As filed with the Securities and Exchange Commission on
April 23, 1998
File No. 811-07603
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6 |X|
STANDISH, AYER & WOOD MASTER PORTFOLIO
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(Exact Name of Registrant as Specified in Charter)
P.O. Box 501
George Town, Grand Cayman
Cayman Island, B.W.I.
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(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
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(Name and Address of Agent for Service)
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EXPLANATORY NOTES
This Amendment No. 6 to the Registration Statement on Form N-1A (the
"Amendment") has been filed by the Registrant pursuant to Section 8(b) of the
Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 8b-16
thereunder. However, beneficial interests in the series of the Registrant are
not 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 Amendment does not constitute an offer to sell, or the solicitation of an
offer to buy, any beneficial interests in any series of the Registrant.
This Amendment relates only to the Standish Fixed Income Portfolio,
Standish Small Diversified Income Portfolio and Standish Global Fixed Income
Portfolio and does not affect the registration of any other series of the
Registrant.
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EXPLANATORY NOTE
Throughout this Part A and Part B of Standish Diversified Income Portfolio
(the "Portfolio"), a series of Standish, Ayer & Wood Master Portfolio (the
"Portfolio Trust"), specified information concerning the Portfolio and the
Portfolio Trust is incorporated by reference from the most recently effective
post-effective amendment to the Registration Statement on Form N-1A (File Nos.
33-8214 and 811-4813) of Standish, Ayer & Wood Investment Trust (the "Trust")
that relates to and includes the prospectus and statement of additional
information of Standish Diversified Income Fund (the "Fund"). Further, to the
extent that information concerning the Portfolio and/or the Portfolio Trust is
so incorporated and the Trust files, pursuant to Rule 497 under the Securities
Act of 1933, as amended (the "1933 Act"), a revised prospectus or statement of
additional information of the Fund or a supplement to the Fund's prospectus or
statement of additional information that amends such incorporated information,
then the amended information contained in such Rule 497 filing is also
incorporated herein by reference. The Fund's current prospectus and statement of
additional information, as amended, revised or supplemented from time to time,
are referred to herein as the "Prospectus" and "SAI," respectively.
Dated April 30, 1998
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH DIVERSIFIED 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 DIVERSIFIED INCOME
PORTFOLIO.
The Portfolio's Part B, of even date herewith, is incorporated by
reference into this Part A.
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.
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-trusts or series, each having distinct investment
objectives and policies, one of which, the Portfolio, is described herein.
Beneficial interests in the Portfolio
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are issued solely in transactions that are exempt from registration under 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.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the Prospectus: "Investment Objectives and
Policies," "Description of Securities and Related Risks," "Investment
Techniques and Related Risks" and "Information about the Master-Feeder
Structure.
ITEM 5. MANAGEMENT OF THE FUND.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's management from "Management" in the
Prospectus.
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 will receive 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 60 days' written
notice.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference information concerning the
master-feeder structure from "Information about the Master-Feeder Structure" in
the Prospectus.
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.
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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 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.
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.
As of the date of this Part A, the Fund beneficially owned approximately
100% of the then outstanding interests in the Portfolio and therefore controlled
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.
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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.
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 accredited
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.
The net asset value of the Portfolio is computed 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 normally 4:00 p.m., New York time (the
"Valuation Time").
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. Securities not listed on an exchange or
national securities market, certain mortgage-backed and asset-backed securities
and securities for which there were no reported transactions are valued at the
last quoted bid prices. Fixed income securities for which accurate market prices
are not readily available and all other assets are valued at fair value as
determined in good faith by Standish 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
Trustees determine 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 determine during such sixty-day period that
amortized cost does not represent fair value.
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
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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
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) in
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 instrument of the Portfolio) of the Portfolio's items of income, gain,
loss, deduction and credit in determining its income tax liability, if any. The
determination of such share will be made in a manner that is intended to comply
with the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
tax regulations.
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 should be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invests all of its investment securities (as such terms are used in the 1940
Act) in the Portfolio.
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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 (normally 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, by 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 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.
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APPENDIX
MOODY'S RATINGS DEFINITIONS FOR CORPORATE BONDS AND 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.
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
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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
- 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
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- 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
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.
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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.
FITCH INVESTORS SERVICE, INC.
LONG-TERM DEBT RATING
DEFINITIONS
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, short- term debt of these issuers is generally rated F-1+.
A - Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB - Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B - Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
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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 currently 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.
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.
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Dated April 30, 1998
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH DIVERSIFIED INCOME PORTFOLIO
PART B
ITEM 10. COVER PAGE.
This Part B expands upon and supplements the information contained in Part
A of Standish Diversified 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 THE STANDISH DIVERSIFIED INCOME
PORTFOLIO.
ITEM 11. TABLE OF CONTENTS. PAGE
General Information and History .......................................... B-1
Investment Objective and Policies ........................................ B-1
Management of the Portfolio .............................................. B-2
Control Persons and Principal Holders of Securities ...................... B-3
Investment Advisory and Other Services ................................... B-3
Brokerage Allocation and Other Practices ................................. B-3
Capital Stock and Other Securities ....................................... B-4
Purchase, Redemption and Pricing of Securities Being Offered ............. B-4
Tax Status ............................................................... B-4
Underwriters ............................................................. B-7
Calculation of Performance Data .......................................... B-7
Financial Statements ..................................................... B-7
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objective 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
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portfolio strategies that the Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the SAI: "Investment Objective and Policies"
and "Investment Restrictions."
ITEM 14. MANAGEMENT OF THE PORTFOLIO.
Trustees and Officers of the Portfolio Trust. The Trustees of the
Portfolio Trust are identical to the Trustees of the Trust. The officers of the
Portfolio Trust are Messrs. Clayson, Ladd, Wood, Hollis and Martins, and Mdmes.
Banfield, Chase, Herrmann and Kneeland, who hold the same office with the
Portfolio Trust as with the Trust. The Portfolio Trust incorporates by reference
the information concerning the management of the Portfolio and the Portfolio
Trust from "Management" in the SAI.
Compensation of Trustees and Officers. The Portfolio Trust pays no
compensation to the Trustees of the Portfolio Trust that are 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 during the fiscal year ended December 31, 1997.
The following table sets forth all compensation paid to the Portfolio
Trust's Trustees as of the Portfolio's fiscal year ended December 31, 1997:
Pension or
Retirement
Benefits
Aggregate Accrued as Total Compensation
Compensation Part of from
from the Portfolio's Portfolio and Other
Name of Trustee Portfolio Expenses Funds in Complex*
--------------- --------- -------- -----------------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 478 0 49,375
Benjamin M. Friedman 483 0 49,375
John H. Hewitt 478 0 54,375
Edward H. Ladd 0 0 0
Caleb Loring, III 478 0 49,375
Richard S. Wood 0 0 0
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* As of the date of this Part B there were 27 registered investment
companies (or series thereof) in the fund complex, seven of which were
series of the Portfolio Trust. Total compensation is based on historical
data for the year ended December 31, 1997.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of the date of this Part B, 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 date
of this Part B, the Standish Diversified Income Fund beneficially owned
approximately 100% of the then outstanding interests of the Portfolio and
therefore controlled the Portfolio. Accordingly, the Fund may be able to take
actions with respect to the Trust (i.e., elect Trustees or approve an advisory
agreement) without the approval of other investors in the Portfolio. The
Standish Diversified Income Fund is a separate diversified series of the
Standish, Ayer & Wood Investment Trust, an open-end investment company, located
at One Financial Center, Boston, MA 02111.
Registered investment companies investing in the Portfolio have informed
the Portfolio that whenever such an investor is requested to vote on matters
pertaining to the fundamental policies of the Portfolio, the investment company
will hold a meeting of shareholders and will cast its votes as instructed by the
company's shareholders.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's investment advisory and other services
from "Management" in the SAI.
Custodian. Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, 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.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's brokerage allocation and other practices
from "Portfolio Transactions" in the SAI.
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ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference the section entitled "The
Portfolio and Its Investors" in the SAI.
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 Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's pricing of interests being offered from
"Determination of Net Asset Value" in the SAI.
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 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.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's tax status from "Taxation" in the SAI.
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.
B-4
<PAGE>
Non-U.S. Investors
The following is a discussion of the principal U.S. federal income tax
consequences of an investment in the Portfolio by an entity that is organized or
established under Non-U.S. laws and that is or would be properly classified as a
corporation under the entity classification principles of U.S. tax law (a
"Foreign Investor"). This discussion assumes that, without considering the
effect, if any, of an investment in the Portfolio, the Foreign Investor will not
be engaged in a trade or business in the U.S. and that the Foreign Investor will
not have any activities in or connections with the U.S. other than its
investment in the Portfolio. This discussion also assumes that the Portfolio
will be classified as a partnership for U.S.
federal income tax purposes.
The Portfolio intends to operate so that Foreign Investors in the
Portfolio would not be considered to be engaged in a trade or business in the
U.S. solely as a result of investing in the Portfolio, under special U.S.
federal income tax provisions applicable to certain entities the principal
business of which is trading in stocks or securities for their own account.
Consequently, it is anticipated that a Foreign Investor in the Portfolio will
generally not incur any U.S. taxes in respect of the ownership or disposition of
its interest in the Portfolio, including upon the allocation or distribution to
it of the ordinary income and capital gains realized by the Portfolio, with the
exception described in the next sentence. Foreign Investors may be subject to
nonresident alien withholding tax (which would be withheld by the Portfolio or
its agent and paid to U.S. tax authorities) at the rate of 30% (or a reduced
rate if an income tax treaty rate reduction is available) on certain amounts
treated as ordinary income allocated to them by the Portfolio, except to the
extent a U.S. withholding tax exemption may be available. Such an exemption will
generally be available principally for (i) interest income that qualifies as
"portfolio interest" under U.S. tax law, (ii) other interest from certain
short-term debt obligations or bank deposits, and (iii) interest and dividends
that are treated as non-U.S. source income under the Internal Revenue Code of
1986, as amended (the "Code") (e.g., in general, interest or dividends paid with
respect to the Portfolio's investments in stock or securities of non-U.S.
companies or non-U.S. governmental entities, which may be subject to withholding
or other taxes imposed by the countries in which such issuers are located). Such
an exemption will not, however, be available for dividend income the Portfolio
receives with respect to its investments in stock of U.S. corporations, certain
U.S.-source interest that does not qualify as portfolio interest, and possibly
certain other income. U.S. withholding taxes could also apply to gains
attributable to any interests held by the Portfolio in U.S. real property other
than interests held solely as a creditor, but the Portfolio anticipates that it
will generally not hold the types of interests in U.S. real property to which
these withholding taxes apply.
If the Portfolio were considered to be engaged in a U.S. trade or business
for U.S. federal income tax purposes, any Foreign Investor in the Portfolio
would also be
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considered to be engaged in a U.S. trade or business and would be subject to
U.S. federal income tax on its allocable share of any income of the Portfolio
which is considered to be effectively connected with such U.S. trade or business
("Effectively Connected Income"). The tax on Effectively Connected Income would
be imposed on a net basis at the rates applicable to U.S. taxpayers generally
(and the after-tax amount of such income could also be subject to a separate
branch profits tax at a 30% rate). The Portfolio would be required to withhold
tax from the portion of its Effectively Connected Income which is allocable to
Foreign Investors at the highest rates applicable to U.S. taxpayers (whether or
not distributions are made by the Portfolio to such Foreign Investors during the
taxable year). To the extent the income of the Portfolio constitutes Effectively
Connected Income, a Foreign Investor may also be subject to U.S. federal income
tax on some or all of the gain it recognizes on the disposition of its interest
in the Portfolio. As stated above, the Portfolio intends to operate in a manner
that will not result in the Portfolio's income being treated as Effectively
Connected Income.
The U.S. nonresident alien withholding taxes which may be applicable to a
Foreign Investor's allocable share of some of the Portfolio's income might in
some cases be reduced or eliminated under a tax treaty between the U.S. and the
foreign country of which the Foreign Investor is a resident, if that country has
an income tax treaty with the U.S., the Foreign Investor qualifies for benefits
under that treaty, the treaty applies to investments made through partnership
entities like the Portfolio, and any other applicable requirements can be
satisfied. Prospective Foreign Investors should consult their tax advisors
regarding the potential applicability to them of an income tax treaty and the
procedures for qualifying for treaty benefits.
Massachusetts Taxation
A Foreign Investor or U.S. investor that is properly classified as a
corporation under U.S. federal and Massachusetts tax principles (collectively,
an "Investor") might be required to pay Massachusetts corporate excise tax if
the Investor or the Portfolio has sufficient activities in or contacts with the
Commonwealth of Massachusetts ("tax nexus") to be subject to Massachusetts
taxing jurisdiction. The Portfolio intends to conduct its operations so that it
should not have tax nexus with Massachusetts and, consequently, an Investor that
is not otherwise subject to Massachusetts taxation should not become subject to
Massachusetts taxation solely by virtue of investing in the Portfolio. It should
be noted that, under present Massachusetts tax law, an Investor that qualifies
as a RIC under the federal income tax provisions incorporated in Massachusetts
law will not be required to pay any Massachusetts income or Massachusetts
corporate excise or franchise tax even if tax nexus with Massachusetts does
exist as a result of investing in the Portfolio.
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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. The
Portfolio's annual report to interest holders for the fiscal year ended December
31, 1997, which contains financial statements audited by Coopers & Lybrand, is
incorporated by reference into this Part B from the SAI.
B-7
<PAGE>
EXPLANATORY NOTE
Throughout this Part A and Part B of Standish Fixed Income Portfolio (the
"Portfolio"), a series of Standish, Ayer & Wood Master Portfolio (the "Portfolio
Trust"), specified information concerning the Portfolio and the Portfolio Trust
is incorporated by reference from the most recently effective post-effective
amendment to the Registration Statement on Form N-1A (File Nos. 33-8214 and
811-4813) of Standish, Ayer & Wood Investment Trust (the "Trust") that relates
to and includes the prospectus and statement of additional information of
Standish Fixed Income Fund (the "Fund"). Further, to the extent that information
concerning the Portfolio and/or the Portfolio Trust is so incorporated and the
Trust files, pursuant to Rule 497 under the Securities Act of 1933, as amended
(the "1933 Act"), a revised prospectus or statement of additional information of
the Fund or a supplement to the Fund's prospectus or statement of additional
information that amends such incorporated information, then the amended
information contained in such Rule 497 filing is also incorporated herein by
reference. The Fund's current prospectus and statement of additional
information, as amended, revised or supplemented from time to time, are referred
to herein as the "Prospectus" and "SAI," respectively.
Dated April 30, 1998
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.
The Portfolio's Part B, of even date herewith, is incorporated by
reference into this Part A.
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.
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-trusts or series, each having distinct investment
objectives and policies, one of which, the Portfolio, is described herein.
Beneficial interests in the Portfolio
A-1
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are issued solely in transactions that are exempt from registration under 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.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the Prospectus: "Investment Objectives and
Policies," "Description of Securities and Related Risks," "Investment
Techniques and Related Risks" and "Information about the Master-Feeder
Structure."
ITEM 5. MANAGEMENT OF THE FUND.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's management from "Management" in the
Prospectus.
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 will receive 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 60 days' written
notice.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference information concerning the
master-feeder structure from "Information about the Master-Feeder Structure" in
the Prospectus.
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.
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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 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.
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.
As of the date of this Part A, the Fund beneficially owned approximately
100% of the then outstanding interests in the Portfolio and therefore controlled
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.
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<PAGE>
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.
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 accredited
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.
The net asset value of the Portfolio is computed 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 normally 4:00 p.m., New York time (the
"Valuation Time").
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. Securities not listed on an exchange or
national securities market, certain mortgage-backed and asset-backed securities
and securities for which there were no reported transactions are valued at the
last quoted bid prices. Fixed income securities for which accurate market prices
are not readily available and all other assets are valued at fair value as
determined in good faith by Standish 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
Trustees determine 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 determine during such sixty-day period that
amortized cost does not represent fair value.
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
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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 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) in
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 instrument of the Portfolio) of the Portfolio's items of income, gain,
loss, deduction and credit in determining its income tax liability, if any. The
determination of such share will be made in a manner that is intended to comply
with the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
tax regulations.
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 should be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invests 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 (normally 4:00 p.m. Eastern Time) on the
NYSE or, as of such
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earlier times at which the Portfolio's net asset value is calculated on each
Business Day, by 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 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.
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APPENDIX
MOODY'S RATINGS DEFINITIONS FOR CORPORATE BONDS AND 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.
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
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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
- 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
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- 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
intransition or due to external threats, or both, often in environment of rapid
economic and social change
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
slightlymore 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.
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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.
FITCH INVESTORS SERVICE, INC.
LONG-TERM DEBT RATING
DEFINITIONS
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability topay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, short- term debt of these issuers is generally rated F-1+.
A - Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
belowinvestment grade is higher than for bonds with higher ratings.
BB - Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B - Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
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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 increaseinvestment
risk, albeit not very significantly.
A - Obligations for which there is currently 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.
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 securitydenominated in a foreign
currency and one of the rating services does not provide a foreign currency
rating forthe issuer, the Portfolio will treat the security as being unrated.
A-11
<PAGE>
Dated April 30, 1998
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 THE STANDISH FIXED INCOME PORTFOLIO.
ITEM 11. TABLE OF CONTENTS. PAGE
General Information and History .......................................... B-1
Investment Objective and Policies ........................................ B-1
Management of the Portfolio .............................................. B-2
Control Persons and Principal Holders of Securities ...................... B-3
Investment Advisory and Other Services ................................... B-3
Brokerage Allocation and Other Practices ................................. B-4
Capital Stock and Other Securities ....................................... B-4
Purchase, Redemption and Pricing of Securities Being Offered ............. B-4
Tax Status ............................................................... B-4
Underwriters ............................................................. B-7
Calculation of Performance Data .......................................... B-7
Financial Statements ..................................................... B-7
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objective and
policies of the Portfolio. This Part B should be read only in conjunction with
Part A.
B-1
<PAGE>
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.
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the SAI: "Investment Objective and Policies"
and "Investment Restrictions."
ITEM 14. MANAGEMENT OF THE PORTFOLIO.
Trustees and Officers of the Portfolio Trust. The Trustees of the
Portfolio Trust are identical to the Trustees of the Trust. The officers of the
Portfolio Trust are Messrs. Clayson, Ladd, Wood, Hollis and Martins, and Mdmes.
Banfield, Chase, Herrmann and Kneeland, who hold the same office with the
Portfolio Trust as with the Trust. The Portfolio Trust incorporates by reference
the information concerning the management of the Portfolio and the Portfolio
Trust from "Management" in the SAI.
Compensation of Trustees and Officers. The Portfolio Trust pays no
compensation to the Trustees of the Portfolio Trust that are 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 during the fiscal year ended December 31, 1997.
The following table sets forth all compensation paid to the Portfolio
Trust's Trustees as of the Portfolio's fiscal year ended December 31, 1997:
Pension or
Retirement
Benefits
Aggregate Accrued as Total Compensation
Compensation Part of from
From Portfolio's Portfolio and Other
Name of Trustee The Portfolio Expenses Funds in Complex*
--------------- ------------- -------- ------------------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 14,287 0 49,375
Benjamin M. Friedman 14,287 0 49,375
John H. Hewitt 16,907 0 54,375
Edward H. Ladd 0 0 0
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Caleb Loring, III 14,287 0 49,375
Richard S. Wood 0 0 0
* As of the date of this Part B there were 27 registered investment
companies (or series thereof) in the fund complex, seven of which were
series of the Portfolio Trust. Total compensation is based on historical
data for the year ended December 31, 1997.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of the date of this Part B, 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 date
of this Part B, the Standish Fixed Income Fund beneficially owned approximately
100% of the then outstanding interests of the Portfolio and therefore controlled
the Portfolio. Accordingly, the Fund may be able to take actions with respect to
the Trust (i.e., elect Trustees or approve an advisory agreement) without the
approval of other investors in the Portfolio. The Standish Fixed Income Fund is
a separate diversified series of the Standish, Ayer & Wood Investment Trust, an
open-end investment company, located at One Financial Center, Boston, MA 02111.
Registered investment companies investing in the Portfolio have informed
the Portfolio that whenever such an investor is requested to vote on matters
pertaining to the fundamental policies of the Portfolio, the investment company
will hold a meeting of shareholders and will cast its votes as instructed by the
company's shareholders.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's investment advisory and other services
from "Management" in the SAI.
Custodian. Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, 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.
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<PAGE>
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's brokerage allocation and other practices
from "Portfolio Transactions" in the SAI.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference the section entitled "The
Portfolio and Its Investors" in the SAI.
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 Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's pricing of interests being offered from
"Determination of Net Asset Value" in the SAI.
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 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.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's tax status from "Taxation" in the SAI.
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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.
Non-U.S. Investors
The following is a discussion of the principal U.S. federal income tax
consequences of an investment in the Portfolio by an entity that is organized or
established under Non-U.S. laws and that is or would be properly classified as a
corporation under the entity classification principles of U.S. tax law (a
"Foreign Investor"). This discussion assumes that, without considering the
effect, if any, of an investment in the Portfolio, the Foreign Investor will not
be engaged in a trade or business in the U.S. and that the Foreign Investor will
not have any activities in or connections with the U.S. other than its
investment in the Portfolio. This discussion also assumes that the Portfolio
will be classified as a partnership for U.S.
federal income tax purposes.
The Portfolio intends to operate so that Foreign Investors in the
Portfolio would not be considered to be engaged in a trade or business in the
U.S. solely as a result of investing in the Portfolio, under special U.S.
federal income tax provisions applicable to certain entities the principal
business of which is trading in stocks or securities for their own account.
Consequently, it is anticipated that a Foreign Investor in the Portfolio will
generally not incur any U.S. taxes in respect of the ownership or disposition of
its interest in the Portfolio, including upon the allocation or distribution to
it of the ordinary income and capital gains realized by the Portfolio, with the
exception described in the next sentence. Foreign Investors may be subject to
nonresident alien withholding tax (which would be withheld by the Portfolio or
its agent and paid to U.S. tax authorities) at the rate of 30% (or a reduced
rate if an income tax treaty rate reduction is available) on certain amounts
treated as ordinary income allocated to them by the Portfolio, except to the
extent a U.S. withholding tax exemption may be available. Such an exemption will
generally be available principally for (i) interest income that qualifies as
"portfolio interest" under U.S. tax law, (ii) other interest from certain
short-term debt obligations or bank deposits, and (iii) interest and dividends
that are treated as non-U.S. source income under the Internal Revenue Code of
1986, as amended (the "Code") (e.g., in general, interest or dividends paid with
respect to the Portfolio's investments in stock or securities of non-U.S.
companies or non-U.S. governmental entities, which may be subject to withholding
or other taxes imposed by the countries in which such issuers are located). Such
an exemption will not, however, be available for dividend income the Portfolio
receives with respect to its investments in stock of U.S. corporations, certain
U.S.-source interest that does not qualify as portfolio interest, and possibly
certain other income. U.S. withholding taxes could also apply to gains
attributable to any
B-5
<PAGE>
interests held by the Portfolio in U.S. real property other than interests held
solely as a creditor, but the Portfolio anticipates that it will generally not
hold the types of interests in U.S. real property to which these withholding
taxes apply.
If the Portfolio were considered to be engaged in a U.S. trade or business
for U.S. federal income tax purposes, any Foreign Investor in the Portfolio
would also be considered to be engaged in a U.S. trade or business and would be
subject to U.S. federal income tax on its allocable share of any income of the
Portfolio which is considered to be effectively connected with such U.S. trade
or business ("Effectively Connected Income"). The tax on Effectively Connected
Income would be imposed on a net basis at the rates applicable to U.S. taxpayers
generally (and the after-tax amount of such income could also be subject to a
separate branch profits tax at a 30% rate). The Portfolio would be required to
withhold tax from the portion of its Effectively Connected Income which is
allocable to Foreign Investors at the highest rates applicable to U.S. taxpayers
(whether or not distributions are made by the Portfolio to such Foreign
Investors during the taxable year). To the extent the income of the Portfolio
constitutes Effectively Connected Income, a Foreign Investor may also be subject
to U.S. federal income tax on some or all of the gain it recognizes on the
disposition of its interest in the Portfolio. As stated above, the Portfolio
intends to operate in a manner that will not result in the Portfolio's income
being treated as Effectively Connected Income.
The U.S. nonresident alien withholding taxes which may be applicable to a
Foreign Investor's allocable share of some of the Portfolio's income might in
some cases be reduced or eliminated under a tax treaty between the U.S. and the
foreign country of which the Foreign Investor is a resident, if that country has
an income tax treaty with the U.S., the Foreign Investor qualifies for benefits
under that treaty, the treaty applies to investments made through partnership
entities like the Portfolio, and any other applicable requirements can be
satisfied. Prospective Foreign Investors should consult their tax advisors
regarding the potential applicability to them of an income tax treaty and the
procedures for qualifying for treaty benefits.
Massachusetts Taxation
A Foreign Investor or U.S. investor that is properly classified as a
corporation under U.S. federal and Massachusetts tax principles (collectively,
an "Investor") might be required to pay Massachusetts corporate excise tax if
the Investor or the Portfolio has sufficient activities in or contacts with the
Commonwealth of Massachusetts ("tax nexus") to be subject to Massachusetts
taxing jurisdiction. The Portfolio intends to conduct its operations so that it
should not have tax nexus with Massachusetts and, consequently, an Investor that
is not otherwise subject to Massachusetts taxation should not become subject to
Massachusetts taxation solely by virtue of investing in the Portfolio. It should
be noted that, under present Massachusetts tax law, an Investor that qualifies
as a RIC under the federal income tax provisions incorporated
B-6
<PAGE>
in Massachusetts law will not be required to pay any Massachusetts income or
Massachusetts corporate excise or franchise tax even if tax nexus with
Massachusetts does exist as a result of investing 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. The
Portfolio's annual report to interest holders for the fiscal year ended December
31, 1997, which contains financial statements audited by Coopers & Lybrand, is
incorporated by reference into this Part B from the SAI.
B-7
<PAGE>
EXPLANATORY NOTE
Throughout this Part A and Part B of Standish Global Fixed Income
Portfolio (the "Portfolio"), a series of Standish, Ayer & Wood Master Portfolio
(the "Portfolio Trust"), specified information concerning the Portfolio and the
Portfolio Trust is incorporated by reference from the most recently effective
post-effective amendment to the Registration Statement on Form N-1A (File Nos.
33-8214 and 811-4813) of Standish, Ayer & Wood Investment Trust (the "Trust")
that relates to and includes the prospectus and statement of additional
information of Standish Global Fixed Income Fund (the "Fund"). Further, to the
extent that information concerning the Portfolio and/or the Portfolio Trust is
so incorporated and the Trust files, pursuant to Rule 497 under the Securities
Act of 1933, as amended (the "1933 Act"), a revised prospectus or statement of
additional information of the Fund or a supplement to the Fund's prospectus or
statement of additional information that amends such incorporated information,
then the amended information contained in such Rule 497 filing is also
incorporated herein by reference. The Fund's current prospectus and statement of
additional information, as amended, revised or supplemented from time to time,
are referred to herein as the "Prospectus" and "SAI," respectively.
Dated April 30, 1998
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.
The Portfolio's Part B, of even date herewith, is incorporated by
reference into this Part A.
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.
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-trusts or series, each having distinct investment
objectives and policies, one of which, the Portfolio, is described herein.
Beneficial interests in the Portfolio
A-1
<PAGE>
are issued solely in transactions that are exempt from registration under 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.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the Prospectus: "Investment Objectives and
Policies," "Description of Securities and Related Risks," "Investment
Techniques and Related Risks" and "Information about the Master-Feeder
Structure."
ITEM 5. MANAGEMENT OF THE FUND.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's management from "Management" in the
Prospectus.
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 will receive 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 60 days' written
notice.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference information concerning the
master-feeder structure from "Information about the Master-Feeder Structure" in
the Prospectus.
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.
A-2
<PAGE>
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 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.
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.
As of the date of this Part A, the Fund beneficially owned approximately
100% of the then outstanding interests in the Portfolio and therefore controlled
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.
A-3
<PAGE>
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.
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 accredited
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.
The net asset value of the Portfolio is computed 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 normally 4:00 p.m., New York time (the
"Valuation Time").
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. Securities not listed on an exchange or
national securities market, certain mortgage-backed and asset-backed securities
and securities for which there were no reported transactions are valued at the
last quoted bid prices. Fixed income securities for which accurate market prices
are not readily available and all other assets are valued at fair value as
determined in good faith by Standish 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
Trustees determine 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 determine during such sixty-day period that
amortized cost does not represent fair value.
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
A-4
<PAGE>
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 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) in
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 instrument of the Portfolio) of the Portfolio's items of income, gain,
loss, deduction and credit in determining its income tax liability, if any. The
determination of such share will be made in a manner that is intended to comply
with the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
tax regulations.
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 should be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invests 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 (normally 4:00 p.m. Eastern Time) on the
NYSE or, as of such
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earlier times at which the Portfolio's net asset value is calculated on each
Business Day, by 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 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.
A-6
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APPENDIX
MOODY'S RATINGS DEFINITIONS FOR CORPORATE BONDS AND 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.
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
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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
- 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
A-8
<PAGE>
- 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
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.
A-9
<PAGE>
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.
FITCH INVESTORS SERVICE, INC.
LONG-TERM DEBT RATING
DEFINITIONS
AAA - Bonds considered to be investment grade and of the highestcredit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A - Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB - Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes.
A-10
<PAGE>
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B - Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need forreasonable business and economic activity throughout the
life of the issue.
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 currently 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 toincreased investment risk than for obligations in other
categories.
BB - Obligations for which there is a possibility of investment riskdeveloping.
Capacity for timely repayment of principal and interest exists, but is
susceptible over time to adverse changes in business, economic or financial
conditions.
A-11
<PAGE>
Dated April 30, 1998
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 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 THE STANDISH GLOBAL FIXED INCOME
PORTFOLIO.
ITEM 11. TABLE OF CONTENTS. PAGE
General Information and History .......................................... B-1
Investment Objective and Policies ........................................ B-1
Management of the Portfolio .............................................. B-2
Control Persons and Principal Holders of Securities ...................... B-3
Investment Advisory and Other Services ................................... B-3
Brokerage Allocation and Other Practices ................................. B-3
Capital Stock and Other Securities ....................................... B-3
Purchase, Redemption and Pricing of Securities Being Offered ............. B-4
Tax Status ............................................................... B-4
Underwriters ............................................................. B-6
Calculation of Performance Data .......................................... B-6
Financial Statements ..................................................... B-7
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objective 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.
B-1
<PAGE>
The Portfolio Trust incorporates by reference the information
concerning the Portfolio's investment objective, policies and restrictions
from the following sections of the SAI: "Investment Objective and Policies"
and "Investment Restrictions."
ITEM 14. MANAGEMENT OF THE PORTFOLIO.
Trustees and Officers of the Portfolio Trust. The Trustees of the
Portfolio Trust are identical to the Trustees of the Trust. The officers of the
Portfolio Trust are Messrs. Clayson, Ladd, Wood, Hollis and Martins, and Mdmes.
Banfield, Chase, Herrmann and Kneeland, who hold the same office with the
Portfolio Trust as with the Trust. The Portfolio Trust incorporates by reference
the information concerning the management of the Portfolio and the Portfolio
Trust from "Management" in the SAI.
Compensation of Trustees and Officers. The Portfolio Trust pays no
compensation to the Trustees of the Portfolio Trust that are 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 during the fiscal year ended December 31, 1997.
The following table sets forth all compensation paid to the Portfolio
Trust's Trustees as of the Portfolio's fiscal year ended December 31, 1997:
Pension or
Retirement
Benefits
Aggregate Accrued as Total Compensation
Compensation Part of from
from the Portfolio's Portfolio and Other
Name of Trustee Portfolio Expenses Funds in Complex*
--------------- --------- -------- -----------------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 3,348 0 49,375
Benjamin M. Friedman 3,525 0 49,375
John H. Hewitt 3,348 0 54,375
Edward H. Ladd 0 0 0
Caleb Loring, III 3,348 0 49,375
Richard S. Wood 0 0 0
* As of the date of this Part B there were 27 registered investment
companies (or series thereof) in the fund complex, seven of which were
series of the Portfolio Trust. Total compensation is based on historical
data for the year ended December 31, 1997.
B-2
<PAGE>
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of the date of this Part B, 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 date
of this Part B, the Standish Global Fixed Income Fund beneficially owned
approximately 100% of the then outstanding interests of the Portfolio and
therefore controlled the Portfolio. Accordingly, the Fund may be able to take
actions with respect to the Trust (i.e., elect Trustees or approve an advisory
agreement) without the approval of other investors in the Portfolio. The
Standish Global Fixed Income Fund is a separate diversified series of the
Standish, Ayer & Wood Investment Trust, an open-end investment company, located
at One Financial Center, Boston, MA 02111.
Registered investment companies investing in the Portfolio have informed
the Portfolio that whenever such an investor is requested to vote on matters
pertaining to the fundamental policies of the Portfolio, the investment company
will hold a meeting of shareholders and will cast its votes as instructed by the
company's shareholders.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's investment advisory and other services
from "Management" in the SAI.
Custodian. Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, 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.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's brokerage allocation and other practices
from "Portfolio Transactions" in the SAI.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio Trust incorporates by reference the section entitled "The
Portfolio and Its Investors" in the SAI.
B-3
<PAGE>
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 Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's pricing of interests being offered from
"Determination of Net Asset Value" in the SAI.
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 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.
The Portfolio Trust incorporates by reference information concerning the
Portfolio's and the Portfolio Trust's tax status from "Taxation" in the SAI.
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.
Non-U.S. Investors
The following is a discussion of the principal U.S. federal income tax
consequences of an investment in the Portfolio by an entity that is organized or
established under Non-U.S. laws and that is or would be properly classified as a
B-4
<PAGE>
corporation under the entity classification principles of U.S. tax law (a
"Foreign Investor"). This discussion assumes that, without considering the
effect, if any, of an investment in the Portfolio, the Foreign Investor will not
be engaged in a trade or business in the U.S. and that the Foreign Investor will
not have any activities in or connections with the U.S. other than its
investment in the Portfolio. This discussion also assumes that the Portfolio
will be classified as a partnership for U.S.
federal income tax purposes.
The Portfolio intends to operate so that Foreign Investors in the
Portfolio would not be considered to be engaged in a trade or business in the
U.S. solely as a result of investing in the Portfolio, under special U.S.
federal income tax provisions applicable to certain entities the principal
business of which is trading in stocks or securities for their own account.
Consequently, it is anticipated that a Foreign Investor in the Portfolio will
generally not incur any U.S. taxes in respect of the ownership or disposition of
its interest in the Portfolio, including upon the allocation or distribution to
it of the ordinary income and capital gains realized by the Portfolio, with the
exception described in the next sentence. Foreign Investors may be subject to
nonresident alien withholding tax (which would be withheld by the Portfolio or
its agent and paid to U.S. tax authorities) at the rate of 30% (or a reduced
rate if an income tax treaty rate reduction is available) on certain amounts
treated as ordinary income allocated to them by the Portfolio, except to the
extent a U.S. withholding tax exemption may be available. Such an exemption will
generally be available principally for (i) interest income that qualifies as
"portfolio interest" under U.S. tax law, (ii) other interest from certain
short-term debt obligations or bank deposits, and (iii) interest and dividends
that are treated as non-U.S. source income under the Internal Revenue Code of
1986, as amended (the "Code") (e.g., in general, interest or dividends paid with
respect to the Portfolio's investments in stock or securities of non-U.S.
companies or non-U.S. governmental entities, which may be subject to withholding
or other taxes imposed by the countries in which such issuers are located). Such
an exemption will not, however, be available for dividend income the Portfolio
receives with respect to its investments in stock of U.S. corporations, certain
U.S.-source interest that does not qualify as portfolio interest, and possibly
certain other income. U.S. withholding taxes could also apply to gains
attributable to any interests held by the Portfolio in U.S. real property other
than interests held solely as a creditor, but the Portfolio anticipates that it
will generally not hold the types of interests in U.S.
real property to which these withholding taxes apply.
If the Portfolio were considered to be engaged in a U.S. trade or business
for U.S. federal income tax purposes, any Foreign Investor in the Portfolio
would also be considered to be engaged in a U.S. trade or business and would be
subject to U.S. federal income tax on its allocable share of any income of the
Portfolio which is considered to be effectively connected with such U.S. trade
or business ("Effectively Connected Income"). The tax on Effectively Connected
Income would be imposed on a net basis at the rates applicable to U.S. taxpayers
generally (and the after-tax
B-5
<PAGE>
amount of such income could also be subject to a separate branch profits tax at
a 30% rate). The Portfolio would be required to withhold tax from the portion of
its Effectively Connected Income which is allocable to Foreign Investors at the
highest rates applicable to U.S. taxpayers (whether or not distributions are
made by the Portfolio to such Foreign Investors during the taxable year). To the
extent the income of the Portfolio constitutes Effectively Connected Income, a
Foreign Investor may also be subject to U.S. federal income tax on some or all
of the gain it recognizes on the disposition of its interest in the Portfolio.
As stated above, the Portfolio intends to operate in a manner that will not
result in the Portfolio's income being treated as Effectively Connected Income.
The U.S. nonresident alien withholding taxes which may be applicable to a
Foreign Investor's allocable share of some of the Portfolio's income might in
some cases be reduced or eliminated under a tax treaty between the U.S. and the
foreign country of which the Foreign Investor is a resident, if that country has
an income tax treaty with the U.S., the Foreign Investor qualifies for benefits
under that treaty, the treaty applies to investments made through partnership
entities like the Portfolio, and any other applicable requirements can be
satisfied. Prospective Foreign Investors should consult their tax advisors
regarding the potential applicability to them of an income tax treaty and the
procedures for qualifying for treaty benefits.
Massachusetts Taxation
A Foreign Investor or U.S. investor that is properly classified as a
corporation under U.S. federal and Massachusetts tax principles (collectively,
an "Investor") might be required to pay Massachusetts corporate excise tax if
the Investor or the Portfolio has sufficient activities in or contacts with the
Commonwealth of Massachusetts ("tax nexus") to be subject to Massachusetts
taxing jurisdiction. The Portfolio intends to conduct its operations so that it
should not have tax nexus with Massachusetts and, consequently, an Investor that
is not otherwise subject to Massachusetts taxation should not become subject to
Massachusetts taxation solely by virtue of investing in the Portfolio. It should
be noted that, under present Massachusetts tax law, an Investor that qualifies
as a RIC under the federal income tax provisions incorporated in Massachusetts
law will not be required to pay any Massachusetts income or Massachusetts
corporate excise or franchise tax even if tax nexus with Massachusetts does
exist as a result of investing in the Portfolio.
ITEM 21. UNDERWRITERS.
Not applicable.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
B-6
<PAGE>
ITEM 23. FINANCIAL STATEMENTS.
Investors will receive the Portfolio's unaudited semi-annual reports and
annual reports audited by the Portfolio's independent accountants. The
Portfolio's annual report to interest holders for the fiscal year ended December
31, 1997, which contains financial statements audited by Coopers & Lybrand, is
incorporated into this Part B from the SAI.
B-7
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
The financial statements of Standish Fixed Income Portfolio, Standish
Global Fixed Income Portfolio and Standish Diversified Income Portfolio, each a
series of Standish, Ayer & Wood Master Portfolio (the "Registrant"), are
incorporated by reference from the Annual Reports to Shareholders for the years
ended December 31, 1997 which are attached to and incorporated by reference into
the Parts B included herewith. (The Annual Reports to Shareholders were filed
electronically on March 9, 1998; file nos. 33-8214 and 811-4813; accession
numbers 0000897436-98- 000085, 0000897436-98-000086 and 0000897436-9 98-000087,
respectively).
(b) EXHIBITS
1(a). Declaration of Trust of the Registrant.*
1(b). Establishment and Designation of Series for Standish Small
Capitalization Equity Portfolio II.**
1(c). Establishment and Designation of Series for Standish
Diversified Income Portfolio.***
1(d). Establishment and Designation of Series for Standish Short
Term Asset Reserve Portfolio.*****
2. By-Laws of the Registrant.*
5(a). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Fixed Income Portfolio, and
Standish, Ayer & Wood, Inc. ("Standish").*
5(b). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Equity Portfolio, and Standish.*
5(c). Form of Investment Advisory Agreement between the Registrant,
with respect to Standish Small Capitalization Equity
Portfolio, and Standish.*
<PAGE>
5(d). Form of Investment Advisory Agreement between the Registrant,
with respect to Global Fixed Income Portfolio, and Standish
International Management Company, L.P. ("SIMCO").*
5(e). Investment Advisory Agreement between the Registrant with
respect to Standish Small Capitalization Equity Portfolio II
and Standish.**
5(f). Investment Advisory Agreement between the Registrant with
respect to Standish Diversified Income Portfolio and
SIMCO.***
5(g). Investment Advisory Agreement between the Registrant with
respect to Standish Short Term Asset Reserve Portfolio and
Standish.*****
8(a). Master Custody Agreement between the Registrant and Investors
Bank & Trust Company.*
8(b). Amendment dated October 5, 1996 to Master Custody Agreement
with respect to Standish Small Capitalization Portfolio II.**
8(c). Form of Amendment dated June 2, 1997 to Master Custody
Agreement with respect to Standish Diversified Income
Portfolio.***
8(d). Form of Amendment to Master Custody Agreement with respect to
Standish Short Term Asset Reserve Portfolio.*****
9(a). Administration Agreement between the Registrant and IBT Trust
Company (Cayman) Ltd.*
9(b). Amendment dated October 5, 1996 to the Administration
Agreement with respect to Standish Small Capitalization
Equity Portfolio II.**
9(c). Form of Amendment dated June 2, 1997 to the Administration
Agreement with respect to Standish Diversified Income
Portfolio.*****
11. Consent of Independent Public Accountants.+
17(a). Financial Data Schedule of Standish Fixed Income Portfolio.+
C-2
<PAGE>
17(b). Financial Data Schedule of Standish Global Fixed Income
Portfolio.+
17(c). Financial Data Schedule of Standish Diversified Income
Portfolio.+
19(a). Power of Attorney (Richard S. Wood).***
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).***
19(c). Power of Attorney (Anne P. Herrmann).***
19(d). Power of Attorney (James E. Hollis III).***
19(e). Power of Attorney (Paul G. Martins).*****
- ----------
+ Filed herewith
* Filed as an exhibit to Registrant's Registration Statement on Form N-1A
(File No. 811-07603) on April 25, 1996 and incorporated by reference
herein.
** Filed as an exhibit to Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A (File No. 811-07603) on October 10, 1996 and
incorporated by reference herein.
*** Filed as an exhibit to Amendment No. 2 to the Registrant's Registration
Statement on Form N-1A (File No. 811-07603) on April 30, 1997 and
incorporated by reference herein.
**** Filed as an exhibit to Amendment No. 3 to the Registrant's Registration
Statement on Form N-1A (File No. 811-07603) on June 2, 1997 and
incorporated by reference herein.
***** Filed as an exhibit to Amendment No. 4 to the Registrant's Registration
Statement on Form N-1A (File No. 811-07603) on December 29, 1997 and
incorporated by reference herein.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
C-3
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Series of Beneficial Interests (as of April 1, 1998)
------------------------------ ---------------------
Standish Fixed Income Portfolio 2
Standish Equity Portfolio 3
Standish Small Capitalization Equity 2
Portfolio
Standish Small Capitalization Equity 2
Portfolio II
Standish Global Fixed Income Portfolio 2
Standish Diversified Income Portfolio 2
Standish Short Term Asset Reserve 2
Portfolio
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
C-4
<PAGE>
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.
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 and Standish Diversified Income
Portfolio, are listed on the Form ADV of Standish as currently on file with the
Commission (File No. 801-584). The business and other connections of the
officers and partners and Standish Diversified Income Portfolio of SIMCO, the
investment adviser to Standish Global Fixed Income Portfolio are listed on the
Form ADV of SIMCO as currently on file with the Commission (File No.
801-639338). 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.
C-5
<PAGE>
ITEM 32. UNDERTAKINGS.
Not applicable.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Amendment to its Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Hamilton, Bermuda on the 28th day of February,
1998.
STANDISH, AYER & WOOD MASTER
PORTFOLIO
By: /s/ Richard S. Wood
-------------------------------
Name: Richard S. Wood
Title: President
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
11. Consent of Independent Public Accountants.
17(a). Financial Data Schedule of Standish Fixed Income Portfolio.
17(b). Financial Data Schedule of Standish Global Fixed Income Portfolio.
17(c). Financial Data Schedule of Standish Diversified Income Portfolio.
Consent of Independent Accountants
To the Trustees of Standish, Ayer & Wood Investment Trust:
We consent to the inclusion in Post-Effective Amendment No. 88 to the
Registration Statement on Form N-1A (1933 Act File Number 33-8214) of Standish,
Ayer & Wood Investment Trust: Standish Controlled Maturity Fund, Standish
Securitized Fund, Standish Fixed Fund II, Standish International Fixed Income
Fund Standish Short-Term Asset Reserve Fund, Standish Fixed Income Fund,
Standish Global Fixed Income Fund and Standish Diversified Income Fund, of our
report dated February 19, 1998, on our audit of the financial statements and
financial highlights of the Standish Controlled Maturity Fund, Standish
Securitized Fund, Standish Fixed Income Fund II, Standish International Fixed
Income Fund, Standish Short-Term Asset Reserve Fund, Standish Fixed Income Fund,
Standish Global Fixed Income Fund and Standish Diversified Income Fund which
report is included in the Annual Report to Shareholders for the period ended
December 31, 1997, which is also included in this Registration Statement.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 16, 1998
Toronto, Ontario
Canada M5H 1V8
tel.: (416) 869-1130
fax: (416) 863-0926
Web site: www.ca.coopers.comCoopers & Lybrand is a member of Coopers & Lybrand
International, a limited liability association incorporated in Switzerland.
April 16, 1998
Consent of Independent Accountants
We consent to the inclusion in Post-Effective Amendment No. 88 to the
Registration Statement of Standish, Ayer & Wood Master Portfolio (1933 Act File
No. 33-08214) on behalf of our reports relating to Standish Fixed Income
Portfolio, Standish Global Fixed Income Portfolio, Standish Diversified Income
Portfolio, dated February 19, 1998, in the Statements of Additional Information,
which are part of such Registration Statements.
We also consent to the reference to our Firm under the caption "Independent
Accountants" in the Prospectuses and under the caption "Experts and Financial
Statements" in the Statements of Additional Information which are part of the
Registration Statements.
COOPERS & LYBRAND
Chartered Accountants
Toronto, Ontario
BJM/sh
Toronto, Ontario
Canada M5H 1V8
tel.: (416) 869-1130
fax: (416) 863-0926
Web site: www.ca.coopers.comCoopers & Lybrand is a member of Coopers & Lybrand
International, a limited liability association incorporated in Switzerland.
April 16, 1998
Consent of Independent Accountants
We consent to the inclusion in Post-Effective Amendment No. 6 to the
Registration Statement of Standish, Ayer & Wood Investment Trust (1940 Act File
No. 811-07603) on behalf of our reports relating to Standish Fixed Income
Portfolio, Standish Global Fixed Income Portfolio, Standish Diversified Income
Portfolio dated February 19, 1998, in the Statements of Additional Information,
which are part of such Registration Statements.
We also consent to the reference to our Firm under the caption "Independent
Accountants" in the Prospectuses and under the caption "Experts and Financial
Statements" in the Statements of Additional Information which are part of the
Registration Statements.
COOPERS & LYBRAND
Chartered Accountants
Toronto, Ontario
BJM/sh
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Standish, Ayer & Wood Investment Trust
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> Standish Diversified Income Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 25,932,408
<INVESTMENTS-AT-VALUE> 25,485,999
<RECEIVABLES> 574,795
<ASSETS-OTHER> 1,824,929
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,885,723
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,381
<TOTAL-LIABILITIES> 101,381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,285,338
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 499,004
<NET-ASSETS> 27,784,342
<DIVIDEND-INCOME> 79,562
<INTEREST-INCOME> 665,247
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 744,809
<REALIZED-GAINS-CURRENT> 132,120
<APPREC-INCREASE-CURRENT> (377,925)
<NET-CHANGE-FROM-OPS> 499,004
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 27,784,342
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 45,742
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 138,250
<AVERAGE-NET-ASSETS> 15,807,206
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Standish, Ayer & Wood Investment Trust
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> Standish Fixed Income Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 3,263,787,091
<INVESTMENTS-AT-VALUE> 3,309,841,243
<RECEIVABLES> 45,795,070
<ASSETS-OTHER> 14,474,530
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,370,110,843
<PAYABLE-FOR-SECURITIES> 38,330,133
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,157,995
<TOTAL-LIABILITIES> 44,488,128
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,854,353,074
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 471,269,641
<NET-ASSETS> 3,325,622,715
<DIVIDEND-INCOME> 6,202,603
<INTEREST-INCOME> 199,818,084
<OTHER-INCOME> 0
<EXPENSES-NET> 10,313,208
<NET-INVESTMENT-INCOME> 195,707,479
<REALIZED-GAINS-CURRENT> 42,948,051
<APPREC-INCREASE-CURRENT> 27,756,610
<NET-CHANGE-FROM-OPS> 266,412,140
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 709,511,126
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,043,263
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,313,208
<AVERAGE-NET-ASSETS> 2,891,364,715
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Standish, Ayer & Wood Investment Trust
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> Standish Global Fixed Income Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 254,293,024
<INVESTMENTS-AT-VALUE> 252,858,535
<RECEIVABLES> 4,708,681
<ASSETS-OTHER> 8,540,415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 266,107,631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,554,474
<TOTAL-LIABILITIES> 3,554,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221,536,429
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,016,728
<NET-ASSETS> 262,553,157
<DIVIDEND-INCOME> 75,945
<INTEREST-INCOME> 14,121,353
<OTHER-INCOME> 0
<EXPENSES-NET> 1,226,099
<NET-INVESTMENT-INCOME> 12,971,199
<REALIZED-GAINS-CURRENT> 10,546,998
<APPREC-INCREASE-CURRENT> (1,136,692)
<NET-CHANGE-FROM-OPS> 22,381,505
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 102,738,659
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 802,027
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,226,099
<AVERAGE-NET-ASSETS> 200,788,140
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
