SUPPLEMENT Dated December 20, 1995
TO THE PROSPECTUS OF
STANDISH EQUITY FUND
Dated May 1, 1995
EXCHANGE OF SHARES
Effective immediately, shares of the Fund may be exchanged for shares
of one or more other funds in the Standish, Ayer & Wood family of funds. Shares
of the Fund redeemed in an exchange transaction are valued at their net asset
value next determined after the exchange request is received by the Trust.
Shares of a fund purchased in an exchange transaction are sold at their net
asset value next determined after the exchange request is received by the Trust
and payment for the shares is received by the fund into which your shares are to
be exchanged. Until receipt of the purchase price by the fund into which your
shares are to be exchanged (which may take up to three business days), your
money will not be invested. To obtain a current prospectus for any of the other
funds in the Standish, Ayer & Wood family of funds, please call the Trust at
(800) 221-4795. Please consider the differences in investment objectives and
expenses of a fund as described in its prospectus before making an exchange.
Written Exchanges
Shares of a Fund may be exchanged by written order to: "Standish, Ayer
& Wood Investment Trust, One Financial Center, Boston, Massachusetts 02111". A
written exchange request must (a) state the name of the current Fund, (b) state
the name of fund into which the current Fund shares will be exchanged, (c) state
the number of shares or the dollar amount to be exchanged, (d) identify the
shareholder's account numbers in both funds and (d) be signed by each registered
owner exactly as the shares are registered. Signature(s) must be guaranteed as
listed under "Written Redemption" below.
Telephonic Exchanges
Shareholders who complete the telephonic privileges portion of the
Fund's account application or who have previously elected telephonic redemption
privileges may exchange shares by calling (800) 221- 4795. The telephonic
privileges are not available to shareholders automatically; they must first
elect the privilege. Proper identification will be required for each telephonic
exchange. Please see "Telephonic Redemption" in the attached Prospectus for more
information regarding telephonic transactions.
General Exchange Information
All exchanges are subject to the following exchange restrictions: (i)
the fund into which shares are being exchanged must be registered for sale in
your state; (ii) exchanges may be made only between funds that are registered in
the same name, address and, if applicable, taxpayer identification number; and
(iii) unless waived by the Trust, the amount to be exchanged must satisfy the
minimum account size of the fund to be exchanged into. Exchange requests will
not be processed until payment for the shares of the current Fund have been
received. The exchange privilege may be changed or discontinued and may be
subject to additional limitations upon sixty (60) days' notice to shareholders,
including certain restrictions on purchases by market-timer accounts.
---------------------
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<PAGE>
The following revises and replaces the first paragraph under the
caption "Purchase of Shares" in the attached Prospectus:
PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Trust, which
offers shares of the Fund to the public on a continuous basis. Shares are sold
at the net asset value per share next computed after the purchase order is
received by the Trust and payment for the shares is received by the Fund. Unless
waived by the Trust, the minimum initial investment is $100,000. Additional
investments may be made in amounts of at least $10,000.
---------------------
The following revises and replaces the information under the caption
"Written Redemption" in the attached Prospectus:
WRITTEN REDEMPTION
Shares of the Fund may be redeemed by written order to: "Standish, Ayer
& Wood Investment Trust, One Financial Center, Boston, Massachusetts 02111". A
written redemption request must (a) state the name of the Fund, (b) state the
number of shares or the dollar amount to be redeemed, (c) identify the
shareholder's account number and (d) be signed by each registered owner exactly
as the shares are registered. Signature(s) must be guaranteed by a member of
either the Securities Transfer Association's STAMP program or the New York Stock
Exchange's Medallion Signature Program, or by any one of the following
institutions, provided that such institution meets credit standards established
by Investors Bank & Trust Company, the Fund's transfer agent: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or has net capital
of at least $100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, or a federal savings bank or association; or
(v) a national securities exchange, a registered securities exchange or a
clearing agency. Additional supporting documents may be required in the case of
estates, trusts, corporations, partnerships and other shareholders which are not
individuals. Redemption proceeds will normally be paid by check mailed within
seven days of receipt of a written redemption request in proper form. If shares
of the Fund to be redeemed were recently purchased by check, the Fund may delay
transmittal of redemption proceeds until such time as it has assured itself that
good funds have been collected for the purchase of such shares.
This may take up to fifteen (15) days.
---------------------
The following revises and supplements the information under the caption
"Investment Objective and Policies" in the attached Prospectus:
Other Investment Companies
The Fund may invest up to 10% of its total assets in the securities of
other investment companies but may not invest more than 5% of its total assets
in the securities of any one investment company or acquire more than 3% of the
voting securities of any other investment company. For example, the Fund may
invest in Standard & Poor's Depositary Receipts (commonly referred to as
"Spiders"), which are exchange-traded shares of a closed-end investment company
that are designed to replicate the price performance and dividend yield of the
Standard & Poor's 500 Composite Stock Price Index. The Fund will indirectly bear
its proportionate share of any management fees and other expenses paid by
investment companies in which it invests in addition to the advisory and
administration fees paid by the Fund. However, to the extent that the Fund
invests in a registered open-end investment company, the Adviser will waive its
advisory fees on the portion of the Fund's assets so invested.
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<PAGE>
Prospectus dated May 1, 1995
PROSPECTUS
STANDISH EQUITY FUND
One Financial Center
Boston, Massachusetts 02111
(800) 221-4795
Standish Equity Fund (the "Fund") is one fund in the Standish, Ayer & Wood
family of funds. The Fund is organized as a separate diversified investment
series of Standish, Ayer & Wood Investment Trust (the "Trust"), an open-end
management investment company.
The Fund's investment objective is to achieve long-term growth of capital
through investment primarily in equity securities of companies which appear to
be undervalued. Under normal circumstances, at least 80% of the Fund's assets
will be invested in such securities. The Fund invests primarily in publicly
traded equity securities of United States companies and, to a lesser extent, of
foreign issuers. The Fund normally does not invest in securities which are
restricted as to disposition by federal securities laws or are otherwise
illiquid. See "Investment Policies." Standish, Ayer & Wood, Inc., Boston,
Massachusetts, is the Fund's investment adviser (the "Adviser").
Investors may purchase shares from the Fund without a sales commission or
other transaction charges. Unless waived by the Fund, the minimum initial
investment is $100,000. Additional investments may be made in amounts of at
least $10,000.
This Prospectus is intended to set forth concisely the information about
the Fund and the Trust that a prospective investor should know before investing.
Investors are encouraged to read this Prospectus and retain it for future
reference. Additional information about the Fund and the Trust is contained in a
Statement of Additional Information which has been filed with the Securities and
Exchange Commission (the "SEC") and is available upon request and without charge
by calling or writing the Trust at the telephone number or address listed above.
The Statement of Additional Information bears the same date as this Prospectus
and is incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
CONTENTS
Expense Information 2
Financial Highlights 3
Investment Objective and Policies 4
Risk Factors and Suitability 7
Calculation of Performance Data 7
Dividends and Distributions 8
Purchase of Shares 8
Redemption of Shares 8
Management 9
Federal Income Taxes 10
The Fund and Its Shares 10
Custodian, Transfer Agent and Dividend Disbursing Agent 11
Independent Accountants 11
Legal Counsel 11
Tax Certification Instructions 11
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EXPENSE INFORMATION
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
Estimated Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.50%
12b-1 Fees None
Other Expenses 0.20%
Total Fund Operating Expenses 0.70%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Example 1 yr. 3 yrs. 5 yrs. 10 yrs.
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end
of each time period: $7 $22 $38 $85
You would pay the following expenses on the same investment,
assuming no redemption: $7 $22 $38 $85
</TABLE>
The purpose of the above table is to assist the investor in understanding
the various costs and expenses of the Fund that an investor in the Fund will
bear directly or indirectly. See "Management -- Investment Adviser" and
"Management -- Expenses." The figure shown in the caption "Other Expenses,"
which includes, among other things, custodian and transfer agent fees,
registration costs and payments for insurance and audit and legal services, is
based upon expenses for the Fund's fiscal year ended December 31, 1994.
THE INFORMATION IN THE TABLE AND HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5%
ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
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FINANCIAL HIGHLIGHTS
The financial highlights for the years ended December 31, 1993 and 1994
have been audited by Coopers & Lybrand L.L.P., independent accountants, whose
report, together with the financial statements of the Fund, is incorporated into
the Statement of Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Year Ended December 31,
------------------------------------------------
1994 1993 1992* 1991*,+
------------------------ ----------------------
Net asset value -- beginning of period $30.89 $26.28 $25.66 $20.00
----------- ---------- ---------- -----------
Income from investment operations:
Net investment income** $0.45 $0.50 $0.56 $0.46
Net realized and unrealized gain (loss)
on investments (1.62) 5.57 1.81 6.17
----------- ---------- ----------- -----------
Total from investment operations ($1.17) $6.07 $2.37 $6.63
----------- ---------- ----------- -----------
Less distributions declared to shareholders:
From net investment income ($0.44) ($0.47) ($0.54) ($0.35)
From realized gain (0.62) (0.99) (1.19) (0.62)
From paid-in capital - - (0.02) -
----------- ---------- ----------- -----------
Total distributions declared to shareholders ($1.06) ($1.46) ($1.75) ($0.97)
----------- ---------- ----------- -----------
Net asset value -- end of period $28.66 $30.89 $26.28 $25.66
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Total return -3.78% 20.79% 9.52% 33.45% t
Ratios (to average net assets)/Supplemental Data:
Expenses** 0.70% 0.80% 0.00% 1.00% t
Net investment income** 1.55% 1.29% 2.52% 1.92% t
Portfolio turnover 182% 192% 92% 86%
Net assets at end of period (000 omitted) $86,591 $72,916 $14,680 $7,498
The Investment Adviser did not impose a portion of its advisory fee. If
this voluntary reduction had not been undertaken, the net investment income
per share and the ratios would have been:
Net investment income per share $0.47 $0.34 $0.23 #
Ratios (to average net assets):
Expenses 0.97% 1.00% 1.99% #
Net investment income 1.12% 1.52% 0.93% #
t Computed on an annualized basis.
* Audited by other auditors.
+ For the period from January 2, 1991 (start of business) to December 31, 1991.
# Unaudited
Further information about the performance of the Fund is contained in the
Fund's Annual Report, which may be obtained from the Fund without charge.
</TABLE>
3
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INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to achieve long-term growth of capital
through investment primarily in equity securities of companies which appear to
be undervalued. Under normal circumstances at least 80% of the Fund's total
assets will be invested in such securities. (Equity securities include common
stocks, securities convertible into common stocks and options, futures and other
strategic transactions based on common stocks.) The Fund may invest in equity
securities of foreign issuers that are listed on a United States securities
exchange or traded in the U.S. over-the-counter market, and may invest up to 10%
of its assets in such securities which are not so listed or traded.
The Fund may also invest in debt securities and preferred stocks which are
convertible into, or exchangeable for, common stocks. Such securities will be
rated Aaa, Aa or A by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA or
A by Standard & Poor's Ratings Group ("Standard & Poor's") or if not rated, are
determined to be of comparable credit quality by the Adviser. Up to 5% of the
Fund's total assets invested in convertible debt securities and preferred stocks
may be rated Baa by Moody's or BBB by Standard & Poor's or, if not rated,
determined to be of comparable credit quality by the Adviser. In the case of a
security that is rated differently by the two rating services, the higher rating
is used in connection with the foregoing policy. In the event the rating on a
security held in the Fund's portfolio is downgraded by a rating service, such
action will be considered by the Adviser in its evaluation of the overall
investment merits of that security, but will not necessarily result in the sale
of the security. Securities rated Baa by Moody's or BBB by Standard & Poor's and
unrated securities of equivalent credit quality are considered medium grade
obligations with speculative characteristics. Adverse changes in economic
conditions or other circumstances are more likely to weaken the issuer's
capacity to pay interest and repay principal on these securities than is the
case for issuers of higher rated securities.
The Fund may write call options on its portfolio securities and purchase
put options on its portfolio securities and invest in financial futures
contracts on U.S. equity indices and options on such futures contracts. Although
the Fund does not normally invest in equity securities which are restricted as
to disposition by federal securities laws or are otherwise illiquid, the Fund
may so invest up to 15% of its net assets. Because of the uncertainty inherent
in all investments, no assurance can be given that the Fund will achieve its
investment objective. The investment objective is a fundamental policy which may
not be changed without a vote of shareholders. Investment policies which are not
fundamental policies may be changed by the Trustees of the Trust without the
approval of shareholders. The Fund's investment policies are described further
in the Statement of Additional Information.
Investment Policies
The Fund will follow a disciplined investment strategy, emphasizing stocks
which the Adviser believes to offer above average potential for capital growth.
Although the precise application of the discipline will vary according to market
4
<PAGE>
conditions, the Adviser intends to use statistical modeling techniques that
utilize stock specific factors, such as current price earnings ratios, stability
of earnings growth, forecasted changes in earnings growth, trends in consensus
analysts' estimates, and measures of earnings results relative to expectations,
to identify equity securities that are attractive as purchase candidates. Once
identified, these securities will be subject to further fundamental analysis by
the Adviser's professional staff before they are included in the Fund's
holdings. Securities selected for inclusion in the Fund's portfolio will
represent various industries and sectors.
Short-Term Debt Securities
The Fund may establish and maintain cash balances for temporary purposes in
order to maintain liquidity to meet shareholder redemptions. The Fund may also
establish and maintain cash balances for defensive purposes without limitation
to hedge against potential stock market declines. The Fund's cash balances,
including uncommitted cash balances, may be invested in investment grade money
market instruments and short-term interest-bearing securities. The securities
consist of U.S. Government obligations and obligations issued or guaranteed by
any U.S. Government agencies or instrumentalities, instruments of U.S. and
foreign banks (including negotiable certificates of deposit, non-negotiable
fixed time deposits and bankers' acceptances), repurchase agreements, prime
commercial paper of U.S. and foreign companies, and debt securities that make
periodic interest payments at variable or floating rates.
The Fund's investments in money market securities (i.e., securities with
maturities of less than one year) will be rated, at the time of investment P-1,
by Moody's or A-1 by Standard & Poor's. At least 95% of the Fund's assets
invested in short-term interest-bearing securities (i.e., securities with
maturities of one to three years) will be rated, at the time of investment, Aaa,
Aa, or A by Moody's or AAA, AA, or A by Standard & Poor's or, if not rated,
determined to be of comparable credit quality by the Adviser. Up to 5% of assets
invested in such short-term securities may be invested in securities which are
rated Baa by Moody's or BBB by Standard & Poor's or, if not rated, determined to
be of comparable credit quality by the Adviser.
Yields on debt securities depend on a variety of factors, such as general
conditions in the money and bond markets, and the size, maturity and rating of a
particular issue. Debt securities with longer maturities tend to produce higher
yields and are generally subject to greater potential capital appreciation and
depreciation. The market prices of debt securities usually vary depending upon
available yields, rising when interest rates decline and declining when interest
rates rise.
Foreign Securities
Although the Fund intends to invest primarily in equity securities of U.S.
issuers, the Fund may invest (without limitation) in equity securities of
foreign issuers that are listed on a United States exchange or traded in the
U.S. over-the-counter market, and may invest up to 10% of its assets in foreign
equity securities which are not so listed or traded. Foreign securities will be
selected for investment by the Fund if the Adviser believes these securities
will offer above average capital growth potential. Investing in securities of
foreign companies and securities denominated in foreign currencies or utilizing
foreign currency transactions involve certain risks. See "Risk Factors and
Suitability."
5
<PAGE>
Strategic Transactions
The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity market movements),
or to enhance potential gain. Such strategies are generally accepted as part of
modern portfolio management and are regularly utilized by many mutual funds and
other institutional investors. Techniques and instruments used by the Fund may
change over time as new instruments and strategies are developed or regulatory
changes occur.
In the course of pursuing its investment objective, the Fund may purchase
and sell (write) exchange-listed and over-the-counter put and call options on
securities, equity indices and other financial instruments; purchase and sell
financial futures contracts and options thereon; enter into various interest
rate transactions such as swaps, caps, floors or collars; and enter into various
currency transactions such as currency forward contracts, currency futures
contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions"). Strategic
Transactions may be used in an attempt to protect against possible changes in
the market value of securities held in or to be purchased for the Fund's
portfolio resulting from securities market or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, or to establish a position in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. In addition to the
hedging transactions referred to in the preceding sentence, Strategic
Transactions may also be used to enhance potential gain in circumstances where
hedging is not involved although the Fund's net loss exposure resulting from
Strategic Transactions entered into for such purposes will not exceed 3% of the
Fund's net assets at any one time and, to the extent necessary, the Fund will
close out transactions in order to comply with this limitation. (Transactions
such as writing covered call options are considered to involve hedging for the
purposes of this limitation.) In calculating the Fund's net loss exposure from
such Strategic Transactions, an unrealized gain from a particular Strategic
Transaction position would be netted against an unrealized loss from a related
Strategic Transaction position. For example, if the Adviser believes that Fund
is underweighted in cyclical stocks and overweighted in consumer stocks, the
Fund may buy a cyclical index call option and sell a cyclical index put option
and sell a consumer index call option and buy a consumer index put option. Under
such circumstances, any unrealized loss in the cyclical position would be netted
against any unrealized gain in the consumer position (and vice versa) for
6
<PAGE>
purposes of calculating the Fund's net loss exposure. The ability of the Fund to
utilize these Strategic Transactions successfully will depend on the Adviser's
ability to predict pertinent market movements, which cannot be assured. The Fund
will comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. The Fund's activities involving
Strategic Transactions may be limited by the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company.
Strategic Transactions have risks associated with them including possible
default by the other party to the transaction, illiquidity and, to the extent
the Adviser's view as to certain market movements is incorrect, the risk that
the use of such Strategic Transactions could result in losses greater than if
they had not been used. The writing of put and call options may result in losses
to the Fund, force the purchase or sale, respectively of portfolio securities at
inopportune times or for prices higher than (in the case of purchases due to the
exercise of put options) or lower than (in the case of sales due to the exercise
of call options) current market values, limit the amount of appreciation the
Fund can realize on its investments or cause the Fund to hold a security it
might otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements, or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. The writing of options could significantly increase the Fund's
portfolio turnover rate and, therefore, associated brokerage commissions or
spreads. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures and options transactions for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position, at the same time, in
certain circumstances, these transactions tend to limit any potential gain which
might result from an increase in value of such position. The loss incurred by
the Fund in writing options on futures and entering into futures transactions is
potentially unlimited; however, as described above, the Fund will limit its net
loss exposure resulting from Strategic Transactions entered into for non-hedging
purposes to 3% of its net assets at any one time. Futures markets are highly
volatile and the use of futures may increase the volatility of the Fund's net
asset value. Finally, entering into futures contracts would create a greater
ongoing potential financial risk than would purchases of options where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value and the net
result may be less favorable than if the Strategic Transactions had not been
utilized. Further information concerning the Fund's Strategic Transactions is
set forth in the Statement of Additional Information.
7
<PAGE>
Short-Selling
The Fund may make short sales, which are transactions in which the Fund
sells a security it does not own in anticipation of a decline in the market
value of that security. To complete such a transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund then is obligated to replace
the security borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender amounts equal to any dividends or interest which
accrue during the period of the loan. To borrow the security, the Fund also may
be required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is closed
out.
Until the Fund replaces a borrowed security in connection with a short
sale, the Fund will: (a) maintain daily a segregated account not with the
broker, containing cash or U.S. Government securities, at such a level that (i)
the amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii) the
amount deposited in the segregated account plus the amount deposited with the
broker as collateral will not be less than the market value of the security at
the time it was sold short; or (b) otherwise cover its short position.
The Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates by an amount greater than the
premium and transaction costs. This result is the opposite of what one would
expect from a cash purchase of a long position in a security. The amount of any
gain will be decreased, and the amount of any loss increased, by the amount of
any premium or amounts in lieu of dividends or interest the Fund may be required
to pay in connection with a short sale.
The Fund's loss on a short sale as a result of an increase in the price of
a security sold short is potentially unlimited. The Fund may purchase call
options to provide a hedge against an increase in the price of a security sold
short by the Fund. When the Fund purchases a call option it has to pay a premium
to the person writing the option and a commission to the broker selling the
option. If the option is exercised by the Fund, the premium and the commission
paid may be more than the amount of the brokerage commission charged if the
security were to be purchased directly. See "Strategic Transactions" above.
The Fund anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any specified
portion of its assets, as a matter of practice, will be in short sales. However,
no securities will be sold short if, after giving effect to any such short sale,
the total market value of all securities sold short would exceed 5% of the value
of the Fund's net assets.
8
<PAGE>
In addition to the short sales discussed above, the Fund may make short
sales "against the box," a transaction in which the Fund enters into a short
sale of a security which the Fund owns. The proceeds of the short sale are held
by a broker until the settlement date at which time the Fund delivers the
security to close the short position. The Fund receives the net proceeds from
the short sale.
Repurchase Agreements.
The Fund may invest up to 10% of its net assets in repurchase agreements
under normal circumstances. Repurchase agreements acquired by the Fund will
always be fully collateralized as to principal and interest by money market
instruments and will be entered into with commercial banks, brokers and dealers
considered creditworthy by the Adviser. Investing in repurchase agreements
involves the risk of default by or the insolvency of the other party to the
repurchase agreement.
Illiquid and Restricted Securities
The Fund may not invest more than 15% of its net assets in illiquid
investments and securities that are subject to restrictions on resale (i.e.,
private placement or "restricted securities") under the Securities Act of 1933,
as amended ("1933 Act"), including securities eligible for resale in reliance on
Rule 144A under the 1933 Act. Illiquid investments include securities that are
not readily marketable, repurchase agreements maturing in more than seven days,
time deposits with a notice or demand period of more than seven days, certain
over-the-counter options, and restricted securities, unless it is determined,
based upon continuing review of the trading markets for the specific restricted
security, that such restricted security is eligible for resale under Rule 144A
and is liquid. The Board of Trustees has adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity of
restricted securities. The Board of Trustees, however, retains oversight
focusing on factors such as valuation, liquidity and availability of information
and is ultimately responsible for such determinations. Investing in restricted
securities eligible for resale pursuant to Rule 144A could have the effect of
increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities. The purchase price and subsequent valuation of restricted
and illiquid securities normally reflect a discount, which may be significant,
from the market price of comparable securities for which a liquid market exists.
Portfolio Turnover
It is not the policy of the Fund to purchase or sell securities for trading
purposes. However, the Fund places no restrictions on portfolio turnover and it
may sell any portfolio security without regard to the period of time it has been
held. The Fund may therefore generally change its portfolio investments at any
time in accordance with the Adviser's appraisal of factors affecting any
particular issuer or market, or the economy in general. A rate of turnover of
100% would occur, for example, if the value of the lesser of purchases and sales
of portfolio securities for a particular year equaled the average monthly value
of portfolio securities owned during the year (excluding securities with a
maturity date of one year or less at the date of acquisition). A high rate of
portfolio turnover involves a correspondingly greater amount of transaction
costs which must be borne directly by the Fund and thus indirectly by its
shareholders. It may also result in the realization of larger amounts of net
short-term capital gains, distributions of which are taxable to shareholders as
ordinary income and may, under certain circumstances, make it more difficult for
the Fund to qualify as a regulated investment company under the Code. The Fund's
portfolio turnover rates are listed in the section captioned "Financial
Highlights."
9
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Investment Restrictions
The Fund has adopted certain fundamental policies which may not be changed
without the approval of the Fund's shareholders. These policies provide, among
other things, that the Fund may not: (i) with respect to at least 75% of its
total assets, invest more than 5% in the securities of any one issuer (other
than the U.S. Government, its agencies or instrumentalities) or acquire more
than 10% of the outstanding voting securities of any issuer; (ii) issue senior
securities, borrow money, enter into reverse repurchase agreements or pledge or
mortgage its assets, except that the Fund may borrow from banks in an amount up
to 15% of the current value of its total assets as a temporary measure for
extraordinary or emergency purposes (but not investment purposes), and pledge
its assets to an extent not greater than 15% of the current value of its total
assets to secure such borrowings; however, the Fund may not make any additional
investments while its outstanding borrowings exceed 5% of the current value of
its total assets; (iii) make loans of portfolio securities, except that the Fund
may enter into repurchase agreements with respect to 10% of the value of its net
assets; (iv) invest more than 25% of its total assets in a single industry
except that this restriction shall not apply to U.S. Government securities, or
(v) purchase the securities of other investment companies, provided that the
Fund may make such a purchase as part of a merger, consolidation, or acquisition
of assets.
If any percentage restriction described above is adhered to at the time of
investment, a subsequent increase or decrease in the percentage resulting from a
change in the value of the Fund's assets will not constitute a violation of the
restriction. Additional fundamental policies adopted by the Fund are described
in the Statement of Additional Information.
RISK FACTORS AND SUITABILITY
The Fund is not intended to provide an investment program meeting all of
the requirements of an investor. The Fund will not emphasize current income
unless this income will have a favorable influence on the market value of a
portfolio security. Additionally, notwithstanding the Fund's ability to spread
risk by holding securities of a number of portfolio companies, shareholders
should be able and prepared to bear the risk of investment losses which may
accompany the investments contemplated by the Fund.
Foreign Securities
Investing in securities of foreign companies and securities denominated in
foreign currencies or utilizing foreign currency transactions involve certain
risks of political, economic and legal conditions and developments not typically
associated with investing in securities of U.S. companies. Such conditions or
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developments might include unfavorable changes in currency exchange rates,
exchange control regulations (including currency blockage), expropriation of
assets of companies in which the Fund invests, nationalization of such
companies, imposition of withholding taxes on dividend or interest payments, and
possible difficulty in obtaining and enforcing judgments against a foreign
issuer. Also, foreign securities may not be as liquid and may be more volatile
than comparable domestic securities. Furthermore, issuers of foreign securities
are subject to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The Fund, in connection with its
purchases and sales of foreign securities, other than securities denominated in
United States dollars, will incur transaction costs in converting currencies.
Brokerage commissions in foreign countries are generally fixed, and other
transaction costs related to securities exchanges are generally higher than in
the United States. Most foreign securities of the Fund are held by foreign
subcustodians that satisfy certain eligibility requirements. However, foreign
subcustodian arrangements are significantly more expensive than domestic
custody. In addition, foreign settlement of securities transactions is subject
to local law and custom that is not, generally, as well established or as
reliable as U.S. regulation and custom applicable to settlements of securities
transactions and, accordingly, there is generally perceived to be a greater risk
of loss in connection with securities transactions in many foreign countries.
The Fund's policy of investing no more than 10% of its total assets in foreign
securities that are not listed on a U.S. stock exchange or traded in the U.S.
over-the-counter market is intended to limit the Fund's exposure to the risks
associated with investments in foreign securities.
CALCULATION OF PERFORMANCE DATA
From time to time the Fund may advertise its total return. Total return
figures are based on historical earnings and are not intended to indicate future
performance. The "total return" of the Fund refers to the average annual
compounded rates of return over 1, 5 and 10 year periods that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged to
all shareholder accounts and deducts all nonrecurring charges at the end of each
period. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.
DIVIDENDS AND DISTRIBUTIONS
Dividends from short-term and long-term capital gains, if any, after
reduction by capital losses, will be declared and distributed at least annually,
as will any dividends from net investment income. Dividends from net investment
income and from short-term and long-term capital gains, if any, are
automatically reinvested in additional shares of the Fund unless the shareholder
elects to receive them in cash.
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PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Fund, which offers
its shares to the public on a continuous basis. Shares are sold at the net asset
value per share next computed after the purchase order is received by the Fund.
Unless waived by the Fund, the minimum initial investment is $100,000.
Additional investments may be made in amounts of at least $10,000.
Orders for the purchase of Fund shares received by dealers by the close of
regular trading on the New York Stock Exchange on any business day and
transmitted to the Fund by the close of its business day (normally 4:00 p.m.,
New York City time) will be effected as of the close of regular trading on the
New York Stock Exchange on that day. Otherwise, orders will be effected at the
net asset value per share determined on the next business day. It is the
responsibility of dealers to transmit orders so that they will be received by
the Fund before the close of its business day. Shares of the Fund purchased
through dealers may be subject to transaction fees, no part of which will be
received by the Fund or the Adviser.
The Fund's net asset value per share is computed on each day on which the
New York Stock Exchange is open as of the close of regular trading (currently
4:00 p.m. New York City time). The net asset value per share is calculated by
determining the value of all the Fund's assets, subtracting all liabilities and
dividing the result by the total number of shares outstanding. Portfolio
securities are valued at the last sales prices, on the valuation date, on the
exchange or national securities market on which they are primarily traded.
Securities not listed on an exchange or national securities market, or
securities for which there are no reported transactions, are valued at the last
quoted bid prices. Securities for which quotations are not readily available and
all other assets will be valued at fair value as determined in good faith by the
Adviser in accordance with procedures approved by the Trustees. Additional
information concerning the Fund's valuation policies is contained in the
Statement of Additional Information.
In the sole discretion of the Adviser, the Fund may accept securities
instead of cash for the purchase of shares of the Fund. The Adviser will
determine that any securities acquired in this manner are consistent with the
investment objective, policies and restrictions of the Fund. The securities will
be valued in the manner stated above. The purchase of shares of the Fund for
securities instead of cash may cause an investor who contributed them to realize
a taxable gain or loss with respect to the securities transferred to the Fund.
The Trust reserves the right in its sole discretion (i) to suspend the
offering of the Fund's shares, (ii) to reject purchase orders when in the best
interest of the Fund and (iii) to modify or eliminate the minimum initial
investment in Fund shares.
REDEMPTION OF SHARES
Shares of the Fund may be redeemed by any of the methods described below at
the net asset value per share next determined after receipt of a redemption
request in proper form. Redemptions will not be processed until a completed
Share Purchase Application and payment for the shares to be redeemed have been
received.
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Written Redemption
Shares of the Fund may be redeemed by written order to Standish Equity
Fund, One Financial Center, 26th Floor, Boston, MA 02111. A written redemption
request must (a) state the number of shares or the dollar amount to be redeemed,
(b) identify the shareholder's account number and (c) be signed by each
registered owner exactly as the shares are registered. Signature guarantees,
when required, must be obtained from any one of the following institutions,
provided that such institution meets credit standards established by the Fund's
Transfer Agent: (i) a bank; (ii) a securities broker or dealer, including a
government or municipal securities broker or dealer, that is a member of a
clearing corporation or has net capital of at least $100,000; (iii) a credit
union having authority to issue signature guarantees; (iv) a savings and loan
association, a building and loan association, a cooperative bank, or a federal
savings bank or association; or (v) a national securities exchange, a registered
securities exchange or a clearing agency. Additional supporting documents may be
required in the case of estates, trusts, corporations, partnerships and other
shareholders which are not individuals. Redemption proceeds will normally be
paid by check mailed within seven days of receipt of a written redemption
request in proper form. If shares to be redeemed were recently purchased by
check, the Fund may delay transmittal of redemption proceeds until such time as
it has assured itself that good funds have been collected for the purchase of
such shares. This may take up to fifteen (15) days.
Telephonic Redemption
Shareholders who complete the telephonic redemption portion of the Fund's
account application may redeem shares by calling (800) 221-4795. Such privilege
is not available to shareholders automatically; they must first elect the
privilege. Redemption proceeds will be mailed or wired in accordance with the
shareholder's instruction on the account application to a pre-designated
account. Wire charges, if any, will be deducted from redemption proceeds. By
maintaining an account that is eligible for redemption by telephone, the
shareholder authorizes the Adviser, the Trust and the Fund's custodian to act
upon instructions of any person to redeem shares from the shareholder's account.
Redemption proceeds will be sent only by check payable to the shareholder of
record at the address of record, unless the shareholder has indicated, in the
initial application for the purchase of shares, a commercial bank to which
redemption proceeds may be sent by wire. These instructions may be changed
subsequently only in writing, accompanied by a signature guarantee, and
additional documentation in the case of shares held by a corporation or other
entity or by a fiduciary such as a trustee or executor.
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By maintaining a telephonic redemption account, the shareholder
acknowledges that, as long as the Fund employs reasonable procedures to confirm
that telephonic instructions are genuine, and if the Fund follows telephonic
instructions that it reasonably believes to be genuine, neither the Adviser, nor
the Trust, nor the Fund's custodian, nor their respective officers or employees,
will be liable for any loss, expense or cost arising out of any request for a
telephonic redemption, even if such transaction results from any fraudulent or
unauthorized instructions. Depending upon the circumstances, the Fund intends to
employ personal identification or written confirmation of transactions
procedures, and if it does not, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. Redemption proceeds will normally be
paid promptly after receipt of telephonic instructions, but no later than seven
days thereafter, except as described above. Shareholders may experience delays
in exercising telephone redemption privileges during periods of abnormal market
activity. Accordingly, during periods of volatile economic and market
conditions, shareholders may wish to consider transmitting redemption requests
in writing.
Repurchase Order
In addition to written redemption of Fund shares, the Fund may accept wire
or telephone orders from brokers or dealers for the repurchase of Fund shares or
from the Adviser with respect to accounts over which it has investment
discretion. The repurchase price is the net asset value per share next
determined after receipt of an order by a broker or dealer, which is obligated
to transmit the order to the Fund prior to the close of the Fund's business day
(normally 4:00 p.m.). Brokers or dealers may charge for their services in
connection with a repurchase of Fund shares, but the Fund imposes no charge for
share repurchases.
* * * *
The proceeds paid upon redemption or repurchase may be more or less than
the cost of the shares, depending upon the market value of the Fund's portfolio
investments at the time of redemption or repurchase. The Fund intends to pay
cash for all shares redeemed, but under certain conditions, the Fund may make
payments wholly or partially in portfolio securities.
Because of the cost of maintaining shareholder accounts, the Fund may
redeem, at net asset value, the shares in any account if the value of such
shares has decreased to less than $25,000 as a result of redemptions or
transfers. Before doing so, the Fund will notify the shareholder that the value
of the shares in the account is less than the specified minimum and will allow
the shareholder 30 days to make an additional investment in an amount which will
increase the value of the account to at least $25,000.
MANAGEMENT
Trustees
The Fund is a separate investment series of Standish, Ayer & Wood
Investment Trust, a Massachusetts business trust. Under the terms of the
Agreement and Declaration of Trust establishing the Trust, which is governed by
the laws of The Commonwealth of Massachusetts, the Trustees of the Trust are
ultimately responsible for the management of its business and affairs.
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Investment Adviser
Standish, Ayer & Wood, Inc. (the "Adviser"), One Financial Center, Boston,
Massachusetts 02111, serves as investment adviser to the Fund pursuant to an
investment advisory agreement with the Trust and manages the Fund's investments
and affairs subject to the supervision of the Trustees of the Trust.
The Adviser is a Massachusetts corporation incorporated in 1933 and is a
registered investment adviser under the Investment Advisers Act of 1940. The
Adviser provides fully discretionary management services and counseling and
advisory services to a broad range of clients throughout the United States. The
Adviser also provides investment advisory services to certain other funds of the
Trust, acting as sole investment adviser to Standish Small Capitalization Equity
Fund, Standish Fixed Income Fund, Standish Intermediate Tax Exempt Bond Fund,
Standish Massachusetts Intermediate Tax Exempt Bond Fund, and Standish
Securitized Fund, which had net assets of $121 million, $1.8 billion, $28
million, $31 million and $54 million, respectively, at March 31, 1995, and as
co-investment adviser to Consolidated Standish Short-Term Asset Reserve Fund,
which had net assets of $258 million at March 31, 1995. The Adviser is the
managing general partner of Standish International Management Company, L.P.
("SIMCO"), which is the investment adviser to Standish International Equity
Fund, Standish International Fixed Income Fund and Standish Global Fixed Income
Fund which had net assets of $89 million, $1.1 billion and $135 million,
respectively, at March 31, 1995. Corporate pension funds are the largest asset
under active management by the Adviser. The Adviser's clients also include
charitable and educational endowment funds, financial institutions, trusts and
individual investors. As of March 31, 1995, the Adviser managed approximately
$24 billion of assets.
The Fund's portfolio managers are Ralph S. Tate and David C. Cameron, who
have been primarily responsible for the day-to-day management of the Fund's
portfolio since its inception in January, 1991. Mr. Tate has served as a
Director and Vice President of the Adviser since April, 1990 and prior thereto
was a Vice President of Aetna Life and Casualty, Hartford, Connecticut. During
the past five years, Mr. Cameron has served as a Director (1990) and Vice
President of the Adviser.
Subject to the supervision and direction of the Trustees of the Trust, the
Adviser manages the Fund's portfolio in accordance with its stated investment
objective and policies, recommends investment decisions for the Fund, places
orders to purchase and sell securities on behalf of the Fund, and permits the
Fund to use the name "Standish." The Adviser provides all necessary office space
and services of executive personnel for administering the affairs of the Fund.
For these services, the Fund pays a fee monthly at the annual rate of 0.50% of
average daily net asset value. In addition, for the fiscal year ending December
31, 1995, the Adviser has voluntarily agreed to limit the Fund's aggregate
annual operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to the lower of (a) .80% of the Fund's average daily net
assets, or (b) the permissible limit applicable in any state in which shares of
the Fund are then qualified for sale. For the fiscal year ended December 31,
1994, advisory fees paid to the Advisor totalled $422,731 which represented
0.50% of the Fund's average net assets.
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Expenses
The Fund bears all expenses of its operations other than those incurred by
the Adviser under the investment advisory agreement. Among other expenses, the
Fund will pay investment advisory fees; bookkeeping, share pricing and
shareholder servicing fees and expenses; custodian fees and expenses; legal and
auditing fees; expenses of prospectuses, statements of additional information
and shareholder reports which are furnished to existing shareholders;
registration and reporting fees and expenses; and Trustees' fees and expenses.
The Adviser bears without subsequent reimbursement the distribution expenses
attributable to the offering and sale of Fund shares. Expenses of the Trust
which relate to more than one series are allocated among such series by the
Adviser and SIMCO in an equitable manner, primarily on the basis of relative net
asset values. For the fiscal year ended December 31, 1994, expenses borne by the
Fund amounted to $590,173 which represented 0.70% of the Fund's average net
assets.
Portfolio Transactions
Subject to the supervision of the Trustees of the Trust, the Adviser
selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Fund. The Adviser will seek to obtain the best
available price and most favorable execution with respect to all transactions
for the Fund.
Subject to the consideration of best price and execution and to applicable
regulations, the receipt of research and sales of Fund shares may also be
considered factors in the selection of brokers and dealers that execute orders
to purchase and sell portfolio securities for the Fund.
FEDERAL INCOME TAXES
The Fund presently qualifies and intends to continue to qualify for
taxation as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). If it qualifies for treatment as a regulated
investment company, the Fund will not be subject to federal income tax on income
(including capital gains) distributed to shareholders in the form of dividends
or capital gain distributions in accordance with certain timing requirements of
the Code.
The Fund will be subject to nondeductible 4% excise tax under the Code to
the extent that it fails to meet certain distribution requirements with respect
to each calendar year. Certain distributions made in order to satisfy the Code's
distribution requirements may be declared by the Fund during October, November
or December of the year but paid during the following January. Such
distributions will be taxable to taxable shareholders as if received on December
31 of the year the distributions are declared, rather than the year in which the
distributions are received.
Shareholders which are taxable entities or persons will be subject to
federal income tax on dividends and capital gain distributions made by the Fund.
Dividends paid by the Fund from net investment income, certain net foreign
currency gains, and any excess of net short-term capital gain over net long-term
capital loss will be taxable to shareholders as ordinary income, whether
received in cash or Fund shares. The portion of such dividends attributable to
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qualifying dividends the Fund receives, if any, may qualify for the 70%
corporate dividends received deduction, subject to certain holding period
requirements and debt financing limitations under the Code. Dividends paid by
the Fund from net capital gain (the excess of net long-term capital gain over
net short-term capital loss), called "capital gain distributions," will be
taxable to shareholders as long-term capital gains, whether received in cash or
Fund shares and without regard to how long the shareholder has held shares of
the Fund. Capital gain distributions do not qualify for the corporate dividends
received deduction. Dividends and capital gain distributions may also be subject
to state and local or foreign taxes.
The Fund anticipates that it may be subject to foreign withholding taxes or
other foreign taxes on income (possibly including capital gains) on certain
foreign investments (if any), which will reduce the yield or return on those
investments. Such taxes may be reduced or eliminated pursuant to an income tax
treaty in some cases. The Fund anticipates that it generally will not qualify to
pass such foreign taxes and any associated tax deductions or credits through to
its shareholders.
Redemptions and repurchases of shares are taxable events on which a
shareholder may recognize a gain or loss. Special rules recharacterize as
long-term any losses on the sale or exchange of Fund shares with a tax holding
period of six months or less, to the extent the shareholder received a capital
gain distribution with respect to such shares.
Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on dividends, capital gain
distributions, and the proceeds of redemptions or repurchases of shares, if they
fail to furnish the Fund with their correct taxpayer identification number and
certain certifications or if they are otherwise subject to backup withholding.
Individuals, corporations and other shareholders that are not U.S. persons under
the Code are subject to different tax rules and may be subject to nonresident
alien withholding at the rate of 30% (or a lower rate provided by an applicable
tax treaty) on amounts treated as ordinary dividends from the Fund and, unless a
current IRS Form W-8 or an acceptable substitute is furnished to the Fund, to
backup withholding on certain payments from the Fund.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent, if any, the Fund's distributions
are derived from interest on (or, in the case of intangibles taxes, the value of
its assets is attributable to) certain U.S. Government obligations, provided in
some states that certain thresholds for holdings of such obligations and/or
reporting requirements are satisfied.
After the close of each calendar year, the Fund will send a notice to
shareholders that provides information about the federal tax status of
distributions to shareholders for such calendar year.
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THE FUND AND ITS SHARES
The Fund is a separate investment series of Standish, Ayer & Wood
Investment Trust, an unincorporated business trust organized under the laws of
The Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust dated August 13, 1986. Under the Agreement and Declaration of Trust, the
Trustees have authority to issue an unlimited number of shares of beneficial
interest, par value $.01 per share, of the Fund. Each share of the Fund is
entitled to one vote. All Fund shares have equal rights with regard to voting,
redemption, dividends, distributions and liquidation, and shareholders of the
Fund have the right to vote as a separate class with respect to certain matters
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Agreement and Declaration of Trust. Shares of the Fund do not have cumulative
voting rights. Fractional shares have proportional voting rights and participate
in any distributions and dividends. When issued, each Fund share will be fully
paid and nonassessable. Shareholders of the Fund do not have preemptive or
conversion rights. Certificates representing shares of the Fund will not be
issued.
The Trust has established thirteen series and may establish additional
series at any time. Each series is a separate taxpayer, eligible to qualify as
separate regulated investment company for federal income tax purposes. The
calculation of the net asset value of a series and the determination of the tax
consequences of investing in a series will be determined separately for each
series.
The Trust is not required to hold annual meetings of shareholders. Special
meetings of shareholders may be called from time to time for purposes such as
electing or removing Trustees, changing a fundamental policy, or approving an
investment advisory agreement.
If less than two-thirds of the Trustees holding office have been elected by
shareholders, a special meeting of shareholders of the Trust will be called to
elect Trustees. Under the Agreement and Declaration of Trust and the 1940 Act,
the record holders of not less than two-thirds of the outstanding shares of the
Trust may remove a Trustee by votes cast in person or by proxy at a meeting
called for the purpose or by a written declaration filed with each of the
Trust's custodian banks. Except as described above, the Trustees will continue
to hold office and may appoint successor Trustees. Whenever ten or more
shareholders of the Trust who have been such for at least six months, and who
hold in the aggregate shares having a net asset value of at least $25,000 or
which represent at least 1% of the outstanding shares, whichever is less, apply
to the Trustees in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request a meeting, and such
application is accompanied by a form of communication and request which they
wish to transmit, the Trustees shall within five (5) business days after receipt
of such application either (1) afford to such applicants access to a list of the
names and addresses of all shareholders as recorded on the books of the Trust;
or (2) inform such applicants as to the approximate number of shareholders of
record and the approximate cost of mailing to them the proposed communication or
form of request.
Inquiries concerning the Fund should be made by contacting the Fund at the
Fund's address and telephone number listed on the cover of this Prospectus.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Investors Bank & Trust Company, 24 Federal Street, Boston, Massachusetts
02110, serves as the Fund's transfer and dividend disbursing agent and as
custodian of all cash and securities of the Fund.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, serves as independent accountants for the Trust and will audit the Fund's
financial statements annually.
LEGAL COUNSEL
Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, is legal
counsel to the Trust and to the Adviser.
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or in the Statement of Additional Information, and, if given or made,
such other information or representations must not be relied upon as having been
authorized by the Trust. This Prospectus does not constitute an offering in any
jurisdiction in which such offering may not be lawfully made.
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Tax Certification Instructions
Federal Law requires that taxable distributions and proceeds of
redemptions and exchanges be reported to the IRS and that 31% be withheld if you
fail to provide your correct Taxpayer Identification Number (TIN) and the
certifications contained in the Account Purchase Application (Application) or
you are otherwise subject to backup withholding. Amounts withheld and forwarded
to the IRS can be credited as a payment of tax when completing your Federal
income tax return.
For most individual taxpayers, the TIN is the social security number.
Special rules apply for certain accounts. For example, for an account
established under the Uniform Gift to Minors Act, the TIN of the minor should be
furnished. If you do not have a TIN, you may apply for one using forms available
at local offices of the Social Security Administration or the IRS, and you
should write "Applied For" in the space for a TIN on the application.
Recipients exempt from backup withholding, including corporations and
certain other entities, should provide their TIN and underline "exempt" in
section 2(a) of the TIN section of the Application to avoid possible erroneous
withholding. Non-resident aliens and foreign entities may be subject to
withholding of up to 30% on certain distributions received from the Fund and
must provide certain certifications on IRS Form W-8 to avoid backup withholding
with respect to other payments. For further information, see Code Sections 1441,
1442 and 3406 and/or consult your tax advisor.
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