
Portfolio may lend its portfolio securities with a value up to 20% of its total
assets (with a 10% limit for any borrower).

If any percentage restriction described above is adhered to at the time
of investment, a subsequent increase or decrease in the percentage resulting
from a change in the value of the Portfolio's assets will not constitute a
violation of the restriction. Certain non-fundamental and additional fundamental
policies adopted by the Portfolio are described in Part B.

RISK FACTORS
The Portfolio is not intended to provide an investment program meeting
all the requirements of an investor. Additionally, investors of the Portfolio
should be able and prepared to bear the risk of investment losses which may
accompany the investments contemplated by the Portfolio.

Investing in foreign securities may involve a higher degree of risk
than investing in domestic securities.

FOREIGN SECURITIES
Investing in securities of foreign companies and securities denominated
in foreign currencies or utilizing foreign currency transactions involves
certain risks of political, economic and legal conditions and developments not
typically associated with investing in securities of U.S. companies. Such
conditions or developments might include unfavorable changes in currency
exchange rates, exchange control regulations (including currency blockage),
expropriation of assets of companies in which the Portfolio invests,
nationalization of such companies, imposition of withholding taxes on dividend
or interest payments, and possible difficulty in obtaining and enforcing
judgments against a foreign issuer. Also, foreign securities may not be as
liquid and may be more volatile than comparable domestic securities.
Furthermore, issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting and

Global Fixed Income - Part A

<PAGE>

A-11

disclosure requirements than domestic issuers. The Portfolio, in connection with
its purchases and sales of foreign securities, other than securities denominated
in United States dollars, will incur transaction costs in converting currencies.
Brokerage commissions in foreign countries are generally fixed, and other
transaction costs related to securities exchanges are generally higher than in
the United States. Most foreign securities of the Portfolio are held by foreign
subcustodians that satisfy certain eligibility requirements. However, foreign
subcustodian arrangements are significantly more expensive than domestic
custody. In addition, foreign settlement of securities transactions is subject
to local law and custom that is not, generally, as well established or as
reliable as U.S. regulation and custom applicable to settlements of securities
transactions and, accordingly, there is generally perceived to be a greater risk
of loss in connection with securities transactions in many foreign countries.

EMERGING MARKETS
The Portfolio may invest in countries with emerging economies or
securities markets ("Emerging Markets"). Investments in Emerging Markets
involves risks in addition to those generally associated with investments in
foreign securities. Political and economic structures in many Emerging Markets
may be undergoing significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristics
of more developed countries. As a result, the risks described above relating to
investments in foreign securities, including the risks of nationalization or
expropriation of assets, may be heightened. In addition, unanticipated political
or social developments may affect the values of the Portfolio's investments and
the availability to the Portfolio of additional investments in such Emerging
Markets. The small size and inexperience of the securities markets in certain
Emerging Markets and the limited volume of trading in securities in those
markets may make the Portfolio's investments in such countries less liquid and
more volatile than investments in countries with more developed securities
markets (such as the U.S., Japan or most Western European countries).

Global Fixed Income - Part A

<PAGE>

A-12

generally more sensitive to adverse economic or political changes or, in the
case of corporate issuers, to individual company developments. BB Rated
Securities also may have less liquid markets than higher rated securities, and
their liquidity, as well as their value, may be more severely affected by
adverse economic conditions. Adverse publicity and investor perceptions of the
market, as well as newly enacted or proposed legislation, may also have a
negative impact on the market for BB Rated Securities.

ITEM 5. MANAGEMENT OF THE FUND.

INVESTMENT ADVISER
Standish International Management Company, L.P. (the "Adviser"), One
Financial Center, Boston, MA 02111, serves as investment adviser to the
Portfolio pursuant to an investment advisory agreement and manages the
Portfolio's investments and affairs subject to the supervision of the Trustees
of the Portfolio Trust. The Adviser is a Delaware limited partnership which was
organized in 1991 and is a registered investment adviser under the Investment
Advisers Act of 1940. The general partner of the Adviser is Standish, Ayer &
Wood, Inc. ("Standish"), One Financial Center, Boston, MA 02111, which holds a
99.98% partnership interest. The limited partners, who each hold a 0.01%
interest in the Adviser, are Walter M. Cabot, Sr., Chairman of the Board of the
Adviser and a Director and Senior Adviser to Standish, and D. Barr Clayson, the
President of the Adviser and a Managing Director of Standish.

Standish and the Adviser provide fully discretionary management
services and counseling and advisory services to a broad range of clients
throughout the United States and abroad.

As of February 29, 1996, Standish or the Adviser served as the
investment adviser to each of the following fourteen funds in the Standish, Ayer
& Wood family of funds:

Global Fixed Income - Part A

<PAGE>

A-13
<TABLE>
<CAPTION>

Net Assets
(FEBRUARY 29, 1996)
<S> <C>

Corporate pension funds are the largest asset under active management
by Standish. Standish's clients also include charitable and educational
endowment funds, financial institutions, trusts and individual investors. As of
February 29, 1996, Standish managed approximately $29 billion in assets.

The Portfolio's portfolio manager is Richard S. Wood. Mr. Wood has been
primarily responsible for the day-to-day management of the Standish Global Fixed
Income Fund, a series of Standish, Ayer & Wood Investment Trust (the "Fund"),
since the Fund's inception and of the Portfolio's portfolio since the Fund's
conversion to the Hub and Spoke master-feeder fund structure on April 25, 1996.
During the past five years, Mr. Wood has served as a Vice President and Director
of Standish, President of the Standish, Ayer & Wood Investment Trust and
Executive Vice President of the Adviser.

Global Fixed Income - Part A

<PAGE>

A-14

EXPENSES
The Portfolio is responsible for all of its costs and expenses not
expressly stated to be payable by the Adviser under the investment advisory
agreement with the Portfolio. Among other expenses, the Portfolio pays
investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; expenses of notices and reports of interest-holders; and the expenses
of the Portfolio's administrator. The Portfolio will pay legal and auditing
fees; any registration and reporting fees and expenses; and Trustees' fees and
expenses. Expenses of the Portfolio Trust which relate to more than one of their
respective series are allocated among such series by the Adviser and Standish in
an equitable manner.

The Adviser has agreed in the advisory agreement to limit the
Portfolio's total annual operating expenses (excluding brokerage commissions,
taxes and extraordinary expenses) to 0.65% of the Portfolio's average daily net
assets. If the expense limit is exceeded, the compensation due the Adviser for
such fiscal year shall be proportionately reduced by the amount of such excess
by a reduction or refund thereof at the time such compensation is payable after
the end of each calendar month, subject to readjustment during such fiscal year.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

Global Fixed Income - Part A

<PAGE>

A-15

to circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations.

At April 25, 1996, Standish Global Fixed Income Fund, One Financial
Center, Boston, Massachusetts, 02111, had sole voting and investment power with
respect to more than 25% of the then outstanding interests of the Portfolio, and
was deemed to beneficially own such interest on behalf of its shareholders and
to control the Portfolio.

Please see Item 7 for a discussion of the Portfolio's dividend policy.

ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.

Beneficial interests in the Portfolio are issued solely in transactions
that are exempt from registration under the 1933 Act. See "General Description
of Registrant" above.

Global Fixed Income - Part A

<PAGE>

A-16

The Portfolio Trust reserves the right to cease accepting investments
in the Portfolio at any time or to reject any investment order.

Global Fixed Income - Part A

<PAGE>

A-17

aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the Valuation Time, on the following
Business Day.

It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its investment securities (as such phrase is used in the 1940
Act) in the Portfolio.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value next determined after receipt by the Portfolio
or its agent of a withdrawal request in proper form. The proceeds of a
withdrawal will be paid by the Portfolio in federal funds normally on the
Business Day the withdrawal is effected, but in any event within five Business
Days following receipt of the request. The Portfolio reserves the right to pay
redemptions in kind. Investments in the Portfolio may not be transferred.

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

Global Fixed Income - Part A

<PAGE>

A-18

ADDITIONAL INFORMATION.

KEY TO MOODY'S RATINGS FOR CORPORATE BONDS AND FOR SOVEREIGN, SUBNATIONAL AND
SOVEREIGN RELATED ISSUERS

Aaa -Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa -Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.

A -Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa -Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.

Ba -Bonds which are rated Ba are judged to have speculative elements.
Their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

STANDARD & POOR'S RATINGS DEFINITIONS FOR
CORPORATE BONDS

AAA -Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA -Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small
degree.

Global Fixed Income - Part A

<PAGE>

A-19

A -Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.

BBB -Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.

BB -Debt rated BB is regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such debt will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.

STANDARD & POOR'S CHARACTERISTICS OF
SOVEREIGN DEBT OF FOREIGN COUNTRIES

AAA -Stable, predictable governments with demonstrated track record of
responding flexibly to changing economic and political circumstances

-Key players in the global trade and financial system

-Prosperous and resilient economies, high per capita incomes

-Low fiscal deficits and government debt, low inflation

-Low external debt

AA -Stable, predictable governments with demonstrated track record of
responding to changing economic and political circumstances

-Tightly integrated into global trade and financial system

-Differ from AAAs only to a small degree because:

-Economies are smaller, less prosperous and generally more vulnerable
to adverse external influences (e.g., protection and terms of trade
shocks)

-More variable fiscal deficits, government debt and inflation

-Moderate to high external debt.

A -Politics evolving toward more open, predictable forms of governance in
environment of rapid economic and social change

-Established trend of integration into global trade and financial
system

Global Fixed Income - Part A

<PAGE>

A-20

-Economies are smaller, less prosperous and generally more vulnerable
to adverse external influences (e.g., protection and terms of trade
shocks), but

-Usually rapid growth in output and per capita incomes

-Manageable through variable fiscal deficits, government debt and
inflation

-Usually low but variable debt.

BB -Political factors a source of major uncertainty, either because system
is in transition or due to external threats, or both, often in
environment of rapid economic and social change

-Integration into global trade and financial system growing but
untested

-Low to moderate income developing economies but variable performance
and quite vulnerable to adverse external influences

-Variable to high fiscal deficits, government debt and inflation

-Very high and variable debt, often graduates of Brady plan but track
record not well established.

DESCRIPTION OF DUFF & PHELPS RATINGS
FOR CORPORATE BONDS AND FOR
SOVEREIGN, SUBNATIONAL AND SOVEREIGN RELATED ISSUERS

AAA -Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA -High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.

A -Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

BBB -Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.

BB -Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according
to industry conditions or company fortunes. Overall quality may move up
or down frequently within this category.

Global Fixed Income - Part A

<PAGE>

IBAC LONG TERM RATINGS FOR CORPORATE
BONDS AND FOR SOVEREIGN, SUBNATIONAL
AND SOVEREIGN RELATED ISSUES

AAA -Obligations for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
substantially.

AA -Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.

A -Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.

BBB -Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.

BB -Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest
exists, but is susceptible over time to adverse changes in business,
economic or financial conditions.

* * *

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH FIXED INCOME PORTFOLIO

PART B

ITEM 10. COVER PAGE.

This Part B expands upon and supplements the information contained in
Part A of Standish Fixed Income Portfolio (the "Portfolio"), a separate
investment series of Standish, Ayer & Wood Master Portfolio (the "Portfolio
Trust"). This Part B should be read in conjunction with such Part A.

NEITHER PART A NOR THIS PART B CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH FIXED INCOME PORTFOLIO.

ITEM 11. TABLE OF CONTENTS. PAGE

General Information and History . . . . . . . . . . . B- 1
Investment Objectives and Policies . . . . . . . . . B- 1
Management of the Portfolio . . . . . . . . . . . . . B-15
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . B-18
Investment Advisory and Other Services . . . . . . . B-18
Brokerage Allocation and Other Practices . . . . . . B-20
Capital Stock and Other Securities . . . . . . . . . B-21
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . B-21
Tax Status . . . . . . . . . . . . . . . . . . . . . B-23
Underwriters . . . . . . . . . . . . . . . . . . . . B-26
Calculation of Performance Data . . . . . . . . . . . B-26
Financial Statements . . . . . . . . . . . . . . . . B-26

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

Part A contains additional information about the investment objectives
and policies of the Portfolio. This Part B should be read only in conjunction
with Part A. This section contains supplemental information concerning the types
of securities and other instruments in which the Portfolio may invest, the
investment policies and portfolio strategies that the Portfolio may utilize and
certain risks attendant to those investments, policies and strategies.

MONEY MARKET INSTRUMENTS AND REPURCHASE AGREEMENTS
Money market instruments include short-term U.S. Government securities,
commercial paper (promissory notes issued by corporations to finance their

<PAGE>

B-2

short-term credit needs), negotiable certificates of deposit, nonnegotiable
fixed time deposits, bankers' acceptances and repurchase agreements.

U.S. Government securities include securities which are direct
obligations of the U.S. Government backed by the full faith and credit of the
United States, and securities issued by agencies and instrumentalities of the
U.S. Government, which may be guaranteed by the U.S. Treasury or supported by
the issuer's right to borrow from the U.S. Treasury or may be backed by the
credit of the federal agency or instrumentality itself. Agencies and
instrumentalities of the U.S. Government include, but are not limited to,
Federal Land Banks, the Federal Farm Credit Bank, the Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks and the
Federal National Mortgage Association.

Investments in commercial paper will be rated Prime-1 by Moody's
Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings Group
("S&P") or Duff 1+ by Duff & Phelps, which are the highest ratings assigned by
these rating services (even if rated lower by one or more of the other
agencies), or which, if not rated or rated lower by one or more of the agencies
and not rated by the other agency or agencies, are judged by Standish, Ayer &
Wood, Inc. ("Standish" or the "Adviser"), the Portfolio's investment adviser, to
be of equivalent quality to the securities so rated.

A repurchase agreement is an agreement under which the Portfolio
acquires money market instruments (generally U.S. Government securities) from a
commercial bank, broker or dealer, subject to resale to the seller at an
agreed-upon price and date (normally the next business day). The resale price
reflects an agreed-upon interest rate effective for the period the instruments
are held by the Portfolio and is unrelated to the interest rate on the
instruments. The instruments acquired by the Portfolio (including accrued
interest) must have an aggregate market value in excess of the resale price and
will be held by the custodian bank for the Portfolio until they are repurchased.
The Trustees of the Portfolio Trust will monitor the standards which the Adviser
will use in reviewing the credit worthiness of any party to a repurchase
agreement with the Portfolio.

The use of repurchase agreements involves certain risks. For example,
if the seller defaults on its obligation to repurchase the instruments acquired
by the Portfolio at a time when their market value has declined, the Portfolio
may incur a loss. If the seller becomes insolvent or subject to liquidation or
reorganization under bankruptcy or other laws, a court may determine that the
instruments acquired by the Portfolio are collateral for a loan by the Portfolio
and therefore are subject to sale by the trustee in bankruptcy. Finally, it is
possible that the Portfolio may not be able to substantiate its interest in the
instruments it acquires. While the Trustees acknowledge these risks, it is
expected that they can be controlled through careful documentation and
monitoring.

STRATEGIC TRANSACTIONS
The Portfolio may, but is not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest

Fixed Income - Part B

<PAGE>

B-3

rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities, or to enhance potential gain. Such strategies are generally accepted
as part of modern portfolio management and are regularly utilized by many mutual
funds and other institutional investors. Techniques and instruments used by the
Portfolio may change over time as new instruments and strategies are developed
or regulatory changes occur.

In the course of pursuing its investment objective, the Portfolio may
purchase and sell (write) exchange-listed and over-the-counter put and call
options on securities, equity and fixed-income indices and other financial
instruments; purchase and sell financial futures contracts and options thereon;
enter into various interest rate transactions such as swaps, caps, floors or
collars; and enter into various currency transactions such as currency forward
contracts, currency futures contracts, currency swaps or options on currencies
or currency futures (collectively, all the above are called "Strategic
Transactions"). Strategic Transactions may be used in an attempt to protect
against possible changes in the market value of securities held in or to be
purchased for the Portfolio's portfolio resulting from securities markets or
currency exchange rate fluctuations, to protect the Portfolio's unrealized gains
in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or duration
of the Portfolio's portfolio, or to establish a position in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities. In addition to the hedging transactions referred to in the preceding
sentence, Strategic Transactions may also be used to enhance potential gain in
circumstances where hedging is not involved although the Portfolio will attempt
to limit its net loss exposure resulting from Strategic Transactions entered
into for such purposes to not more than 3% of the Portfolio's net assets at any
one time and, to the extent necessary, the Portfolio will close out transactions
in order to comply with this limitation. (Transactions such as writing covered
call options are considered to involve hedging for the purposes of this
limitation.) In calculating the Portfolio's net loss exposure from such
Strategic Transactions, an unrealized gain from a particular Strategic
Transaction position would be netted against an unrealized loss from a related
Strategic Transaction position. For example, if the Adviser anticipates that the
Belgian franc will appreciate relative to the French franc, the Portfolio may
take a long forward currency position in the Belgian franc and a short foreign
currency position in the French franc. Under such circumstances, any unrealized
loss in the Belgian franc position would be netted against any unrealized gain
in the French franc position (and vice versa) for purposes of calculating the
Portfolio's net loss exposure. The ability of the Portfolio to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Portfolio will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Portfolio's activities involving
Strategic Transactions may be limited in order to enable certain of its
investors to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company.

Fixed Income - Part B

<PAGE>

B-4

RISKS OF STRATEGIC TRANSACTIONS
Strategic Transactions have risks associated with them including
possible default by the other party to the transaction, illiquidity and, to the
extent the Adviser's view as to certain market movements is incorrect, the risk
that the use of such Strategic Transactions could result in losses greater than
if they had not been used. The writing of put and call options may result in
losses to the Portfolio, force the purchase or sale, respectively, of portfolio
securities at inopportune times or for prices higher than (in the case of
purchases due to the exercise of put options) or lower than (in the case of
sales due to the exercise of call options) current market values, limit the
amount of appreciation the Portfolio can realize on its investments or cause the
Portfolio to hold a security it might otherwise sell. The use of currency
transactions can result in the Portfolio incurring losses as a result of a
number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Portfolio's position. The writing of
options could significantly increase the Portfolio's portfolio turnover rate
and, therefore, associated brokerage commissions or spreads. In addition,
futures and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time, in certain
circumstances, they tend to limit any potential gain which might result from an
increase in value of such position. The loss incurred by the Portfolio in
writing options on futures and entering into futures transactions is potentially
unlimited; however, as described above, the Portfolio will attempt to limit its
net loss exposure resulting from Strategic Transactions entered into for
non-hedging purposes to not more than 3% of its net assets at any one time.
Futures markets are highly volatile and the use of futures may increase the
volatility of the Portfolio's net asset value. Finally, entering into futures
contracts would create a greater ongoing potential financial risk than would
purchases of options where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value and the net result may be less favorable than if the Strategic
Transactions had not been utilized.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
The Investment Company Act of 1940, as amended (the "1940 Act"), limits
the ability of one investment company to invest in the securities of another
investment company. The staff of the Securities and Exchange Commission (the
"SEC") takes the position that CMOs and certain other securitized assets are
investment companies for this purpose unless such issuers have complied with an
exemptive rule or have obtained orders from the SEC exempting them from all
provisions of the Act. The Portfolio intends to operate within the applicable
limitations. See the Part A for a further description of CMOs.

Fixed Income - Part B

<PAGE>

B-5

GENERAL CHARACTERISTICS OF OPTIONS
Put options and call options typically have similar structural
characteristics and operational mechanics regardless of the underlying
instrument on which they are purchased or sold. Thus, the following general
discussion relates to each of the particular types of options discussed in
greater detail below. In addition, many Strategic Transactions involving options
require segregation of the Portfolio's assets in special accounts, as described
below under "Use of Segregated Accounts."

A put option gives the purchaser of the option, in consideration for
the payment of a premium, the right to sell, and the writer the obligation to
buy (if the option is exercised), the underlying security, commodity, index,
currency or other instrument at the exercise price. For instance, the
Portfolio's purchase of a put option on a security might be designed to protect
its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the
Portfolio the right to sell such instrument at the option exercise price. A call
option, in consideration for the payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell (if the
option is exercised), the underlying instrument at the exercise price. The
Portfolio may purchase a call option on a security, futures contract index,
currency or other instrument to seek to protect the Portfolio against an
increase in the price of the underlying instrument that it intends to purchase
in the future by fixing the price at which it may purchase such instrument. An
American style put or call option may be exercised at any time during the option
period while a European style put or call option may be exercised only upon
expiration or during a fixed period prior thereto. The Portfolio is authorized
to purchase and sell exchange listed options and over-the-counter options ("OTC"
options). Exchange listed options are issued by a regulated intermediary such as
the Options Clearing Corporation ("OCC"), which guarantees the performance of
the obligations of the parties to such options. The discussion below uses the
OCC as an example, but is also applicable to other financial intermediaries.

With certain exceptions, exchange listed options generally settle by
physical delivery of the underlying security or currency, although in the future
cash settlement may become available. Index options and Eurodollar instruments
are cash settled for the net amount, if any, by which the option is in-the-money
(i.e., where the value of the underlying instrument exceeds, in the case of a
call option, or is less than, in the case of a put option, the exercise price of
the option) at the time the option is exercised. Frequently, rather than taking
or making delivery of the underlying instrument through the process of
exercising the option, listed options are closed by entering into offsetting
purchase or sale transactions that do not result in ownership of the new option.

The Portfolio's ability to close out its position as a purchaser or
seller of an exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. There is no assurance that a liquid option
market on an exchange will exist. In the event that the relevant market for an
option on an exchange ceases to exist, outstanding options on that exchange
would generally continue to be exercisable in accordance with their terms.

Fixed Income - Part B

<PAGE>

B-6

The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct agreement with
the Counterparty. In contrast to exchange listed options, which generally have
standardized terms and performance mechanics, all the terms of an OTC option,
including such terms as method of settlement, term, exercise price, premium,
guarantees and security, are set by negotiation of the parties. The Portfolio
will generally sell (write) OTC options (other than OTC currency options) that
are subject to a buy-back provision permitting the Portfolio to require the
Counterparty to sell the option back to the Portfolio at a formula price within
seven days. (To the extent that the Portfolio does not do so, the OTC options
are subject to the Portfolio's restriction on illiquid securities.) The
Portfolio expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Portfolio will engage in OTC option transactions only with U.S.
Government securities dealers recognized by the Federal Reserve Bank of New York
as "Primary dealers," or broker dealers, domestic or foreign banks or other
financial institutions which have received, combined with any credit
enhancements, a long-term debt rating of A from S&P or Moody's or an equivalent
rating from any other nationally recognized statistical rating organization
("NRSRO") or the debt of which is determined to be of equivalent credit quality
by the Adviser. The staff of the SEC currently takes the position that, absent
the buy-back provisions discussed above, OTC options purchased by the Portfolio,
and portfolio securities "covering" the amount of the Portfolio's obligation
pursuant to an OTC option sold by it (the cost of the sell-back plus the
in-the-money amount, if any) are illiquid, and are subject to the Portfolio's
limitation on investing in illiquid securities. However, for options written
with "primary dealers" pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount which is considered to be illiquid
may be calculated by reference to a formula price.

Fixed Income - Part B

<PAGE>

B-7

portfolio or will increase the Portfolio's income. The sale (writing) of put
options can also provide income.

The Portfolio may purchase and sell (write) call options on securities
including U.S. Treasury and agency securities, mortgage-backed securities,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on U.S. and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Portfolio must be
covered (i.e., the Portfolio must own the securities or the futures contract
subject to the call) or must meet the asset segregation requirements described
below as long as the call is outstanding. Even though the Portfolio will receive
the option premium to help offset any loss, the Portfolio may incur a loss if
the exercise price is below the market price for the security subject to the
call at the time of exercise. A call sold by the Portfolio also exposes the
Portfolio during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying security or
instrument and may require the Portfolio to hold a security or instrument which
it might otherwise have sold.

The Portfolio may purchase and sell (write) put options on securities
including U.S. Treasury and agency securities, mortgage backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts. The Portfolio will not sell put options if, as a result, more
than 50% of the Portfolio's assets would be required to be segregated to cover
its potential obligations under such put options other than those with respect
to futures and options thereon. In selling put options, there is a risk that the
Portfolio may be required to buy the underlying security at a price above the
market price.

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES
The Portfolio may also purchase and sell (write) call and put options
on securities indices and other financial indices. Options on securities indices
and other financial indices are similar to options on a security or other
instrument except that, rather than settling by physical delivery of the
underlying instrument, they settle by cash settlement. For example, an option on
an index gives the holder the right to receive, upon exercise of the option, an
amount of cash if the closing level of the index upon which the option is based
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option (except if, in the case of an OTC option, physical
delivery is specified). This amount of cash is equal to the differential between
the closing price of the index and the exercise price of the option, which also
may be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount. In addition to
the methods described above, the Portfolio may cover call options on a
securities index by owning securities whose price changes are expected to be
similar to those of the underlying index, or by having an absolute and immediate
right to acquire such securities without additional cash consideration (or for

Fixed Income - Part B

<PAGE>

B-8

additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities in its portfolio.

GENERAL CHARACTERISTICS OF FUTURES
The Portfolio may enter into financial futures contracts or purchase or
sell put and call options on such futures. Futures are generally bought and sold
on the commodities exchanges where they are listed and involve payment of
initial and variation margin as described below. The sale of futures contracts
creates a firm obligation by the Portfolio, as seller, to deliver to the buyer
the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). The purchase of futures
contracts creates a corresponding obligation by the Portfolio, as purchaser to
purchase a financial instrument at a specific time and price. Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Portfolio's use of financial futures and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the regulations of the Commodity Futures Trading Commission relating
to exclusions from regulation as a commodity pool operator. Those regulations
currently provide that the Portfolio may use commodity futures and option
positions (i) for bona fide hedging purposes without regard to the percentage of
assets committed to margin and option premiums, or (ii) for other purposes
permitted by the SEC to the extent that the aggregate initial margin and option
premiums required to establish such non-hedging positions (net of the amount
that the positions were "in the money" at the time of purchase) do not exceed 5%
of the net asset value of the Portfolio's portfolio, after taking into account
unrealized profits and losses on such positions. Typically, maintaining a
futures contract or selling an option thereon requires the Portfolio to deposit,
with its custodian for the benefit of a futures commission merchant as security
for its obligations an amount of cash or other specified assets (initial margin)
which initially is typically 1% to 10% of the face amount of the contract (but
may be higher in some circumstances). Additional cash or assets (variation
margin) may be required to be deposited directly with the futures commission
merchant thereafter on a daily basis as the value of the contract fluctuates.
The purchase of an option on financial futures involves payment of a premium for
the option without any further obligation on the part of the Portfolio. If the
Portfolio exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just it would for any position. Futures contracts and options
thereon are generally settled by entering into an offsetting transaction but
there can be no assurance that the position can be offset prior to settlement at
an advantageous price, nor that delivery will occur. The segregation
requirements with respect to futures contracts and options thereon are described
below.

CURRENCY TRANSACTIONS
The Portfolio may engage in currency transactions with Counterparties
in order to hedge the value of portfolio holdings denominated in particular

Fixed Income - Part B

<PAGE>

B-9

currencies against fluctuations in relative value or to enhance potential gain.
Currency transactions include currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional (agreed upon)
difference among two or more currencies and operates similarly to an interest
rate swap, which is described below. A Portfolio may enter into over-the-counter
currency transactions with Counterparties which have received, combined with any
credit enhancements, a long term debt rating of A by S&P or Moody's,
respectively, or that have an equivalent rating from NRSRO or (except for OTC
currency options) are determined to be equivalent credit quality by the Adviser.

The Portfolio's dealings in forward currency contracts and other
currency transactions such as futures, options, options on futures and swaps
will generally be limited to hedging involving either specific transactions or
portfolio positions. See "Strategic Transactions." Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of a Portfolio, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

The Portfolio will not enter into a transaction to hedge currency
exposure to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging as described below.

The Portfolio may also cross-hedge currencies by entering into
transactions to purchase or sell one or more currencies that are expected to
decline in value in relation to other currencies to which the Portfolio has or
in which the Portfolio expects to have portfolio exposure. For example, the
Portfolio may hold a French government bond and the Adviser may believe that
French francs will deteriorate against German marks. The Portfolio would sell
French francs to reduce its exposure to that currency and buy German marks. This
strategy would be a hedge against a decline in the value of French francs,
although it would expose the Portfolio to declines in the value of the German
mark relative to the U.S. dollar.

Fixed Income - Part B

<PAGE>

B-10

are or are expected to be denominated, and to buy U.S. dollars. The amount of
the contract would not exceed the value of the Portfolio's securities
denominated in linked currencies. For example, if the Adviser considers that the
Austrian schilling is linked to the German deutschemark (the "D-mark"), the
Portfolio holds securities denominated in schillings and the Adviser believes
that the value of schillings will decline against the U.S. dollar, the Adviser
may enter into a contract to sell D-marks and buy dollars. Proxy hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to the Portfolio
if the Currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived linkage
between various currencies may not be present or may not be present during the
particular time that the Portfolio is engaging in proxy hedging. If the
Portfolio enters into a currency hedging transaction, the Portfolio will comply
with the asset segregation requirements described below.

RISKS OF CURRENCY TRANSACTIONS
Currency transactions are subject to risks different from those of
other portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy, purchases
and sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Portfolio
if it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks that
apply to the use of futures generally. Further, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in the
issuing nation. Trading options on currency futures is relatively new, and the
ability to establish and close out positions on such options is subject to the
maintenance of a liquid market which may not always be available. Currency
exchange rates may fluctuate based on factors extrinsic to that country's
economy.

COMBINED TRANSACTIONS
The Portfolio may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions, structured notes and any combination of futures, options, currency
and interest rate transactions (component transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Adviser it is in the best interests of the Portfolio to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

Fixed Income - Part B

<PAGE>

B-11

SWAPS, CAPS, FLOORS AND COLLARS
Among the Strategic Transactions into which the Portfolio may enter are
interest rate, currency and index swaps and the purchase or sale of related
caps, floors and collars. The Portfolio expects to enter into these transactions
primarily for hedging purposes, including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio,
protecting against currency fluctuations, as a duration management technique or
protecting against an increase in the price of securities the Portfolio
anticipates purchasing at a later date. Swaps, caps, floors and collars may also
be used to enhance potential gain in circumstances where hedging in not involved
although, as described above, the Portfolio will attempt to limit its net loss
exposure resulting from swaps, caps, floors and collars and other Strategic
Transactions entered into for such purposes to not more than 3% of the
Portfolio's net assets at any one time. The Portfolio will not sell interest
rate caps or floors where it does not own securities or other instruments
providing the income stream the Portfolio may be obligated to pay. Interest rate
swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain rate of return within a predetermined range of
interest rates or values.

Fixed Income - Part B

<PAGE>

B-12

markets for the specific security, that such security is liquid. The Board of
Trustees of the Portfolio Trust has adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity of swaps,
caps, floors and collars. The Portfolio Trust's Board of Trustees, however,
retains oversight focusing on factors such as valuation, liquidity and
availability of information and is ultimately responsible for such
determinations. The staff of the SEC currently takes the position that swaps,
caps, floors and collars are illiquid, and are subject to the Portfolio's
limitation on investing in illiquid securities.

EURODOLLAR CONTRACTS
The Portfolio may make investments in Eurodollar contracts. Eurodollar
contracts are U.S. dollar-denominated futures contracts or options thereon which
are linked to the London Interbank Offered Rate ("LlBOR"), although foreign
currency-denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. The Portfolio might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

RISKS OF STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES
When conducted outside the United States, Strategic Transactions may
not be regulated as rigorously as in the United States, may not involve a
clearing mechanism and related guarantees, and are subject to the risk of
governmental actions affecting trading in, or the prices of, foreign securities,
currencies and other instruments. The value of such positions also could be
adversely affected by: (i) lesser availability than in the United States of data
on which to make trading decisions, (ii) delays in the Portfolio's ability to
act upon economic events occurring in foreign markets during non-business hours
in the United States, (iii) the imposition of different exercise and settlement
terms and procedures and margin requirements than in the United States, (iv)
lower trading volume and liquidity, and (v) other complex foreign political,
legal and economic factors. At the same time, Strategic Transactions may offer
advantages such as trading in instruments that are not currently traded in the
United States or arbitrage possibilities not available in the United States.

Fixed Income - Part B

<PAGE>

B-13

account for fluctuations in the value of the account or the Portfolio's
obligations on the underlying Strategic Transactions. Assets held in a
segregated account would not be sold while the Strategic Transaction is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

"WHEN-ISSUED" AND "DELAYED DELIVERY SECURITIES"
The Portfolio may commit up to 15% of its net assets to purchase
securities on a "when-issued" and "delayed delivery" basis, which means that
delivery and payment for the securities will normally take place 15 to 45 days
after the date of the transaction. The payment obligation and interest rate on
the securities are fixed at the time the Portfolio enters into the commitment,
but interest will not accrue to the Portfolio until delivery of and payment for
the securities. Although the Portfolio will only make commitments to purchase
"when-issued" and "delayed delivery" securities with the intention of actually
acquiring the securities, the Portfolio may sell the securities before the
settlement date if deemed advisable by the Adviser.

Unless the Portfolio has entered into an offsetting agreement to sell
the securities purchased on a when-issued or forward commitment basis, cash or
liquid, high-grade debt obligations with a market value at least equal to the
amount of the Portfolio's commitment will be segregated with the Portfolio's
custodian bank. If the market value of these securities declines, additional
cash or securities will be segregated daily so that the aggregate market value
of the segregated securities equals the amount of the Portfolio's commitment.

Securities purchased on a "when-issued" and "delayed delivery" basis
may have a market value on delivery which is less than the amount paid by the
Portfolio. Changes in market value may be based upon the public's perception of
the creditworthiness of the issuer or changes in the level of interest rates.
Generally, the value of "when-issued" securities will fluctuate inversely to
changes in interest rates, i.e., they will appreciate in value when interest
rates fall and will depreciate in value when interest rates rise.

PORTFOLIO TURNOVER
It is not the policy of the Portfolio to purchase or sell securities
for trading purposes. However, the Portfolio places no restrictions on portfolio
turnover and it may sell any portfolio security without regard to the period of
time it has been held, except as may be necessary to enable certain of its
investors to maintain their status as a regulated investment company under the
Code. The Portfolio may therefore generally change its portfolio investments at
any time in accordance with the Adviser's appraisal of factors affecting any
particular issuer or market, or the economy in general. A rate of turnover of
100% would occur if the value of the lesser of purchases and sales of portfolio
securities for a particular year equaled the average monthly value of portfolio
securities owned during the year (excluding short-term securities). A high rate
of portfolio turnover (100% or more) involves a correspondingly greater amount
of brokerage commissions and other costs which must be borne directly by the

Fixed Income - Part B

<PAGE>

B-14

Portfolio and thus indirectly by its shareholders. It may also result in the
realization of larger amounts of net short-term capital gains, which (when
allocated to and distributed by an investor in the Portfolio that qualifies as a
regulated investment company) are taxable to its shareholders as ordinary income
and may, under certain circumstances, make it more difficult for such an
investor to qualify as a regulated investment company under the Code.

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following fundamental policies. Each of
the Portfolio's fundamental policies cannot be changed unless the change is
approved by the "vote of the outstanding voting securities" of the Portfolio,
which phrase as used herein means the lesser of (i) 67% or more of the voting
securities of the Portfolio present at a meeting, if the holders of more than
50% of the outstanding voting securities of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Portfolio.

As a matter of fundamental policy, the Portfolio may not:

1. Invest, with respect to at least 75% of its total assets, more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer.

2. Issue senior securities, borrow money or securities or pledge or
mortgage its assets, except that the Portfolio may (a) borrow money
from banks as a temporary measure for extraordinary or emergency
purposes (but not for investment purposes) in an amount up to 15% of
the current value of its total assets, (b) enter into forward roll
transactions, and (c) pledge its assets to an extent not greater than
15% of the current value of its total assets to secure such borrowings.

3. Lend portfolio securities except that the Portfolio may enter into
repurchase agreements.

4. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
Government securities, including mortgage pass-through securities
(GNMAs).

5. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the
Portfolio may be deemed to be an underwriter under the Securities Act
of 1933.

6. Purchase real estate or real estate mortgage loans, although the
Portfolio may purchase marketable securities of companies which deal in
real estate, real estate mortgage loans or interests therein.

Fixed Income - Part B

<PAGE>

B-15

7. Purchase securities on margin (except that the Portfolio 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
Portfolio may purchase and sell financial futures contracts and options
on financial futures contracts and engage in foreign currency exchange
transactions.

The following restrictions are not fundamental policies and may be
changed by the Trustees of the Portfolio Trust without investor approval in
accordance with applicable laws, regulations or regulatory policy. The Portfolio
may not:

a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the Portfolio's net assets or (b)
at all times during which a short position is open it owns an equal
amount of such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.

b. Invest in companies for the purpose of exercising control or
management.

c. Purchase securities of any other investment company, provided that the
Portfolio may make such a purchase as part of a merger, consolidation,
or acquisition of assets, and provided further that the Portfolio may
make such a purchase in the open market where no commission or profit
to a sponsor or dealer results from the purchase other than customary
brokers' commissions and then only to the extent permitted by the 1940
Act.

d. Purchase or write options, except as described under "Strategic
Transactions."

e. Invest in interests in oil, gas or other exploration or development
programs.

f. Invest more than 5% of the assets of the Portfolio in the securities of
any issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than obligations issued or guaranteed by the
U.S. Government or its agencies, and securities fully collateralized by
such securities.

g. Invest in securities of any company if any officer or director
(Trustee) of the Portfolio Trust or of the Portfolio's investment
adviser owns more than 1/2 of 1% of the outstanding securities of such
company and such officers and directors (Trustees) own in the aggregate
more than 5% of the securities of such company.

h. Invest more than an aggregate of 15% of the net assets of the Portfolio
in the aggregate of (a) repurchase agreements which are not terminable
within

Fixed Income - Part B

<PAGE>

seven days, (b) securities subject to legal or contractual restrictions
on resale or for which there are no readily available market quotations
and (c) other illiquid securities, including nonnegotiable fixed time
deposits.

i. Invest more than 5% of its net assets in repurchase agreements.

j. Make any additional investments while its outstanding bank borrowings
exceed 5% of its total assets.

ITEM 14. MANAGEMENT OF THE PORTFOLIO.

TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST
The Trustees and executive officers of the Portfolio Trust are listed
below. All executive officers of the Portfolio Trust are affiliates of Standish,
Ayer & Wood, Inc., the Portfolio's investment adviser.
<TABLE>
<CAPTION>

NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION
AND DATE OF BIRTH WITH TRUST DURING PAST 5 YEARS
- ----------------- ------------- -------------------
<S> <C> <C>

*D. Barr Clayson, 7/29/35 Vice President Vice President and Managing
c/o Standish, Ayer & Wood, Inc. and Trustee Director, Standish, Ayer
One Financial Center & Wood, Inc.; President,
Boston, MA 02111 Standish International
Management Company, L.P.

Samuel C. Fleming, 9/30/40 Trustee Chairman of the Board and
c/o Decision Resources, Inc. Chief Executive Officer,
1100 Winter Street Decision Resources, Inc.;
Waltham, MA 02154 through 1989, Senior V.P.
Arthur D. Little

Benjamin M. Friedman, 8/5/44 Trustee William Joseph Maier
c/o Harvard University Professor of Political
Cambridge, MA 02138 Economy, Harvard
University

John H. Hewitt, 4/11/35 Trustee Trustee, The Peabody
P.O. Box 307 Foundation; Trustee,
So. Woodstock, VT 05071 Visiting Nurse Alliance of
Vermont and New Hampshire
</TABLE>

Fixed Income - Part B

<PAGE>

<TABLE>
<CAPTION>
B-17

NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION
AND DATE OF BIRTH WITH TRUST DURING PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>

Edward H. Ladd*, 1/3/38 Trustee and Chairman of the Board and
c/o Standish, Ayer & Wood, Inc. Vice President Managing Director,
One Financial Center Standish, Ayer & Wood, Inc.
Boston, MA 02111 since 1990; formerly,
President of Standish, Ayer
& Wood, Inc.

Caleb Loring III, 11/14/43 Trustee Trustee, Essex Street
c/o Essex Street Associates Associates (family
P.O. Box 5600 investment trust office);
Beverly Farms, MA 01915 Director, Holyoke Mutual
Insurance Company

Richard S. Wood*, 5/2/54 President and Vice President, Secretary
c/o Standish, Ayer & Wood, Inc. Trustee and Director, Standish,
One Financial Center Ayer & Wood, Inc.;
Boston, MA 02111 Executive Vice President,
Standish International
Management Company, L.P.

James E. Hollis III, 11/21/48 Executive Vice Vice President and
c/o Standish, Ayer & Wood, Inc. President Director, Standish, Ayer
One Financial Center & Wood, Inc.
Boston, MA 02111

David W. Murray, 5/5/40 Treasurer and Vice President, Treasurer
c/o Standish, Ayer & Wood, Inc. Secretary and Director, Standish,
One Financial Center Ayer & Wood, Inc.
Boston, MA 02111

Beverly E. Banfield, 7/6/56 Vice President Vice President and
c/o Standish, Ayer & Wood, Inc. Compliance Officer,
One Financial Center Standish, Ayer & Wood,
Boston, MA 02111 Inc.; Assistant Vice
President and Compliance
Officer, Freedom Capital
Management Corp.
(1989-1992)

Lavinia B. Chase, 6/4/46 Vice President Vice President, Standish,
c/o Standish, Ayer & Wood, Inc. Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

</TABLE>

Fixed Income - Part B

<PAGE>

Anne P. Herrmann, 1/26/56 Vice President Mutual Fund Administrator,
c/o Standish, Ayer & Wood, Inc. Standish, Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

Denise B. Kneeland, 8/19/51 Vice President Senior Operations Manager,
c/o Standish, Ayer & Wood, Inc. Standish, Ayer & Wood, Inc.
One Financial Center since January, 1995;
Boston, MA 02111 formerly, Vice President,
Scudder Stevens and Clark
</TABLE>

*Indicates that Trustee is an interested person of the Portfolio Trust for
purposes of the 1940 Act.

COMPENSATION OF TRUSTEES AND OFFICERS
The Portfolio Trust pays no compensation to the Trustees of the
Portfolio Trust affiliated with the Adviser or to the Portfolio Trust's
officers. None of the Trustees or officers have engaged in any financial
transactions with the Portfolio Trust or the Adviser.

The following table estimates the amount of compensation to be paid to
the Portfolio Trust's Trustees for the Portfolio's initial fiscal year ending
December 31, 1996. In addition, each Trustee is reimbursed for out-of-pocket
expenses associated with attending Trustee meetings.
<TABLE>
<CAPTION>

Pension or
Retirement Total
Benefits Compensation
Aggregate Accrued as from Portfolio and
Compensation* Part of Other Funds in
NAME OF TRUSTEE FROM THE PORTFOLIO FUND'S EXPENSES COMPLEX**
<S> <C> <C> <C>

D. Barr Clayson $0 $0 $0
Samuel C. Fleming 18,001 0 41,750
Benjamin M. Friedman 15,855 0 36,750
John H. Hewitt 15,855 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 15,855 0 36,750
Richard S. Wood 0 0 0

</TABLE>

* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.

** As of the date of this Part B, there were 18 registered investment companies
(or series thereof) in the fund complex, four of which were series of the
Portfolio Trust. The information is provided for the last calendar year.

Fixed Income - Part B

<PAGE>

B-19

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of March 26, 1996, the Trustees and officers of the Portfolio Trust
as a group beneficially owned (i.e., had voting and/or investment power) less
than 1% of the then outstanding interests of the Portfolio. As of the close of
business on April 25, 1996, Standish Fixed Income Fund (the "Fund"), a series of
shares of Standish, Ayer & Wood Investment Trust, owned approximately 100% of
the value of the outstanding interests in the Portfolio. Because the Fund
controls the Portfolio, it may take actions without the approval of any other
investor in the Portfolio.

The Fund has informed the Portfolio Trust that whenever it is requested
to vote on matters pertaining to the fundamental policies of the Portfolio, the
Fund will hold a meeting of shareholders and will cast its votes as instructed
by the Fund's shareholders. It is anticipated that other registered investment
companies investing in the Portfolio will follow the same or a similar practice.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISER OF THE PORTFOLIO TRUST
Standish serves as the Adviser to the Portfolio pursuant to a written
investment advisory agreement with the Portfolio Trust. Prior to the close of
business on April 25, 1996, Standish managed directly the assets of the Fund
pursuant to an investment advisory agreement. This agreement was terminated by
the Fund on such date subsequent to the approval by the Fund's shareholders on
March 29, 1996 to implement certain changes in the Fund's investment
restrictions which enable the Fund to invest all of its investment securities in
the Portfolio. The Adviser is a Massachusetts corporation organized in 1933 and
is registered under the Investment Advisers Act of 1940.

The following, constituting all of the Directors and all of the
shareholders of the Adviser, are the Adviser's controlling persons: Caleb F.
Aldrich, Nicholas S. Battelle, Walter M. Cabot, Sr., David H. Cameron, Karen K.
Chandor, D. Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A.
Flaherty, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
Ladd, Laurence A. Manchester, David W. Murray, George W. Noyes, Arthur H.
Parker, Howard B. Rubin, Austin C. Smith, David C. Stuehr, James J. Sweeney,
Ralph S. Tate, and Richard S. Wood.

Certain services provided by the Adviser under the investment advisory
agreement are described in Part A. These services are provided without
reimbursement by the Portfolio for any costs incurred. Under the investment
advisory agreement, the Adviser is paid a fee based upon a percentage of the
Portfolio's average daily net asset value computed as described in Part A. The
fee is accrued daily and paid monthly.

Fixed Income - Part B

<PAGE>

B-20

share pricing expenses; custodian fees and expenses; administration fees; legal
and auditing fees and expenses; expenses of investor notices and reports;
registration and reporting fees and expenses; and Trustees' fees and expenses.

Unless terminated as provided below, the investment advisory agreement
continues in full force and effect until April 25, 1998 and 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 Portfolio Trust or by the
"vote of a majority of the outstanding voting securities" of the Portfolio, and,
in either event (ii) by vote of a majority of the Trustees of the Portfolio
Trust who are not parties to the investment advisory 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. The investment
advisory agreement may be terminated at any time without the payment of any
penalty by vote of the Trustees of the Portfolio Trust or by the "vote of a
majority of the outstanding voting securities" of the Portfolio or by the
Adviser, on sixty days' written notice to the other parties. The investment
advisory agreement terminates in the event of its assignment as defined in the
1940 Act.

In an attempt to avoid any potential conflict with portfolio
transactions for the Portfolio, the Adviser and the Portfolio Trust have each
adopted extensive restrictions on personal securities trading by personnel of
the Adviser and its affiliates. These restrictions include: pre-clearance of all
personal securities transactions and a prohibition of purchasing initial public
offerings of securities. These restrictions are a continuation of the basic
principle that the interests of the Portfolio and its investors, come before
those of the Adviser, its affiliates and their employees.

The Portfolio's administration agreement can be terminated by either
party on not more than sixty days' written notice.

CUSTODIAN
Investors Bank & Trust Company, 24 Federal Street, Boston,
Massachusetts 02110, serves as custodian of all cash and securities of the
Portfolio.

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, P.O. Box 219, Grand Cayman, Cayman Islands, BWI,
serves as independent accountants for the Portfolio Trust and will audit the
Portfolio's financial statements annually.

Fixed Income - Part B

<PAGE>

B-21

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

The Adviser is responsible for placing the Portfolio's portfolio
transactions and will do so in a manner deemed fair and reasonable to the
Portfolio and not according to any formula. The primary consideration in all
portfolio transactions will be prompt execution of orders in an efficient manner
at the most favorable price. In selecting broker-dealers and in negotiating
commissions, the Adviser will consider the firm's reliability, the quality of
its execution services on a continuing basis and its financial condition. In
addition, if the Adviser determines in good faith that the amount of commissions
charged by a broker is reasonable in relation to the value of the brokerage and
research services provided by such broker, the Portfolio may pay commissions to
such broker in an amount greater than the amount another firm may charge.
Research services may include (i) furnishing advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities, (ii)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts, and (iii) effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research services
furnished by firms through which the Portfolio effects its securities
transactions may be used by the Adviser in servicing other accounts; not all of
these services may be used by the Adviser in connection with the Portfolio. The
investment advisory fee paid by the Portfolio under the advisory agreement will
not be reduced as a result of the Adviser's receipt of research services.

The Adviser also places portfolio transactions for other advisory
accounts. The Adviser will seek to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities for the
Portfolio and another advisory account. In some cases, this procedure could have
an adverse effect on the price or the amount of securities available to the
Portfolio. In making such allocations, the main factors considered by the
Adviser will be the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held, and
opinions of the persons responsible for recommending the investment.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

The Portfolio is a series of Standish, Ayer & Wood Master Portfolio, an
open-end management investment company registered under the 1940 Act. The
Portfolio Trust was organized as a master trust fund under the laws of the State
of New York on January 18, 1996.

Interests in the Portfolio have no preemptive or conversion rights, and
are fully paid and non-assessable, except as set forth described in Part A. The
Portfolio normally will not hold meetings of holders of such interests except as
required under the 1940 Act or its declaration of trust. The Portfolio would be
required to hold a meeting of holders in the event that at any time less than a

Fixed Income - Part B

<PAGE>

B-22

majority of its Trustees holding office had been elected by holders. The
Trustees of the Portfolio continue to hold office until their successors are
elected and have qualified. Holders holding a specified percentage of interests
in the Portfolio may call a meeting of holders in the Portfolio for the purpose
of removing any Trustee. A Trustee of the Portfolio may be removed upon a
majority vote of the interests held by holders in the Portfolio qualified to
vote in the election. The 1940 Act requires the Portfolio 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.

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.

Beneficial interests in the Portfolio are issued solely in transactions
that are exempt from registration under the Securities Act of 1933. See "General
Description of Registrant," "Purchase of Securities Being Offered" and
"Redemption or Repurchase" in Part A.

The value of the Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined each day on which the New York Stock Exchange is open (a
"Business Day"). Currently the New York Stock Exchange is not open on weekends,
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The value of the Portfolio's net
assets is determined as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., New York City time). Each investor in the
Portfolio may add to or reduce its investment in the Portfolio on each Business
Day. As of 4:00 p.m. (Eastern time) on each Business Day, the value of each
investor's interest in the Portfolio will be determined by multiplying the net
asset value of the Portfolio by the percentage representing that investor's
share of the aggregate beneficial interests in the Portfolio. Any additions or
reductions which are to be effected on that day will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of 4:00 p.m. on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 4:00 p.m. on such day plus or minus, as the
case may be, the amount of the net additions to or reductions in the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of 4:00 p.m. on the following Business Day.

For purpose of calculating the Portfolio's net asset value, fixed
income securities (other than money market instruments) for which accurate
market prices

Fixed Income - Part B

<PAGE>

B-23

are readily available are valued at their current market value on the basis of
quotations, which may be furnished by a pricing service or provided by dealers
in such securities. Fixed income securities for which accurate market prices are
not readily available and other assets are valued at fair value as determined in
good faith by the Adviser in accordance with procedures approved by the
Trustees, which may include the use of yield equivalents or matrix pricing.
Money market instruments with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis. If the
Portfolio acquires a money market instrument with more than sixty days remaining
to its maturity, it is valued at current market value until the sixtieth day
prior to maturity and will then be valued at amortized cost based upon the value
on such date unless the Trustees determine during such sixty-day period that
amortized cost does not represent fair value.

The Portfolio intends to pay redemption proceeds in cash for all
interest redeemed but, under certain conditions, the Portfolio may make payment
wholly or partly in portfolio securities. The Portfolio will select such
securities in a manner it considers equitable, regardless of which securities
were deposited by the investor or the composition of the Portfolio's portfolio
at the time of the redemption in-kind. Portfolio securities paid upon withdrawal
or reduction of an interest-holder's investment in the Portfolio will be valued
at their then current market value. The Portfolio Trust has elected to be
governed by the provisions of Rule 18f-1 under the 1940 Act which limits the
Portfolio's obligation to make cash redemption payments to any investor during
any 90 day period to the lesser of $250,000 of 1% of the Portfolio's net asset
value at the beginning of such period. An investor may incur brokerage costs in
converting portfolio securities received upon redemption to cash. The Portfolio
intends that it will not redeem an investor's interest in-kind except in
circumstances in which the particular investor is permitted to redeem in-kind or
in the event that the particular investor completely withdraws its interest in
the Portfolio.

ITEM 20. TAX STATUS.

Fixed Income - Part B

<PAGE>

B-24

accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the investor to satisfy the tax distribution requirements that apply to
the investor and that must be satisfied in order to avoid Federal income and/or
excise tax on the investor. For purposes of applying the requirements of the
Code regarding qualification as a RIC, the investor will be deemed (i) to own
its proportionate share of each of the assets of the Portfolio and (ii) to be
entitled to the gross income of the Portfolio attributable to such share.

If the Portfolio invests in zero coupon securities, certain increasing
rate or deferred interest securities or, in general, other securities with
original issue discount (or with market discount if the Portfolio elects to
include market discount in income currently), the Portfolio must accrue income
on such investments prior to the receipt of the corresponding cash payments.
However, an investor that qualifies as a RIC must distribute, at least annually,
all or substantially all of its net income, including its distributive share of
such income accrued by the Portfolio, to shareholders to qualify as a RIC under
the Code and avoid federal income and excise taxes. Therefore, the Portfolio may
have to dispose of its portfolio securities under disadvantageous circumstances
to generate cash, or may have to leverage itself by borrowing the cash, to
provide cash that the investor may withdraw from the Portfolio and distribute in
order to satisfy the distribution requirements applicable to the investor.

Limitations imposed by the Code on regulated investment companies may
restrict the Portfolio's ability to enter into futures, options or currency
forward transactions.

Certain options, futures or currency forward transactions undertaken by
the Portfolio may cause the Portfolio to recognize gains or losses from marking
to market even though the Portfolio's positions have not been sold or terminated
and affect the character as long-term or short-term (or, in the case of certain
options, futures or forward contracts, as ordinary income or loss) and timing of
some capital gains and losses realized by the Portfolio and allocable to an
investor in the Portfolio. Any net mark to market gains may also have to be
distributed by an investor that is a RIC to satisfy the distribution
requirements referred to above even though no corresponding cash amounts may
concurrently be received, possibly requiring the disposition by the Portfolio of
portfolio securities or borrowing to obtain the necessary cash. Also, certain of
the Portfolio's losses on the Portfolio's transactions involving options,
futures or forward contracts and/or offsetting Portfolio positions may be
deferred rather than being taken into account currently in calculating the
Portfolio's taxable income or gain. Certain of the applicable tax rules may be
modified if the Portfolio is eligible and chooses to make one or more of certain
tax elections that may be available. Because an investor's income, gains and
losses consist primarily of its share of the income, gains and losses of the
Portfolio, which are directly affected by the provisions described in this
paragraph, these transactions may affect the amount, timing and character of the
distributions to shareholders by an investor that qualifies as a RIC. The
Portfolio will take into account the special tax rules (including consideration
of available

Fixed Income - Part B

<PAGE>

B-25

elections) applicable to options, futures or forward contracts in order to
minimize any potential adverse tax consequences.

The Federal income tax rules applicable to mortgage dollar rolls and
interest rate swaps, caps, floors and collars are unclear in certain respects,
and the Portfolio may be required to account for these instruments under tax
rules in a manner that, under certain circumstances, may limit its transactions
in these instruments.

Foreign exchange gains and losses realized by the Portfolio in
connection with certain transactions involving foreign currency-denominated debt
securities, if any, certain foreign currency futures and options, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and, because certain RICs are expected to invest in the Portfolio, may
affect the amount, timing and character of the distributions to shareholders of
an investor that is a RIC. In some cases, elections may be available that would
alter this treatment. Any such transactions that are not directly related to the
Portfolio's investment in stock or securities, possibly including speculative
currency positions or currency derivatives not used for hedging purposes, may
increase the amount of gain it is deemed to recognize from the sale of certain
investments held for less than three months. The share of such gain of an
investor qualifying as a RIC (plus any such gain the investor may realize from
other sources) is limited under the Code to less than 30% of such investor's
annual gross income, and such transactions could under future Treasury
regulations produce income not among the types of "qualifying income" from which
the investor must derive at least 90% of its annual gross income.

The Portfolio may be subject to withholding and other taxes imposed by
foreign countries with respect to its investments in foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. The shareholders of an investor that qualifies as a RIC would be entitled
to claim U.S. foreign tax credits or deductions with respect to such taxes,
subject to certain provisions and limitations contained in the Code, only if
more than 50% of the value of the investor's total assets at the close of any
taxable year were to consist of stock or securities of foreign corporations and
the investor were to file an election with the Internal Revenue Service. The
investments of the Portfolio are such that investors that are RICs generally
will not meet this 50% requirement.

Fixed Income - Part B

<PAGE>

B-26

distributed to its shareholders. An investor that is a RIC would not be able to
pass through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the investor to recognize taxable income or gain
without the concurrent receipt of cash. The Portfolio may limit and/or manage
its stock holdings, if any, in passive foreign investment companies to minimize
the investor's tax liability or maximize its return from these investments.

Investment in debt obligations by the Portfolio that are at risk of or
in default presents special tax issues for an investor. Tax rules are not
entirely clear about issues such as when the Portfolio may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Portfolio, in the event
that it holds such obligations, in order to reduce the risk of any RIC investing
in the Portfolio, distributing insufficient income to preserve its status as a
RIC and seek to avoid becoming subject to Federal income or excise tax.

Due to possible unfavorable consequences under present tax law for
certain investors that are RICs, the Portfolio does not currently intend to
acquire "residual" interests in real estate mortgage investment conduits
("REMICs"), although the Portfolio may acquire "regular" interests in REMICs.

Distributions by an investor in the Portfolio that qualifies as a RIC
to its corporate shareholders would potentially qualify in their hands for the
corporate dividends received deduction, subject to certain holding period
requirements and limitations on debt financing under the Code, only to the
extent the RIC investor was properly allocated dividend income from the
Portfolio's stock investments in U.S. domestic corporations. Although the
Portfolio is not expected to concentrate its investments in such stock, the
Portfolio is permitted to acquire preferred stocks, and it is therefore possible
that a portion of a RIC investor's distributions, attributable to its
distributive share of the dividends the Portfolio receives with respect to such
preferred stocks, may qualify for the dividends received deduction.

Non-U.S. investors not engaged in a U.S. trade or business with which
their investment in the Portfolio is effectively connected will be subject to
U.S. Federal income tax treatment that is different from that described above.
These investors may be subject to nonresident alien withholding tax at the rate
of 30% (or a lower rate under an applicable treaty) on certain amounts treated
as ordinary income allocated to them by the Portfolio, except to the extent a
withholding tax exemption may be available. Such an exemption will not, however,
be available for dividend income and certain other income. Non-U.S. investors
should consult their tax advisers regarding such treatment and the application
of foreign taxes to an investment in the Portfolio.

Fixed Income - Part B

<PAGE>

B-27

There are certain tax issues that will be relevant to only certain of
the investors, such as investors who contribute assets rather than cash to the
Portfolio. It is intended that such contributions of assets will not be taxable,
provided certain requirements are met. Such investors are advised to consult
their own tax advisors as to the tax consequences of an investment in the
Portfolio.

ITEM 21. UNDERWRITERS.

Not applicable.

ITEM 22. CALCULATION OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL STATEMENTS.

Investors will receive the Portfolio's unaudited semi-annual reports
and annual reports audited by the Portfolio's independent accountants.

Fixed Income - Part B

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO

PART B

ITEM 10. COVER PAGE.

This Part B expands upon and supplements the information contained in
Part A of Standish Equity Portfolio (the "Portfolio"), a separate investment
series of Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust"). This
Part B should be read in conjunction with such Part A.

NEITHER PART A NOR THIS PART B CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH EQUITY PORTFOLIO.

ITEM 11. TABLE OF CONTENTS. PAGE

General Information and History . . . . . . . . . . . B- 1
Investment Objectives and Policies . . . . . . . . . B- 1
Management of the Portfolio . . . . . . . . . . . . . B-15
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . B-18
Investment Advisory and Other Services . . . . . . . B-18
Brokerage Allocation and Other Practices . . . . . . B-20
Capital Stock and Other Securities . . . . . . . . . B-21
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . B-21
Tax Status . . . . . . . . . . . . . . . . . . . . . B-23
Underwriters . . . . . . . . . . . . . . . . . . . . B-25
Calculation of Performance Data . . . . . . . . . . . B-25
Financial Statements . . . . . . . . . . . . . . . . B-25

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

The Portfolio's investment objective is to achieve long-term growth of
capital through investment primarily in equity securities of companies which
appear to be undervalued. Under normal circumstances, at least 80% of the
Portfolio's assets will be invested in such securities. The Portfolio may invest
in equity securities of foreign issuers that are listed on a United States

<PAGE>

B-2

exchange or traded in the U.S. over-the-counter market, but will not invest more
than 10% of its assets in such securities which are not so listed or traded. In
addition, the Portfolio may engage in certain strategic transactions as
discussed below. Although the Portfolio normally does not invest in securities
which are restricted as to disposition by federal securities laws or are
otherwise illiquid, the Portfolio may so invest up to 15% of its net assets. The
Portfolio purchases short-term interest-bearing securities with uninvested
funds, the amount of which will depend upon market conditions and the needs of
the Portfolio.

FOREIGN SECURITIES
Foreign securities may be purchased and sold in over-the-counter
markets (but persons affiliated with the Portfolio will not act as principal in
such purchases and sales) or on stock exchanges located in the countries in
which the respective principal offices of the issuers of the various securities
are located, if that is the best available market. Foreign stock markets are
generally not as developed or efficient as those in the United States. While
growing in volume, they usually have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of comparable United States companies. Fixed
commissions on foreign stock exchanges are generally higher than negotiated
commissions on United States exchanges, although the Portfolio will endeavor to
achieve the most favorable net results on its portfolio transactions. There is
generally less government supervision and regulation of stock exchanges, brokers
and listed companies abroad than in the United States.

The dividends and interest payable on certain of the Portfolio's
foreign portfolio securities may be subject to foreign withholding taxes and in
some cases capital gains from such securities may also be subject to foreign
tax, thus reducing the net amount of income or gain available for distribution
to the Portfolio's investors.

Investors should understand that the expense ratio of the Portfolio may
be higher than that of investment companies investing exclusively in domestic
securities because of the cost of maintaining the custody of foreign securities.

Equity - Part B

<PAGE>

B-3

and sell financial futures contracts and options thereon; enter into various
interest rate transactions such as swaps, caps, floors or collars; and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions"). Strategic
Transactions may be used in an attempt to protect against possible changes in
the market value of securities held in or to be purchased for the Portfolio's
portfolio resulting from securities market or currency exchange rate
fluctuations, to protect the Portfolio's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, or to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. In addition to the
hedging transactions referred to in the preceding sentence, Strategic
Transactions may also be used to enhance potential gain in circumstances where
hedging is not involved although the Portfolio will attempt to limit net loss
exposure resulting from Strategic Transactions entered into for such purposes to
not more than 3% of the Portfolio's net assets at any one time and, to the
extent necessary, the Portfolio will close out transactions in order to comply
with this limitation. (Transactions such as writing covered call options are
considered to involve hedging for the purposes of this limitation.) In
calculating the Portfolio's net loss exposure from such Strategic Transactions,
an unrealized gain from a particular Strategic Transaction position would be
netted against an unrealized loss from a related Strategic Transaction position.
For example, if Standish, Ayer & Wood, Inc. ("Standish" or the "Adviser")
believes that the Portfolio is underweighted in cyclical stocks and overweighted
in consumer stocks, the Portfolio may buy a cyclical index call option and sell
a cyclical index put option and sell a consumer index call option and buy a
consumer index put option. Under such circumstances, any unrealized loss in the
cyclical position would be netted against any unrealized gain in the consumer
position (and vice versa) for purposes of calculating the Portfolio's net loss
exposure. The ability of the Portfolio to utilize these Strategic Transactions
successfully will depend on the Adviser's ability to predict pertinent market
movements, which cannot be assured. The Portfolio will comply with applicable
regulatory requirements when implementing these strategies, techniques and
instruments. The Portfolio's activities involving Strategic Transactions may be
limited in order to enable certain of the Portfolio's investors to comply with
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company.

Equity - Part B

<PAGE>

B-4

Portfolio can realize on its investments or cause the Portfolio to hold a
security it might otherwise sell. The use of currency transactions can result in
the Portfolio incurring losses as a result of a number of factors including the
imposition of exchange controls, suspension of settlements, or the inability to
deliver or receive a specified currency. The use of options and futures
transactions entails certain other risks. In particular, the variable degree of
correlation between price movements of futures contracts and price movements in
the related portfolio position of the Portfolio creates the possibility that
losses on the hedging instrument may be greater than gains in the value of the
Portfolio's position. The writing of options could significantly increase the
Portfolio's portfolio turnover rate and, therefore, associated brokerage
commissions or spreads. In addition, futures and options markets may not be
liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Portfolio might not be able to
close out a transaction without incurring substantial losses, if at all.
Although the use of futures and options transactions for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
at the same time, in certain circumstances, they tend to limit any potential
gain which might result from an increase in value of such position. The loss
incurred by the Portfolio in writing options on futures and entering into
futures transactions is potentially unlimited; however, as described above, the
Portfolio will attempt to limit its net loss exposure resulting from Strategic
Transactions entered into for non-hedging purposes to not more than 3% of its
net assets at any one time. Futures markets are highly volatile and the use of
futures may increase the volatility of the Portfolio's net asset value. Finally,
entering into futures contracts would create a greater ongoing potential
financial risk than would purchases of options where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value and the net result may be less
favorable than if the Strategic Transactions had not been utilized.

Equity - Part B

<PAGE>

B-5

and the seller the obligation to sell (if the option is exercised), the
underlying instrument at the exercise price. The Portfolio may purchase a call
option on a security, futures contract, index, currency or other instrument to
seek to protect the Portfolio against an increase in the price of the underlying
instrument that it intends to purchase in the future by fixing the price at
which it may purchase such instrument. An American style put or call option may
be exercised at any time during the option period while a European style put or
call option may be exercised only upon expiration or during a fixed period prior
thereto. The Portfolio is authorized to purchase and sell exchange listed
options and over-the-counter options ("OTC options"). Exchange listed options
are issued by a regulated intermediary such as the Options Clearing Corporation
("OCC"), which guarantees the performance of the obligations of the parties to
such options. The discussion below uses the OCC as an example, but is also
applicable to other financial intermediaries.

With certain exceptions, exchange listed options generally settle by
physical delivery of the underlying security or currency, although in the future
cash settlement may become available. Index options and Eurodollar instruments
are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Portfolio will generally sell (write) OTC options (other than OTC currency
options) that are subject to a buy-back provision permitting the Portfolio to
require the Counterparty to sell the option back to the Portfolio at a formula

Equity - Part B

<PAGE>

B-6

price within seven days. (To the extent that the Portfolio does not do so, the
OTC options are subject to the Portfolio's restriction on illiquid securities.)
The Portfolio expects generally to enter into OTC options that have cash
settlement provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Portfolio will engage in OTC option transactions only with U.S.
Government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers", or broker dealers, domestic or foreign banks or other
financial institutions which have received, combined with any credit
enhancements, a long-term debt rating of A from Standard & Poor's Ratings Group
("S&P") or Moody's Investors Service, Inc. ("Moody's") or an equivalent rating
from any other nationally recognized statistical rating organization ("NRSRO")
or which issue debt that is determined to be of equivalent credit quality by the
Adviser. The staff of the Securities and Exchange Commission ("SEC") currently
takes the position that, absent the buy-back provisions discussed above, OTC
options purchased by the Portfolio, and portfolio securities "covering" the
amount of the Portfolio's obligation pursuant to an OTC option sold by it (the
cost of the sell-back plus the in-the-money amount, if any) are illiquid, and
are subject to the Portfolio's limitation on investing in illiquid securities.
However, for options written with "primary dealers" in U.S. Government
securities pursuant to an agreement requiring a closing purchase transaction at
a formula price, the amount which is considered to be illiquid may be calculated
by reference to a formula price.

If the Portfolio sells (writes) a call option, the premium that it
receives may serve as a partial hedge, to the extent of the option premium,
against a decrease in the value of the underlying securities or instruments in
its portfolio or will increase the Portfolio's income. The sale (writing) of put
options can also provide income.

The Portfolio may purchase and sell (write) call options on securities,
equity securities (including convertible securities) and Eurodollar instruments
that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by the Portfolio must be "covered" (i.e., the
Portfolio must own the securities or futures contract subject to the call) or
must meet the asset segregation requirements described below as long as the call
is outstanding. Even though the Portfolio will receive the option premium to
help offset any loss, the Portfolio may incur a loss if the exercise price is
below the market price for the security subject to the call at the time of

Equity - Part B

<PAGE>

B-7

exercise. A call sold by the Portfolio also exposes the Portfolio during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security or instrument and may require the
Portfolio to hold a security or instrument which it might otherwise have sold.

The Portfolio may purchase and sell (write) put options on securities
including equity securities (including convertible securities) and Eurodollar
instruments (whether or not it holds the above securities in its portfolio), and
on securities indices, currencies and futures contracts. The Portfolio will not
sell put options if, as a result, more than 50% of the Portfolio's assets would
be required to be segregated to cover its potential obligations under such put
options other than those with respect to futures and options thereon. In selling
put options, there is a risk that the Portfolio may be required to buy the
underlying security at a price above the market price.

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES
The Portfolio may also purchase and sell (write) call and put options
on securities indices and other financial indices. Options on securities indices
and other financial indices are similar to options on a security or other
instrument except that, rather than settling by physical delivery of the
underlying instrument, they settle by cash settlement. For example, an option on
an index gives the holder the right to receive, upon exercise of the option, an
amount of cash if the closing level of the index upon which the option is based
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option (except if, in the case of an OTC option, physical
delivery is specified). This amount of cash is equal to the differential between
the closing price of the index and the exercise price of the option, which also
may be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount upon exercise
of the option. In addition to the methods described above, the Portfolio may
cover call options on a securities index by owning securities whose price
changes are expected to be similar to those of the underlying index, or by
having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of other
securities in its portfolio.

Equity - Part B

<PAGE>

B-8

gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such position
upon exercise of the option.

The Portfolio's use of financial futures and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the regulations of the Commodity Futures Trading Commission relating
to exclusions from regulation as a commodity pool operator. Those regulations
currently provide that the Portfolio may use commodity futures and option
positions (i) for bona fide hedging purposes without regard to the percentage of
assets committed to margin and option premiums, or (ii) for other purposes
permitted by the SEC to the extent that the aggregate initial margin and option
premiums required to establish such non-hedging positions (net of the amount the
positions were "in the money" at the time of purchase) do not exceed 5% of the
net asset value of the Portfolio's portfolio, after taking into account
unrealized profits and losses on such positions. Typically, maintaining a
futures contract or selling an option thereon requires the Portfolio to deposit
with its custodian for the benefit of a futures commission merchant as security
for its obligations an amount of cash or other specified assets (initial margin)
which initially is typically 1% to 10% of the face amount of the contract (but
may be higher in some circumstances). Additional cash or assets (variation
margin) may be required to be deposited directly with the futures commission
merchant thereafter on a daily basis as the value of the contract fluctuates.
The purchase of an option on financial futures involves payment of a premium for
the option without any further obligation on the part of the Portfolio. If the
Portfolio exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur. The
segregation requirements with respect to futures contracts and options thereon
are described below.

CURRENCY TRANSACTIONS
The Portfolio may engage in currency transactions with Counterparties
in order to hedge the value of portfolio holdings denominated in particular
currencies against fluctuations in relative value or to enhance potential gain.
Currency transactions include currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional (agreed-upon)
difference among two or more currencies and operates similarly to an interest
rate swap, which is described below. A Portfolio may enter into over-the-counter
currency transactions with Counterparties which have received, combined with any
credit enhancements, a long term debt rating of A by S&P or Moody's,
respectively, or that have an equivalent rating from a NRSRO or (except for OTC

Equity - Part B

<PAGE>

B-9

currency options) whose obligations are determined to be of equivalent credit
quality by the Adviser.

The Portfolio's dealings in forward currency contracts and other
currency transactions such as futures, options, options on futures and swaps
will generally be limited to hedging involving either specific transactions or
portfolio positions. See, "Strategic Transactions." Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of a Portfolio, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

The Portfolio may also cross-hedge currencies by entering into
transactions to purchase or sell one or more currencies that are expected to
decline in value in relation to other currencies to which the Portfolio has or
in which the Portfolio expects to have portfolio exposure. For example, the
Portfolio may hold a French security and the Adviser may believe that French
francs will deteriorate against German marks. The Portfolio would sell French
francs to reduce its exposure to that currency and buy German marks. This
strategy would be a hedge against a decline in the value of French francs,
although it would expose the Portfolio to declines in the value of the German
mark relative to the U.S. dollar.

To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, the Portfolio may also engage
in proxy hedging. Proxy hedging is often used when the currency to which the
Portfolio's portfolio is exposed is difficult to hedge or to hedge against the
dollar. Proxy hedging entails entering into a forward contract to sell a
currency whose changes in value are generally considered to be linked to a
currency or currencies in which certain of the Portfolio's portfolio securities
are or are expected to be denominated, and to buy U.S. dollars. The amount of
the contract would not exceed the value of the Portfolio's securities
denominated in linked currencies. For example, if the Adviser considers that the
Austrian schilling is linked to the German deutschemark (the "D-mark"), the
Portfolio holds securities denominated in schillings and the Adviser believes
that the value of schillings will decline against the U.S. dollar, the Adviser
may enter into a contract to sell D-marks and buy dollars. Proxy hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to the Portfolio
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived linkage
between various currencies

Equity - Part B

<PAGE>

B-10

may not be present or may not be present during the particular time that the
Portfolio is engaging in proxy hedging. If the Portfolio enters into a currency
hedging transaction, the Portfolio will comply with the asset segregation
requirements described below.

COMBINED TRANSACTIONS
The Portfolio may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions, structured notes and any combination of futures, options, currency
and interest rate transactions ("component transactions"), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Adviser it is in the best interests of the Portfolio to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

Equity - Part B

<PAGE>

B-11

although, as described above, the Portfolio will attempt to limit its net loss
exposure resulting from swaps, caps, floors and collars and other Strategic
Transactions entered into for such purposes to not more than 1% of the
Portfolio's net assets at any one time. The Portfolio will not sell interest
rate caps or floors where it does not own securities or other instruments
providing the income stream the Portfolio may be obligated to pay. Interest rate
swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain rate of return within a predetermined range of
interest rates or values.

The Portfolio will usually enter into swaps on a net basis, i.e., the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. The Portfolio will not
enter into any swap, cap, floor or collar transaction unless, at the time of
entering into such transaction, the unsecured long-term debt of the
Counterparty, combined with any credit enhancements, is rated at least A by S&P
or Moody's or has an equivalent rating from an NRSRO or which issue debt that is
determined to be of equivalent credit quality by the Adviser. If there is a
default by the Counterparty, the Portfolio may have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed. Swaps, caps, floors and collars
are considered illiquid for purposes of the Portfolio's policy regarding
illiquid securities, unless it is determined, based upon continuing review of
the trading markets for the specific security, that such security is liquid. The
Board of Trustees has adopted guidelines and delegated to the Adviser the daily
function of determining and monitoring the liquidity of swaps, caps, floors and
collars. The Portfolio Trust's Board of Trustees, however, retains oversight
focusing on factors such as valuation, liquidity and availability of information
and is ultimately responsible for such determinations. The staff of the SEC
currently takes the position that swaps, caps, floors and collars are illiquid,
and are subject to the Portfolio's limitation on investing in illiquid
securities.

Equity - Part B

<PAGE>

B-12

EURODOLLAR CONTRACTS
The Portfolio may make investments in Eurodollar contracts. Eurodollar
contracts are U.S. dollar-denominated futures contracts or options thereon which
are linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. The Portfolio might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

USE OF SEGREGATED ACCOUNTS
The Portfolio will hold securities or other instruments whose values
are expected to offset its obligations under the Strategic Transactions. The
Portfolio will cover Strategic Transactions as required by interpretive
positions of the SEC. The Portfolio will not enter into Strategic Transactions
that expose the Portfolio to an obligation to another party unless it owns
either (i) an offsetting position in securities or other options, futures
contracts or other instruments or (ii) cash, receivables or liquid, high grade
debt securities with a value sufficient to cover its potential obligations. The
Portfolio may have to comply with any applicable regulatory requirements for
Strategic Transactions, and if required, will set aside cash and other assets in
a segregated account with its custodian bank in the amount prescribed. In that
case, the Portfolio's custodian would maintain the value of such segregated
account equal to the prescribed amount by adding or removing additional cash or
other assets to account for fluctuations in the value of the account or the
Portfolio's obligations on the underlying Strategic Transactions. Assets held in
a segregated account would not be sold while the Strategic Transaction is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

Equity - Part B

<PAGE>

B-13

MONEY MARKET INSTRUMENTS AND REPURCHASE AGREEMENTS
When the Adviser considers investments in equity securities to present
excessive risks and to maintain liquidity for redemptions, the Portfolio may
invest all or a portion of its assets in money market instruments or short-term
interest-bearing securities. The Portfolio may also invest uncommitted cash in
such instruments and securities.

Money market instruments include short-term U.S. government securities,
U.S. and foreign commercial paper (promissory notes issued by corporations to
finance their short-term credit needs), negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances and repurchase
agreements.

U.S. government securities include securities which are direct
obligations of the U.S. government backed by the full faith and credit of the
United States, and securities issued by agencies and instrumentalities of the
U.S. government, which may be guaranteed by the U.S. Treasury or supported by
the issuer's right to borrow from the Treasury or may be backed by the credit of
the federal agency or instrumentality itself. Agencies and instrumentalities of
the U.S. government include, but are not limited to, Federal Land Banks, the
Federal Farm Credit Bank, the Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks and the Federal National
Mortgage Association.

A repurchase agreement is an agreement under which the Portfolio
acquires money market instruments (generally U.S. government securities) from a
commercial bank, broker or dealer, subject to resale to the seller at an
agreed-upon price and date (normally the next business day). The resale price
reflects an agreed-upon interest rate effective for the period the instruments
are held by the Portfolio and is unrelated to the interest rate on the
instruments. The instruments acquired by the Portfolio (including accrued
interest) must have an aggregate market value in excess of the resale price and
will be held by the custodian bank for the Portfolio until they are repurchased.
The Trustees will monitor the standards which the Adviser will use in reviewing
the creditworthiness of any party to a repurchase agreement with the Portfolio.

Equity - Part B

<PAGE>

B-14

PORTFOLIO TURNOVER
The Portfolio places no restrictions on portfolio turnover and it may
sell any portfolio security without regard to the period of time it has been
held, except as may be necessary to enable an investor in the Portfolio to
maintain its status as a regulated investment company under the Internal Revenue
Code. The Portfolio may therefore generally change its portfolio investments at
any time in accordance with the Adviser's appraisal of factors affecting any
particular issuer or market, or the economy in general.

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following fundamental policies. The
Portfolio's fundamental policies cannot be changed unless the change is approved
by the "vote of the outstanding voting securities" of the Portfolio, which
phrase as used herein means the lesser of (i) 67% or more of the voting
securities of the Portfolio present at a meeting, if the holders of more than
50% of the outstanding voting securities of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Portfolio.

As a matter of fundamental policy, the Portfolio may not:

1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
government securities.

2. Underwrite the securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the
Portfolio may be deemed to be an underwriter under the Securities Act
of 1933.

3. Purchase real estate or real estate mortgage loans.

4. Purchase securities on margin (except that the Portfolio may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities).

5. Purchase or sell commodities or commodity contracts (except futures
contracts and options on such futures contracts and foreign currency
exchange transactions).

6. With respect to at least 75% of its total assets, invest more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer.

Equity - Part B

<PAGE>

B-15

purposes (but not for investment purposes), and (b) pledge its assets
to an extent not greater than 15% of the current value of its total
assets to secure such borrowings.

8. Make loans of portfolio securities, except that the Portfolio may enter
into repurchase agreements.

The following restrictions are not fundamental policies and may be
changed by the Trustees of the Portfolio Trust without investor approval, in
accordance with applicable laws, regulations or regulatory policy. The Portfolio
may not:

b. Invest in companies for the purpose of exercising control or
management.

c. Invest in interests in oil, gas or other exploration or development
programs.

d. Invest more than 5% of the assets of the Portfolio in the securities of
any issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than (a) obligations issued or guaranteed by the
U.S. Government or its agencies and (b) repurchase agreements fully
collateralized by such securities.

e. Invest in securities of any company if any officer or director
(trustee) of the Portfolio Trust or of the Portfolio's investment
adviser owns more than 1/2 of 1% of the outstanding securities of such
company and such officers and directors (trustees) own in the aggregate
more than 5% of the securities of such company.

f. Purchase or write options, except pursuant to the limitations under
"Strategic Transactions."

g. Invest more than an aggregate of 15% of the net assets of the Portfolio
in the aggregate of (a) repurchase agreements which are not terminable
within seven days and (b) securities subject to legal or contractual
restrictions on resale or for which there are no readily available
market quotations and (c) in other illiquid securities, unless such
securities were received as distributions on portfolio securities.

h. Purchase the securities of other investment companies, provided that
the Portfolio may make such a purchase as part of a merger,
consolidation, or

Equity - Part B

<PAGE>

acquisition of assets, and provided further that the Portfolio may make
such a purchase in the open market where no commission or profit to a
sponsor or dealer results from the purchase other than customary
brokers' commissions and then only to the extent permitted by the 1940
Act.

i. Invest more than 10% of its net assets in repurchase agreements.

j. Make any additional investments while its outstanding borrowings exceed
5% of the current value of its total assets.

ITEM 14. MANAGEMENT OF THE PORTFOLIO.

TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST

The Trustees and executive officers of the Portfolio Trust are listed
below. All executive officers of the Portfolio Trust are affiliates of Standish,
Ayer & Wood, Inc., the Portfolio's investment adviser.
<TABLE>
<CAPTION>

NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION
AND DATE OF BIRTH WITH TRUST DURING PAST 5 YEARS
- ----------------- ------------- -------------------
<S> <C> <C>

Benjamin M. Friedman, 8/5/44 Trustee William Joseph Maier
c/o Harvard University Professor of Political
Cambridge, MA 02138 Economy, Harvard
University

John H. Hewitt, 4/11/35 Trustee Trustee, The Peabody
P.O. Box 307 Foundation; Trustee,
So. Woodstock, VT 05071 Visiting Nurse Alliance of
Vermont and New Hampshire

</TABLE>

Equity - Part B

<PAGE>

B-17
<TABLE>
<CAPTION>

James E. Hollis III, 11/21/48 Executive Vice Vice President and
c/o Standish, Ayer & Wood, Inc. President Director, Standish, Ayer
One Financial Center & Wood, Inc.
Boston, MA 02111

David W. Murray, 5/5/40 Treasurer and Vice President, Treasurer
c/o Standish, Ayer & Wood, Inc. Secretary and Director, Standish,
One Financial Center Ayer & Wood, Inc.
Boston, MA 02111

Lavinia B. Chase, 6/4/46 Vice President Vice President, Standish,
c/o Standish, Ayer & Wood, Inc. Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

</TABLE>

Equity - Part B

<PAGE>

Anne P. Herrmann, 1/26/56 Vice President Mutual Fund Administrator,
c/o Standish, Ayer & Wood, Inc. Standish, Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

*Indicates that Trustee is an interested person of the Portfolio Trust for
purposes of the 1940 Act.

COMPENSATION OF TRUSTEES AND OFFICERS

The Portfolio Trust pays no compensation to the Trustees of the
Portfolio Trust affiliated with the Adviser or to the Portfolio Trust's
officers. None of the Trustees or officers have engaged in any financial
transactions with the Portfolio Trust or the Adviser.

D. Barr Clayson $0 $0 $0
Samuel C. Fleming 650 0 41,750
Benjamin M. Friedman 574 0 36,750
John H. Hewitt 574 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 574 0 36,750
Richard S. Wood 0 0 0

</TABLE>

* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.

Equity - Part B

<PAGE>

B-19

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of March 26, 1996, the Trustees and officers of the Portfolio Trust
as a group beneficially owned (i.e., had voting and/or investment power) less
than 1% of the then outstanding interests of the Portfolio. As of the close of
business on April 25, 1996, Standish Equity Fund (the "Fund"), a series of
shares of Standish, Ayer & Wood Investment Trust, owned approximately 100% of
the value of the outstanding interests in the Portfolio. Because the Fund
controls the Portfolio, it may take actions without the approval of any other
investor in the Portfolio.

The Fund has informed the Portfolio that whenever it is requested to
vote on matters pertaining to the fundamental policies of the Portfolio, the
Fund will hold a meeting of shareholders and will cast its votes as instructed
by the Fund's shareholders. It is anticipated that other registered investment
companies investing in the Portfolio will follow the same or a similar practice.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISER OF THE PORTFOLIO TRUST

Standish serves as the Adviser to the Portfolio pursuant to a written
investment advisory agreement with the Portfolio Trust. Prior to the close of
business on April 25, 1996, Standish managed directly the assets of the Fund
pursuant to an investment advisory agreement. This agreement was terminated by
the Fund on such date subsequent to the approval by the Fund's shareholders on
March 29, 1996 to implement certain changes in the Fund's investment
restrictions which enable the Fund to invest all of its investment securities in
the Portfolio. The Adviser is a Massachusetts corporation organized in 1933 and
is registered under the Investment Advisers Act of 1940.

Equity - Part B

<PAGE>

B-20

Pursuant to the investment advisory agreement, the Portfolio bears
expenses of its operations other than those incurred by the Adviser pursuant to
the investment advisory agreement. Among other expenses, the Portfolio will pay
share pricing expenses; custodian fees and expenses; administration fees; legal
and auditing fees and expenses; expenses of investor notices and reports;
registration and reporting fees and expenses; and Trustees' fees and expenses.

ADMINISTRATOR OF THE PORTFOLIO

The Portfolio's administration agreement can be terminated by either
party on not more than sixty days' written notice.

CUSTODIAN

Investors Bank & Trust Company, 24 Federal Street, Boston,
Massachusetts 02110, serves as custodian of all cash and securities of the
Portfolio.

Equity - Part B

<PAGE>

B-21

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand, P.O. Box 219, Grand Cayman, Cayman Islands, BWI,
serves as independent accountants for the Portfolio Trust and will audit the
Portfolio's financial statements annually.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Equity - Part B

<PAGE>

B-22

Interests in the Portfolio have no preemptive or conversion rights, and
are fully paid and non-assessable, except described in Part A. The Portfolio
normally will not hold meetings of holders of such interests except as required
under the 1940 Act or its declaration of trust. The Portfolio 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 had been elected by holders. The Trustees of the
Portfolio continue to hold office until their successors are elected and have
qualified. Holders holding a specified percentage of interests in the Portfolio
may call a meeting of holders in the Portfolio for the purpose of removing any
Trustee. A Trustee of the Portfolio may be removed upon a majority vote of the
interests held by holders in the Portfolio qualified to vote in the election.
The 1940 Act requires the Portfolio 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.

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.

Equity - Part B

<PAGE>

B-23

then be applied to determine the value of the investor's interest in the
Portfolio as of 4:00 p.m. on the following Business Day.

Portfolio securities are valued at the last sale prices, on the
valuation day, on the exchange or national securities market on which they are
primarily traded. Securities not listed on an exchange or national securities
market, or securities for which there were no reported transactions, are valued
at the last quoted bid prices. Securities for which quotations are not readily
available and all other assets are valued at fair value as determined by the
Adviser in accordance with procedures approved by the Trustees.

Money market instruments with less than sixty days remaining to
maturity when acquired by the Portfolio are valued on an amortized cost basis.
If the Portfolio acquires a money market instrument with more than sixty days
remaining to its maturity, it is valued at current market value until the
sixtieth day prior to maturity and will then be valued at amortized cost based
upon the value on such date unless the Trustees determine during such sixty-day
period that amortized cost does not represent fair value.

The Portfolio intends to pay redemption proceeds in cash for all
interests redeemed but, under certain conditions, the Portfolio may make payment
wholly or partly in portfolio securities. The Portfolio will select such
securities in a manner it considers equitable, regardless of which securities
were deposited by the investor or the composition of the Portfolio's portfolio
at the time of the redemption in-kind. Portfolio securities paid upon withdrawal
or reduction of an interest-holder's investment in the Portfolio will be valued
at their then current market value. The Portfolio Trust has elected to be
governed by the provisions of Rule 18f-1 under the 1940 Act which limits the
Portfolio's obligation to make cash redemption payments to any investor during
any 90-day period to the lesser of $250,000 or 1% of the Portfolio's net asset
value at the beginning of such period. An investor may incur brokerage costs in
converting portfolio securities received upon redemption to cash. The Portfolio
intends that it will not redeem an investor's interest in-kind except in
circumstances in which the particular investor is permitted to redeem in-kind or
in the event that the particular investor completely withdraws its interest in
the Portfolio.

ITEM 20. TAX STATUS.

Equity - Part B

<PAGE>

B-24

distributive share of the Portfolio's net investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
The Portfolio will make allocations to an investor that qualifies as a RIC in
accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the investor to satisfy the tax distribution requirements that apply to
the investor and that must be satisfied in order to avoid Federal income and/or
excise tax on the investor. For purposes of applying the requirements of the
Code regarding qualification as a RIC, the investor will be deemed (i) to own
its proportionate share of each of the assets of the Portfolio and (ii) to be
entitled to the gross income of the Portfolio attributable to such share.

Limitations imposed by the Code on regulated investment companies may
restrict the Portfolio's ability to enter into futures, options or currency
forward transactions.

The Federal income tax rules applicable to interest rate or currency
swaps, caps, floors and collars are unclear in certain respects, and the
Portfolio may be required to account for these instruments under tax rules in a
manner that, under certain circumstances, may limit its transactions in these
instruments.

Equity - Part B

<PAGE>

B-25

foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and, because
certain RICs are expected to invest in the Portfolio, may affect the amount,
timing and character of the distributions to shareholders of an investor that is
a RIC. In some cases, elections may be available that would alter this
treatment. Any such transactions that are not directly related to the
Portfolio's investment in stock or securities, possibly including speculative
currency positions or currency derivatives not used for hedging purposes, may
increase the amount of gain it is deemed to recognize from the sale of certain
investments held for less than three months. The share of such gain of an
investor qualifying as a RIC (plus any such gain the investor may realize from
other sources) is limited under the Code to less than 30% of such investor's
annual gross income, and such transactions could under future Treasury
regulations produce income not among the types of "qualifying income" from which
the investor must derive at least 90% of its annual gross income.

If the Portfolio acquires stock in certain non-U.S. corporations that
receive at least 75% of their annual gross income from passive sources (such as
interest, dividends, rents, royalties or capital gain) or hold at least 50% of
their assets in investments producing such passive income ("passive foreign
investment companies"), an investor could be subject to Federal income tax and
additional interest charges on its allocable portion of "excess distributions"
received from such companies or gain from the sale of stock in such companies,
even if all income or gain actually allocated to the investor is timely
distributed to its shareholders. An investor that is a RIC would not be able to
pass through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the investor to recognize taxable income or gain
without the concurrent receipt of cash. The Portfolio may limit and/or manage
its stock holdings, if any, in passive foreign investment companies to minimize
the investor's tax liability or maximize its return from these investments.

Equity - Part B

<PAGE>

B-26

distributions, attributable to its distributive share of the dividends the
Portfolio receives with respect to such stocks, will generally qualify as
dividends in the hands of the RIC for purposes of the RIC's being able to make
distributions that may qualify for the dividends received deduction.

ITEM 21. UNDERWRITERS.

Not applicable.

ITEM 22. CALCULATION OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL STATEMENTS.

Investors will receive the Portfolio's unaudited semi-annual reports
and annual reports audited by the Portfolio's independent accountants.

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SMALL CAPITALIZATION EQUITY PORTFOLIO

PART B

ITEM 10. COVER PAGE.

This Part B expands upon and supplements the information contained in
the Part A of Standish Small Capitalization Equity Portfolio (the "Portfolio"),
a separate investment series of Standish, Ayer & Wood Master Portfolio (the
"Portfolio Trust"). This Part B should be read in conjunction with such Part A.

NEITHER PART A NOR THIS PART B CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH SMALL CAPITALIZATION
EQUITY PORTFOLIO.

ITEM 11. TABLE OF CONTENTS. PAGE

General Information and History . . . . . . . . . . . B- 1
Investment Objectives and Policies . . . . . . . . . B- 1
Management of the Portfolio . . . . . . . . . . . . . B-16
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . B-19
Investment Advisory and Other Services . . . . . . . B-19
Brokerage Allocation and Other Practices . . . . . . B-21
Capital Stock and Other Securities . . . . . . . . . B-22
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . B-22
Tax Status . . . . . . . . . . . . . . . . . . . . . B-24
Underwriters . . . . . . . . . . . . . . . . . . . . B-26
Calculation of Performance Data . . . . . . . . . . . B-26
Financial Statements . . . . . . . . . . . . . . . . B-26

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

The Portfolio's investment objective is to achieve long-term growth of
capital through investment primarily in equity securities of small
capitalization companies. Under normal circumstances, at least 80% of the
Portfolio's assets

<PAGE>

B-2

will be invested in such securities. The Portfolio invests primarily in publicly
traded securities including securities issued in initial public offerings. The
Portfolio does not normally invest in equity securities which are restricted as
to disposition by federal securities laws or are otherwise illiquid. The
Portfolio may invest up to 15% of its net assets in foreign equity securities,
including securities of foreign issuers that are listed on a U.S. exchange or
traded in the over-the-counter market and American Depositary Receipts (ADRs).
In addition, the Portfolio may engage in certain strategic transactions as
discussed below. The Portfolio purchases short-term interest-bearing securities
with uninvested funds, the proportion of which will depend upon market
conditions and the needs of the Portfolio.

COMMON STOCKS
The common stocks of small growth companies in which the Portfolio
invests typically have market capitalizations up to $700 million. (Morningstar
Mutual Funds, a leading mutual fund monitoring service, includes in the
small-cap category all funds with median portfolio market capitalizations of
less than $1 billion.) Investments are expected to emphasize companies involved
with value added products or services in expanding industries. At times,
particularly when Standish, Ayer & Wood, Inc. ("Standish" or the "Adviser")
believes that the securities of small companies are overvalued, the Portfolio's
portfolio may include securities of larger, more mature companies, provided that
the value of the securities of such larger, more mature companies shall not
exceed 20% of the Portfolio's net assets. The Portfolio will attempt to reduce
risk by diversifying its investments within the investment policies set forth
above. The Portfolio will invest in publicly traded equity securities and,
excluding equity securities received as distributions on portfolio securities,
will not normally hold equity securities which are restricted as to disposition
under federal securities laws or are otherwise illiquid or not readily
marketable.

FOREIGN SECURITIES
Foreign securities may be purchased and sold in over-the-counter
markets or on stock exchanges located in the countries in which the respective
principal offices of their issuers are located, if that is the best available
market. Foreign stock markets are generally not as developed or efficient as
those in the United States. While growing in volume, they usually have
substantially less volume than the New York Stock Exchange, and securities of
some foreign companies are less liquid and more volatile than securities of
comparable United States companies. Fixed commissions on foreign stock exchanges
are generally higher than negotiated commissions on United States exchanges,
although the Portfolio will endeavor to achieve the most favorable net results
on its portfolio transactions. There is generally less government supervision
and regulation of stock exchanges, brokers and listed companies abroad than in
the United States.

The dividends and interest payable on certain of the Portfolio's
foreign portfolio securities may be subject to foreign withholding taxes, (and
in some cases capital gains from such securities may also be subject to foreign
taxes) thus reducing the net amount of income available for distribution to the
Portfolio's investors.

Small Cap - Part B

<PAGE>

B-3

The Portfolio may acquire sponsored and unsponsored ADRs. Unsponsored
ADRs are acquired from banks that do not have a contractual relationship with
the issuer of the security underlying the depositary receipt to issue and secure
such depositary receipt. To the extent that the Portfolio invests in such
unsponsored ADRs there may be an increased possibility that the Portfolio may
not become aware of events affecting the underlying security and thus the value
of the related depositary receipt. In addition, certain benefits (i.e., rights
offerings) which may be associated with the security underlying the depositary
receipt may not inure to the benefit of the holder of such depositary receipt.

MONEY MARKET INSTRUMENTS AND REPURCHASE AGREEMENTS
When the Adviser considers investments in equity securities to present
excessive risks, the Portfolio may invest all or a portion of its assets in debt
securities or cash equivalents. The Portfolio will also invest uncommitted cash
in short-term debt securities.

To maintain liquidity for redemptions or at times when the Adviser
deems it advisable because of market conditions, the Portfolio may invest in
short-term debt securities and short-term securities of the United States
government and its instrumentalities or retain cash or cash equivalents.

Money market instruments include short-term U.S. Government securities,
U.S. and foreign commercial paper (promissory notes issued by corporations to
finance their short-term credit needs), negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances and repurchase
agreements.

U.S. Government securities include securities which are direct
obligations of the U.S. Government backed by the full faith and credit of the
United States, and securities issued by agencies and instrumentalities of the
U.S. Government, which may be guaranteed by the U.S. Treasury or supported by
the issuer's right to borrow from the Treasury or may be backed by the credit of
the federal agency or instrumentality itself. Agencies and instrumentalities of
the U.S. Government include, but are not limited to, Federal Land Banks, the
Federal Farm Credit Bank, the Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks and the Federal National
Mortgage Association.

The Portfolio may invest up to 10% of its net assets in repurchase
agreements. A repurchase agreement is an agreement under which the Portfolio
acquires money market instruments (generally U.S. Government securities) from a
commercial bank, broker or dealer, subject to resale to the seller at an
agreed-upon price and date (normally the next business day). The resale price
reflects an agreed-upon interest rate effective for the period the instruments
are held by the Portfolio and is unrelated to the interest rate on the
instruments. The instruments acquired by the Portfolio (including accrued
interest) must have an aggregate market value in excess of the resale price and

Small Cap - Part B

<PAGE>

B-4

will be held by the Portfolio's custodian bank until they are repurchased. The
Trustees will consider the standards which the Adviser will use in reviewing the
creditworthiness of any party to a repurchase agreement with the Portfolio.

STRATEGIC TRANSACTIONS
The Portfolio may, but is not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity market
movements), to manage the effective maturity or duration of fixed-income
securities, or to enhance potential gain. Such strategies are generally accepted
as part of modern portfolio management and are regularly utilized by many mutual
funds and other institutional investors. Techniques and instruments used by the
Portfolio may change over time as new instruments and strategies are developed
or regulatory changes occur.

Small Cap - Part B

<PAGE>

B-5

Portfolio's net loss exposure from such Strategic Transactions, an unrealized
gain from a particular Strategic Transaction position would be netted against an
unrealized loss from a related Strategic Transaction position. For example, if
the Adviser believes that the Portfolio is underweighted in cyclical stocks and
overweighted in consumer stocks, the Portfolio may buy a cyclical index call
option and sell a cyclical index put option and sell a consumer index call
option and buy a consumer index put option. Under such circumstances, any
unrealized loss in the cyclical position would be netted against any unrealized
gain in the consumer position (and vice versa) for purposes of calculating the
Portfolio's net loss exposure. The ability of the Portfolio to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Portfolio will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Portfolio's activities involving
Strategic Transactions may be limited in order to enable certain of the
Portfolio's investors to comply with the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), for
qualification as a regulated investment company.

RISKS OF STRATEGIC TRANSACTIONS

Strategic Transactions have risks associated with them including
possible default by the other party to the transaction, illiquidity and, to the
extent the Adviser's view as to certain market movements is incorrect, the risk
that the use of such Strategic Transactions could result in losses greater than
if they had not been used. The writing of put and call options may result in
losses to the Portfolio, force the purchase or sale, respectively, of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation the Portfolio can realize on its investments or
cause the Portfolio to hold a security it might otherwise sell. The use of
currency transactions can result in the Portfolio incurring losses as a result
of a number of factors including the imposition of exchange controls, suspension
of settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Portfolio's position. The writing of
options could significantly increase the Portfolio's portfolio turnover rate
and, therefore, associated brokerage commissions or spreads. In addition,
futures and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time, in certain
circumstances, they tend to limit any potential gain which might result from an
increase in value of such position. The loss incurred by the Portfolio in
writing options on futures and entering into futures transactions is potentially
unlimited; however, as

Small Cap - Part B

<PAGE>

B-6

described above, the Portfolio will attempt to limit its net loss exposure
resulting from Strategic Transactions entered into for non-hedging purposes to
not more than 3% of its net assets at any one time. Futures markets are highly
volatile and the use of futures may increase the volatility of an investor's net
asset value. Finally, entering into futures contracts would create a greater
ongoing potential financial risk than would purchases of options where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value and the net
result may be less favorable than if the Strategic Transactions had not been
utilized.

A put option gives the purchaser of the option, in consideration for
the payment of a premium, the right to sell, and the writer the obligation to
buy (if the option is exercised), the underlying security, commodity, index,
currency or other instrument at the exercise price. For instance, the
Portfolio's purchase of a put option on a security might be designed to protect
its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the
Portfolio the right to sell such instrument at the option exercise price. A call
option, in consideration for the payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell (if the
option is exercised), the underlying instrument at the exercise price. The
Portfolio may purchase a call option on a security, futures contract, index,
currency or other instrument to seek to protect the Portfolio against an
increase in the price of the underlying instrument that it intends to purchase
in the future by fixing the price at which it may purchase such instrument. An
American style put or call option may be exercised at any time during the option
period while a European style put or call option may be exercised only upon
expiration or during a fixed period prior thereto. The Portfolio is authorized
to purchase and sell exchange listed options and over-the-counter options ("OTC
options"). Exchange listed options are issued by a regulated intermediary such
as the Options Clearing Corporation ("OCC"), which guarantees the performance of
the obligations of the parties to such options. The discussion below uses the
OCC as an example, but is also applicable to other financial intermediaries.

Small Cap - Part B

<PAGE>

B-7

or making delivery of the underlying instrument through the process of
exercising the option, listed options are closed by entering into offsetting
purchase or sale transactions that do not result in ownership of the new option.

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Portfolio will engage in OTC option transactions only with U.S.
Government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers," or broker dealers, domestic or foreign banks or other
financial institutions which have received, combined with any credit
enhancements, a long-term debt rating of A from Standard & Poor's Ratings Group
("S&P") or Moody's Investor Services ("Moody's") or an equivalent rating from
any other nationally recognized statistical rating organization ("NRSRO") or the
debt of which is determined to be of equivalent credit quality by the Adviser.
The staff of the Securities and Exchange Commission (the "SEC") currently takes
the position that, absent the buy-back provisions discussed above, OTC options

Small Cap - Part B

<PAGE>

B-8

purchased by the Portfolio, and portfolio securities "covering" the amount of
the Portfolio's obligation pursuant to an OTC option sold by it (the cost of the
sell-back plus the in-the-money amount, if any) are illiquid, and are subject to
the Portfolio's limitation on investing no more than 15% of its assets in
illiquid securities. However, for options written with "primary dealers" in U.S.
Government securities pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount which is considered to be illiquid
may be calculated by reference to a formula price.

The Portfolio may purchase and sell (write) call options on securities,
equity securities (including convertible securities) and Eurodollar instruments
that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by the Portfolio must be "covered" (i.e., the
Portfolio must own the securities or futures contract subject to the call) or
must meet the asset segregation requirements described below as long as the call
is outstanding. Even though the Portfolio will receive the option premium to
help protect it against loss, a call sold by the Portfolio exposes the Portfolio
during the term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying security or instrument and
may require the Portfolio to hold a security or instrument which it might
otherwise have sold.

Small Cap - Part B

<PAGE>

B-9

the closing price of the index and the exercise price of the option, which also
may be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount. In addition to
the methods described above, the Portfolio may cover call options on a
securities index by owning securities whose price changes are expected to be
similar to those of the underlying index, or by having an absolute and immediate
right to acquire such securities without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities in its portfolio.

GENERAL CHARACTERISTICS OF FUTURES
The Portfolio may enter into financial futures contracts or purchase or
sell put and call options on such futures. Futures are generally bought and sold
on the commodities exchanges where they are listed with payment of initial and
variation margin as described below. The sale of futures contracts creates a
firm obligation by the Portfolio, as seller, to deliver to the buyer the
specific type of financial instrument called for in the contract at a specific
future time for a specified price (or, with respect to index futures and
Eurodollar instruments, the net cash amount). The purchase of futures contracts
creates a corresponding obligation by the Portfolio, as purchaser. Options on
futures contracts are similar to options on securities except that an option on
a futures contract gives the purchaser the right in return for the premium paid
to assume a position in a futures contract and obligates the seller to deliver
such position if the option is exercised.

The Portfolio's use of financial futures and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the regulations of the Commodity Futures Trading Commission relating
to exclusions from regulation as a commodity pool operator. Those regulations
currently provide that the Portfolio may use commodity futures and option
positions (i) for bona fide hedging purposes without regard to the percentage of
assets committed to margin and option premiums, or (ii) for other purposes
permitted by the SEC to the extent that the aggregate initial margin and option
premiums required to establish such non-hedging positions (net of the amount the
positions were "in the money" at the time of purchase) do not exceed 5% of the
net asset value of the Portfolio's portfolio, after taking into account
unrealized profits and losses on such positions. Typically, maintaining a
futures contract or selling an option thereon requires the Portfolio to deposit
with a financial intermediary as security for its obligations an amount of cash
or other specified assets (initial margin) which initially is typically 1% to
10% of the face amount of the contract (but may be higher in some
circumstances). Additional cash or assets (variation margin) may be required to
be deposited thereafter on a daily basis as the value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the
Portfolio. If the Portfolio exercises an option on a futures contract, it will
be obligated to post initial margin (and potential subsequent variation margin)
for the resulting futures position just as it would for any position. Futures
contracts and options thereon are generally settled by entering into an
offsetting transaction, but there can be no assurance that the position can be
offset prior to settlement at an advantageous price, nor that

Small Cap - Part B

<PAGE>

B-10

delivery will occur. The segregation requirements with respect to futures
contracts and options thereon are described below.

CURRENCY TRANSACTIONS
The Portfolio may engage in currency transactions with Counterparties
in order to hedge the value of portfolio holdings denominated in particular
currencies against fluctuations in relative value or to enhance potential gain.
Currency transactions include forward currency contracts, exchange listed
currency futures, exchange listed and OTC options on currencies, and currency
swaps. A forward currency contract involves a privately negotiated obligation to
purchase or sell (with delivery generally required) a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. A
currency swap is an agreement to exchange cash flows based on the notional
(agreed-upon) difference among two or more currencies and operates similarly to
an interest rate swap, which is described below. The Portfolio may enter into
over-the-counter currency transactions with Counterparties which have received,
combined with any credit enhancements, a long term debt rating of A by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Adviser.

The Portfolio's dealings in forward currency contracts and other
currency transactions such as futures, options, options on futures and swaps
will generally be limited to hedging involving either specific transactions or
portfolio positions. See, "Strategic Transactions." Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of a Portfolio, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

The Portfolio may also cross-hedge currencies by entering into
transactions to purchase or sell one or more currencies that are expected to
decline in value in relation to other currencies to which the Portfolio has or
in which the Portfolio expects to have portfolio exposure. For example, the
Portfolio may hold a French security and the Adviser may believe that French
francs will deteriorate against German marks. The Portfolio would sell French
francs to reduce its exposure to that currency and buy German marks. This
strategy would be a hedge against a decline in the value of French francs,
although it would expose the Portfolio to declines in the value of the German
mark relative to the U.S. dollar.

Small Cap - Part B

<PAGE>

B-11

Small Cap - Part B

<PAGE>

B-12

A combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

SWAPS, CAPS, FLOORS AND COLLARS
Among the Strategic Transactions into which the Portfolio may enter are
interest rate, currency and index swaps and the purchase or sale of related
caps, floors and collars. The Portfolio expects to enter into these transactions
primarily for hedging purposes, including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio,
protecting against currency fluctuations, as a duration management technique or
protecting against an increase in the price of securities the Portfolio
anticipates purchasing at a later date. Swaps, caps, floors and collars may also
be used to enhance potential gain in circumstances where hedging is not involved
although, as described above, the Portfolio will attempt to limit its net loss
exposure resulting from swaps, caps, floors and collars and other Strategic
Transactions entered into for such purposes to not more than 3% of the
Portfolio's net assets at any one time. The Portfolio will not sell interest
rate caps or floors where it does not own securities or other instruments
providing the income stream the Portfolio may be obligated to pay. Interest rate
swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them, and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain rate of return within a predetermined range of
interest rates or values.

Small Cap - Part B

<PAGE>

B-13

as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed. Swaps, caps, floors and collars are considered illiquid for purposes
of the Portfolio's policy regarding illiquid securities, unless it is
determined, based upon continuing review of the trading markets for the specific
security, that such security is liquid. The Board of Trustees of the Portfolio
Trust has adopted guidelines and delegated to the Adviser the daily function of
determining and monitoring the liquidity of swaps, caps, floors and collars. The
Portfolio Trust's Board of Trustees, however, retains oversight focusing on
factors such as valuation, liquidity and availability of information and is
ultimately responsible for such determinations. The Staff of the SEC currently
takes the position that swaps, caps, floors and collars are illiquid, and are
subject to the Portfolio's limitation on investing in illiquid securities.

EURODOLLAR INSTRUMENTS
The Portfolio may make investments in Eurodollar instruments.
Eurodollar instruments are U.S. dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. The
Portfolio might use Eurodollar futures contracts and options thereon to hedge
against changes in LIBOR, to which many interest rate swaps and fixed income
instruments are linked.

Small Cap - Part B

<PAGE>

B-14

to comply with any applicable regulatory requirements for Strategic
Transactions, and if required, will set aside cash and other assets in a
segregated account with its custodian bank in the amount prescribed. In that
case, the Portfolio's custodian would maintain the value of such segregated
account equal to the prescribed amount by adding or removing additional cash or
other assets to account for fluctuations in the value of the account or the
Portfolio's obligations on the underlying Strategic Transactions. Assets held in
a segregated account would not be sold while the Strategic Transaction is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

SHORT-TERM DEBT SECURITIES
For defensive or temporary purposes, the Portfolio may invest in
investment grade money market instruments and short-term interest-bearing
securities. Such securities may be used to invest uncommitted cash balances, to
maintain liquidity to meet shareholder redemptions, or to take a defensive
position against potential stock market declines. The Portfolio's investments
will include U.S. Government obligations and obligations issued or guaranteed by
any U.S. Government agencies or instrumentalities, instruments of U.S. and
foreign banks (including negotiable certificates of deposit, non-negotiable
fixed time deposits and bankers' acceptances), repurchase agreements, prime
commercial paper of U.S. and foreign companies, and debt securities that make
periodic interest payments at variable or floating rates.

PORTFOLIO TURNOVER
The Portfolio places no restrictions on portfolio turnover and it may
sell any portfolio security without regard to the period of time it has been
held, except as may be necessary to enable certain of the Portfolio's investors
to maintain their status as a regulated investment company under the Internal
Revenue Code. The Portfolio may therefore generally change its portfolio
investments at any time in accordance with the Adviser's appraisal of factors
affecting any particular issuer or market, or the economy in general.

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following fundamental policies. The
Portfolio's fundamental policies cannot be changed unless the change is approved
by the "vote of the outstanding voting securities" of the Portfolio which phrase
as used herein means the lesser of (i) 67% or more of the voting securities of
the Portfolio present at a meeting, if the holders of more than 50% of the

Small Cap - Part B

<PAGE>

B-15

outstanding voting securities of the Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities of the
Portfolio.

As a matter of fundamental policy, the Portfolio may not:

1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to U.S.
Government securities.

3. Purchase real estate or real estate mortgage loans.

4. Purchase securities on margin (except that the Portfolio may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities).

5. Purchase or sell commodities or commodity contracts except that the
Portfolio may purchase and sell financial futures contracts and options
on financial futures contracts and engage in foreign currency exchange
transactions.

7. Issue senior securities, borrow money, enter into reverse repurchase
agreements or pledge or mortgage its assets, except that the Portfolio
may (a) borrow money from banks in an amount up to 15% of the current
value of its total assets as a temporary measure for extraordinary or
emergency purposes (but not for investment purposes) and (b) pledge its
assets to an extent not greater than 15% of the current value of its
total assets to secure such borrowings.

8. Make loans of portfolio securities, except that the Fund may enter into
repurchase agreements.

Small Cap - Part B

<PAGE>

B-16

securities it has the right to obtain through the conversion or
exchange of such other securities an amount equal to the securities
sold short.

b. Purchase or write options except to the extent described above under
"Strategic Transactions."

c. Invest in companies for the purpose of exercising control or
management.

d. Invest in interests in oil, gas or other exploration or development
programs.

e. Invest more than 5% of the assets of the Portfolio in the securities of
any issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than (a) obligations issued or guaranteed by the
U.S. Government or its agencies and (b) repurchase agreements fully
collateralized by such securities.

f. Invest in securities of any company if any officer or director
(trustee) of the Portfolio Trust or of the Portfolio's investment
adviser owns more than 1/2 of 1% of the outstanding securities of such
company and such officers and directors (trustees) own in the aggregate
more than 5% of the securities of such company.

g. Invest more than an aggregate of 15% of the net assets of the Portfolio
in (a) repurchase agreements which are not terminable within seven
days, (b) securities subject to legal or contractual restrictions on
resale or for which there are no readily available market quotations
and (c) other illiquid securities.

h. Purchase the securities of other investment companies, provided that
the Portfolio may make such a purchase as part of a merger,
consolidation, or acquisition of assets, and provided further that the
Portfolio may make such a purchase in the open market where no
commission or profit to a sponsor or dealer results from the purchase
other than customary brokers' commissions and then only to the extent
permitted by the 1940 Act.

i. Invest more than 10% of its net assets in repurchase agreements.

j. Make any additional investments while its outstanding borrowings exceed
5% of the current value of its total assets.

Small Cap - Part B

<PAGE>

ITEM 14. MANAGEMENT OF THE PORTFOLIO.

TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST

NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION
AND DATE OF BIRTH WITH TRUST DURING PAST 5 YEARS
- ----------------- ------------- -------------------
<S> <C> <C>

Benjamin M. Friedman, 8/5/44 Trustee William Joseph Maier
c/o Harvard University Professor of Political
Cambridge, MA 02138 Economy, Harvard
University

John H. Hewitt, 4/11/35 Trustee Trustee, The Peabody
P.O. Box 307 Foundation; Trustee,
So. Woodstock, VT 05071 Visiting Nurse Alliance of
Vermont and New Hampshire

Small Cap - Part B

<PAGE>

James E. Hollis III, 11/21/48 Executive Vice Vice President and
c/o Standish, Ayer & Wood, Inc. President Director, Standish, Ayer
One Financial Center & Wood, Inc.
Boston, MA 02111

David W. Murray, 5/5/40 Treasurer and Vice President, Treasurer
c/o Standish, Ayer & Wood, Inc. Secretary and Director, Standish,
One Financial Center Ayer & Wood, Inc.
Boston, MA 02111

Lavinia B. Chase, 6/4/46 Vice President Vice President, Standish,
c/o Standish, Ayer & Wood, Inc. Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

Anne P. Herrmann, 1/26/56 Vice President Mutual Fund Administrator,
c/o Standish, Ayer & Wood, Inc. Standish, Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

*Indicates that Trustee is an interested person of the Portfolio Trust for
purposes of the 1940 Act.

Small Cap - Part B

<PAGE>

B-19

COMPENSATION OF TRUSTEES AND OFFICERS

D. Barr Clayson $0 $0 $0
Samuel C. Fleming 1,447 0 41,750
Benjamin M. Friedman 1,273 0 36,750
John H. Hewitt 1,273 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 1,273 0 36,750
Richard S. Wood 0 0 0

</TABLE>

* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of March 26, 1996, the Trustees and officers of the Portfolio Trust
as a group beneficially owned (i.e., had voting and/or investment power) less
than 1% of the then outstanding interests of the Portfolio. As of the close of
business on April 25, 1996, Standish Small Capitalization Equity Fund (the
"Fund"), a series of shares of Standish, Ayer & Wood Investment Trust, owned
approximately 100% of the value of the outstanding interests in the Portfolio.
Because the Fund controls the Portfolio, it may take actions without the
approval of any other investor in the Portfolio.

Small Cap - Part B

<PAGE>

B-20

Fund's shareholders. It is anticipated that other registered investment
companies investing in the Portfolio will follow the same or a similar practice.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISER OF THE PORTFOLIO TRUST

Small Cap - Part B

<PAGE>

B-21

called for the purpose of voting on such approval. The investment advisory
agreement may be terminated at any time without the payment of any penalty by
vote of the Trustees of the Portfolio Trust or by the "vote of a majority of the
outstanding voting securities" of the Portfolio or by the Adviser, on sixty
days' written notice to the other parties. The investment advisory agreement
terminates in the event of its assignment as defined in the 1940 Act.

ADMINISTRATOR OF THE PORTFOLIO

The Portfolio's administration agreement can be terminated by either
party on not more than sixty days' written notice.

CUSTODIAN

Investors Bank & Trust Company, 24 Federal Street, Boston,
Massachusetts 02110, serves as custodian of all cash and securities of the
Portfolio.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand, P.O. Box 219, Grand Cayman, Cayman Islands, BWI,
serves as independent accountants for the Portfolio Trust and will audit the
Portfolio's financial statements annually.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

Small Cap - Part B

<PAGE>

B-22

execution services on a continuing basis and its financial condition. In
addition, if the Adviser determines in good faith that the amount of commissions
charged by a broker is reasonable in relation to the value of the brokerage and
research services provided by such broker, the Portfolio may pay commissions to
such broker in an amount greater than the amount another firm may charge.
Research services may include (i) furnishing advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities, (ii)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts, and (iii) effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research services
furnished by firms through which the Portfolio effects its securities
transactions may be used by the Adviser in servicing other accounts; not all of
these services may be used by the Adviser in connection with the Portfolio. The
investment advisory fee paid by the Portfolio under the advisory agreement will
not be reduced as a result of the Adviser's receipt of research services.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Interests in the Portfolio have no preemptive or conversion rights, and
are fully paid and non-assessable, except as described in Part A. The Portfolio
normally will not hold meetings of holders of such interests except as required
under the 1940 Act or its declaration of trust. The Portfolio 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 had been elected by holders. The Trustees of the
Portfolio continue to hold office until their successors are elected and have
qualified. Holders holding a specified percentage of interests in the Portfolio
may call a meeting of holders in the Portfolio for the purpose of removing any
Trustee. A Trustee of the Portfolio may be removed upon a majority vote of the
interests held by holders in the Portfolio qualified to vote in the election.
The 1940 Act requires the Portfolio to assist its holders in calling such a
meeting. Upon liquidation of the Portfolio, holders in the Portfolio would be

Small Cap - Part B

<PAGE>

B-23

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.

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.

Money market instruments with less than sixty days remaining to
maturity when acquired by the Portfolio are valued on an amortized cost basis.
If the

Small Cap - Part B

<PAGE>

B-24

Portfolio acquires a money market instrument with more than sixty days remaining
to its maturity, it is valued at current market value until the sixtieth day
prior to maturity and will then be valued at amortized cost based upon the value
on such date unless the Trustees determine during such sixty-day period that
amortized cost does not represent fair value.

ITEM 20. TAX STATUS.

The Portfolio will be treated as a partnership for federal income tax
purposes. As such, the Portfolio is not subject to federal income taxation.
Instead, each investor in the Portfolio that is subject to federal income
taxation must take into account, in computing its federal income tax liability,
if any, its share of the Portfolio's income, gains, losses, deductions, credits
and tax preference items, without regard to whether it has received any cash
distributions from the Portfolio. Because certain investors in the Portfolio
have qualified and elected or intend to qualify and elect to be treated as a
"regulated investment company" ("RIC") under Subchapter M of the Code, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements in order for these investors to satisfy them. The
Portfolio will allocate at least annually among its investors, each investor's
distributive share of the Portfolio's net investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
The Portfolio will make allocations to an investor that qualifies as a RIC in
accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the investor to satisfy the tax distribution requirements that apply to
the investor and that must be satisfied in order to avoid Federal income and/or
excise tax on the investor. For purposes of applying the requirements of the
Code regarding qualification as a RIC, the investor will be deemed (i) to own
its proportionate share of each of the assets of the Portfolio and (ii) to be
entitled to the gross income of the Portfolio attributable to such share.

Small Cap - Part B

<PAGE>

B-25

Limitations imposed by the Code on regulated investment companies may
restrict the Portfolio's ability to enter into futures, options or currency
forward transactions.

Small Cap - Part B

<PAGE>

B-26

other sources) is limited under the Code to less than 30% of such investor's
annual gross income, and such transactions could under future Treasury
regulations produce income not among the types of "qualifying income" from which
the investor must derive at least 90% of its annual gross income.

Distributions by an investor in the Portfolio that qualifies as a RIC
to its corporate shareholders would potentially qualify in their hands for the
corporate dividends received deduction, subject to certain holding period
requirements and limitations on debt financing under the Code, only to the
extent the RIC investor was properly allocated dividend income from the
Portfolio's stock investments in U.S. domestic corporations. A portion of a RIC
investor's distributions, attributable to its distributive share of the
dividends the Portfolio receives with respect to such stocks, will generally
qualify as dividends in the hands of the RIC for purposes of the RIC's being
able to make distributions that may qualify for the dividends received
deduction.

Small Cap - Part B

<PAGE>

B-27

ordinary income allocated to them by the Portfolio, except to the extent a
withholding tax exemption may be available. Such an exemption will not, however,
be available for dividend income and certain other income. Non-U.S. investors
should consult their tax advisers regarding such treatment and the application
of foreign taxes to an investment in the Portfolio.

ITEM 21. UNDERWRITERS.

Not applicable.

ITEM 22. CALCULATION OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL STATEMENTS.

Investors will receive the Portfolio's unaudited semi-annual reports
and annual reports audited by the Portfolio's independent accountants.

<PAGE>

Dated April 25, 1996

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH GLOBAL FIXED INCOME PORTFOLIO

PART B

ITEM 10. COVER PAGE.

This Part B expands upon and supplements the information contained in
the Part A of Standish Global Fixed Income Portfolio (the "Portfolio"), a
separate investment series of Standish, Ayer & Wood Master Portfolio (the
"Portfolio Trust"). This Part B should be read in conjunction with such Part A.

NEITHER PART A NOR THIS PART B CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY BENEFICIAL INTERESTS IN STANDISH GLOBAL FIXED INCOME
PORTFOLIO.

ITEM 11. TABLE OF CONTENTS. PAGE

General Information and History . . . . . . . . . . . B- 1
Investment Objectives and Policies . . . . . . . . . B- 1
Management of the Portfolio . . . . . . . . . . . . . B-16
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . B-18
Investment Advisory and Other Services . . . . . . . B-19
Brokerage Allocation and Other Practices . . . . . . B-20
Capital Stock and Other Securities . . . . . . . . . B-21
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . B-22
Tax Status . . . . . . . . . . . . . . . . . . . . . B-23
Underwriters . . . . . . . . . . . . . . . . . . . . B-27
Calculation of Performance Data . . . . . . . . . . . B-27
Financial Statements . . . . . . . . . . . . . . . . B-27

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

MONEY MARKET INSTRUMENTS AND REPURCHASE AGREEMENTS
Money market instruments include short-term U.S. and foreign Government
securities, commercial paper (promissory notes issued by corporations to finance
their short-term credit needs), negotiable certificates of deposit,

<PAGE>

B-2

non-negotiable fixed time deposits, bankers' acceptances and repurchase
agreements.

U.S. Government securities include securities which are direct
obligations of the U.S. Government backed by the full faith and credit of the
United States, and securities issued by agencies and instrumentalities of the
U.S. Government, which may be guaranteed by the U.S. Treasury or supported by
the issuer's right to borrow from the Treasury or may be backed by the credit of
the federal agency or instrumentality itself. Agencies and instrumentalities of
the U.S. Government include, but are not limited to, Federal Land Banks, the
Federal Farm Credit Bank, the Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks and the Federal National
Mortgage Association.

Investments in commercial paper will be rated "Prime-1" by Moody's
Investors Service, Inc. ("Moody's") or "A-1" by Standard & Poor's Ratings Group
("S&P") or Duff 1+ by Duff & Phelps, Inc. which are the highest ratings assigned
by these rating services (even if rated lower by one or more of the other
agencies), or which, if not rated or rated lower by one or more of the agencies
and not rated by the other agency or agencies, are judged by Standish
International Management Company, L.P. (the "Adviser"), the Portfolio's
investment adviser, to be of equivalent quality to the securities so rated. In
determining whether securities are of equivalent quality, the Adviser may take
into account, but will not rely entirely on, ratings assigned by foreign rating
agencies.

A repurchase agreement is an agreement under which the Portfolio
acquires money market instruments (generally U.S. Government securities) from a
commercial bank, broker or dealer, subject to resale to the seller at an
agreed-upon price and date (normally the next business day). The resale price
reflects an agreed-upon interest rate effective for the period the instruments
are held by the Portfolio and is unrelated to the interest rate on the
instruments. The instruments acquired by the Portfolio (including accrued
interest) must have an aggregate market value in excess of the resale price and
will be held by the custodian bank for the Portfolio until they are repurchased.
The Trustees of the Portfolio Trust will monitor the standards which the Adviser
will use in reviewing the creditworthiness of any party to a repurchase
agreement with the Portfolio.

Global Fixed Income - Part B

<PAGE>

B-3

STRATEGIC TRANSACTIONS
The Portfolio may, but is not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements), to manage the effective maturity or duration of
fixed-income securities, or to enhance potential gain. Such strategies are
generally accepted as part of modern portfolio management and are regularly
utilized by many mutual funds and other institutional investors. Techniques and
instruments used by the Portfolio may change over time as new instruments and
strategies are developed or regulatory changes occur.

In the course of pursuing its investment objective, the Portfolio may
purchase and sell (write) exchange-listed and over-the-counter put and call
options on securities, equity and fixed-income indices and other financial
instruments; purchase and sell financial futures contracts and options thereon;
enter into various interest rate transactions such as swaps, caps, floors or
collars; and enter into various currency transactions such as currency forward
contracts, currency futures contracts, currency swaps or options on currencies
or currency futures (collectively, all the above are called "Strategic
Transactions"). Strategic Transactions may be used in an attempt to protect
against possible changes in the market value of securities held in or to be
purchased for the Portfolio's portfolio resulting from securities market or
currency exchange rate fluctuations, to protect the Portfolio's unrealized gains
in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or duration
of the Portfolio's portfolio, or to establish a position in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities. In addition to the hedging transactions referred to in the preceding
sentence, Strategic Transactions may also be used to enhance potential gain in
circumstances where hedging is not involved although the Portfolio will attempt
to limit its net loss exposure resulting from Strategic Transactions entered
into for such purposes to not more than 3% of the Portfolio's net assets at any
one time and, to the extent necessary, the Portfolio will close out transactions
in order to comply with this limitation. (Transactions such as writing covered
call options are considered to involve hedging for the purposes of this
limitation.) In calculating the Portfolio's net loss exposure from such
Strategic Transactions, an unrealized gain from a particular Strategic
Transaction position would be netted against an unrealized loss from a related
Strategic Transaction position. For example, if the Adviser anticipates that the
Belgian franc will appreciate relative to the French franc, the Portfolio may
take a long forward currency position in the Belgian franc and a short foreign
currency position in the French franc. Under such circumstances, any unrealized
loss in the Belgian franc position would be netted against any unrealized gain
in the French franc position (and vice versa) for purposes of calculating the
Portfolio's net loss exposure. The ability of the Portfolio to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Portfolio will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Portfolio's activities involving
Strategic Transactions may be

Global Fixed Income - Part B

<PAGE>

B-4

limited in order to enable certain of the Portfolio's investors to comply with
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification as a regulated investment company.

RISKS OF STRATEGIC TRANSACTIONS
Strategic Transactions have risks associated with them including
possible default by the other party to the transaction, illiquidity and, to the
extent the Adviser's view as to certain market movements is incorrect, the risk
that the use of such Strategic Transactions could result in losses greater than
if they had not been used. The writing of put and call options may result in
losses to the Portfolio, force the purchase or sale, respectively, of portfolio
securities at inopportune times or for prices higher than (in the case of
purchases due to the exercise of put options) or lower than (in the case of
sales due to the exercise of call options) current market values, limit the
amount of appreciation the Portfolio can realize on its investments or cause the
Portfolio to hold a security it might otherwise sell. The use of currency
transactions can result in the Portfolio incurring losses as a result of a
number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Portfolio's position. The writing of
options could significantly increase the Portfolio's portfolio turnover rate
and, therefore, associated brokerage commissions or spreads. In addition,
futures and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time, in certain
circumstances, they tend to limit any potential gain which might result from an
increase in value of such position. The loss incurred by the Portfolio in
writing options on futures and entering into futures transactions is potentially
unlimited; however, as described above, the Portfolio will attempt to limit its
net loss exposure resulting from Strategic Transactions entered into for
non-hedging purposes to not more than 3% of its net assets at any one time.
Futures markets are highly volatile and the use of futures may increase the
volatility of the Portfolio's investor's net asset value. Finally, entering into
futures contracts would create a greater ongoing potential financial risk than
would purchases of options where the exposure is limited to the cost of the
initial premium. Losses resulting from the use of Strategic Transactions would
reduce net asset value and the net result may be less favorable than if the
Strategic Transactions had not been utilized.

Global Fixed Income - Part B

<PAGE>

B-5

relates to each of the particular types of options discussed in greater detail
below. In addition, many Strategic Transactions involving options require
segregation of the Portfolio's assets in special accounts, as described below
under "Use of Segregated Accounts."

A put option gives the purchaser of the option, in consideration for
the payment of a premium, the right to sell, and the writer the obligation to
buy if the option is exercised, the underlying security, commodity, index,
currency or other instrument at the exercise price. For instance, the
Portfolio's purchase of a put option on a security might be designed to protect
its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the
Portfolio the right to sell such instrument at the option exercise price. A call
option, in consideration for the payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell if the option
is exercised, the underlying instrument at the exercise price. The Portfolio may
purchase a call option on a security, futures contract, index, currency or other
instrument to seek to protect the Portfolio against an increase in the price of
the underlying instrument that it intends to purchase in the future by fixing
the price at which it may purchase such instrument. An American style put or
call option may be exercised at any time during the option period while a
European style put or call option may be exercised only upon expiration or
during a fixed period prior thereto. The Portfolio is authorized to purchase and
sell exchange listed options and over-the-counter options ("OTC options").
Exchange listed options are issued by a regulated intermediary such as the
Options Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options. The discussion below uses the OCC as
an example, but is also applicable to other financial intermediaries.

With certain exceptions, exchange listed options generally settle by
physical delivery of the underlying security or currency, although in the future
cash settlement may become available. Index options and Eurodollar instruments
are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

Global Fixed Income - Part B

<PAGE>

B-6

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Portfolio will engage in OTC option transactions only with U.S.
Government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers", or broker dealers, domestic or foreign banks or other
financial institutions which have received, combined with any credit
enhancements, a long-term debt rating of A from S&P or Moody's or an equivalent
rating from any other nationally recognized statistical rating organization
("NRSRO") or which issue debt that is determined to be of equivalent credit
quality by the Adviser. The staff of the Securities and Exchange Commission (the
"SEC") currently takes the position that, absent the buy-back provisions
discussed above, OTC options purchased by the Portfolio, and portfolio
securities "covering" the amount of the Portfolio's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the in-the-money amount,
if any) are illiquid, and are subject to the Portfolio's limitation on investing
in illiquid securities. However, for options written with "primary dealers" in
U.S. Government securities pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount which is considered to be illiquid
may be calculated by reference to a formula price.

If the Portfolio sells (writes) a call option, the premium that it
receives may serve as a partial hedge, to the extent of the option premium,
against a

Global Fixed Income - Part B

<PAGE>

B-7

decrease in the value of the underlying securities or instruments in its
portfolio or will increase the Portfolio's income. The sale (writing) of put
options can also provide income.

The Portfolio may purchase and sell (write) call options on securities
including U.S. Treasury and agency securities, mortgage-backed securities,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on U.S. and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Portfolio must be
"covered" (i.e., the Portfolio must own the securities or the futures contract
subject to the call) or must meet the asset segregation requirements described
below as long as the call is outstanding. Even though the Portfolio will receive
the option premium to help offset any loss, the Portfolio may incur a loss if
the exercise price is below the market price for the security subject to the
call at the time of exercise. A call sold by the Portfolio also exposes the
Portfolio during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying security or
instrument and may require the Portfolio to hold a security or instrument which
it might otherwise have sold.

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES
The Portfolio may also purchase and sell (write) call and put options
on securities indices and other financial indices. Options on securities indices
and other financial indices are similar to options on a security or other
instrument except that, rather than settling by physical delivery of the
underlying instrument, they settle by cash settlement. For example, an option on
an index gives the holder the right to receive, upon exercise of the option, an
amount of cash if the closing level of the index upon which the option is based
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option (except if, in the case of an OTC option, physical
delivery is specified). This amount of cash is equal to the differential between
the closing price of the index and the exercise price of the option, which also
may be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount upon exercise
of the option. In addition to the methods described above, the Portfolio may
cover call options on a securities index by owning securities whose price
changes

Global Fixed Income - Part B

<PAGE>

B-8

are expected to be similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities in its
portfolio.

The Portfolio's use of financial futures and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the regulations of the Commodity Futures Trading Commission relating
to exclusions from regulation as a commodity pool operator. Those regulations
currently provide that the Portfolio may use commodity futures and option
positions (i) for bona fide hedging purposes without regard to the percentage of
assets committed to margin and option premiums, or (ii) for other purposes
permitted by the SEC to the extent that the aggregate initial margin and option
premiums required to establish such non-hedging positions (net of the amount
that the positions were "in the money" at the time of purchase) do not exceed 5%
of the net asset value of the Portfolio's portfolio, after taking into account
unrealized profits and losses in such positions. Typically, maintaining a
futures contract or selling an option thereon requires the Portfolio to deposit,
with its custodian for the benefit of a futures commission merchant, as security
for its obligations an amount of cash or other specified assets (initial margin)
which initially is typically 1% to 10% of the face amount of the contract (but
may be higher in some circumstances). Additional cash or assets (variation
margin) may be required to be deposited directly with the futures commission
merchant thereafter on a daily basis as the value of the contract fluctuates.
The purchase of an option on financial futures involves payment of a premium for
the option without any further obligation on the part of the Portfolio. If the
Portfolio exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous

Global Fixed Income - Part B

<PAGE>

B-9

price, nor that delivery will occur. The segregation requirements with respect
to futures contracts and options thereon are described below.

The Portfolio's dealings in forward currency contracts and other
currency transactions such as futures, options, options on futures and swaps
will generally be limited to hedging involving either specific transactions or
portfolio positions. See, "Strategic Transactions." Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of a Portfolio, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

Global Fixed Income - Part B

<PAGE>

B-10

Global Fixed Income - Part B

<PAGE>

B-11

opinion of the Adviser it is in the best interests of the Portfolio to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

SWAPS, CAPS, FLOORS AND COLLARS
Among the Strategic Transactions into which the Portfolio may enter are
interest rate, currency and index swaps and the purchase or sale of related
caps, floors and collars. The Portfolio expects to enter into these transactions
primarily for hedging purposes, including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio,
protecting against currency fluctuations, as a duration management technique or
protecting against an increase in the price of securities the Portfolio
anticipates purchasing at a later date. Swaps, caps, floors and collars may also
be used to enhance potential gain in circumstances where hedging is not involved
although, as described above, the Portfolio will attempt to limit its net loss
exposure resulting from swaps, caps, floors and collars and other Strategic
Transactions entered into for such purposes to not more than 3% of the
Portfolio's net assets at any one time. The Portfolio will not sell interest
rate caps or floors where it does not own securities or other instruments
providing the income stream the Portfolio may be obligated to pay. Interest rate
swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain rate of return within a predetermined range of
interest rates or values.

Global Fixed Income - Part B

<PAGE>

B-12

agreements related to the transaction. The swap market has grown substantially
in recent years with a large number of banks and investment banking firms acting
both as principals and as agents utilizing standardized swap documentation. As a
result, the swap market has become relatively liquid. Caps, floors and collars
are more recent innovations for which standardized documentation has not yet
been fully developed. Swaps, caps, floors and collars are considered illiquid
for purposes of the Portfolio's policy regarding illiquid securities, unless it
is determined, based upon continuing review of the trading markets for the
specific security, that such security is liquid. The Board of Trustees of the
Portfolio Trust has adopted guidelines and delegated to the Adviser the daily
function of determining and monitoring the liquidity of swaps, caps, floors and
collars. The Board of Trustees, however, retains oversight focusing on factors
such as valuation, liquidity and availability of information and is ultimately
responsible for such determinations. The Staff of the SEC currently takes the
position that swaps, caps, floors and collars are illiquid, and are subject to
the Portfolio's limitation on investing in illiquid securities.

EURODOLLAR CONTRACTS
The Portfolio may make investments in Eurodollar contracts. Eurodollar
contracts are U.S. dollar-denominated futures contracts or options thereon which
are linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. The Portfolio might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

Global Fixed Income - Part B

<PAGE>

B-13

offsetting position in securities or other options, futures contracts or other
instruments or (ii) cash, receivables or liquid, high grade debt securities with
a value sufficient to cover its potential obligations. The Portfolio may have to
comply with any applicable regulatory requirements for Strategic Transactions,
and if required, will set aside cash and other assets in a segregated account
with its custodian bank in the amount prescribed. In that case, the Portfolio's
custodian would maintain the value of such segregated account equal to the
prescribed amount by adding or removing additional cash or other assets to
account for fluctuations in the value of the account or the Portfolio's
obligations on the underlying Strategic Transactions. Assets held in a
segregated account would not be sold while the Strategic Transaction is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

"WHEN-ISSUED" AND "DELAYED DELIVERY" SECURITIES
The Portfolio may commit up to 25% of its net assets to purchase
securities on a "when-issued" or "delayed delivery" basis, which means that
delivery and payment for the securities will normally take place 15 to 45 days
after the date of the transaction. The payment obligation and interest rate on
the securities are fixed at the time the Portfolio enters into the commitment,
but interest will not accrue to the Portfolio until delivery of and payment for
the securities. Although the Portfolio will only make commitments to purchase
"when-issued" and "delayed delivery" securities with the intention of actually
acquiring the securities, the Portfolio may sell the securities before the
settlement date if deemed advisable by the Adviser.

Unless the Portfolio has entered into an offsetting agreement to sell
the securities, cash, or liquid high-grade debt obligations with a market value
equal to the amount of the Portfolio's commitment will be segregated with the
custodian bank for the Portfolio. If the market value of these securities
declines, additional cash or securities will be segregated daily so that the
aggregate market value of the segregated securities equals the amount of the
Portfolio's commitment.

Global Fixed Income - Part B

<PAGE>

B-14

Portfolio's investors to maintain their status as a regulated investment company
under the Code. The Portfolio may therefore generally change its portfolio
investments at any time in accordance with the Adviser's appraisal of factors
affecting any particular issuer or market, or relevant economic conditions.
Portfolio turnover is not expected to exceed 250% on an annual basis.

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following fundamental policies. The
Portfolio's fundamental policies cannot be changed unless the change is approved
by the "vote of the outstanding voting securities" of the Portfolio which phrase
as used herein means the lesser of (i) 67% or more of the voting securities of
the Portfolio present at a meeting, if the holders of more than 50% of the
outstanding voting securities of the Portfolio are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities of the
Portfolio.

As a matter of fundamental policy, the Portfolio may not:

1. Invest more than 25% of the current value of its total assets in any
single industry, provided that this restriction shall not apply to debt
securities issued or guaranteed by the United States government or its
agencies or instrumentalities.

3. Purchase real estate or real estate mortgage loans, although the
Portfolio may purchase marketable securities of companies which deal in
real estate, real estate mortgage loans or interests therein.

4. Purchase securities on margin (except that the Portfolio may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities).

6. With respect to at least 50% of its total assets, invest more than 5%
in the securities of any one issuer (other than the U.S. Government,
its agencies or instrumentalities) or acquire more than 10% of the
outstanding voting securities of any issuer.

7. Issue senior securities, borrow money, enter into reverse repurchase
agreements or pledge or mortgage its assets, except that the Portfolio
may (a) borrow money from banks as a temporary measure for
extraordinary or

Global Fixed Income - Part B

<PAGE>

B-15

emergency purposes (but not for investment purposes) in an amount up to
15% of the current value of its total assets, (b) enter into forward
roll transactions, and (c) pledge its assets to an extent not greater
than 15% of the current value of its total assets to secure such
borrowings.

8. Lend portfolio securities except that the Portfolio may lend portfolio
securities with a value up to 20% of its total assets (with a 10% limit
for any borrower) and may enter into repurchase agreements.

a. Make short sales of securities unless (a) after effect is given to any
such short sale, the total market value of all securities sold short
would not exceed 5% of the value of the investor's net assets or (b) at
all times during which a short position is open it owns an equal amount
of such securities, or by virtue of ownership of convertible or
exchangeable securities it has the right to obtain through the
conversion or exchange of such other securities an amount equal to the
securities sold short.

b. Invest in companies for the purpose of exercising control or
management.

c. Purchase the securities of other investment companies, provided that
the Portfolio may make a purchase (a) in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission), provided that immediately thereafter (i) not more
than 10% of the Portfolio's total assets would be invested in such
securities, (ii) not more than 5% of the Portfolio's total assets would
be invested in the securities of any one investment company and (iii)
not more than 3% of the voting stock of any one investment company
would be owned by the Portfolio, or (b) as part of a merger,
consolidation, or acquisition of assets.

d. Purchase or write options, except as described under "Strategic
Transactions."

e. Invest in interests in oil, gas or other exploration or development
programs.

f. Invest more than 5% of the assets of the Portfolio in the securities of
any issuers which together with their corporate parents have records of
less than three years' continuous operation, including the operation of
any predecessor, other than debt securities issued or guaranteed by
U.S. or foreign national, provincial, state or other governments with
taxing authority or by their agencies or by supranational entities and
securities fully collateralized by such securities.

Global Fixed Income - Part B

<PAGE>

g. Invest in securities of any company if any officer or director
(trustee) of the Portfolio Trust or of the Portfolio's investment
adviser owns more than 1/2 of 1% of the outstanding securities of such
company and such officers and directors (trustees) own in the aggregate
more than 5% of the securities of such company.

h. Invest more than an aggregate of 15% of the net assets of the Portfolio
in the aggregate of (a) repurchase agreements which are not terminable
within seven days, (b) securities subject to legal or contractual
restrictions on resale or for which there are no readily available
market quotations and (c) in other illiquid securities, including
nonnegotiable fixed time deposits.

i. Invest more than 25% of its net assets in repurchase agreements.

j. Make additional investments while its outstanding borrowings exceed 5%
of the current value of its total assets.

Purchases of securities of other investment companies permitted under
restriction (c) above could cause the Portfolio to pay additional management and
advisory fees and distribution fees.

ITEM 14. MANAGEMENT OF THE PORTFOLIO.

TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST

The Trustees and executive officers of the Portfolio Trust are listed
below. All executive officers of the Portfolio Trust are affiliates of Standish
International Management Company, L.P., the Portfolio's investment adviser.
<TABLE>
<CAPTION>

NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION
AND DATE OF BIRTH WITH TRUST DURING PAST 5 YEARS
- ----------------- ------------- -------------------
<S> <C> <C>

Global Fixed Income - Part B
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
B-17

Benjamin M. Friedman, 8/5/44 Trustee William Joseph Maier
c/o Harvard University Professor of Political
Cambridge, MA 02138 Economy, Harvard
University

John H. Hewitt, 4/11/35 Trustee Trustee, The Peabody
P.O. Box 307 Foundation; Trustee,
So. Woodstock, VT 05071 Visiting Nurse Alliance of
Vermont and New Hampshire

James E. Hollis III, 11/21/48 Executive Vice Vice President and
c/o Standish, Ayer & Wood, Inc. President Director, Standish, Ayer
One Financial Center & Wood, Inc.
Boston, MA 02111

David W. Murray, 5/5/40 Treasurer and Vice President, Treasurer
c/o Standish, Ayer & Wood, Inc. Secretary and Director, Standish,
One Financial Center Ayer & Wood, Inc.
Boston, MA 02111

</TABLE>

Global Fixed Income - Part B

Lavinia B. Chase, 6/4/46 Vice President Vice President, Standish,
c/o Standish, Ayer & Wood, Inc. Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

Anne P. Herrmann, 1/26/56 Vice President Mutual Fund Administrator,
c/o Standish, Ayer & Wood, Inc. Standish, Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111

*Indicates that Trustee is an interested person of the Portfolio Trust for
purposes of the 1940 Act.

COMPENSATION OF TRUSTEES AND OFFICERS

Global Fixed Income - Part B

<PAGE>

B-19
<TABLE>
<CAPTION>

D. Barr Clayson $0 $0 $0
Samuel C. Fleming 1,103 0 41,750
Benjamin M. Friedman 970 0 36,750
John H. Hewitt 970 0 36,750
Edward H. Ladd 0 0 0
Caleb Loring, III 970 0 36,750
Richard S. Wood 0 0 0

</TABLE>

* Estimated. The Portfolio Trust is newly organized and has not paid any
Trustee's fees.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of March 26, 1996, the Trustees and officers of the Portfolio Trust
as a group beneficially owned (i.e., had voting and/or investment power) less
than 1% of the then outstanding interests of the Portfolio. As of the close of
business on April 25, 1996, Standish Global Fixed Income Fund (the "Fund"), a
series of shares of Standish, Ayer & Wood Investment Trust, owned approximately
100% of the value of the outstanding interests in the Portfolio. Because the
Fund controls the Portfolio, it may take actions without the approval of any
other investor in the Portfolio.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISER OF THE PORTFOLIO TRUST

Standish International Management Company, L.P. serves as the Adviser
to the Portfolio pursuant to a written investment advisory agreement with the
Portfolio Trust. Prior to the close of business on April 25, 1996, the Adviser
managed directly the assets of the Fund pursuant to an investment advisory
agreement. This agreement was terminated by the Fund on such date subsequent to

Global Fixed Income - Part B

<PAGE>

B-20

the approval by the Fund's shareholders on March 29, 1996 to implement certain
changes in the Fund's investment restrictions which enable the Fund to invest
all of its investment securities in the Portfolio. The Adviser is a Delaware
limited partnership organized in 1991 and is registered under the Investment
Adviser Act of 1940. The General Partner of the Adviser is Standish, Ayer &
Wood, Inc. ("Standish"), One Financial Center, Boston, MA 02111, which holds a
99.98% partnership interest. The Limited Partners, who each hold a 0.01%
interest in the Adviser, are Walter M. Cabot, Sr., Chairman of the Board of the
Adviser and a Director of and a Senior Adviser to Standish, and D. Barr Clayson,
the President of the Adviser and a Managing Director of Standish. Richard S.
Wood, a Vice President and Director of Standish and the President of the Trust,
is the Executive Vice President of the Adviser.

The following, constituting all of the Directors and all of the
shareholders of Standish, are Standish's controlling persons: Caleb F. Aldrich,
Nicholas S. Battelle, Walter M. Cabot, David H. Cameron, Karen K. Chandor, D.
Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A. Flaherty, Maria
O'Malley Furman, James E. Hollis III, Raymond J. Kuback, Edward H. Ladd,
Laurence A. Manchester, David W. Murray, George W. Noyes, Arthur H. Parker,
Howard B. Rubin, Austin C. Smith, David C. Stuehr, James J. Sweeney, Ralph S.
Tate and Richard S. Wood.

Global Fixed Income - Part B

<PAGE>

B-21

written notice to the other parties. The investment advisory agreement
terminates in the event of its assignment as defined in the 1940 Act.

In an attempt to avoid any potential conflict with portfolio
transactions for the Portfolio, the Adviser and the Portfolio Trust have each
adopted extensive restrictions on personal securities trading by personnel of
the Adviser and its affiliates. These restrictions include: pre-clearance of all
personal securities transactions and a prohibition of purchasing initial public
offerings of securities. These restrictions are a continuation of the basic
principle that the interests of the Portfolio and its investors come before
those of the Adviser, its affiliates and their employees.

ADMINISTRATOR OF THE PORTFOLIO

IBT Trust Company (Cayman) Ltd. serves as the administrator to the
Portfolio (the "Portfolio Administrator") pursuant to a written administration
agreement with the Portfolio Trust on behalf of the Portfolio. The Portfolio
Administrator provides the Portfolio Trust with office space for managing its
affairs, and with certain clerical services and facilities. For these services,
the Portfolio Administrator currently receives a fee from the Portfolio in the
amount of $7,500 annually.

The Portfolio's administration agreement can be terminated by either
party on not more than sixty days' written notice.

CUSTODIAN

Investors Bank & Trust Company, 24 Federal Street, Boston,
Massachusetts 02110, serves as custodian of all cash and securities of the
Portfolio.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand, P.O. Box 219, Grand Cayman, Cayman Islands, BWI,
serves as independent accountants for the Portfolio Trust and will audit the
Portfolio's financial statements annually.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

Global Fixed Income - Part B

<PAGE>

B-22

Research services may include (i) furnishing advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities, (ii)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts, and (iii) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). Research
services furnished by firms through which the Portfolio effects its securities
transactions may be used by the Adviser in servicing other accounts; not all of
these services may be used by the Adviser in connection with the Portfolio. The
investment advisory fee paid by the Portfolio under the Investment Advisory
Agreement will not be reduced as a result of the Adviser's receipt of research
services.

The Adviser also places portfolio transactions for other advisory
accounts. The Adviser will seek to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities by the
Portfolio and another advisory account. In some cases, this procedure could have
an adverse effect on the price or the amount of securities available to the
Portfolio. In making such allocations, the main factors considered by the
Adviser will be the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held, and
opinions of the persons responsible for recommending the investment.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio.

Global Fixed Income - Part B

<PAGE>

B-23

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.

Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of regular trading on the New York
Stock Exchange. The values of such securities in the Portfolio's portfolio and
used in computing the net asset value of the Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of regular trading on the New York Stock Exchange. Occasionally,
events which affect the values of such securities and such exchange rates may

Global Fixed Income - Part B

<PAGE>

B-24

occur between the times at which they are determined and the close of regular
trading on the New York Stock Exchange and will therefore not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities are
valued at their fair value as determined in good faith in accordance with
procedures approved by the Trustees of the Portfolio Trust.

ITEM 20. TAX STATUS.

Global Fixed Income - Part B

<PAGE>

B-50

available for withdrawal at appropriate times and in sufficient amounts to
enable the investor to satisfy the tax distribution requirements that apply to
the investor and that must be satisfied in order to avoid Federal income and/or
excise tax on the investor. For purposes of applying the requirements of the
Code regarding qualification as a RIC, the investor will be deemed (i) to own
its proportionate share of each of the assets of the Portfolio and (ii) to be
entitled to the gross income of the Portfolio attributable to such share.

Limitations imposed by the Code on regulated investment companies may
restrict the Portfolio's ability to enter into futures, options or currency
forward transactions.

Global Fixed Income - Part B

<PAGE>

B-51

The Federal income tax rules applicable to mortgage dollar rolls and
interest rate or currency swaps, caps, floors and collars are unclear in certain
respects, and the Portfolio may be required to account for these instruments
under tax rules in a manner that, under certain circumstances, may limit its
transactions in these instruments.

Foreign exchange gains and losses realized by the Portfolio in
connection with certain transactions involving foreign currency-denominated debt
securities, certain foreign currency futures and options, foreign currency
forward contracts, foreign currencies, or payables or receivables denominated in
a foreign currency are subject to Section 988 of the Code, which generally
causes such gains and losses to be treated as ordinary income and losses and,
because certain RICs are expected to invest in the Portfolio, may affect the
amount, timing and character of the distributions to shareholders of an investor
that is a RIC. In some cases, elections may be available that would alter this
treatment. Any such transactions that are not directly related to the
Portfolio's investment in stock or securities, possibly including speculative
currency positions or currency derivatives not used for hedging purposes, may
increase the amount of gain it is deemed to recognize from the sale of certain
investments held for less than three months. The share of such gain of an
investor qualifying as a RIC (plus any such gain the investor may realize from
other sources) is limited under the Code to less than 30% of such investor's
annual gross income, and such transactions could under future Treasury
regulations produce income not among the types of "qualifying income" from which
the investor must derive at least 90% of its annual gross income.

The Portfolio may be subject to withholding and other taxes imposed by
foreign countries with respect to its investments in foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. The shareholders of an investor that qualifies as a RIC would be entitled
to claim U.S. foreign tax credits with respect to such taxes, subject to certain
provisions and limitations contained in the Code, only if more than 50% of the
value of the investor's total assets at the close of any taxable year were to
consist of stock or securities of foreign corporations and the investor were to
file an election with the Internal Revenue Service. The investments of the
Portfolio are such that investors that are RICs may, in some years, be able to
meet this 50% requirement.

Global Fixed Income - Part B

<PAGE>

B-52

its stock holdings, if any, in passive foreign investment companies to minimize
the investor's tax liability or maximize its return from these investments.

Investment in debt obligations by the Portfolio that are at risk of or
in default presents special tax issues for an investor. Tax rules are not
entirely clear about issues such as when the Portfolio may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These other issues will be addressed by the Portfolio, in the event
that it holds such obligations, in order to reduce the risk of any RIC investing
in the Portfolio, distributing insufficient income to preserve its status as a
RIC and seek to avoid becoming subject to Federal income or excise tax.

Due to possible unfavorable consequences under present tax law for an
investor that qualifies as a RIC, the Portfolio does not currently intend to
acquire "residual" interests in real estate mortgage investment conduits
("REMICs"), although the Portfolio may acquire "regular" interests in REMICs.

Distributions by an investor in the Portfolio that qualifies as a RIC
to its corporate shareholders would potentially qualify in their hands for the
corporate dividends received deduction, subject to certain holding period
requirements and limitations on debt financing under the Code, only to the
extent the investor was properly allocated dividend income from the Portfolio's
stock investments in U.S. domestic corporations. Because the Portfolio generally
will not invest in such stock, it is unlikely that the Portfolio will receive
and allocate to its investors any significant amount of dividends that may
qualify for the dividends received deduction.

There are certain tax issues that will be relevant to only certain of
the investors, such as investors who contribute assets rather than cash to the
Portfolio. It is intended that such contributions of assets will not be taxable
provided certain requirements are met. Such investors are advised to consult

Global Fixed Income - Part B

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B-53

their own tax advisors as to the tax consequences of an investment in the
Portfolio.

ITEM 21. UNDERWRITERS.

Not applicable.

ITEM 22. CALCULATION OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL STATEMENTS.

Investors will receive the Portfolio's unaudited semi-annual reports
and annual reports audited by the Portfolio's independent accountants.

<PAGE>

STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH FIXED INCOME PORTFOLIO
STANDISH EQUITY PORTFOLIO
STANDISH SMALL CAPITALIZATION EQUITY PORTFOLIO
STANDISH GLOBAL FIXED INCOME PORTFOLIO

PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS

The financial statements called for by this Item are included
in Part B and listed in Item 23 hereof.

(B) EXHIBITS

1. Declaration of Trust of the Registrant is filed herein.

2. By-Laws of the Registrant is filed herein.

5(A). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Fixed Income Portfolio, and Standish,
Ayer & Wood, Inc. ("Standish") is filed herein.

5(B). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Equity Portfolio, and Standish is
filed herein.

5(C). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Small Capitalization Equity
Portfolio, and Standish is filed herein.

5(D). Form of Investment Advisory Agreement between the Registrant,
with respect to Global Fixed Income Portfolio, and Standish
International Management Company, L.P. is filed herein.

8. Master Custody Agreement between the Registrant and Investors
Bank & Trust Company is filed herein.

9. Administration Agreement between the Registrant and IBT Trust
Company (Cayman) Ltd. is filed herein.

19(A). Power of Attorney (Richard S. Wood) is filed herein.

19(B). Power of Attorney (Samuel C. Fleming, Benjamin M. Friedman,
John H. Hewitt, Edward H. Ladd, Caleb Loring III, Richard S.
Wood and D. Barr Clayson) is filed herein.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

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<PAGE>

C-2

Not applicable.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Series of Beneficial Interests (as of March 29, 1996)

Standish Fixed Income Portfolio 0
Standish Equity Portfolio 0
Standish Small Capitalization
Equity Portfolio 0
Standish Global Fixed Income Portfolio 0

ITEM 27. INDEMNIFICATION.

Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an Exhibit herewith.

Under the Registrant's Declaration of Trust, any past or present
Trustee or officer of the Registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by him
in connection with any action, suit or proceeding to which he may be a party or
is otherwise involved by reason of his being or having been a Trustee or officer
of the Registrant. The Declaration of Trust of the Registrant does not authorize
indemnification where it is determined, in the manner specified in the
Declaration, that such Trustee or officer has not acted in good faith in the
reasonable belief that his actions were in the best interest of the Registrant.
Moreover, the Declaration does not authorize indemnification where such Trustee
or officer is liable to the Registrant or its investors by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by any such Trustee, officer or controlling person
against the Registrant in connection with the securities being registered, and
the Commission is still of the same opinion, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

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<PAGE>

C-3

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

STANDISH, AYER & WOOD, INC. AND STANDISH INTERNATIONAL MANAGEMENT COMPANY,
L.P.:

The business and other connections of the officers and Directors of
Standish, the investment adviser to all series of the Registrant other than
Standish Global Fixed Income Portfolio, are listed on the Form ADV of Standish
as currently on file with the Commission (File No. 801-584), the text of which
is hereby incorporated by reference.

The business and other connections of the officers and partners of
Standish International Management Company, L.P. ("Standish International"), the
investment adviser to Standish Global Fixed Income Portfolio, are listed on the
Form ADV of Standish International as currently on file with the Commission
(File No. 801-639338), the text of which is hereby incorporated by reference.

The following sections of each such Form ADV are incorporated herein by
reference:

(a) Items 1 and 2 of Part 2;

(b) Section IV, Business Background, of
each Schedule D.

ITEM 29. PRINCIPAL UNDERWRITERS.

Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

The Registrant maintains the records required by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3 inclusive thereunder at
its registered office, located in care of IBT Trust Company (Cayman) Ltd., The
Bank of Nova Scotia Building, George Town, Grand Cayman, Cayman Islands, British
West Indies. Certain records, including records relating to the Registrant's
shareholders and the physical possession of its securities, may be maintained
pursuant to Rule 31a-3 at the main offices of the Registrant's custodian.

ITEM 31. MANAGEMENT SERVICES.

Not applicable.

ITEM 32. UNDERTAKINGS.

Not applicable.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of George Town, Grand Cayman, B.W.I. on the 28th day of March, 1996.

STANDISH, AYER & WOOD MASTER PORTFOLIO

/S/RICHARD S. WOOD*
Richard S. Wood

*By: /S/SUSAN JAKUBOSKI
Susan Jakuboski
Attorney-In-Fact

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<PAGE>

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION

1 Declaration of Trust

2 By-Laws

5(A) Form of Investment Advisory Agreement with respect to Standish
Fixed Income Portfolio

5(B) Form of Investment Advisory Agreement with respect to Standish
Equity Portfolio

5(C) Form of Investment Advisory Agreement with respect to Standish
Small Capitalization Equity Portfolio

5(D) Form of Investment Advisory Agreement with respect to Standish
Global Fixed Income Portfolio

8 Custody Agreement

9 Administration Agreement

19(A) Power of Attorney (Richard S. Wood)

19(B) Power of Attorney (Samuel C. Flemming, Benjamin Friedman, John
H. Hewitt, Edward H. Ladd, Caleb Loring III, Richard S. Wood
and D. Barr Clayson)

STANDISH, AYER & WOOD MASTER PORTFOLIO

DECLARATION OF TRUST

Dated as of January 18, 1996

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<PAGE>

TABLE OF CONTENTS
PAGE

ARTICLE I--THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------

Section 1.1 Name . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Definitions . . . . . . . . . . . . . . . . . . .1

ARTICLE II--TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------

Section 2.1 Number and Qualification . . . . . . . . . . . . 3
Section 2.2 Term and Election . . . . . . . . . . . . . . . . 4
Section 2.3 Resignation, Removal and Retirement . . . . . . . 4
Section 2.4 Vacancies . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Meetings and Actions Without Meetings . . . . . . 5
Section 2.6 Officers; Chairman of the Board . . . . . . . . . 5
Section 2.7 By-Laws . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE III--POWERS OF TRUSTEES . . . . . . . . . . . . . . . . . . . 6
------------------

Section 3.1 General . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Investments . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Legal Title . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Sale and Increases of Interests . . . . . . . . . 7
Section 3.5 Decreases and Redemptions of Interests . . . . . .8
Section 3.6 Borrow Money . . . . . . . . . . . . . . . . . . .8
Section 3.7 Delegation; Committees . . . . . . . . . . . . . .8
Section 3.8 Collection and Payment . . . . . . . . . . . . . .8
Section 3.9 Expenses . . . . . . . . . . . . . . . . . . . . .8
Section 3.10 Miscellaneous Powers . . . . . . . . . . . . . . 9
Section 3.11 Further Powers . . . . . . . . . . . . . . . . . 9

ARTICLE IV--INVESTMENT ADVISORY, ADMINISTRATION AND PLACEMENT
AGENT ARRANGEMENTS; CUSTODIAN . . . . . . . . . . 10
-----------------------------

Section 4.1 Investment Advisory and Other Arrangements . . . .10
Section 4.2 Parties to Contract . . . . . . . . . . . . . . . 10
Section 4.3 Custodian . . . . . . . . . . . . . . . . . . . . 10
Section 4.4 1940 Act Governance . . . . . . . . . . . . . . . 10

ARTICLE V-- LIMITATIONS OF LIABILITY OF TRUSTEES,
OFFICERS, ETC. . . . . . . . . . . . . . . . . . . . .11
--------------

Section 5.1 Limitation of Liability . . . . . . . . . . . . . 11

Section 5.2 Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors
to Third Parties . . . . . . . . . . . . . . . .11
Section 5.3 Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors
to Trust, Holders, etc. . . . . . . . . . . . . 11
Section 5.4 Mandatory Indemnification . . . . . . . . . . . . 12
Section 5.5 Indemnification of Holders . . . . . . . . . . . 13

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PAGE

Section 5.6 No Bond Required of Trustees . . . . . . . . . . .13
Section 5.7 No Duty of Investigation; Notice in Trust
Instruments, etc. . . . . . . . . . . . . . . .13
Section 5.8 Reliance on Experts, etc. . . . . . . . . . . . . 13
Section 5.9 No Repeal or Modification . . . . . . . . . . . . 13

ARTICLE VI--INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . 14
---------

Section 6.1 Interests . . . . . . . . . . . . . . . . . . . . 14
Section 6.2 Establishment and Designation of Series . . . . . 14
Section 6.3 Non-Transferability . . . . . . . . . . . . . . . 15
Section 6.4 Register of Interests . . . . . . . . . . . . . . 15
Section 6.5 Status of Interests; Limitations of Holder
Liability . . . . . . . . . . . . . . . . . . 15

ARTICLE VII--INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS . . . . 15

ARTICLE VIII--DETERMINATION OF BOOK CAPITAL ACCOUNT BALANCES,
AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 16
-----------------

Section 8.1 Book Capital Account Balances . . . . . . . . . . 16
Section 8.2 Allocations and Distributions to Holders . . . . .16
Section 8.3 Power to Modify Foregoing Procedures . . . . . . .16

ARTICLE IX--HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------

Section 9.1 Rights of Holders . . . . . . . . . . . . . . . . 17
Section 9.2 Meetings of Holders . . . . . . . . . . . . . . . 17
Section 9.3 Notice of Meetings . . . . . . . . . . . . . . . .18
Section 9.4 Record Date for Meetings, Distributions, etc. . . 18
Section 9.5 Proxies, etc. . . . . . . . . . . . . . . . . . . 18
Section 9.6 Reports . . . . . . . . . . . . . . . . . . . . . 18
Section 9.7 Inspection of Records . . . . . . . . . . . . . . 19
Section 9.8 Holder Action by Written Consent . . . . . . . . .19
Section 9.9 Notices . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE X--DURATION; TERMINATION; DISSOLUTION; AMENDMENT; MERGERS; ETC. 19

Section 10.1 Duration . . . . . . . . . . . . . . . . . . . . 19
Section 10.2 Dissolution . . . . . . . . . . . . . . . . . . . 20
Section 10.3 Termination . . . . . . . . . . . . . . . . . . . 20
Section 10.4 Amendment Procedure . . . . . . . . . . . . . . . 21
Section 10.5 Merger, Consolidation and Sale of Assets . . . . .22
Section 10.6 Incorporation . . . . . . . . . . . . . . . . . . 22

ARTICLE XI--MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .22
-------------

Section 11.1 Certificate of Designation; Agent for
Service of Process . . . . . . . . . . . . . . .22
Section 11.2 Governing Law . . . . . . . . . . . . . . . . . . 22

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PAGE

Section 11.3 Counterparts . . . . . . . . . . . . . . . . . . .23
Section 11.4 Reliance by Third Parties . . . . . . . . . . . . 23
Section 11.5 Provisions in Conflict with Law or Regulations . .23

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<PAGE>

DECLARATION OF TRUST

STANDISH, AYER & WOOD MASTER PORTFOLIO

This DECLARATION OF TRUST of STANDISH, AYER & WOOD MASTER
PORTFOLIO is made as of the 18th day of January, 1996 by the parties signatory
hereto, as Trustees (as defined in Section 1.2 hereof).

W I T N E S S E T H:

WHEREAS, the Trustees desire to form a master trust fund or
"Trust" (as defined in Section 1.2 hereof) under the law of the State of New
York consisting of one or more subtrusts or "Series" (as defined in Section 1.2
hereof) for the investment and reinvestment of assets contributed thereto; and

WHEREAS, it is proposed that the trust assets be composed of
money and other property contributed to the Series, such assets to be held and
managed in trust for the benefit of the holders of beneficial interests in such
Series;

NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust all money and other property contributed to the Trust and will
manage and dispose of the same for the benefit of such holders of beneficial
interests and subject to the provisions hereof, to wit:

ARTICLE I

THE TRUST

1.1. NAME. The name of the Trust shall be STANDISH, AYER &
WOOD MASTER PORTFOLIO and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the term "Trust" wherever hereinafter used) shall
refer to the Trustees as Trustees, and not individually, and shall not refer to
the officers, employees, agents or independent contractors of the Trust or its
holders of beneficial interests.

1.2. DEFINITIONS. As used in this Declaration, the following
terms shall have the following meanings:

"ADMINISTRATOR" shall mean any party furnishing services to
one or more Series pursuant to any administration contract described in Section
4.1 hereof.

"BOOK CAPITAL ACCOUNT" shall mean, for any Holder (as
hereinafter defined) at any time, the Book Capital Account of the Holder at such
time with respect to the Holder's beneficial interest in the Trust Property (as
hereinafter defined) of any Series, determined in accordance with the method as
may be established by the Trustees pursuant to Section 8.1 hereof. The Trust
shall maintain separate records of Book Capital Accounts for each such Series.

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<PAGE>

"CODE" shall mean the United States Internal Revenue Code of
1986, as amended from time to time, as well as any non-superseded provisions of
the Internal Revenue Code of 1954, as amended (or any corresponding provision or
provisions of succeeding law).

"COMMISSION" shall mean the United States Securities and
Exchange Commission.

"DECLARATION" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to "DECLARATION", "HEREOF",
"HEREIN" and "HEREUNDER" shall be deemed to refer to this Declaration rather
than the article or section in which any such word appears.

"FISCAL YEAR" shall mean an annual period determined by the
Trustees which ends on December 31 of each year or on such other day as is
permitted or required by the Code.

"HOLDER" shall mean the record holder of any Interest.

"INSTITUTIONAL INVESTOR(S)" shall mean any regulated
investment company, segregated asset account, foreign investment company, common
trust fund, group trust or other investment arrangement, whether organized
within or without the United States of America, other than an individual, S
corporation, partnership or grantor trust that are beneficially owned by any
individual, S corporation or partnership.

"INTERESTED PERSON" shall have the meaning given it in the
1940 Act (as hereinafter defined).

"INTEREST" shall mean the beneficial interest of a Holder in
the Trust Property of any Series, including all rights, powers and privileges
accorded to Holders by this Declaration, which interest may be expressed as a
percentage, determined by calculating for a particular Series, at such times and
on such basis as the Trustees shall from time to time determine, the ratio of
each Holder's Book Capital Account balance to the total of all Holders' Book
Capital Account balances. Reference herein to a specified percentage of, or
fraction of, Interests, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balances of all, or a specified group of, Holders.

"INVESTMENT ADVISER" shall mean any party furnishing services
to one or more Series of the Trust pursuant to any investment advisory contract
described in Section 4.1 hereof.

"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting of
Holders of one or more Series as the context may require, of (A) 67% or more of
the Interests present or represented at such meeting, if Holders of more than
50% of all Interests in such one or more Series are present or represented by
proxy, or (B) more than 50% of all Interests in such one or more Series,
whichever is less.

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<PAGE>

"1940 ACT" shall mean the United States Investment Company Act
of 1940, as amended from time to time, and the rules and regulations thereunder.

"PERSON" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.

"REDEMPTION" shall mean the complete withdrawal of an Interest
of a Holder the result of which is to reduce the Book Capital Account balance of
that Holder to zero, and the term "redeem" shall mean to effect a Redemption.

"SERIES" shall mean the subtrusts of the Trust as the same are
established and designated pursuant to Article VI hereof, each of which shall be
a separate subtrust.

"TRUST" shall mean the master trust fund established hereby
and shall include each Series hereof.

"TRUST PROPERTY" shall mean as of any particular time any and
all assets or other property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of any Series or for the
account of the Trustees, each component of which shall be allocated and belong
to a specific Series to the exclusion of all other Series.

"TRUSTEES" shall mean each signatory to this Declaration, so
long as such signatory shall continue in office in accordance with the terms
hereof, and all other individuals who at the time in question have been duly
elected or appointed and have qualified as Trustees in accordance with the
provisions hereof and are then in office, and reference in this Declaration to a
Trustee or Trustees shall refer to such individual or individuals in their
capacity as Trustees hereunder.

ARTICLE II

TRUSTEES

2.1. NUMBER AND QUALIFICATION. The number of Trustees shall be
fixed from time to time by action of the Trustees taken as provided in Section
2.5 hereof; provided, however, that the number of Trustees so fixed shall in no
event be less than two or more than fifteen. Any vacancy created by an increase
in the number of Trustees may be filled by the appointment of an individual
having the qualifications described in this Section 2.1 made by action of the
Trustees taken as provided in Section 2.5 hereof. Any such appointment shall not
become effective, however, until the individual named in the written instrument
of appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy occurs, until such vacancy is filled as provided in Section 2.4
hereof, the Trustees continuing in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all

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<PAGE>

the duties imposed upon the Trustees by this Declaration. A Trustee shall be an
individual at least 21 years of age who is not under legal disability.

2.2. TERM AND ELECTION. Each Trustee named herein, or elected
or appointed prior to the first meeting of Holders, shall (except in the event
of resignations, retirements, removals or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required under
the 1940 Act. Subject to the provisions of Section 16(a) of the 1940 Act and
except as provided in Section 2.3 hereof, each Trustee shall hold office during
the lifetime of the Trust and until its termination as hereinafter provided.

2.3. RESIGNATION, REMOVAL AND RETIREMENT. Any Trustee may
resign his or her trust (without need for prior or subsequent accounting) by an
instrument in writing executed by such Trustee and delivered or mailed to the
Chairman, if any, the President or the Secretary of the Trust and such
resignation shall be effective upon such delivery, or at a later date according
to the terms of the instrument. Any Trustee may be removed with or without cause
by the affirmative vote of Holders of two-thirds of the Interests or (provided
the aggregate number of Trustees, after such removal and after giving effect to
any appointment made to fill the vacancy created by such removal, shall not be
less than the number required by Section 2.1 hereof) by the action of two-thirds
of the remaining Trustees. Any Trustee who has attained a mandatory retirement
age, if any, established pursuant to any written policy adopted from time to
time by a majority of the Trustees shall, automatically and without action by
such Trustee or the remaining Trustees, be deemed to have retired in accordance
with the terms of such policy, effective as of the date determined in accordance
with such policy. Any Trustee who has become incapacitated by illness or injury
as determined by a majority of the other Trustees, may be retired by written
instrument executed by a majority of the other Trustees, specifying the date of
such Trustee's retirement. Upon the resignation, retirement or removal of a
Trustee, or a Trustee otherwise ceasing to be a Trustee, such resigning,
retired, removed or former Trustee shall execute and deliver such documents as
the remaining Trustees shall require for the purpose of conveying to the Trust
or the remaining Trustees any Trust Property held in the name of such resigning,
retired, removed or former Trustee. Upon the death of any Trustee or upon
removal, retirement or resignation due to any Trustee's incapacity to serve as
Trustee, the legal representative of such deceased, removed, retired or
resigning Trustee shall execute and deliver on behalf of such deceased, removed,
retired or resigning Trustee such documents as the remaining Trustees shall
require for the purpose set forth in the preceding sentence.

2.4. VACANCIES. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
retirement or removal of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, Holders of at least a majority of
the Interests entitled to vote, acting at any meeting of Holders held in
accordance with Section 9.2 hereof, or, to the extent permitted by the 1940 Act,
a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
The Trustees

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may appoint a new Trustee as provided above in anticipation of a vacancy
expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only when or after the expected vacancy occurs. Subject
to the foregoing sentence, as soon as any Trustee has accepted such appointment
in writing, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. The power of appointment is subject to Section
16(a) of the 1940 Act.

2.5. MEETINGS AND ACTIONS WITHOUT MEETINGS. Meetings of the
Trustees shall be held from time to time upon the call of the Chairman, if any,
the President, the Secretary, an Assistant Secretary or any two Trustees.
Regular meetings of the Trustees may be held without call or notice at a time
and place fixed by the By-Laws or by resolution of the Trustees. Notice of any
other meeting shall be mailed or otherwise given not less than 24 hours before
the meeting but may be waived in writing by any Trustee either before or after
such meeting. The attendance of a Trustee at a meeting shall constitute a waiver
of notice of such meeting except in the situation in which a Trustee attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting was not lawfully called or convened. The Trustees
may act with or without a meeting. A quorum for all meetings of the Trustees
shall be a majority of the Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consent of a majority of the Trustees.

Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all meetings
of any such committee shall be a majority of the members thereof. Unless
provided otherwise in this Declaration, any action of any such committee may be
taken at a meeting by vote of a majority of the members present (a quorum being
present) or without a meeting by written consent of a majority of the members.

Any notice, waiver or written consent hereunder may be
provided and delivered to the Trust or a Trustee by facsimile or other similar
electronic mechanism.

With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5 and shall be entitled to vote to the extent permitted by the
1940 Act.

All or any one or more Trustees may participate in a meeting
of the Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all individuals participating
in the meeting can hear each other and participation in a meeting by means of
such communications equipment shall constitute presence in person at such
meeting.

2.6. OFFICERS; CHAIRMAN OF THE BOARD. The Trustees shall, from
time to time, elect a President, a Secretary and a Treasurer. The Trustees may
elect

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or appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees may
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers, agents or independent contractors with such powers
as the Trustees may deem to be advisable. The Chairman, if any, shall be and
each other officer may, but need not, be a Trustee.

2.7. BY-LAWS. The Trustees may adopt and, from time to time,
amend or repeal By-Laws for the conduct of the business of the Trust.

ARTICLE III

POWERS OF TRUSTEES

3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust and each
Series to the same extent as if the Trustees were the sole owners of the Trust
Property and such business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees may perform
such acts as in their sole discretion they deem proper for conducting the
business of the Trust and any Series. The enumeration of or failure to mention
any specific power herein shall not be construed as limiting such exclusive and
absolute control. The powers of the Trustees may be exercised without order of
or resort to any court.

The Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust.

3.2. INVESTMENTS. The Trustees shall have the power with
respect to the Trust and each Series to:

(a) conduct, operate and carry on the business of an
investment company;

(b) subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute
or otherwise deal in or dispose of United States and foreign currencies and
related instruments including forward contracts, and securities, including
common and preferred stock, warrants, bonds, debentures, time notes and all
other evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible securities,
forward contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, or by the United
States Government, any foreign government, or any agency, instrumentality or
political subdivision of the United States Government or any foreign government,
or any international instrumentali-

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ty, or by any bank, savings institution, corporation or other business entity
organized under the laws of the United States or any state or under any foreign
laws; and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of any kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
such rights, powers and privileges in respect of any of such investments; and
the Trustees shall be deemed to have the foregoing powers with respect to any
additional instruments in which the Trustees may determine to invest;

The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.

3.3. LEGAL TITLE. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have the
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series, or in
the name or nominee name of any other Person on behalf of the Trust or any
Series, on such terms as the Trustees may determine.

The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each individual who may hereafter become a
Trustee upon his due election and qualification. Upon the resignation, removal
or death of a Trustee, such resigning, removed or deceased Trustee shall
automatically cease to have any right, title or interest in any Trust Property,
and the right, title and interest of such resigning, removed or deceased Trustee
in the Trust Property shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.

3.4. SALE AND INCREASES OF INTERESTS. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit any
Institutional Investor to purchase from the Trust an Interest in a Series, or
increase such Interest, for such type of consideration, including cash or
property, at such time or times (including, without limitation, each business
day), and on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. Individuals, S
corporations, partnerships and grantor trusts that are beneficially owned by any
individual, S corporation or partnership may not purchase Interests. The
Trustees, in their discretion, may refuse to sell an Interest in a Series to any
person without any cause or reason therefor. A Holder which has redeemed its
Interest in a Series may not be permitted to purchase an Interest in such Series
until the later of 60 calendar days after the date of such Redemption or the
first day of the Fiscal Year next succeeding the Fiscal Year during which such
Redemption occurred.

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3.5 DECREASES AND REDEMPTIONS OF INTERESTS. Subject to Article
VII hereof, the Trustees, in their discretion, may, from time to time, without a
vote of the Holders, permit a Holder to redeem its Interest in a Series, or
decrease such Interest, for either cash or property, at such time or times
(including, without limitation, each business day), and on such terms as the
Trustees may deem best.

3.6. BORROW MONEY. The Trustees shall have power on behalf of
any Series to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets belonging to
such Series, as appropriate, including the lending of portfolio securities, and
to endorse, guarantee, or undertake the performance of any obligation, contract
or engagement of any other Person.

3.7. DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive and absolute control over the Trust
Property and over the business of the Trust and any Series, to delegate from
time to time to such of their number or to officers, employees, agents or
independent contractors of the Trust or any Series the doing of such things and
the execution of such instruments in either the name of the Trust or any Series
or the names of the Trustees or otherwise as the Trustees may deem expedient.

3.8. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; and to pay all claims, including taxes,
against the Trust Property on behalf of any Series; to prosecute, defend,
compromise or abandon any claims relating to the Trust or the Trust Property on
behalf of any Series; to foreclose any security interest securing any
obligation, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.

3.9. EXPENSES. The Trustees shall have power to incur and pay
any expenses from the Trust Property which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of this Declaration,
and to pay reasonable compensation from the Trust Property to themselves as
Trustees. Permitted expenses of the Trust include, but are not limited to,
interest charges, taxes, brokerage fees and commissions; expenses of sales,
increases, decreases or redemptions of Interests; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, placement agents,
custodians transfer agents and fund accountants; legal counsel to the Trust or
to the Trustees; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; costs of forming the Trust and its Series and maintaining its and
their existence; costs of preparing and printing the registration statements and
Holder reports of the Trust and each Series and delivering them to Holders;
expenses of meetings of Holders; costs of maintaining books and accounts; costs
of reproduction, stationery and supplies; fees and expenses of the Trustees;
compensation of the Trust's officers and employees and costs of other personnel
performing services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign securities
laws registration fees and related expenses; and for such non-recurring items as
may arise, including litigation to which the Trust or a Series (or a Trustee or

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officer of the Trust acting as such) is a party, and for all losses and
liabilities by them incurred in administering the Trust. The Trustees shall have
a lien on the assets belonging to the appropriate Series, or in the case of an
expense allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Holders thereto, for the reimbursement
to them of such expenses, disbursements, losses and liabilities. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services as they in good faith
may deem reasonable, and reimbursement for expenses reasonably incurred by
themselves on behalf of the Trust or any Series.

3.10. MISCELLANEOUS POWERS. The Trustees shall have power to:
(a) employ or contract with such Persons as the Trustees may deem appropriate
for the transaction of the business of the Trust or any Series and terminate
such employees or contractual relationships as they consider appropriate; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property insurance policies
insuring the Investment Adviser, Administrator, placement agent, Holders,
Trustees, officers, employees, agents or independent contractors of the Trust
against all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity, whether or
not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing and other retirement, incentive
and benefit plans for the Trustees, officers, employees or agents of the Trust
or any Series; (e) prosecute, defend and settle lawsuits in the name of the
Trust or any Series and pay settlements and judgments out of the Trust Property;
(f) to the extent permitted by law, indemnify any Person with whom the Trust has
dealings, including the Investment Adviser, Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors of the
Trust, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
Fiscal Year of the Trust or any Series and the method by which its accounts
shall be kept; and (i) adopt a seal for the Trust or any Series, but the absence
of such a seal shall not impair the validity of any instrument executed on
behalf of the Trust or such Series.

3.11. FURTHER POWERS. The Trustees shall have power to conduct
the business of the Trust or any Series and carry on its operations in any and
all of its branches and maintain offices, whether within or without the State of
New York, in any and all states of the United States of America, in the District
of Columbia, and in any and all commonwealths, territories, dependencies,
colonies, possessions, agencies or instrumentalities of the United States of
America and of foreign governments, and to do all such other things and execute
all such instruments as they deem necessary, proper, appropriate or desirable in
order to promote the interests of the Trust or any Series although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust or any Series which is made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees. The Trustees
shall not be required to obtain any court order in order to deal with Trust
Property.

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ARTICLE IV

Investment Advisory, Administration
AND PLACEMENT AGENT ARRANGEMENTS; CUSTODIAN

4.1. INVESTMENT ADVISORY AND OTHER ARRANGEMENTS. The Trustees
may in their discretion, from time to time, enter into investment advisory
contracts, administration contracts, placement agent agreements or other service
agreements whereby the other party to such contract or agreement shall undertake
to furnish with respect to one or more particular Series such investment
advisory, administration, placement agent and/or other services as the Trustees
shall, from time to time, consider appropriate or desirable and all upon such
terms and conditions as the Trustees may in their sole discretion determine.
Notwithstanding any provision of this Declaration, the Trustees may authorize
any Investment Adviser (subject to such general or specific instructions as the
Trustees may, from time to time, adopt) to employ one or more subadvisers and to
effect purchases, sales, loans or exchanges of Trust Property on behalf of any
Series or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of any such
Investment Adviser (all without any further action by the Trustees).

4.2. PARTIES TO CONTRACT. Any contract of the character
described in Section 4.1 or Section 4.3 hereof or in the By-Laws of the Trust
may be entered into with any corporation, firm, trust or association, although
one or more of the Trustees or officers of the Trust may be an officer,
director, Trustee, shareholder or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any individual holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust or any Series under or by reason of any such contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was reasonable and fair and not inconsistent
with the provisions of this Article IV or the By-Laws. The same Person may be
the other party to one or more contracts entered into pursuant to Section 4.1 or
Section 4.3 hereof or the By-Laws, and any individual may be financially
interested or otherwise affiliated with Persons who are parties to any or all of
the contracts mentioned in this Section 4.2 or in the By-Laws.

4.3 CUSTODIAN. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust on behalf of each
Series in custody meeting the requirements of Section 17(f) of the 1940 Act and
the rules thereunder. The Trustees, on behalf of the Trust or any Series, may
enter into an agreement with a custodian on terms and conditions acceptable to
the Trustees, providing for the custodian, among other things, (a) to hold the
securities owned by the Trust on behalf of any Series and deliver the same upon
written order or oral order confirmed in writing, (b) to receive and receipt for
any moneys due to the Trust on behalf of any Series and deposit the same in its
own banking department or elsewhere, (c) to disburse such funds upon orders or
vouchers, and (d) to employ one or more subcustodians.

4.4. 1940 ACT GOVERNANCE. Any contract referred to in Section
4.1 hereof shall be consistent with and subject to the applicable requirements
of

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Section 15 of the 1940 Act and the rules and orders thereunder with respect to
its continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal. No amendment to a contract referred to in
Section 4.1 hereof shall be effective unless assented to in a manner consistent
with the requirements of Section 15 of the 1940 Act, and the rules and orders
thereunder.

ARTICLE V

Limitations of
LIABILITY OF TRUSTEES, OFFICERS, ETC.

5.1. LIMITATION OF LIABILITY. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
assets of all Series or such particular Series for payment under such contract
or claim, and no Holder shall have any liability for amounts payable under such
contract or claim or for any other obligation or liability of the Trust or any
Series.

5.2. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS,
EMPLOYEES, AGENTS, INDEPENDENT CONTRACTORS TO THIRD PARTIES. No Trustee,
officer, employee, agent or independent contractor (except in the case of an
agent or independent contractor to the extent expressly provided by written
contract) of the Trust or any Series shall be subject to any personal liability
whatsoever to any Person, other than the Trust or the Holders, in connection
with Trust Property or the affairs of the Trust; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature against a
Trustee, officer, employee, agent or independent contractor (except in the case
of an agent or independent contractor to the extent expressly provided by
written contract) of the Trust arising in connection with the affairs of the
Trust.

5.3. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS OR
EMPLOYEES TO TRUST, HOLDERS, ETC. No Trustee, officer or employee of the Trust
shall be liable to the Trust or the Holders for any action or failure to act
(including, without limitation, the failure to compel in any way any former or
acting Trustee to redress any breach of trust) except for such Person's own bad
faith, willful misfeasance, gross negligence or reckless disregard of such
Person's duties.

5.4. MANDATORY INDEMNIFICATION. The Trust shall indemnify, to
the fullest extent permitted by law (including the 1940 Act), each Trustee,
officer or employee of the Trust (including any Person who serves at the Trust's
request as a director, officer or trustee of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by such Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, in which such Person may be
involved or with which such Person may be threatened, while in office or
thereafter, by reason of such Person being or having been such a Trustee,
officer, employee, except with respect to any matter as to which such Person
shall have been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of such Person's duties, such liabilities
and expenses being

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liabilities only of the Series out of which such claim for indemnification
arises; provided, however, that as to any matter disposed of by a compromise
payment by such Person, pursuant to a consent decree or otherwise, no
indemnification either for such payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Person's office (i) by the court or other
body approving the settlement or other disposition; or (ii) based upon a review
of readily available facts (as opposed to a full trial-type inquiry), by written
opinion from independent legal counsel approved by the Trustees; or (iii) by a
majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, based upon a review of readily available facts (as
opposed to a full trial-type inquiry). The rights accruing to any Person under
these provisions shall not exclude any other right to which such Person may be
lawfully entitled; provided that no Person may satisfy any right of indemnity or
reimbursement granted in this Section 5.4 or in Section 5.2 hereof or to which
such Person may be otherwise entitled except out of the Trust Property. The
rights of indemnification provided herein may be insured against by policies
maintained by the Trust. The Trustees may make advance payments in connection
with indemnification under this Section 5.4, provided that the indemnified
Person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that such Person is not entitled to such
indemnification, and provided further that either (i) such Person shall have
provided appropriate security for such undertaking, or (ii) the Trust is insured
against losses arising out of any such advance payments, or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is a reasonable basis for
believing that such Person will not be disqualified from indemnification under
this Section 5.4.

5.5. INDEMNIFICATION OF HOLDERS. If any Holder or former
Holder of any Series shall be held personally liable solely by reason of such
Holder being or having been a Holder and not because of such Holder's acts or
omissions or for some other reason, the Holder or former Holder (or such
Holder's general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by such Holder, assume the defense of any claim made
against such Holder for any act or obligation of the Series and satisfy any
judgment thereon from the assets of the Series.

5.6. NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such,
be obligated to give any bond or surety or other security for the performance of
any of such Trustee's duties hereunder.

5.7. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC. No purchaser, lender or other Person dealing with any Trustee, officer,
employee, agent or independent contractor of the Trust or any Series shall be
bound to make any inquiry concerning the validity of any transaction purporting
to be made by such Trustee, officer, employee, agent or independent contractor
or be liable for

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the application of money or property paid, loaned or delivered to or on the
order of such Trustee, officer, employee, agent or independent contractor. Every
obligation, contract, instrument, certificate or other interest or undertaking
of the Trust or any Series, and every other act or thing whatsoever executed in
connection with the Trust or any Series shall be conclusively taken to have been
executed or done by the executors thereof only in their capacity as Trustees,
officers, employees, agents or independent contractors of the Trust or any
Series. Every written obligation, contract, instrument, certificate or other
interest or undertaking of the Trust or any Series made or sold by any Trustee,
officer or employee of the Trust or any Series, in such capacity, shall contain
an appropriate recital to the effect that the Trustee, officer or employee of
the Trust or any Series shall not personally be bound by or liable thereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim thereunder, and appropriate references shall be made therein
to the Declaration, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any Trustee, officer or employee of the Trust or any
Series. Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property, the Holders, and the
Trustees, officers or employees of the Trust and any Series in such amount as
the Trustees shall deem adequate to cover possible tort liability, and such
other insurance as the Trustees in their sole judgment shall deem advisable.

5.8. RELIANCE ON EXPERTS, ETC. Each Trustee, officer or
employee of the Trust and any Series shall, in the performance of such Person's
duties, be fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon the books of
account or other records of the Trust or any Series (whether or not the Trust or
any Series would have the power to indemnify such Persons against such
liability), upon an opinion of legal counsel, or upon reports made to the Trust
or any Series by any of its officers or employees or by any Investment Adviser
or Administrator, accountant, appraiser or other experts or consultants selected
with reasonable care by the Trustees, officers or employees of the Trust or any
Series, regardless of whether such counsel or expert may also be a Trustee.

5.9. NO REPEAL OR MODIFICATION. Any repeal or modification of
this Article V by the Holders, or adoption or modification of any other
provision of this Declaration or the By-Laws inconsistent with this Article V,
shall be prospective only, to the extent that such repeal or modification would,
if applied retrospectively, adversely affect any limitation on the liability of
any Person or indemnification available to any indemnified Person with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.

ARTICLE VI

INTERESTS

6.1. INTERESTS. The beneficial interest in the Trust Property
shall consist of non-transferable Interests. Interests may be issued by the
Trust only to Institutional Investors, as may be approved by the Trustees, for
cash or other consideration acceptable to the Trustees, subject to the
requirements of the 1940 Act. The Interests shall be personal property giving
only the rights in

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this Declaration specifically set forth. The value of an Interest shall be equal
to the Book Capital Account balance of the Holder of the Interest. All Interests
issued hereunder shall be fully paid and nonassessable.

The Trustees shall have authority, from time to time, to
establish Series, each of which shall be a separate subtrust and the Interests
in which shall be separate and distinct from the Interests in any other Series.
The Series shall include, without limitation, those Series specifically
established and designated pursuant to Section 6.2 hereof, and such other Series
as the Trustees may from time to time deem necessary or desirable. The Trustees
shall have exclusive power without the requirement of Holder approval to
establish and designate such separate and distinct Series, and, subject to the
provisions of this Declaration and the 1940 Act, to fix and determine the rights
of Holders of Interests in such Series, including with respect to the price,
terms and manner of purchase and redemption, dividends and other distributions,
rights on liquidation, sinking or purchase fund provisions, conversion rights
and conditions under which the Holders of the several Series shall have separate
voting rights or no voting rights.

6.2. ESTABLISHMENT AND DESIGNATION OF SERIES. The
establishment and designation of any Series shall be effective upon the
execution by the Secretary or an Assistant Secretary of the Trust, pursuant to
authorization by a majority of the Trustees, of an instrument setting forth such
establishment and designation and the relative rights and preferences of the
Interests in such Series, or as otherwise provided in such instrument. At any
time that there are no Interests outstanding of any particular Series previously
established and designated, the Trustees may by resolution adopted by a majority
of their number, and evidenced by an instrument executed by the Secretary or an
Assistant Secretary of the Trust, abolish that Series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration of Trust.

Without limiting the authority of the Trustees set forth above
to establish and designate further Series, the Trustees hereby establish and
designate the Series set forth on Schedule A hereto. The Interests in each of
these Series and any Interests in any further Series that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have the following relative rights and
preferences:

(a) ASSETS BELONGING TO SERIES. All consideration
received by the Trust for the issue or sale of Interests in a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held by the Trustees in a separate trust for the benefit
of the Holders of Interests in that Series and shall irrevocably belong to that
Series for all purposes, and shall be so recorded upon the books of account of
the Trust. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and

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<PAGE>

any funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, are herein referred to as "assets belonging to"
that Series. No Series shall have any right to or interest in the assets
belonging to any other Series, and no Holder shall have any right or interest
with respect to the assets belonging to any Series in which it does not hold an
Interest.

(b) LIABILITIES BELONGING TO SERIES. The assets
belonging to each particular Series shall be charged with the liabilities in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series. The liabilities, expenses, costs, charges and
reserves so charged to a Series are herein referred to as "liabilities belonging
to" that Series. No Series shall be liable for or charged with the liabilities
belonging to any other Series, and no Holder shall be subject to any liabilities
belonging to any Series in which it does not hold an Interest.

(c) VOTING. On each matter submitted to a vote of the
Holders, each Holder shall be entitled to a vote proportionate to its Interest
as recorded on the books of the Trust. Each Series shall vote as a separate
class except as to voting for Trustees, as otherwise required by the 1940 Act,
or if determined by the Trustees to be a matter which affects all Series. As to
any matter which does not affect the interest of all Series, only the Holders in
the one or more affected Series shall be entitled to vote. On each matter
submitted to a vote of the Holders, a Holder may apportion its vote with respect
to a proposal in the same proportion as its own shareholders voted with respect
to that proposal.

6.3. NON-TRANSFERABILITY. A Holder may not transfer, sell, or
exchange its Interest except as part of a merger or similar plan of reorganiza-
tion of a Holder that qualifies under Section 368 of the Code as permitted by
the Trustees. Any other attempted transfer will not be recognized or given
effect by the Trust.

6.4. REGISTER OF INTERESTS. A register shall be kept by the
Trust under the direction of the Trustees which shall contain the name, address
and Book Capital Account balance of each Holder in each Series. Such register
shall be conclusive as to the identity of the Holders. No Holder shall be
entitled to receive payment of any distribution, nor to have notice given to it
as herein provided, until it has given its address to such officer or agent of
the Trust as is keeping such register for entry thereon.

6.5. STATUS OF INTERESTS; LIMITATION OF HOLDER LIABILITY.
Interests shall be deemed to be personal property giving Holders only the rights
provided in this Declaration. Every Holder, by virtue of having acquired its
Interest, shall be held expressly to have assented to and agreed to be bound by
the terms of this Declaration and to have become a party hereto. No Holder shall
be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. Neither the Trust nor the Trustees shall have any power to bind any
Holder personally or to demand payment from any Holder for anything, other than
as agreed by the Holder. Every written obligation of the Trust or any Series may
contain a statement to the effect that such obligation may only be enforced
against the assets of the appropriate Series or all Series; however, the
omission

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of such statement shall not operate to bind or create personal liability for an
Holder or Trustee.
ARTICLE VII

INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS

Subject to applicable law, to the provisions of this
Declaration and to such restrictions as may from time to time be adopted by the
Trustees, each Holder may vary its Interest in any Series at any time by
increasing (through a capital contribution) or decreasing (through a capital
withdrawal) or by a Redemption of its Interest. An increase in the Interest of a
Holder in a Series shall be reflected as an increase in the Book Capital Account
balance of that Holder in that Series and a decrease in the Interest of a Holder
in a Series or the Redemption of the Interest of that Holder shall be reflected
as a decrease in the Book Capital Account balance of that Holder in that Series.
The Trust shall, upon appropriate and adequate notice from any Holder, increase,
decrease or redeem such Holder's Interest for an amount determined by the
application of a formula adopted for such purpose by resolution of the Trustees;
provided that (a) the amount received by the Holder upon any such decrease or
Redemption shall not exceed the decrease in the Holder's Book Capital Account
balance effected by such decrease or Redemption of its Interest, and (b) if so
authorized by the Trustees, the Trust may, at any time and from time to time,
charge fees for effecting any such decrease or Redemption, at such rates as the
Trustees may establish, and may, at any time and from time to time, suspend such
right of decrease or Redemption. The procedures, if any, for effecting decreases
or Redemptions shall be as determined by the Trustees from time to time.

ARTICLE VIII

Determination of Book Capital Account
BALANCES AND DISTRIBUTIONS

8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account
balance of Holders with respect to a particular Series shall be determined on
such days and at such time or times as the Trustees may determine. The Trustees
may adopt resolutions setting forth the method of determining the Book Capital
Account balance of each Holder. The power and duty to make calculations pursuant
to such resolutions may be delegated by the Trustees to the Investment Adviser
or Administrator, custodian, or such other Person as the Trustees may determine.
Upon the Redemption of an Interest, the Holder of that Interest shall be
entitled to receive the balance of its Book Capital Account. A Holder may not
transfer its Book Capital Account balance.

8.2. ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees
may, in compliance with the Code, the 1940 Act and generally accepted accounting
principles, establish the procedures by which the Trust shall make with respect
to each Series (i) the allocation of unrealized gains and losses, taxable income
and tax loss, and profit and loss, or any item or items thereof, to each Holder,
(ii) the payment of distributions, if any, to Holders, and (iii) upon
liquidation, the final distribution of items of taxable income and expense. Any
such procedures shall be set forth in writing and be furnished to the Trust's
accountants. The Trustees may amend the procedures, if any, adopted pursuant to

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this Section 8.2 from time to time. The Trustees may retain from the net profits
of each Series such amount as they may deem necessary to pay the liabilities and
expenses of that Series.

8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the net
income and net assets of the Trust and of each Series, the allocation of income
of the Trust and of each Series, the Book Capital Account balance of each
Holder, or the payment of distributions to the Holders as they may deem
necessary or desirable to enable the Trust or a Series to comply with any
provision of the 1940 Act or any order of exemption issued by the Commission or
with the Code.

ARTICLE IX

HOLDERS

9.1. RIGHTS OF HOLDERS. The ownership of the Trust Property
and the right to conduct any business described herein are vested exclusively in
the Trustees, and the Holders shall have no right or title therein other than
the beneficial interest conferred by their Interests and they shall have no
power or right to call for any partition or division of any Trust Property.

The Trust shall be entitled to treat a Holder of record as the holder
in fact and shall not be bound to recognize any equitable or other claim of
interest in such Holder's Interest on the part of any other entity except as may
be otherwise expressly provided by law.

In addition, the Holders shall have power to vote only with respect to
(a) the election of Trustees as provided in Article II, Section 2.4; (b) the
removal of Trustees as provided in Article II, Section 2.3; (c) any investment
advisory contract as provided in Article IV, Section 4.1; (d) any dissolution of
a Series as provided in Article X, Section 10.2; (e) the amendment of this
Declaration to the extent and as provided in Article X, Section 10.4; (f) any
merger, consolidation or sale of assets as provided in Article X, Section 10.5;
and (g) such additional matters relating to the Trust as may be required by the
1940 Act or otherwise required or authorized by law, by this Declaration or the
By-Laws or any registration statement of the Trust filed with the Commission, or
as the Trustees may consider desirable.

9.2. MEETINGS OF HOLDERS. Meetings of Holders may be called at
any time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests in one or more Series (if the meeting relates solely to such Series),
or not less than 10% of the Interests in the Trust (if the meeting relates to
the Trust and not solely to one or more particular Series), such request
specifying the purpose or purposes for which such meeting is to be called. Any
such meeting shall be held within or without the State of New York and within or
without the United States of America on such day and at such time as the
Trustees shall designate. Holders of at least one-third of the Interests in one
or more Series (if the meeting relates solely to such one or more Series) or
Holders of at least one-third of the Interests in the Trust (if the meeting
relates to the Trust and

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<PAGE>

not solely to one or more particular Series), present in person or by proxy,
shall constitute a quorum for the transaction of any business, except as may
otherwise be required by the 1940 Act, other applicable law, this Declaration or
the By-Laws. If a quorum is present at a meeting, an affirmative vote of the
Holders present, in person or by proxy, holding more than 50% of the total
Interests of the Holders in a Series or the Trust, as applicable, present either
in person or by proxy, at such meeting constitutes the action of the Holders in
such Series or the Trust, as applicable, unless a greater number of affirmative
votes is required by the 1940 Act, other applicable law, this Declaration or the
By-Laws, and except that a plurality of the total Interests of the Holders
present shall elect a Trustee. All or any one of more Holders may participate in
a meeting of Holders by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.

9.3. NOTICE OF MEETINGS. Notice of each meeting of Holders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Holder of the Series or the Trust, as the case may be,
at its registered address, mailed at least 10 days and not more than 60 days
before the meeting. Notice of any meeting may be waived in writing by any Holder
either before or after such meeting. The attendance of a Holder at a meeting
shall constitute a waiver of notice of such meeting except in the situation in
which a Holder attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting was not lawfully
called or convened. At any meeting, any business properly before the meeting may
be considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.

9.4. RECORD DATE FOR MEETINGS, DISTRIBUTIONS, ETC. For the
purpose of determining the Holders who are entitled to notice of and to vote at
any meeting, or to participate in any distribution, or for the purpose of any
other action, the Trustees may from time to time fix a future date, not more
than 90 days prior to the date of any meeting of Holders or the payment of any
distribution or the taking of any other action, as the case may be, as a record
date for the determination of the Persons to be treated as Holders of the Series
or the Trust, as the case may be, for such purpose.

9.5. PROXIES, ETC. At any meeting of Holders, any Holder
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall be in writing and shall have been placed on
file with the Secretary, or with such other officer or agent of the Trust as the
Secretary may direct, for verification prior to the time at which such vote is
to be taken. A proxy may be revoked by a Holder at any time before it has been
exercised by placing on file with the Secretary, or with such other officer or
agent of the Trust as the Secretary may direct, a later dated proxy or written
revocation. Pursuant to a resolution of a majority of the Trustees, proxies may
be solicited in the name of the Trust or of one or more Trustees or of one or
more officers of the Trust. Only Holders on the record date shall be entitled to
vote. Each such Holder shall be entitled to a vote proportionate to its Interest
in the Series or the Trust, as the case may be. When an Interest is held jointly
by several Persons, any one of them may vote at any meeting in person or by
proxy

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<PAGE>

in respect of such Interest, but if more than one of them is present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Interest. A proxy purporting to be executed by or on behalf of a Holder,
including proxies received via telecopy, shall be deemed valid unless challenged
at or prior to its exercise, and the burden of proving invalidity shall rest on
the challenger.

9.6. REPORTS. As to each Series, the Trustees shall cause to
be prepared and furnished to each Holder thereof, at least annually as of the
end of each Fiscal Year, a report of operations containing a balance sheet and a
statement of income of such Series prepared in conformity with generally
accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition, with
respect to each Series furnish to each Holder of such Series at least
semi-annually interim reports of operations containing an unaudited balance
sheet as of the end of such period and an unaudited statement of income for the
period from the beginning of the then-current Fiscal Year to the end of such
period.

9.7. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Holders during normal business hours for any purpose not
harmful to the Trust.

9.8. HOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken on behalf of the Trust or any Series by Holders may be taken without a
meeting if Holders holding more than 50% of all Interests entitled to vote (or
such larger proportion thereof as shall be required by any express provision of
this Declaration or of applicable law) consent to the action in writing and the
written consents are filed with the records of the meetings of Holders. Such
consents shall be treated for all purposes as a vote taken at a meeting of
Holders. Each such written consent shall be executed by or on behalf of the
Holder delivering such consent and shall bear the date of such execution. No
such written consent shall be effective to take the action referred to therein
unless, within one year of the earliest dated consent, written consents executed
by a sufficient number of Holders to take such action are filed with the records
of the meetings of Holders.

9.9. NOTICES. Any and all communications, including any and
all notices to which any Holder may be entitled, shall be deemed duly served or
given if mailed, postage prepaid, addressed to a Holder at its last known
address as recorded on the register of the Trust or if delivered to a Holder by
courier or by facsimile or other similar electronic mechanism.

ARTICLE X

Duration; Termination; Dissolution;
AMENDMENT; MERGERS; ETC.

10.1. DURATION. Subject to possible dissolution or termination
in accordance with the provisions of Section 10.2 and Section 10.3 hereof,
respectively, the Trust created hereby shall continue until the expiration of

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20 years after the death of the last survivor of the initial Trustees named
herein and the following named persons:
<TABLE>
<CAPTION>

Date of
NAME ADDRESS BIRTH
<S> <C> <C>

Michelle Muriel Rumery 18 Rio Vista Street 07/11/93
North Billerica, MA 01862

Nicole Catherine Rumery 18 Rio Vista Street 12/21/91
North Billerica, MA 01862

Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566

Amanda Jehan Sher Coolidge 483 Pleasant Street, No. 9 08/16/89
Belmont, MA 02178

Caroline Bolger Cima 11 Beechwood Lane 12/23/88
Scarsdale, NY 10583

Adriana L. Saldana 58 Newell Road 03/22/88
Newton, MA 02166
</TABLE>

10.2. DISSOLUTION. Any Series shall be dissolved (i) by the
affirmative vote of the Holders of not less than two-thirds of the Interests in
the Series at any meeting of the Holders or by an instrument in writing, without
a meeting, signed by a majority of the Trustees and consented to in writing by
the Holders of not less than a majority of such Interests, (ii) by the Trustees
by written notice of dissolution to the Holders of the Interests in the Series,
or (iii) upon the bankruptcy or withdrawal of any Holder of an Interest in the
Series, the Series shall be dissolved effective 120 days after the event.
However, the remaining Holders of Interests in such Series may, by majority
vote, agree to continue the business of the Series even if there has been such a
dissolution. The Trust may be dissolved by action of the Trustees upon the
dissolution of the last remaining Series.

10.3. TERMINATION.

(a) Upon an event of dissolution of the Trust or a Series,
unless the Trust or Series is continued in accordance with the proviso to
Section 10.2 above, the Trust or Series, as applicable, shall be terminated in
accordance with the following provisions:

(i) the Trust or Series, as applicable, shall carry
on no business except for the purpose of winding up its affairs;

(ii) the Trustees shall proceed to wind up the
affairs of the Trust or Series, as applicable, and all of the powers
of the Trustees under this Declaration shall continue until the
affairs of the Trust or Series have been wound up, including the
power to fulfill or discharge the contracts of the Trust or Series,
collect

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<PAGE>

the assets of the Trust of Series, sell, convey, assign, exchange or
otherwise dispose of all or any part of the Trust Property affected
to one or more Persons at public or private sale for consideration
which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay the liabilities of the Trust
or Series, and do all other acts appropriate to liquidate the
business of the Trust or Series; provided that any sale, conveyance,
assignment, exchange or other disposition of all or substantially all
the Trust Property or substantially all of the assets belonging to a
particular Series, other than for cash, shall require approval of the
principal terms of the transaction and the nature and amount of the
consideration by the vote of Holders holding more than 50% of the
total Interests in the Trust or Series, as applicable; and

(iii) after paying or adequately providing for the
payment of all liabilities of the Trust or of the Series being
terminated, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees shall distribute the remaining Trust Property of the Trust
or Series, as applicable, in cash or in kind or partly each, among
the Holders according to their respective rights as set forth in the
procedures established pursuant to Section 8.2 hereof.

(b) Upon termination of the Trust or Series and distribution
to the Holders as herein provided, a majority of the Trustees shall execute and
file with the records of the Trust an instrument in writing setting forth the
fact of such termination and distribution. Upon termination of the Trust, the
Trustees shall thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Holders shall thereupon cease.

10.4. AMENDMENT PROCEDURE.

(a) The Trustees may, without any vote of Holders, amend or
otherwise supplement this Declaration by an instrument in writing executed by a
majority of the Trustees, provided that Holders shall have the right to vote on
any amendment (a) which would affect the voting rights of Holders granted in
Article IX, Section 9.1, (b) to this Section 10.4, (c) required to be approved
by Holders by law or by the Trust's registration statement filed with the
Commission, or (d) submitted to them by the Trustees. Any amendment submitted to
Holders which the Trustees determine would affect the Holders of certain but not
all Series shall be authorized by vote of the Holders of such Series affected
and no vote shall be required of Holders of a Series not affected. Any amendment
applicable to the Trust as a whole, unless otherwise required by law or by this
Declaration or the By-Laws, shall be authorized by vote of the Holders of the
Trust. Notwithstanding anything else herein, any amendment to Article V which
would have the effect of reducing the indemnification and other rights provided
thereby and any repeal or amendment of this sentence shall each require the
affirmative vote of the Holders of two-thirds of the Interests entitled to vote
thereon.

(b) No amendment may be made under Section 10.4(a) hereof
which would change any rights with respect to any Interest by reducing the
amount

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<PAGE>

payable thereon upon liquidation of the Trust or any Series or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of Holders of two-thirds of all Interests which would be so affected by
such amendment.

(c) A certification in recordable form executed by a majority
of the Trustees setting forth an amendment and reciting that it was duly adopted
by the Holders or by the Trustees as aforesaid or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when filed with the records of the
Trust.

Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees at any meeting of
Trustees or by an instrument executed by a majority of the Trustees.

10.5. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or
any Series may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property, or assets belonging to such Series, as applicable,
including good will, upon such terms and conditions and for such consideration
when and as authorized, at any meeting of Holders called for such purpose, by
Majority Interests Vote of Interests in the Series affected by such action, or
by an instrument in writing without a meeting, consented to by Holders of not
less than a majority of the Interests in the Series affected by such action, and
any such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the law of the State of
New York, provided however that no such vote shall be required where by
reorganization, purchase of assets or otherwise, the Trust or any affected
Series is the surviving entity.

10.6. INCORPORATION. Upon a Majority Interests Vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the law of any jurisdiction or a trust, partnership,
association or other organization to take over the Trust Property or to carry on
any business in which the Trust directly or indirectly has any interest, and to
sell, convey and transfer the Trust Property to any such corporation, trust,
partnership, association or other organization in exchange for the equity
interests thereof or otherwise, and to lend money to, subscribe for the equity
interests of, and enter into any contract with any such corporation, trust,
partnership, association or other organization, or any corporation, trust,
partnership, association or other organization in which the Trust holds or is
about to acquire equity interests. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained herein shall be construed as
requiring approval of the Holders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to one or more of such organizations or entities.

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<PAGE>

ARTICLE XI

MISCELLANEOUS

11.1. CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF
PROCESS. If required by New York law, the Trust shall file, with the Department
of State of the State of New York, a certificate, in the name of the Trust and
executed by an officer of the Trust, designating the Secretary of State of the
State of New York as an agent upon whom process in any action or proceeding
against the Trust or any Series may be served.

11.2. GOVERNING LAW. The rights of all parties and the
validity and construction of every provision hereof shall be subject to and
construed in accordance with the law of the State of New York and reference
shall be specifically made to the trust law of the State of New York as to the
construction of matters not specifically covered herein or as to which an
ambiguity exists.

11.3. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any one such original
counterpart.

11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by
an individual who, according to the records of the Trust or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or Holders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders, (d) the fact that
the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officer elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees.

11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.

(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, or with other applicable law and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.

(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.

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<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this
Declaration of Trust of STANDISH, AYER & WOOD MASTER PORTFOLIO as of the day and
year first above written.

Edward H. Ladd
As Trustee and not Individually

Richard S. Wood
As Trustee and not Individually

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<PAGE>

SCHEDULE A

STANDISH, AYER & WOOD MASTER PORTFOLIO

INITIAL SERIES

Standish Fixed Income Portfolio
Standish Equity Portfolio
Standish Small Capitalization Equity Portfolio
Standish Global Fixed Income Portfolio

STANDISH, AYER & WOOD MASTER PORTFOLIO

BY-LAWS

As Adopted January 18, 1996

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE I -- MEETINGS OF HOLDERS . . . . . . . . . . . . . 1
-------------------

Section 1.1 Fixing Record Dates . . . . . . . . 1
Section 1.2 Records at Holder Meetings . . . . . . . . 1
Section 1.3 Inspectors of Election . . . . . . . . . . 1
Section 1.4 Proxies; Voting . . . . . . . . . . . . . 2
Section 1.5 Series Holders Meetings . . . . . . . . . 2

ARTICLE II -- MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . . 2
--------------------

Section 2.1 Annual and Regular Meetings . . . . . . . .2
Section 2.2 Notice . . . . . . . . . . . . . . . . . . 2

ARTICLE III -- OFFICERS . . . . . . . . . . . . . . . . 2
--------

Section 3.1 Officers of the Trust . . . . . . . . . . 2
Section 3.2 Election and Tenure . . . . . . . . . . . .2
Section 3.3 Removal of Officers . . . . . . . . . . . .3
Section 3.4 Bonds and Surety . . . . . . . . . . . . . 3
Section 3.5 Chairman, President and Vice President . . 3
Section 3.6 Secretary . . . . . . . . . . . . . . . . .3
Section 3.7 Treasurer . . . . . . . . . . . . . . . . .4
Section 3.8 Other Officers and Duties . . . . . . . . .4

ARTICLE IV -- MISCELLANEOUS . . . . . . . . . . . . . . . 4
-------------

Section 4.1 Depositories . . . . . . . . . . . . . . . 4
Section 4.2 Signatures . . . . . . . . . . . . . . . . 4
Section 4.3 Seal . . . . . . . . . . . . . . . . . . .4
Section 4.4 Indemnification . . . . . . . . . . . . . 5
Section 4.5 Distribution Disbursing Agents and the
Like . . . . . . . . . . . . . . 5

ARTICLE V -- REGULATIONS; AMENDMENT OF BY-LAWS . . . . . . . . 5
---------------------------------

Section 5.1 Regulations . . . . . . . . . . . . . . . .5
Section 5.2 Amendment and Repeal of By-Laws . . . . . .5

<PAGE>

BY-LAWS

STANDISH, AYER & WOOD MASTER PORTFOLIO

These By-Laws are made and adopted pursuant to Section 2.7 of
the Declaration of Trust establishing STANDISH, AYER & WOOD MASTER PORTFOLIO
(the "Trust"), dated as of December 6, 1995 as from time to time amended (the
"Declaration"). All words and terms capitalized in these By-Laws shall have the
meaning or meanings set forth for such words or terms in the Declaration.

ARTICLE I

MEETINGS OF HOLDERS

Section 1.1. FIXING RECORD DATES. If the Trustees do not,
prior to any meeting of the Holders, fix a record date, then the date of mailing
notice of the meeting shall be the record date.

Section 1.2. RECORDS AT HOLDER MEETINGS. At each meeting of
the Holders there shall be open for inspection the minutes of the last previous
meeting of Holders of the Trust and a list of the Holders of the Trust,
certified to be true and correct by the Secretary or other proper agent of the
Trust, as of the record date of the meeting. Such list of Holders shall contain
the name of each Holder in alphabetical order and the address and Interest owned
by such Holder on such record date.

Section 1.3. INSPECTORS OF ELECTION. In advance of any meeting
of the Holders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman, if any, of any meeting of the Holders may, and on the
request of any Holder or his proxy shall, appoint Inspectors of Election. The
number of Inspectors of Election shall be either one or three. If appointed at
the meeting on the request of one or more Holders or proxies, a Majority
Interests Vote shall determine whether one or three Inspectors of Election are
to be appointed, but failure to allow such determination by the Holders shall
not affect the validity of the appointment of Inspectors of Election. In case
any individual appointed as an Inspector of Election fails to appear or fails or
refuses to so act, the vacancy may be filled by appointment made by the Trustees
in advance of the convening of the meeting or at the meeting by the individual
acting as chairman of the meeting. The Inspectors of Election shall determine
the Interest owned by each Holder, the Interests represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall count
and tabulate all votes or consents, shall determine the results, and shall do
such other acts as may be proper to conduct the election or vote with fairness
to all Holders. If there are three Inspectors of Election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. On request of the chairman, if any, of the meeting, or of
any Holder or his proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.

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<PAGE>

Section 1.4. PROXIES; VOTING. No proxy shall be valid after
one year from the date of its execution, unless a longer period is expressly
stated in such proxy.

Section 1.5 SERIES HOLDERS MEETINGS. Whenever a matter is
required to be voted by Holders of the Trust in the aggregate under Section 9.1
and 9.2 of the Declaration, the Trust may either hold a meeting of Holders of
all series to vote on such matter, or hold separate meetings of Holders of each
of the individual series to vote on such matter, provided that (i) such separate
meetings shall be held within one year of each other, (ii) a quorum of the
individual series entitled to vote in person or by proxy shall be present at
each such separate meeting, and (iii) a quorum shall be present in the aggregate
at such separate meetings, and the votes of Holders at all such separate
meetings shall be aggregated in order to determine if sufficient votes have been
cast for such matter to be voted.

When separate meetings are held for Holders of each of the
individual series to vote on a matter required to be voted on by Holders of the
Trust in the aggregate, the record date of each such separate meeting shall be
determined in the manner described above in Section 1.1.

ARTICLE II

MEETINGS OF TRUSTEES

Section 2.1. ANNUAL AND REGULAR MEETINGS. The Trustees shall
hold an annual meeting for the election of officers and the transaction of other
business which may come before such meeting.

Section 2.2. NOTICE. Notice of a meeting shall be given by
mail, by telegram (which term shall include a cablegram), by telecopier or
delivered personally (which term shall include by telephone). Neither the
business to be transacted at, nor the purpose of, any meeting of the Trustees
need be stated in the notice or waiver of notice of such meeting, and no notice
need be given of action proposed to be taken by written consent.

ARTICLE III

OFFICERS

Section 3.1. OFFICERS OF THE TRUST. The officers of the Trust
shall consist of a Chairman, if any, a President, a Secretary, a Treasurer and
such other officers or assistant officers, including Vice Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person. The Trustees may designate a Vice President as an Executive Vice
President and may designate the order in which the other Vice Presidents may
act. The Chairman shall be a Trustee, but no other officer of the Trust,
including the President, need be a Trustee.

Section 3.2. ELECTION AND TENURE. At the initial organization
meeting and thereafter at each annual meeting of the Trustees, the Trustees
shall elect the Chairman, if any, the President, the Secretary, the Treasurer
and such other officers as the Trustees shall deem necessary or appropriate in
order to carry out the business of the Trust. Such officers shall hold office
until the next annual meeting of the Trustees and until their successors have
been duly

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<PAGE>

elected and qualified. The Trustees may fill any vacancy in office or add any
additional officer at any time.

Section 3.3. REMOVAL OF OFFICERS. Any officer may be removed
at any time, with or without cause, by action of a majority of the Trustees.
This provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the Chairman, if any, the President or
the Secretary, and such resignation shall take effect immediately, or at a later
date according to the terms of such notice in writing.

Section 3.4. BONDS AND SURETY. Any officer may be required by
the Trustees to be bonded for the faithful performance of his duties in such
amount and with such sureties as the Trustees may determine.

Section 3.5. CHAIRMAN, PRESIDENT AND VICE PRESIDENTS. The
Chairman, if any, shall, if present, preside at all meetings of the Holders and
of the Trustees and shall exercise and perform such other powers and duties as
may be from time to time assigned to him by the Trustees. Subject to such
supervisory powers, if any, as may be given by the Trustees to the Chairman, if
any, the President shall be the chief executive officer of the Trust and,
subject to the control of the Trustees, shall have general supervision,
direction and control of the business of the Trust and of its employees and
shall exercise such general powers of management as are usually vested in the
office of President of a corporation. In the absence of the Chairman, if any,
the President shall preside at all meetings of the Holders and, in the absence
of the Chairman, the President shall preside at all meetings of the Trustees.
The President shall be, ex officio, a member of all standing committees of
Trustees. Subject to the direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority and
power to attend, to act and to vote, on behalf of the Trust, at any meeting of
any business organization in which the Trust holds an interest, or to confer
such powers upon any other person, by executing any proxies duly authorizing
such person. The President shall have such further authorities and duties as the
Trustees shall from time to time determine. In the absence or disability of the
President, the Vice Presidents in order of their rank or the Vice President
designated by the Trustees, shall perform all of the duties of the President,
and when so acting shall have all the powers of and be subject to all of the
restrictions upon the President. Subject to the direction of the President, each
Vice President shall have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages and
other instruments in writing, and, in addition, shall have such other duties and
powers as shall be designated from time to time by the Trustees or by the
President.

Section 3.6. SECRETARY. The Secretary shall keep the minutes
of all meetings of, and record all votes of, Holders, Trustees and the Executive
Committee, if any. The results of all actions taken at a meeting of the
Trustees, or by written consent of the Trustees, shall be recorded by the
Secretary. The Secretary shall be custodian of the seal of the Trust, if any,
and (and any other person so authorized by the Trustees) shall affix the seal
or, if permitted, a facsimile thereof, to any instrument executed by the Trust
which

SAW0029B
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<PAGE>

would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.

Section 3.7. TREASURER. Except as otherwise directed by the
Trustees, the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the President all powers and duties normally incident to his office. The
Treasurer may endorse for deposit or collection all notes, checks and other
instruments payable to the Trust or to its order and shall deposit all funds of
the Trust as may be ordered by the Trustees or the President. The Treasurer
shall keep accurate account of the books of the Trust's transactions which shall
be the property of the Trust, and which together with all other property of the
Trust in his possession, shall be subject at all times to the inspection and
control of the Trustees. Unless the Trustees shall otherwise determine, the
Treasurer shall be the principal accounting officer of the Trust and shall also
be the principal financial officer of the Trust. The Treasurer shall have such
other duties and authorities as the Trustees shall from time to time determine.
Notwithstanding anything to the contrary herein contained, the Trustees may
authorize the Investment Manager and Administrator to maintain bank accounts and
deposit and disburse funds on behalf of the Trust.

Section 3.8. OTHER OFFICERS AND DUTIES. The Trustees may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of the
Trust. Assistant officers shall act generally in the absence of the officer whom
they assist and shall assist that officer in the duties of his office. Each
officer, employee and agent of the Trust shall have such other duties and
authorities as may be conferred upon him by the Trustees or delegated to him by
the President.

ARTICLE IV

MISCELLANEOUS

Section 4.1. DEPOSITORIES. The funds of the Trust shall be
deposited in such depositories as the Trustees shall designate and shall be
drawn out on checks, drafts or other orders signed by such officer, officers,
agent or agents (including the Investment Manager and Administrator) as the
Trustees may from time to time authorize.

Section 4.2. SIGNATURES. All contracts and other instruments
shall be executed on behalf of the Trust by such officer, officers, agent or
agents as provided in these By-Laws or as the Trustees may from time to time by
resolution provide.

Section 4.3. SEAL. The seal of the Trust, if any, may be
affixed to any document, and the seal and its attestation may be lithographed,
engraved or otherwise printed on any document with the same force and effect as
if it had been imprinted and attested manually in the same manner and with the
same effect as if done by a New York corporation.

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<PAGE>

Section 4.4. INDEMNIFICATION. Insofar as the conditional
advancing of indemnification monies under Section 5.4 of the Declaration for
actions based upon the 1940 Act may be concerned, such payments will be made
only on the following conditions: (i) the advances must be limited to amounts
used, or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on behalf of,
the recipient to repay the amount of the advance which exceeds the amount to
which it is ultimately determined that he is entitled to receive from the Trust
by reason of indemnification; and (iii) (a) such promise must be secured by a
surety bond, other suitable insurance or an equivalent form of security which
assures that any repayment may be obtained by the Trust without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.

Section 4.5. DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The
Trustees shall have the power to employ and compensate such distribution
disbursing agents, warrant agents and agents for the reinvestment of
distributions as they shall deem necessary or desirable. Any of such agents
shall have such power and authority as is delegated to any of them by the
Trustees.

ARTICLE V

REGULATIONS; AMENDMENT OF BY-LAWS

Section 5.1. REGULATIONS. The Trustees may make such
additional rules and regulations, not inconsistent with these By-Laws, as they
may deem expedient concerning the sale and purchase of Interests of the Trust.

Section 5.2. AMENDMENT AND REPEAL OF BY-LAWS. In accordance
with Section 2.7 of the Declaration, the Trustees shall have the power to alter,
amend or repeal the By-Laws or adopt new By-Laws at any time. Action by the
Trustees with respect to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event adopt By-Laws which are
in conflict with the Declaration.

The Declaration refers to the Trustees as Trustees, but not as
individuals or personally; and no Trustee, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust.

SAW0029B
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FORM OF INVESTMENT ADVISORY AGREEMENT

AGREEMENT made as of this day of , 1996, by and between Standish, Ayer
& Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish, Ayer & Wood, Inc., a
Massachusetts corporation (the "Adviser").

W I T N E S S E T H:

WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and

WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Fixed Income Portfolio (the
"Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is willing
to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

I. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.

II. DUTIES OF THE ADVISER. A. The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.

SAW0029B

<PAGE>

B. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of notices and reports to interest-holders, typesetting and
printing of registration and financial statements for regulatory purposes and
for distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.

III. COMPENSATION OF THE ADVISER. A. As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.40% of the Portfolio's first $250 million of average daily net assets, 0.35%
of the Portfolio's next $250 million of average daily net assets, and 0.30% of
the Portfolio's average daily net assets in excess of $500 million. Such fees
shall be accrued when computed and payable monthly. For purposes of calculating
such fee, the Portfolio's average daily net asset value shall be determined by
taking the average of all determinations of net asset value made in the manner
provided in the Portfolio's current prospectus and statement of additional
information.

B. The compensation payable to the Adviser hereunder for any period
less than a full month during which this Agreement is in effect shall be
prorated according to the proportion which such period bears to a full month.

IV. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.

V. TERM AND TERMINATION. A. This Agreement shall become effective on
the date hereof. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years from the date hereof and shall
continue in full force and effect for successive periods of one year thereafter,
but only so long as each such continuance is approved annually 1. by either the
Trustees of the Portfolio Trust or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Portfolio, and, in either
event, 2. by vote of a majority of the Trustees of the Portfolio Trust who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such approval.

B. This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.

C. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.

VI. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the

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<PAGE>

Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and interest-
holders of the Portfolio and this Agreement has been signed by an authorized
officer of the Portfolio Trust, acting as such, and neither such authorization
by such Trustees and interest-holders nor such execution and delivery by such
officer shall be deemed to have been made by any of them, but shall bind only
the trust property of the Portfolio Trust as provided in the Agreement and
Declaration of Trust.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

STANDISH, AYER & WOOD MASTER PORTFOLIO, on
behalf of STANDISH FIXED INCOME PORTFOLIO
Attest:

By:

Its:

STANDISH, AYER & WOOD, INC.

Attest:

By:

Its:

SAW0029B
3

FORM OF INVESTMENT ADVISORY AGREEMENT

W I T N E S S E T H:

WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and

WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Equity Portfolio (the "Portfolio"),
a separate fund of the Portfolio Trust, and the Adviser is willing to furnish
such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. APPOINTMENT OF THE ADVISER. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.

2. DUTIES OF THE ADVISER. (a) The Adviser, at its expense, will furnish
continuously an investment program for the Portfolio, will determine, subject to
the overall supervision and review of the Trustees of the Portfolio Trust what
investments shall be purchased, held, sold or exchanged by the Portfolio and
what portion, if any, of the assets of the Portfolio will be held uninvested,
and shall, on behalf of the Portfolio Trust, make changes in the investments of
the Portfolio. Subject always to the supervision of the Trustees of the
Portfolio Trust and to the provisions of the Portfolio Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Portfolio
and matters incidental thereto. Notwithstanding the foregoing, the Adviser shall
not be required to perform any such non-investment advisory services that may,
in the opinion of counsel to the Portfolio Trust, cause the Portfolio to be
engaged in a "trade or business within the United States", as such term is used
in Section 864 of the Internal Revenue Code of 1986, or any successor statute.
The Adviser, and any affiliate thereof, shall be free to render similar services
to

SAW0029B
1

<PAGE>

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 notices and reports to interest-holders, typesetting and
printing of registration and financial statements for regulatory purposes and
for distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.

3. COMPENSATION OF THE ADVISER. (a) As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.50% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.

(b) The compensation payable to the Adviser hereunder for any period
less than a full month during which this Agreement is in effect shall be
prorated according to the proportion which such period bears to a full month.

4. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; PROVIDED,
HOWEVER, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.

5. TERM AND TERMINATION. (a) This Agreement shall become effective on
the date hereof. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years from the date hereof and shall
continue in full force and effect for successive periods of one year thereafter,
but only so long as each such continuance is approved annually (i) by either the
Trustees of the Portfolio Trust or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Portfolio, and, in either
event, (ii) by vote of a majority of the Trustees of the Portfolio Trust who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such approval.

(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Adviser, on sixty days' written notice to the other
party.

(c) This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.

6. LIMITATION OF LIABILITY. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the

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<PAGE>

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

STANDISH, AYER & WOOD MASTER PORTFOLIO, on
behalf of STANDISH EQUITY PORTFOLIO
Attest:

By:

Its:

STANDISH, AYER & WOOD, INC.

Attest:

By:

Its:

SAW0029B
3

FORM OF INVESTMENT ADVISORY AGREEMENT

W I T N E S S E T H:

WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and

WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Small Capitalization Equity
Portfolio (the "Portfolio"), a separate fund of the Portfolio Trust, and the
Adviser is willing to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

SAW0029B
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<PAGE>

other investment companies and other clients and to engage in other activities,
so long as the services rendered hereunder are not impaired.

3. COMPENSATION OF THE ADVISER. (a) As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.60% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.

(c) The Adviser agrees that if total expenses (excluding brokerage,
taxes and extraordinary expenses) of the Portfolio for any fiscal year of the
Portfolio exceed 1.50% of the Portfolio's average daily net assets, the
compensation due the Adviser for such fiscal year shall be proportionately
reduced by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month, subject
to readjustment during such fiscal year.

(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a

SAW0029B
2

<PAGE>

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 phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January __,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and interest-
holders of the Portfolio and this Agreement has been signed by an authorized
officer of the Portfolio Trust, acting as such, and neither such authorization
by such Trustees and interest-holders nor such execution and delivery by such
officer shall be deemed to have been made by any of them, but shall bind only
the trust property of the Portfolio Trust as provided in the Agreement and
Declaration of Trust.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

STANDISH, AYER & WOOD MASTER PORTFOLIO, on
behalf of STANDISH SMALL CAPITALIZATION
EQUITY PORTFOLIO
Attest:

By:

Its:

STANDISH, AYER & WOOD, INC.

Attest:

By:

Its:

SAW0029B
3

FORM OF INVESTMENT ADVISORY AGREEMENT

AGREEMENT made as of this day of , 1996, by and between Standish, Ayer
& Wood Master Portfolio, an unincorporated trust organized under the laws of the
State of New York (the "Portfolio Trust") and Standish International Management
Company, L.P., a Delaware limited partnership (the "Adviser").

W I T N E S S E T H:

WHEREAS, the Portfolio Trust is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and

WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Global Fixed Income Portfolio (the
"Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is willing
to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

SAW0029B
1

<PAGE>

other investment companies and other clients and to engage in other activities,
so long as the services rendered hereunder are not impaired.

3. COMPENSATION OF THE ADVISER. (a) As full compensation for the
services and facilities furnished by the Adviser under this Agreement, the
Portfolio Trust agrees to pay to the Adviser a fee equal at an annual rate to
0.40% of the Portfolio's average daily net assets. Such fees shall be accrued
when computed and payable monthly. For purposes of calculating such fee, the
Portfolio's average daily net asset value shall be determined by taking the
average of all determinations of net asset value made in the manner provided in
the Portfolio's current prospectus and statement of additional information.

(c) The Adviser agrees that if total expenses (excluding brokerage,
taxes and extraordinary expenses) of the Portfolio for any fiscal year of the
Portfolio exceed 0.65% of the Portfolio's average daily net assets, the
compensation due the Adviser for such fiscal year shall be proportionately
reduced by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month, subject
to readjustment during such fiscal year.

(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Portfolio Trust or by vote of a

SAW0029B
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<PAGE>

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.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

STANDISH, AYER & WOOD MASTER PORTFOLIO, on
behalf of STANDISH GLOBAL FIXED INCOME
PORTFOLIO
Attest:

By:

Its:

STANDISH INTERNATIONAL MANAGEMENT COMPANY,
L.P.

By: Standish, Ayer & Wood, Inc.
Its: General Partner
Attest:

By:

Its:

SAW0029B
3

CUSTODIAN AGREEMENT

between

STANDISH AYER & WOOD
MASTER PORTFOLIO

and

INVESTORS BANK & TRUST COMPANY

<PAGE>

TABLE OF CONTENTS

PAGE

1. Bank Appointed Custodian................................................ 1
2. Definitions ............................................................ 1
2.1 Authorized Person...................................................... 1
2.2 Board.................................................................. 1
2.3 Security............................................................... 1
2.4 Portfolio Security..................................................... 2
2.5 Officers' Certificate.................................................. 2
2.6 Book-Entry System...................................................... 2
2.7 Depository............................................................. 2
2.8 Proper Instructions.................................................... 2
2.9 Foreign Securities..................................................... 2
3. Separate Accounts ...................................................... 3
4. Certification as to Authorized Persons.................................. 3
5. Custody of Cash ........................................................ 3
5.1 Purchase of Securities................................................. 4
5.2 Withdrawals............................................................ 4
5.3 Distributions and Expenses of Fund..................................... 4
5.4 Payment in Respect of Securities....................................... 4
5.5 Repayment of Loans..................................................... 4
5.6 Repayment of Cash...................................................... 4
5.7 Foreign Exchange Transactions.......................................... 4
5.8 Other Authorized Payments.............................................. 4
5.9 Termination............................................................ 5

6. Securities ............................................................. 5

6.1 Segregation and Registration........................................... 5
6.2 Voting and Proxies..................................................... 5
6.3 Book-Entry System...................................................... 7
6.4 Use of a Depository.................................................... 7
6.5 Use of Book-Entry System for Commercial Paper.......................... 8
6.6 Use of Immobilization Programs......................................... 9
6.7 Eurodollar CDs......................................................... 9

<PAGE>

PAGE

6.8 Options and Futures Transactions....................................... 9
6.9 Segregated Account..................................................... 10
6.10 Interest Bearing Call or Time Deposits................................ 11
6.11 Transfer of Securities................................................ 11
7. Withdrawals ............................................................ 13
8. Merger, Dissolution, etc. of Fund....................................... 13
9. Actions of Bank Without Prior Authorization............................. 13
10. Collection; Defaults................................................... 14
11. Maintenance of Records................................................. 14
12. Fund Evaluation ....................................................... 15
13. Concerning the Bank.................................................... 15
13.1 Performance of Duties;
Standard of Care........................................................... 15
13.2 Agents and Subcustodians.............................................. 17
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States.......................................... 17
13.4 Insurance............................................................. 20
13.5 Fees and Expenses of Bank............................................. 20
13.6 Advances by Bank...................................................... 20
14. Termination ........................................................... 21
15. Confidentiality ....................................................... 22
16. Notices ............................................................... 22
17. Amendments ............................................................ 22
18. Parties ............................................................... 22
19. Governing Law ......................................................... 22
20. Counterparts .......................................................... 22
21. Limitation of Liability................................................ 23
22. Single Agreement ...................................................... 23
23. Attachments:
o Schedule A - List of Portfolios

<PAGE>

2314

CUSTODIAN AGREEMENT

AGREEMENT made as of this [ ]day of January , 1996, between the
STANDISH AYER & WOOD MASTER PORTFOLIO, an unincorporated trust organized under
the laws of the State of New York (the "Trust") and INVESTORS BANK & TRUST
COMPANY (the "Bank").

The Trust an open-end management investment company, (on behalf of the
individual Portfolios listed on Appendix A hereto), desires to place and
maintain all of its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act of 1940, as amended, (the "1940 Act") to act as
custodian of the portfolio securities and cash of the Trust, and has indicated
its willingness to so act, subject to the terms and conditions of this
Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:

1. BANK APPOINTED CUSTODIAN. The Trust hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.

2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:

2.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Trust by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.

2.2 BOARD. Board will mean the Board of Directors or the Board of
Trustees of the Trust, as the case may be.

2.3 SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.

2.4 PORTFOLIO SECURITY. Portfolio Security will mean any Security
owned by the Trust.

2.5 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Trust.

2.6 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.

2.7 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as amended,
("Exchange Act"), its successor or successors and its nominee or nominees. The
term "Depository" shall further mean and include any other person authorized to
act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Board.

2.8 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Bank and the Trust shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Trust shall cause all
oral instructions to be promptly confirmed in writing. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act, the Trust shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Trust, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Trust's assets.

2.9 FOREIGN SECURITIES. The term Foreign Securities as used herein will
have the same meaning as when such term is used in rule 17f-5 of the 1940 Act.

3. SEPARATE ACCOUNTS. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon). Unless the context otherwise requires, any reference in this
Agreement to any actions to be taken by the Trust shall be deemed to refer to
the Trust acting on behalf of one or more of its Series, any reference in this
Agreement to any assets of the Trust, including, without limitation, any
Portfolio Securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Trust shall be deemed to refer to duties and obligations with
respect to the individual series and any obligation or liability of the Trust
hereunder shall be binding only with respect to the individual series, and shall
be discharged only out of the assets of such series.

It is agreed that for the purposes of this Agreement, that each of the
series of the Fund listed on Appendix A, individually and not jointly, shall be
deemed to be a party hereto. It is also understood that each of such entities
shall be deemed to be entering into a separate agreement with the Bank that it
is as if each of such entities has signed a separate Agreement with the Bank and
that a single document is being signed simply to facilitate the execution and
administration of the Agreement.

4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Trust will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Trust, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Trust which has been signed by Authorized Persons named in the most recent
certification.

5. CUSTODY OF CASH. As custodian for the Trust, the Bank will open and
maintain a separate account or accounts in the name of of the Trust or in the
name of the Bank, as Custodian of the Trust, and will deposit to the account of
the Trust all of the cash of the Trust, except for cash held by a subcustodian
appointed pursuant to Sections 13.2 or 13.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Trust, notification from the Trust's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Trust, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.

5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Trust, against contemporaneous receipt of such securities by the Bank registered
in the name of the Trust or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, or receipt for the account of
the Bank pursuant to the provisions of Section 6 below, each such payment to be
made at the purchase price shown on a broker's confirmation (or transaction
report in the case of Book Entry Paper) of purchase of the securities received
by the Bank before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made.

5.2 WITHDRAWALS. In such amount as may be necessary for the
withdrawal of beneficial interests in the Trust in accordance with Section 7 of
this Agreement.

5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the
account of the Trust of dividends or other distributions to investors as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, shareholder servicing fees, fees of the
Bank for its services hereunder and reimbursement of the expenses and
liabilities of the Bank as provided hereunder, fees of any transfer agent, fees
for legal, accounting, and auditing services, or other operating expenses of the
Trust.

5.4 PAYMENT IN RESPECT OF SECURITIES. For payments, in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Trust held by or to be delivered to the Bank.

5.5 REPAYMENT OF LOANS. To repay loans of money made to the Trust,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;

5.6 REPAYMENT OF CASH. To repay the cash delivered to the Trust for
the purpose of collateralizing the obligation to return to the Trust
certificates borrowed from the Trust representing Portfolio Securities, but only
upon redelivery to the Bank of such borrowed certificates.

5.7 FOREIGN EXCHANGE TRANSACTIONS. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Trust upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Trust
deals or for their failure to comply with the terms of any contract or option.

5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of
the Trust, or other obligations of the Trust incurred for proper Trust purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Trust, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper purpose of the Trust.

5.9 TERMINATION: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.

6. SECURITIES.

6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 13.2 or 13.3 hereof, the Bank as custodian, will receive
and hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Trust (or series of the Trust in accordance with section 3). All
such Portfolio Securities will be held or disposed of by the Bank for, and
subject at all times to, the instructions of the Trust pursuant to the terms of
this Agreement. Subject to the specific provisions herein relating to Portfolio
Securities that are not physically held by the Bank, the Bank will register all
Portfolio Securities (unless otherwise directed by Proper Instructions or an
Officers' Certificate), in the name of a registered nominee of the Bank as
defined in the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, and will execute and deliver all such certificates
in connection therewith as may be required by such laws or regulations or under
the laws of any state. The Bank will use its best efforts to the end that the
specific Portfolio Securities held by it hereunder will be at all times
identifiable.

The Trust will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Trust.

6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Trust all notices,
proxies and proxy soliciting materials with respect to such Portfolio
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Trust), but without
indicating the manner in which such proxies are to be voted.

6.3 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:

(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers.

(b) The records of the Bank (and any such agent) with respect
to the Trust's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry Portfolio Securities which are included
with other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Trust. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank.

(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Trust or shall pay cash collateral against the return of
Portfolio Securities loaned by the Trust upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Trust. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Trust upon

(i)......receipt of advice from the Book-Entry System
that payment for securities sold or payment of the initial cash collateral
against the delivery of securities loaned by the Trust has been transferred to
the Account; and

(ii).....the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the account of the
Trust. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Trust shall identify the Trust, be maintained
for the Trust by the Bank and shall be provided to the Trust at its request. The
Bank shall send the Trust a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Trust.

(d) The Bank will promptly provide the Trust with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System.

(e) The Bank shall be liable to the Trust for any loss or
damage to the Trust resulting from use of the Book-Entry System by reason of any
gross negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless disregard by the
Bank or any such agent of its duty to use its best efforts to enforce such
rights as it may have against the Book-Entry System; at the election of the
Trust, it shall be entitled to be subrogated for the Bank in any claim against
the Book-Entry System or any other person which the Bank or its agent may have
as a consequence of any such loss or damage if and to the extent that the Trust
has not been made whole for any loss or damage.

6.4 USE OF A DEPOSITORY. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:

(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal on behalf of the Trust with Portfolio
Securities including stock dividends, rights and other items of like nature, and
to receive and remit to the Bank on behalf of the Trust all income and other
payments thereon and to take all steps necessary and proper in connection with
the collection thereof;

(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository.

(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Trust and the Trust shall pay cash collateral against the return of
Portfolio Securities loaned by the Trust only upon delivery of the Securities to
or for the account of the Trust; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment thereof or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Trust.

(d) The Bank shall be liable to the Trust for any loss or
damage to the Trust resulting from use of a Depository by reason of any gross
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts to
enforce such rights as it may have against a Depository; at the election of the
Trust, it shall be entitled to be subrogated for the Bank in any claim against a
Depository or any other person which the Bank or its agent may have as a
consequence of any such loss or damage, if and to the extent that the Trust has
not been made whole for any loss or damage.
In this connection, the Bank shall use its best efforts to ensure that:

(i)......the Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;

(ii).....any proxy materials received by a Depository
with respect to Portfolio Securities deposited with such Depository are
forwarded immediately to the Bank for prompt transmittal to the Trust;

(iii)....such Depository immediately forwards to the
Bank confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Trust's account;

(iv).....such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Trust to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and

(v)......such Depository delivers to the Bank and the
Trust all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Trust may
reasonably request in order to verify the Portfolio Securities held by such
Depository.

6.5 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Trust has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Trust,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-Entry Paper
system, the Bank agrees that:

(a) The Bank will maintain all Book-Entry Paper held by the
Trust in an account of the Bank that includes only assets held by it for
customers.

(b) The records of the Bank with respect to the Trust's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging to the Trust which is included in the Book-Entry
Paper System and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or agents of
the Trust.

(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Trust upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Trust.

(d) The Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Trust, and (ii)
the making of an entry on the records of the Bank to reflect such payment for
the account of the Trust.

(e) the Bank shall transmit to the Trust a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Trust on
the next business day following the transaction; and

(f) the Bank will send to the Trust such reports on its system
of internal accounting control with respect to the Book-Entry Paper System as
the Trust may reasonably request from time to time.
.
6.6 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.

6.7 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Trust and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Trust, and shall have no liability to the Trust
or its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs, except
for any loss or damage to the Trust resulting from the Bank's own gross
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.

6.8 OPTIONS AND FUTURES TRANSACTIONS.

(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-the-Counter.

1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Trust regarding escrow
or other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Trust relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.

2. Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Trust has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Trust.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Trust, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). Unless otherwise agreed to by the Trust and the Bank, the
Bank specifically, but not by way of limitation, shall not be under any duty or
obligation to: (i) periodically check or notify the Trust that the amount of
such collateral held by a broker or held in a Segregated Account is sufficient
to protect such broker of the Trust against any loss; (ii) effect the return of
any collateral delivered to a broker; or (iii) advise the Trust that any option
it holds, has or is about to expire. Such duties or obligations shall be the
sole responsibility of the Trust.

(b) Puts, Calls and Futures Traded on Commodities Exchanges

1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Trust in accordance with the
provisions of any agreement among the Trust, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account deposits
in connection with transactions by the Trust.

2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(2) of this Section 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.

6.9 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Trust, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:

(a) in accordance with the provisions of any agreement among
the Trust, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Trust;

(b)for the purpose of segregating cash or securities in
connection with options purchased or written by the Trust or commodity futures
purchased or written by the Trust;

(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Trust's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Trust's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;

(d) for the purposes of compliance by the Trust with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;

(e) for other proper corporate purposes, but only, in the case
of this clause (e), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account and
declaring such purposes to be proper corporate purposes; and.

(f) assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only

(i)...... with respect to assets deposited in
accordance with the provisions of any agreements referenced in (a) or (b) above,
in accordance with the provisions of such agreements;

(ii) ....with respect to assets deposited pursuant to
(c) or (d) above, for sale or delivery to meet the Trust's obligations under
outstanding firm commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;

(iii) ...for exchange for other liquid assets of
equal or greater value deposited in the Segregated Account;

(iv) ....to the extent that the Trust's outstanding
forward commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other parties or the
Trust's obligations thereunder are met from assets of the Trust other than those
in the Segregated Account;

(v)......for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio Securities; or

(vi).....with respect to assets deposited pursuant to
(e) above, in accordance with the purposes of such account as set forth in
Proper Instructions.

6.10 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Trust of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Trust appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Trust and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Trust.

6.11 TRANSFER OF SECURITIES. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will receive
Proper Instructions requesting such transfer, exchange or delivery stating that
it is for a purpose permitted under the terms of this Section 6.11, specifying
the applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only:

(a) upon sales of Portfolio Securities for the account of the
Trust, against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in a broker's
confirmation of sale of the Portfolio Securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made;

(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;

(d) for the purpose of withdrawing in- kind beneficial
interests in the Trust upon authorization from the Trust;

(e) in the case of option contracts owned by the Trust, for
presentation to the endorsing broker;

(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;

(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Trust by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Trust of
the moneys borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, and such fact is made to appear in
the Proper Instructions, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender. After notice to the Trust from the lender, in accordance with the normal
procedures of the lender, that an event of deficiency or default on the loan has
occurred, the Bank may deliver such pledged Portfolio Securities to or for the
account of the lender;

(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;

(i) for the purpose of delivering securities lent by the Trust
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Trust and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Trust;

(j) for other authorized transactions of the Trust or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed by
an authorized officer of the Trust (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Trust or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and

(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.

As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.

7. WITHDRAWALS. In the case of payment of assets of the Trust held by
the Bank in connection with withdrawal of beneficial interests in the Trust, the
Bank will rely on notification by the Trust's transfer agent of receipt of a
request for withdrawal before such payment is made. Payment shall be made in
accordance with the Articles and By-laws of the Trust, from assets available for
said purpose.

8. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Trust into or the consolidation of the Trust with another investment company,
the sale by the Trust of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Trust and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Trust
set forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate.

9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Trust or the transfer agent:

(a) endorse for collection and collect on behalf of and in the
name of the Trust all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Trust and hold for the account of the Trust all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;

(b) present for payment all coupons and other income items
held by it for the account of the Trust which call for payment upon presentation
and hold the cash received by it upon such payment for the account of the Trust;

(c) receive and hold for the account of the Trust all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder;

(d) execute as agent on behalf of the Trust all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Trust's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Bank will execute and deliver such certificates in connection with
Portfolio Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, or under the laws of any State;

(e) present for payment all Portfolio Securities which are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Trust; and

(f) exchange interim receipts or temporary securities for
definitive securities.

10. COLLECTIONS AND DEFAULTS. The Bank will use all reasonable efforts
to collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Trust in writing of any default or refusal to pay
within two business days from the day on which it receives knowledge of such
default or refusal. In addition, the Bank will send the Trust a written report
once each month showing any income on any Portfolio Security held by it which is
more than ten days overdue on the date of such report and which has not
previously been reported.

11. MAINTENANCE OF RECORDS. The Bank will maintain records with respect
to transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement, and in compliance with the applicable rules and
regulations of the 1940 Act and will furnish the Trust daily with a statement of
condition of the Trust. The Bank will furnish to the Trust at the end of every
month, and at the close of each quarter of the Trust's fiscal year, a list of
the Portfolio Securities and the aggregate amount of cash held by it for the
Fund. The books and records of the Bank pertaining to its actions under this
Agreement and reports by the Bank or its independent accountants concerning its
accounting system, procedures for safeguarding securities and internal
accounting controls will be open to inspection and audit at reasonable times by
officers of or auditors employed by the Trust and will be preserved by the Bank
in the manner and in accordance with the applicable rules and regulations under
the 1940 Act. The Bank recognizes that the books and records it maintains for
the Trust, pursuant to this Agreement, are the property of the Trust and the
Bank agrees to surrender such books and records upon the request of the Trust or
any Authorized Person of the Trust. The information forwarded to the Trust daily
pursuant to this Section 11 and Section 13.3(f) shall be sufficiently detailed
to enable the Trust to maintain detailed amortized accounting and tax books on a
daily basis. The records contemplated by this Section 11 shall be forwarded to
the Trust at its Cayman Island offices used by the Trust in compiling and
maintaining its corporate records and books of account.

12. FUND EVALUATION. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board the net asset value of the Trust, such determination to be made in
accordance with the provisions of the Articles and By-laws of the Trust and
Prospectus and Statement of Additional Information relating to the Trust, and
valuation procedures approved by the Board, and any applicable resolutions of
the Board at the time in force and applicable, as they may from time to time be
amended. Current copies of each such document are to be made available by the
Trust to the Bank on a timely basis. The Bank shall promptly notify the Trust,
or such other persons as the Trust may request of the results of such
computation and determination. In computing the net asset value hereunder, the
Bank may rely in good faith upon information furnished to it by any Authorized
Person in respect of (i) the manner of accrual of the liabilities of the Trust
and in respect of liabilities of the Trust not appearing on its books of account
kept by the Bank, (ii) reserves, if any, authorized by the Board or that no such
reserves have been authorized, (iii) the source of the quotations to be used in
computing the net asset value, (iv) the value to be assigned to any security for
which no price quotations are available, and (v) the method of computation of
the net asset value, and the Bank shall not be responsible for any loss
occasioned by such reliance or for any good faith reliance on any quotations
received from a source pursuant to (iii) above.

In addition, the Bank shall determine daily the net asset value of each
investor's interest in the Trust and shall allocate daily on a book basis and
annually or as mutually agreed on a tax basis among the investors in the Trust
on a pro rata basis all incremental investment activity.

All services and activities provided for in this Section 12 shall be
undertaken from and occur at a location outside the United States.

13. CONCERNING THE BANK.

13.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE.
In performing its duties hereunder and any other duties listed on any Schedule
hereto, if any, the Bank will be entitled to receive and act upon the advice of
independent counsel of its own selection, which may be counsel for the Trust,
and will be without liability for any action taken or thing done or omitted to
be done in accordance with this Agreement in good faith in conformity with such
advice. In the performance of its duties hereunder, the Bank will be protected
and not be liable, and will be indemnified and held harmless for any action
taken or omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Trust except in
the case of its gross negligence, willful misfeasance or bad faith in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.

The Bank will be under no duty or obligation to inquire into and will
not be liable for:

(a) the validity of the issue of any Portfolio Securities
purchased by or for the Trust, the legality of the purchases thereof or the
propriety of the price incurred therefor;

(b) the legality of any sale of any Portfolio Securities by or
for the Trust or the propriety of the amount for which the same are sold;

(c) the legality of an issue or sale of beneficial interests
in the Trust or the sufficiency of the amount to be received therefor;

(d) the legality of the withdrawal of any beneficial interests
in of the Trust or the propriety of the amount to be paid therefor;

(e) the legality of the declaration of any dividend by the
Trust or the legality of the distribution of any Portfolio Securities as payment
in kind of such dividend; and

(f) any property or moneys of the Trust unless and until
received by it or its agent, and any such property or moneys delivered or paid
by it pursuant to the terms hereof.

Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Trust are such as may properly be held by the Trust
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.

Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party for:

(a) any losses or damages of any kind resulting from acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events except
as results from the Bank's own gross negligence; or

(b) for special, punitive or consequential damages arising
from the provision of services hereunder, even if the Bank has been advised of
the possibility of such damages.

13.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF THE TRUST
HELD IN THE UNITED STATES. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.

Upon receipt of Proper Instructions, the Bank may employ subcustodians,
provided that any such subcustodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the
Trust's assets with respect to property of the Trust held in the United States,
and has previously been approved by the Board. The Bank shall have no liability
to the Trust or any other person by reason of any act or omission of any
subcustodian and the Trust shall indemnify the Bank and hold it harmless from
and against any and all actions, suits and claims, arising directly or
indirectly out of the performance of any subcustodian. Upon request of the Bank,
the Trust shall assume the entire defense of any action, suit, or claim subject
to the foregoing indemnity. The Trust shall pay all fees and expenses of any
subcustodian.

13.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE TRUST HELD
OUTSIDE OF THE UNITED STATES.

(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Trust hereby
authorizes and instructs the Bank to employ as sub-custodians for the Trust's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated by
the Trust's Board (each, a "Selected Foreign Sub-Custodian"). Upon receipt of
Proper Instructions, together with a certified resolution of the Trust 's Board
of Trustees, the Bank and the Trust may agree to designate additional foreign
banking institutions and foreign securities depositories to act as Selected
Foreign Sub-Custodians hereunder. Upon receipt of Proper Instructions, the Trust
may instruct the Bank to cease the employment of any one or more such Selected
Foreign Sub-Custodians for maintaining custody of the Trust's assets, and the
Bank shall so cease to employ such sub-custodian as soon as alternate custodial
arrangements have been implemented.

(b) FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise
be agreed upon in writing by the Bank and the Trust, assets of the Trust shall
be maintained in foreign securities depositories that qualify as eligible
foreign custodians under rule 17f-5 of the 1940 Act, pursuant to written
agreement between such depositories and the Bank. Where possible, such
arrangements shall include entry into agreements containing the provisions set
forth in subparagraph (d) hereof. Notwithstanding the foregoing, except as may
otherwise be agreed upon in writing by the Bank and the Trust, the Trust
authorizes the deposit in Euro-clear, the securities clearance and depository
facilities operated by Morgan Guaranty Trust Company of New York in Brussels,
Belgium, of Foreign Securities eligible for deposit therein and to utilize such
securities depository in connection with settlements of purchases and sales of
securities and deliveries and returns of securities, until notified to the
contrary pursuant to subparagraph (a) hereunder.

(c) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Trust the Foreign Securities held by each Selected
Foreign Sub-Custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Trust, and, in the event that such institution deposits
Foreign Securities in a foreign securities depository, that it shall identify on
its books as belonging to the Bank the securities so deposited.

(d) AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Trust (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form previously made available to the Trust and shall provide that: (a) the
Trust's assets will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Trust's assets will be freely transferable without the payment of money or value
other than for custody or administration (including, without limitation, any
fees or taxes payable upon transfers or reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to Bank;
(d) officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent public
accountants for the Trust, will be given access to the books and records of the
foreign banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Trust held by the Selected Foreign Sub-Custodian
will be subject only to the instructions of the Bank or its agents.

(e) ACCESS OF INDEPENDENT ACCOUNTANTS OF THE TRUST. Upon
request of the Trust, the Bank will use its best efforts to arrange for the
independent accountants of the Trust to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.

(f) REPORTS BY BANK. The Bank will supply to the Trust from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Trust held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Securities and other assets of the Trust.

(g) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Transactions with
respect to the assets of the Trust held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Trust to the Bank and
shall be effected in accordance with the applicable Foreign Sub-Custodian
Agreement. If at any time any Foreign Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Trust agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.

Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Securities received for the account of the
Trust and delivery of Foreign Securities maintained for the account of the Trust
may be effected in accordance with the customary established securities trading
or securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.

In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Trust such
information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Trust pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Trust is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Trust or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.

(h) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Trust acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Trust. The Trust acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Trust's securities and
other assets.

(i) LIABILITY OF BANK. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.

(j) MONITORING RESPONSIBILITIES. The Bank shall furnish
annually to the Trust, information concerning the Selected Foreign
Sub-Custodians employed hereunder for use by the Trust in evaluating such
Selected Foreign Sub-Custodians to ensure compliance with the requirements of
Rule 17f-5 of the 1940 Act. In addition, the Bank will promptly inform the Trust
in the event that the Bank is notified by a Selected Foreign Sub-Custodian that
there appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting principles) or any other
capital adequacy test applicable to it by exemptive order, or if the Bank has
actual knowledge of any material loss of the assets of the Trust held by a
Foreign Sub-Custodian.

(k) TAX LAW. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on the Trust or the Bank
as custodian of the Trust by the tax laws of any jurisdiction, and it shall be
the responsibility of the Trust to notify the Bank of the obligations imposed on
the Trust or the Bank as the custodian of the Trust by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Trust with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Trust
has provided such information.

13.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Trust held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Trust.

13.5. FEES AND EXPENSES OF BANK. The Trust will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Trust will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Trust for all reasonable expenses incurred in conjunction
with termination of this Agreement.

13.6 ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Trust to make any payment permitted by this Agreement
upon receipt of any proper authorization required by this Agreement for such
payments by the Trust. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of the Trust's account with the
Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness, a loan made by the Bank to the Trust payable on demand and
bearing interest at the current rate charged by the Bank for such loans unless
the Trust shall provide the Bank with agreed upon compensating balances. The
Trust agrees that the Bank shall have a continuing lien and security interest to
the extent of any overdraft or indebtedness, in and to any property at any time
held by it for the Trust's benefit or in which the Trust has an interest and
which is then in the Bank's possession or control (or in the possession or
control of any third party acting on the Bank's behalf). The Trust authorizes
the Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon against any balance of account
standing to the credit of the Trust on the Bank's books.

14. TERMINATION.

(a) This Agreement may be terminated at any time after three years
from the date of this Agreement without penalty upon sixty days written notice
delivered by either party to the other by means of registered mail, and upon the
expiration of such sixty days this Agreement will terminate; provided, however,
that the effective date of such termination may be postponed to a date not more
than ninety days from the date of delivery of such notice (i) by the Bank in
order to prepare for the transfer by the Bank of all of the assets of the Trust
held hereunder, and (ii) by the Trust in order to give the Trust an opportunity
to make suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Trust will, at its request, have access to
the records of the Bank relating to the performance of its duties as custodian.

(b) In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Trust. The obligation of the Bank to deliver and transfer over the assets of the
Trust held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Trust does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 14(c), deliver the Portfolio Securities and cash of the
Trust held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Trust under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Trust with the
same effect as though selected by the Board.

(c) Prior to the expiration of ninety (90) days after notice of
termination has been given, the Trust may furnish the Bank with an order of the
Trust advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted to the
investors of the Trust the question of whether the Trust will be liquidated or
will function without a custodian for the assets of the Trust held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Trust held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of investors, upon
receipt by the Bank of a copy of the minutes of the meeting of investors at
which action was taken, certified by the Trust's Secretary and an opinion of
counsel to the Trust in form and content satisfactory to the Bank.

15. CONFIDENTIALITY. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.

16. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:

(a) In the case of notices sent to the Trust to:

Standish, Ayer & Wood
Master Portfolio
c/o IBT Trust Company (Cayman) Ltd.
The Bank of Nova Scotia Building
George Town, Grand Cayman
Cayman Islands, BWI

with a duplicate copy to:

Standish, Ayer & Wood, Inc.
One Financial Center
Boston, MA 02111
Attn: James E. Hollis III

(b) In the case of notices sent to the Bank to:

Investors Bank & Trust Company
One First Canadian Place
King Street West
Suite 2800
P.O. Box 231
Toronto, Ontario M5X 1C8
Attention: James Keenan

or at such other place as such party may from time to time designate in writing.

17. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties, and in the case of the
Trust, such alteration or amendment will be authorized and approved by its
Board.

18. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Trust
without the written consent of the Bank or by the Bank without the written
consent of the Trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.

19. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.

20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.

21. LIMITATION OF LIABILITY. Notice is hereby given that this Agreement
has been executed on behalf of the Trust by an officer of the Trust as an
officer and not individually and the obligations of the Trust arising out of
this Agreement are not binding upon any of the trustees, officers or investors
of the Trust individually but are binding only upon the assets and property of
the Trust. No series of the Trust shall be liable for the obligations of any
other series of the Trust.

22. SINGLE AGREEMENT. This Agreement (including any exhibits,
appendices and schedules hereto) constitutes the entire agreement between the
Bank and the Trust as to subject matter hereof and supercedes any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered between the Bank and the Trust.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, outside of the United States, by their respective officers thereunto
duly authorized as of the day and year first written above.

STANDISH, AYER & WOOD
MASTER PORTFOLIO

By:
Name:
Title:
ATTEST:______________________

INVESTORS BANK & TRUST COMPANY

By:
Name:
Title:

ATTEST:______________________

<PAGE>

STANDISH, AYER & WOOD
MASTER PORTFOLIO

By:
Name:
Title:
ATTEST:______________________

INVESTORS BANK & TRUST COMPANY

By:
Name:
Title:

ATTEST:______________________

<PAGE>

SCHEDULE A

STANDISH FIXED INCOME PORTFOLIO
STANDISH EQUITY PORTFOLIO
STANDISH SMALL CAPITALIZATION EQUITY PORTFOLIO
STANDISH GLOBAL FIXED INCOME PORTFOLIO

ADMINISTRATION AGREEMENT

THIS AGREEMENT is made the 29th day of March, 1996

BETWEEN: (1) Standish, Ayer & Wood Master Portfolio,
a New York trust the principal office of
which is at IBT Trust Company (Cayman)
Ltd., The Bank of Nova Scotia Building,
Cardinal Avenue, George Town, Cayman,
Cayman Islands, British West Indies (the
"Trust") OF THE ONE PART

AND: (2) IBT Trust Company (Cayman), Ltd., a
company duly incorporated in the Cayman
Islands the Registered Office of which is
at The Bank of Nova Scotia Building,
Cardinal Avenue, George Town, Cayman,
Cayman Islands, British West Indies
aforesaid (the "Administrator") OF THE
OTHER PART.

WHEREAS:

(A) The Trust is registered under the United States Investment Company Act of
1940 as a management investment company.

(B) The Administrator has agreed to provide general administration services to
the Trust, and the Trust wishes to appoint the Administrator as general
administrator of the Trust upon the terms and conditions hereinafter appearing.

AGREEMENT:

1. (a) In this Agreement the words standing in the first column of the table
next hereinafter contained shall bear the meanings set opposite to them in the
second column thereof, if not inconsistent with the subject or context:

WORDS Meanings

"Declaration of Trust" The Declaration of Trust of the Trust
for the time being in force

"Trustees" The Trustees of the Trust for the time being, or
as the case may be, the Trustees assembled as a board.

"Registration Statement" The Registration Statement of the
Trust as amended and
filed with the
Securities and Exchange
Commission.

(b) The headings are intended for convenience only and shall not affect the
construction of this Agreement.

<PAGE>

APPOINTMENT OF ADMINISTRATOR

2. The Trust hereby appoints the Administrator and the Administrator hereby
agrees to act as general administrator of the Trust in accordance with the terms
and conditions hereof with effect from the date hereof PROVIDED ALWAYS THAT the
Administrator shall at no time become resident in the United States and shall
ensure that all of the business activities engaged in under the provisions of
this agreement are carried on at or from an office or offices located outside
the United States. All activities engaged in under the provisions of this
agreement by the Administrator on behalf of the Trust shall be subject to the
overall policies, directions and control of the Trustees.

DUTIES AS GENERAL CORPORATE ADMINISTRATOR

3. The Administrator shall from time to time deliver such information
explanations and reports to the Trust as the Trust may reasonably require
regarding the conduct of the business of the Trust.

4. The Administrator shall provide the principal office of the Trust; and

(a) conduct on behalf of the Trust all the day to day business of the Trust and
provide the services of registrar and secretary, to the Trust, and provide
signatories on the Company's bank and investment accounts, and provide or
procure such office accommodation, secretarial staff and other facilities as may
be required for the purposes of fulfilling its duties under this Agreement;

(b) receive and approve notices of subscriptions and redemptions of Trust
interests;

(c) ensure compliance with all regulations and laws of the Cayman Islands
including but not limited to filing annual returns, notices of change of
Trustees and Officers and Special Resolutions;

(d) maintain outside the United States the Trust's official corporate books and
records, including the Articles and any by-laws, minutes of meetings, the
Register of Holders of Interests, official copies of contracts, books of
account, balances, portfolio holdings reports and general ledgers;

(e) after consultation with the Trustees, pay redemption proceeds, legal and
accounting fees and any officers' and trustees' compensation, all such payments
to be

<PAGE>

made outside the United States;

(f) deal with and reply to all correspondence and other communications addressed
to the Trust at its principal office, whether in relation to the subscription,
purchase, transfer or redemption of interests in the Trust or otherwise PROVIDED
THAT in the event of any dispute in connection with the issue, ownership,
redemption or otherwise of any interests the matter shall be referred to the
Trust, and the Administrator shall take such action as may reasonably be
required by the Trust;

(g) do all such things as may be necessary for the holding of Trustee and
committee meetings and meetings of the holders of interests in the Trust in
accordance with Cayman Islands law and outside of the United States, including
but not limited to preparing and sending out notice of such meetings, arranging
for adequate accommodation for such meetings and attending, preparing and
distributing the minutes of such meetings;

(h) at any time during business hours permit any duly appointed agent or
representative of the Trust, at the expense of the Trust, to inspect the
Register of Holders of Interests or any other documents or records in the
possession of the Administrator and give such agent or representative during
business hours all information, explanations and assistance as such agent or
representative may reasonably require, and permit representatives of the U.S.
Securities and Exchange Commission to examine books and records of the Trust;

(i) maintain and safeguard the Register of Holders of Interests and other
documents in connection therewith and enter on such Register all original issues
and allotments of interests and all transfers and redemption of such interests
all in accordance with the provisions of the Articles and to prepare all such
lists of Members of the Trust and personal account numbers of Members as may be
required by the Trust;

(j) at the request of the Trust, arrange execution and filing of all documents
for compliance by the Trust with applicable laws and regulations including
without limitation the Trust's Registration Statement, and all amendments
thereto, semi-annual and annual reports, proxy materials and tax returns;

(k) at the request of the Trust, perform such additional
services required by the Trust's Operating Policies

<PAGE>

and Procedures (the "Operating Procedures") to be performed by or on behalf of
the Trust from outside the United States.

To the extent any provision of this Agreement conflicts with any provision of
the Operating Procedures, the applicable provision of the Operating Procedures
shall be deemed to govern.

DEALINGS OF THE ADMINISTRATOR

5. Nothing herein contained shall prevent the Administrator or any firm, person
or company associated in any way with the Administrator from contracting with or
entering into any financial, banking or other transaction with the Trust, any
holder of an interest in the Trust, or any company or body of persons any of
whose securities are held by or for the account of the Trust or from being
interested in such transaction.

6. Nothing herein contained shall prevent the Administrator or any associate of
the Administrator from acting as administrator or general corporate manager or
in any other capacity whatsoever for any other company or body of persons on
such terms as the Administrator or such associate may arrange, and the
Administrator or such associate shall not be deemed to be affected with notice
of or to be under any duty to disclose to the Trust any fact or thing which may
come to its knowledge or that of any of its servants or agents in the course of
so doing or in any manner whatever otherwise than in the course of carrying out
its duties hereunder.

AGENTS AND ADVICE

7. The Administrator shall be at liberty in the performance of its duties and in
the exercise of any of the powers vested in it hereunder to act by responsible
officers or a responsible officer for the time being and to employ and pay an
agent who may (but need not) be an associate of the Administrator to perform or
concur in performing any of the services required to be performed hereunder and
may act or rely upon the opinion or advice or any y broker, lawyer, valuer,
surveyor, auctioneer or other
expert, whether reporting to the Trust, to the Administrator or not, and, except
as provided in clause 11(a) below, the Administrator shall not be responsible
for any loss occasioned by its so acting.

8.The Administrator may at the expense of the Trust refer any legal question to
the legal advisers of the Trust for

<PAGE>

the time being (whose name shall from time to time be notified by or on behalf
of the Trust to the Administrator) or legal advisers that it may select with the
prior approval of the Trust and, subject to clause 11(a) below, may act on any
opinion given by such legal advisers or counsel without being responsible for
the correctness thereof or for any result which may follow from so doing.

REMUNERATION

9. In consideration of the services performed by the Administrator hereunder the
Administrator shall be entitled to receive such fees as are set forth in Exhibit
A attached hereto.

REIMBURSEMENT BY THE TRUST TO THE ADMINISTRATOR

10. In addition to the fees set out in clause 9 above the Trust shall reimburse
to the Administrator all reasonable costs and expenses incurred by the
Administrator in the performance of its duties hereunder.

LIABILITY AND INDEMNITY

11. (a) The Administrator, its subsidiaries, agents, advisors, shareholders,
directors, officers, servants and employees shall not be liable to the Trust or
a holder of an interest in the Trust, or any of its or their successors or
assigns, except for loss arising to the Trust or a holder of an interest in the
Trust by reason of acts of, or omissions constituting negligence or willful
default on the part of any such persons as aforesaid.

(b) The Trust shall indemnify, defend and hold harmless the Administrator and
each of its subsidiaries, agents, advisors, shareholders, directors, officers,
servants and employees from and against any loss, liability, damage, cost or
expense (including reasonable legal fees and expenses and any amounts paid in
settlement), resulting from its or their actions or capacities hereunder or
otherwise concerning the business or activities undertaken on behalf of the
Trust under this Agreement including (without restricting the generality of the
foregoing) loss sustained as a result of delay, mis-delivery or error in
transmission of any cable, telefax, telex or telegraphic communication. Subject
as aforesaid all actions taken by the Administrator shall be taken in good faith
and in the reasonable belief that such actions are taken in the best interests
of the Trust PROVIDED THAT termination of any action, proceeding, demand, claim
or lawsuit by judgment, order or

<PAGE>

settlement shall not, of itself, create a presumption that the conduct in
question was not undertaken in good faith with due care and in a manner
reasonably believed to be in or not opposed to the best interest of the Trust.
The Administrator shall indemnify, defend and hold harmless the Trust and each
of its agents, advisers, holders of interests in the Trust, trustees, officers,
servants and employees from and against any loss, liability, damage, cost and
expense (including reasonable legal fees and expenses and any amounts paid in
settlement), arising out of or based upon any breach by the Administrator of any
provision of this Agreement or of a representation, warranty, or covenant in
this Agreement. No indemnified party shall settle any action, suit, claim,
demand, proceeding or investigation for which indemnity may be sought hereunder
without the prior written approval of the indemnifying party, which approval
shall not be unreasonably withheld. The rights of indemnification hereunder
shall remain in full force and effect regardless of the expiration or
termination of this Agreement.

(c) The foregoing indemnification rights shall in each case be conditioned upon
the indemnified party's fulfillment of his obligation to notify the indemnifying
party in writing as soon as practicable of any action, suit, proceeding or
investigation involving the indemnified party for which indemnity will or could
be sought. With respect to any action, suit, proceeding or investigation of
which the indemnifying party is so notified, the indemnifying party will be
entitled to participate therein at its own expense and/or to assume the defence
thereof at its own expense, with legal counsel reasonably acceptable to the
indemnified party.

(d) This Agreement has been executed on behalf of the Trust by an officer of the
Trust as an officer and not individually and the obligations of the Trust
arising out of this Agreement are not binding upon any of the Trustees,
officers, agents or investors in the Trust individually but are binding only
upon the assets and property of the Trust. No series of the Trust shall be
liable for the obligations of any other series of the Trust.

RIGHT TO ADVISE AND MANAGE THE TRUSTS OF OTHERS

12. The Trust acknowledges that an important part of the Administrator's
business is, and that it derives profits from, managing the affairs of its
affiliates and other entities and that the Administrator will be managing such
affiliates and entities during the same period that it is

<PAGE>

managing the affairs of the Trust. The Administrator and its officers and
employees shall be free to manage such other affiliates and entities and to
retain for its own or their benefit all profits and revenues derived therefrom
PROVIDED THAT the Administrator shall not knowingly prefer affiliates of the
Administrator or other entities to the detriment of the affairs of the Trust.

RESTRICTIONS

13. Neither of the parties hereto shall knowingly do or commit any act, matter
or thing which would or might prejudice or bring into disrepute in any manner
the business or reputation of the other or any trustee, officer or employee of
the other; provided, however, that nothing herein shall prevent either party
from bringing action or asserting publicly or privately any claim against the
other or otherwise prosecuting any dispute against the other party.

14. Except as required by applicable law and save as contemplated by the
Articles, neither of the parties hereto shall either before or after the
termination of this Agreement disclose to any person not authorized by the other
party to receive the same information relating to such party or to the affairs
of such party of which the party disclosing the same shall have become possessed
during the period of this agreement, and both parties shall use all reasonable
endeavours to prevent any such disclosure as aforesaid.

TERMINATION

15. The Administrator shall be entitled to resign its
appointment hereunder:

(a) by giving not less than two (2) month's notice in
writing to the Trust;

(b) if the Trust shall commit any breach of its obligations under this Agreement
and shall fail within ten days of receipt of notice served by the Administrator
requiring it so to do, to make good such breach; and

(c) at any time without such notice as is referred to in sub-paragraphs (a) and
(b) of this clause if the Trust shall go into liquidation (other than for the
purpose of reconstruction or amalgamation upon terms previously approved in
writing by the Administrator) or if a receiver of any of the assets of the Trust
is appointed.

16. The Trust may terminate the appointment of the

<PAGE>

Administrator:

(a) by giving not less than two (2) month's notice in writing to the
Administrator;

(b) if the Administrator shall commit any breach of its obligations under this
Agreement and shall fail within ten days of receipt of notice served by the
Trust requiring it so to do, to make good such breach; and

(c) at any time without such notice as is referred to in sub-paragraphs (a) and
(b) of this clause if the Administrator goes into liquidation (except a
voluntary liquidation for the purpose of reconstruction or amalgamation upon
terms previously approved in writing by the Trust) or if a receiver is appointed
of any of the assets of the Administrator.

17. On termination of the appointment of the administrator mination shall be
without prejudice to any antecedenter liability of the Administrator or the
Trust. The Administrator shall be entitled to receive all fees and other moneys
accrued up to the date of such termination but shall not be entitled to
compensation in respect of such termination.

18. The Administrator shall, on the termination of its appointment, forthwith
hand over to the Trust or as it shall direct all books of account, registers,
correspondence and records of all and every description relating to the affairs
of the Trust which are in the Administrator's possession but not including any
promotional material bearing the style or any trade mark or symbol of the
Administrator. The Administrator shall also in such circumstance deliver or
cause to be delivered to the succeeding administrator or as the Trust shall
direct duly endorsed and in form for transfer all investments then held
hereunder and all funds or other properties of the Trust deposited with or
otherwise held by the Administrator or to its order hereunder and do all such
further acts as the Trust may reasonably require of it.

<PAGE>

REPRESENTATIONS AND WARRANTIES

19. (a) The Administrator represents and warrants to the Trust as follows:

(i) The Administrator has full power and authority to enter into and perform
this Agreement and this Agreement has been duly authorized by all requisite
corporate action, executed and delivered by or on behalf of the Administrator
and constitutes a valid and binding agreement of the Administrator.

(ii) Neither the execution, delivery nor performance of this Agreement by the
Administrator will result in a breach or violation of any statute, law, rule or
of the material provisions of any debenture or other material agreement binding
upon the Administrator and no consent, approval, authorization or license by any
court or governmental agency is required for the execution, delivery or
performance of this Agreement by the Administrator, except such as have been
obtained by the Administrator.

(iii)The Administrator shall act at all times in conformity with the Trust's
Operating Procedures, as amended from time to time.

(b) The Trust represents and warrants to the Administrator as follows:

(i)The Trust has full power and authority to enter into and perform this
Agreement and this Agreement has been duly authorized by all requisite corporate
action, executed and delivered by or on behalf of the Trust and constitutes a
valid and binding agreement of the Trust.

(ii)Neither the execution, delivery nor performance of this Agreement by the
Trust will result in a breach or violation of any statute, law, rule or of the
material provisions of any debentures or other material agreement binding upon
the Trust and no consent, approval, authorization or license by any court or
governmental agency is required for the execution, delivery or performance of
this Agreement by the Trust except such as have been obtained by the Trust.

INDEPENDENT CONTRACTOR

20. For all purposes of this Agreement, the Administrator shall be an
independent contractor and not an employee or dependent agent of the Trust, nor
shall anything

<PAGE>

herein be construed as making the Trust a partner or co-venturer with the
Administrator or any of its affiliates or other clients. Except as provided in
this Agreement, the Administrator shall have no authority to bind, obligate or
represent the Trust.

COMPLETE AGREEMENT

21. This Agreement constitutes the entire agreement between the parties relating
to the subject matter hereof.

ASSIGNMENT

22. This Agreement shall be binding upon the parties hereto and their respective
successors and assigns but may not be assigned by any party without the express
written consent of the other parties which shall not be unreasonably withheld.

23. This Agreement may not be amended except by the written consent of each of
the parties hereto.

NOTICES

24. Any notice delivered under this agreement shall be in writing and signed by
a duly authorized officer of the party giving such notice and shall be delivered
personally or sent by registered or certified mail, postage prepaid, to the
registered office of the party for whom it is intended, with a copy to the
Trust's investment adviser, Standish, Ayer & Wood, Inc., One Financial Center,
Boston, MA 02111. A notice so posted shall be deemed to be served at the
expiration of seventy-two (72) hours after posting and in proving service by
post it shall be sufficient to prove that an envelope containing the notice was
duly addressed, stamped and posted.

GOVERNING LAW

25. This Agreement shall be governed by and construed in accordance with the
laws of the Cayman Islands and the parties hereto agree to submit to the
non-exclusive jurisdiction of the Courts of the Cayman Islands.

IN WITNESS WHEREOF this Agreement has been duly executed for and on behalf of
the parties hereto in manner binding upon them the day and year first above
written.

Signed by ____________________________

for and on behalf of the said Raymond O'Neill

Standish, Ayer & Wood Master Portfolio Assistant
Vice-President

in the presence of:

Witness

Signed by

for and on behalf of the said _____________________________

IBT Trust Company (Cayman), Ltd. Robert V. Donahoe

in the presence of: Officer

Witness

<PAGE>

Schedule A
INVESTORS BANK & TRUST COMPANY
FEE SCHEDULE
FOR
STANDISH, AYER & WOOD MASTER PORTFOLIO

ADMINISTRATIVE SERVICES

Flat Fee on a per fund basis $7,500/year or $625.00/month
(per Hub or per Spoke)

POWER OF ATTORNEY

The undersigned officer of Standish, Ayer & Wood Master Portfolio, a
New York trust (the "Portfolio Trust"), does hereby constitute and appoint
Edward H. Ladd, David W. Murray and Susan Jakuboski, and each of them acting
singly, to be my true, sufficient and lawful attorneys, with full power to each
of them, and each of them acting singly, to sign for me, in my name and in the
capacities indicated below, the Registration Statements on Form N-8A and Form
N-1A to be filed by the Portfolio Trust under the Investment Company Act of
1940, as amended (the "1940 Act"), and any and all amendments thereto, (2) any
and all amendments to the registration statement on Form N-1A of Standish, Ayer
& Wood Investment Trust (the "Investment Trust") under the 1940 Act and the
Securities Act of 1933, as amended (the "1933 Act"), (3) the registration
statement on Form N-1A of any other registered investment company that is or
will become a holder of an interest in the Portfolio Trust (a "Holder"), (4) any
registration statement on Form N-14, and any and all amendments thereto, filed
by the Portfolio Trust, the Investment Trust or any Holder and (5) any and all
other documents and papers relating thereto, and generally to do all such things
in my name and on my behalf in the capacities indicated below to enable the
Portfolio Trust to comply with the 1940 Act and the 1933 Act (where applicable)
and all requirements of the Securities and Exchange Commission thereunder,
hereby ratifying and confirming my signature as it may be signed by said
attorneys or each of them to any and all such documents.

IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument
outside the United States on this 10th day of February, 1996.

/S/ RICHARD S. WOOD
Richard S. Wood, President
(principal executive officer)

SAW0029B

POWER OF ATTORNEY

We, the undersigned Trustees of Standish, Ayer & Wood Master Portfolio,
a New York trust (the "Portfolio Trust"), do hereby severally constitute and
appoint Richard S. Wood, Edward H. Ladd, David W. Murray and Susan Jakuboski,
and each of them acting singly, to be our true, sufficient and lawful attorneys,
with full power to each of them, and each of them acting singly, to sign for
each of us, in the name of each of us and in the capacity as trustee, the
Registration Statement on Form N-1A to be filed by the Portfolio Trust under the
Investment Company Act of 1940, as amended (the "1940 Act"), and any and all
amendments thereto, (2) any and all amendments to the registration statement on
Form N-1A of Standish, Ayer & Wood Investment Trust (the "Investment Trust")
under the 1940 Act and the Securities Act of 1933, as amended (the "1933 Act"),
(3) the registration statement on Form N-1A of any other registered investment
company that is or will become a holder of an interest in the Portfolio Trust (a
"Holder"), (4) any registration statement on Form N-14, and any and all
amendments thereto, filed by the Portfolio Trust, the Investment Trust or any
Holder and (5) any and all other documents and papers relating thereto, and
generally to do all such things in the name of each of us and on behalf of each
of us in the capacity as trustee to enable the Portfolio Trust to comply with
the 1940 Act and the 1933 Act (where applicable) and all requirements of the
Securities and Exchange Commission thereunder, hereby ratifying and confirming
the signature of each of us as it may be signed by said attorneys or each of
them to any and all such documents.

IN WITNESS WHEREOF, we have hereunder set our hands on this Instrument
outside the United States on this 10th day of February, 1996.

/S/ D. BARR CLAYSON /S/ SAMUEL C. FLEMING
D. Barr Clayson, Trustee Samuel C. Fleming, Trustee

/S/ BENJAMIN M. FRIEDMAN /S/ JOHN H. HEWITT
Benjamin M. Friedman, Trustee John H. Hewitt, Trustee

/S/ EDWARD H. LADD /S/ CALEB LORING
Edward H. Ladd, Trustee Caleb Loring III, Trustee

/S/ RICHARD S. WOOD
Richard S. Wood, Trustee

SAW0029B