SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Standish, Ayer & Wood Investment Trust
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(Name of Registrant as Specified in Its Charter)
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February 16, 1996
We at Standish, Ayer & Wood are continually striving to provide superior
investment management in our mutual funds at a reasonable cost. We have found
that by building the assets of our funds we are able to reduce expenses of the
funds on a per share basis and allow our portfolio management teams to focus
more easily on seeking superior performance.
Over the years Standish has been approached by investors who are interested in
using our mutual funds for purposes which require a different structure for the
fund. Several of our clients have expressed strong interest in offering one of
our funds as an option for their 401(k) plan, but these arrangements typically
require an administrative fee to pay for recordkeeping costs. Other institutions
have wanted to offer our funds offshore.
We believe that the addition of new investors through different distribution
channels could prove beneficial to existing shareholders by further reducing the
fixed fund expenses relative to assets. After considerable research, we have
found in the master feeder structure a distribution arrangement that we believe
is both flexible for many different types of markets and beneficial with respect
to costs for current shareholders. The particular version of this structure that
we have selected is called the "Hub & Spoke(R)"1 investment fund structure.
As illustrated at right, the Hub and Spoke structure allows for otherwise
separately managed pools of assets with substantially identical objectives and
restrictions to be managed in a central "HubSM" portfolio with "SpokeSM" funds
representing different distribution options. These spoke or "feeder" funds could
include no-load SEC registered institutional mutual funds--such as your existing
Standish fund, mutual funds with special distribution and administration fees
such as those geared toward use in 401(k) programs, and offshore funds. The Hub
portfolio will be operated in such a manner as to avoid U.S. taxation of
offshore Spoke funds.
[Graphic material omitted. The graph visually demonstrates a sphere (captioned
"Hub Standish Portfolio") located in the center of three additional spheres
(captioned "Spoke Standish Fund," "Spoke Standish 401(k) Fund" and "Spoke
Standish Offshore Fund") which are attached to the center sphere.]
Each Spoke fund holds an interest in the Hub portfolio representing its pro rata
share of the portfolio assets and bears its pro rata share of Hub portfolio
expenses. All additional fees are charged at the Spoke fund level and are
incurred solely by the relevant Spoke fund. Due to an undertaking by Standish to
cap your existing fund's expense ratio (as described in the proxy materials),
shareholders of the Standish fund will experience no increase in expense ratio
as a result of the proposed conversion. To the extent that the expense ratio is
reduced by the added assets we anticipate, all shareholders will benefit. The
management of Standish, Ayer & Wood and the Board of Trustees of the Standish,
Ayer & Wood Investment Trust recommend that shareholders approve proposals set
forth in the enclosed proxy material, which would permit your Standish fund to
become a Spoke fund in a Hub & Spoke structure.
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1 "Hub and Spoke(R)" is a registered service mark; "HubSM" and "SpokeSM" is a
service mark of Signature Financial Group, Inc. Standish, Ayer & Wood and
Standish International Management Co., L.P. are licensees of Signature Financial
Group, Inc.
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Proposal 1 would allow the assets of the current fund to be transferred into
"the Portfolio" or Hub portfolio which would be managed exactly (except as
discussed in Proposal 3) as the fund has been managed. The change in "investment
policy" referenced in the Proposal is that rather than the fund investing
directly in a diversified portfolio of securities, the fund will be invested in
only one vehicle--"the Portfolio," which in turn will hold a diversified
portfolio of securities.
Proposal 2 would allow the Trust to act as an interest holder in the Hub
portfolio on behalf of the fund in electing Trustees of the Hub portfolio,
ratifying the selection of the accountant of the Hub portfolio, and approving
the retention of Standish, Ayer & Wood or Standish International Management Co.,
L.P., as the case may be, as investment adviser to the Hub portfolio.
Proposal 3, which applies only to Standish Equity Fund and Standish Small Cap
Equity Fund, would eliminate a fundamental restriction which prohibits these
funds from investing in other investment companies. This Proposal 3 is distinct
from Proposal 1, which permits these funds, as Spoke funds, simply to invest in
a Hub portfolio. Proposal 3 would make these funds' fundamental restrictions
coextensive with their corresponding Hub portfolios' restrictions and relevant
law, both of which would otherwise allow limited investments in pooled vehicles
that are considered investment companies. This may occur when a direct
investment in securities held by such a vehicle is not feasible or appropriate.
We urge you to read carefully the more detailed explanation of these proposals
in the enclosed proxy statement.
We enclose a Q&A which may cover some of your questions. We would also be happy
to talk with you about this: please call your investment manager at Standish or
James Hollis, Executive Vice President of the Standish, Ayer & Wood Investment
Trust, at (617) 457-5029 or Lavinia Chase, Director of Client Service for the
Standish Mutual Funds, at (617) 457-7343.
Standish believes that this Hub & Spoke structure will allow us to continue to
manage your assets with the greatest attention to portfolio management while
offering distribution options desirable to a broader group of investors. With
conversion we fully expect to provide each shareholder with the same high
quality investment management and client service to which they are accustomed
but also hope to provide this over time at a lower effective cost.
Sincerely,
/s/ Richard S. Wood
President, Standish, Ayer & Wood Investment Trust
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Q&A ON THE HUB AND SPOKE STRUCTURE
WILL THE INVESTMENT PHILOSOPHY OR STRATEGIES OF THE FUND CHANGE AS A RESULT OF
THIS NEW STRUCTURE?
The new structure changes only the legal device through which the fund invests;
it does not change the underlying investment objectives, policies or philosophy
of the fund.
DOES THIS REPRESENT A CHANGE IN FOCUS ON THE PART OF STANDISH, AYER & WOOD?
Standish remains focused on managing assets for institutions and high net worth
individuals. The new Hub and Spoke structure allows Standish to manage what we
hope will be a growing pool of assets without changing our marketing or client
service effort materially.
WILL THE NEW STRUCTURE MEAN THAT THE MANAGEMENT FEE RATE OR TOTAL EXPENSE RATIO
OF THE FUND WILL RISE?
Standish has agreed for an indefinite time to cap your fund's expense ratio at
the level which exists at the time of the conversion so that shareholders will
experience no increase in expense ratio due to the conversion to, or the
operation of, the new structure. Over time, we expect that new types of
investors will bring greater economies of scale and that the expense ratio will
fall.
HOW WILL THE FUND AND ITS SHAREHOLDERS BE TAXED AS THE FUND MOVES INTO THE HUB
AND SPOKE STRUCTURE?
Neither the fund nor its shareholders will realize any gain or loss for federal
or state tax purposes as a result of the fund assets being transferred into the
Hub portfolio.
WHO IS SIGNATURE FINANCIAL?
Signature is a Boston based firm which developed the particular master feeder
process which they have service marked as "Hub and Spoke(R) " structure.
Signature's clients include J.P. Morgan, Citicorp and Chase Manhattan Bank.
WILL THERE BE A CHANGE IN THE FUND'S CUSTODIAN BANK?
We are pleased to continue to use Investors Bank & Trust Company as our fund
custodian, fund accounting services agent and transfer agent. IBT is also the
primary third party administrator of Hub and Spoke funds.
HOW ARE THE CURRENT SHAREHOLDERS EXPECTED TO BENEFIT FROM THIS NEW STRUCTURE?
As a Spoke fund, the fund will become part of another pooled vehicle which we
expect will attract other investors and assets. If this occurs, it will allow
the fund to invest in a larger, more diversified portfolio than is currently the
case. Certain of the fixed costs of the fund are expected, therefore, to be
spread over a larger amount of assets, making the expense ratio diminish.
WHO CAN I TALK WITH ABOUT THIS?
James Hollis, Executive Vice President of the Standish, Ayer & Wood Investment
Trust, or Lavinia Chase, Director of Client Service for the Standish Mutual
Funds, will be happy to talk with you. Call 1-800-221-4795.
