Prospectus dated May 1, 1996
As revised December 18, 1996
PROSPECTUS
STANDISH INTERNATIONAL EQUITY FUND
One Financial Center
Boston, Massachusetts 02111
(800) 221-4795
Standish International 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 obtain long-term capital growth
through investment in a diversified portfolio of foreign equity securities.
Standish International Management Company, L.P., Boston, Massachusetts, is the
Fund's investment adviser (the "Adviser"). The Fund invests primarily in equity
securities of companies located in countries represented in the Morgan Stanley
Capital International Europe, Australia and Far East Index (the "EAFE Index"),
Canada and, to a lesser extent, in countries considered by the Adviser to be
"Emerging Markets." The Fund follows a disciplined investment strategy,
emphasizing stocks and markets which the Adviser believes offer above average
potential for capital growth. Although the precise application of the discipline
varies according to market conditions, the Adviser uses statistical modeling
techniques that utilize stock and market specific factors, to identify equity
securities and markets that are attractive as purchase candidates. The Fund
normally holds investments in no fewer than five countries.
Investors may purchase shares of the Fund from the Trust's principal
underwriter, Standish Fund Distributors, L.P. (the "Principal Underwriter"), at
the address and phone number listed above 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 to the Principal Underwriter 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.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN SHARES OF THE FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
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................................7
Purchase of Shares.........................................8
Exchange of Shares.........................................8
Redemption of Shares.......................................9
Management................................................10
Federal Income Taxes......................................11
The Fund and Its Shares...................................12
Custodian.................................................12
Transfer Agent and Shareholder Servicing Agent............12
Independent Accountants...................................12
Legal Counsel.............................................12
Tax Certification Instructions............................13
<PAGE>
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
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.80%
12b-1 Fees None
Other Expenses 0.42%
Total Fund Operating Expenses 1.22%
<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: $12 $38 $67 $148
</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 on expenses for the Fund's year ended December 31, 1995.
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 LESSER 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%.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The financial highlights for the years ended December 31, 1993, 1994 and
1995 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.
Year ended December 31,
---------------------------------------------------------------------------------
1995 1994 1993 1992* 1991* 1990* 1989* 1988*,+
--------- ---------- -------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $23.12 $26.74 $19.78 $22.20 $20.16 $23.10 $20.07 $20.00
--------- ---------- -------- --------- --------- --------- --------- --------
Income from investment operations
Net investment income $0.04 $0.21 $0.26 $0.26 $0.33 $0.55 $0.49 $0.06
Net realized and unrealized gain (loss) on investme0.45 (2.08) 7.29 (2.47) 2.02 (2.67) 3.23 0.01
--------- ---------- -------- --------- --------- --------- --------- --------
Total from investment operations $0.49 ($1.87) $7.55 ($2.21) $2.35 ($2.12) $3.72 $0.07
--------- ---------- -------- --------- --------- --------- --------- --------
Less distributions declared to shareholders
From net investment income - ($0.12) ($0.23) ($0.21) ($0.30) ($0.41) ($0.50) -
In excess of net investment income - - (0.36) - - - - -
From realized gain (0.07) (1.63) - - (0.01) (0.41) (0.19) -
--------- ---------- -------- --------- --------- --------- --------- --------
Total distributions declared to shareholders ($0.07) ($1.75) ($0.59) ($0.21) ($0.31) ($0.82) ($0.69) $0.00
--------- ---------- -------- --------- --------- --------- --------- --------
Net asset value - end of period $23.54 $23.12 $26.74 $19.78 $22.20 $20.16 $23.10 $20.07
========= ========== ======== ========= ========= ========= ========= ========
Total return 2.14% (6.99%) 38.27% (9.95%) 11.73% (9.44%) 18.79% 5.32%t
Net assets at end of period (000 omitted) $59,473 $104,435 $92,419 $56,539 $47,077 $24,872 $19,141 $10,158
Ratios (to average net assets)/Supplemental Data
Expenses 1.22% 1.23% 1.34% 1.53% 1.54% 1.60% 1.60% 1.60%t
Net investment income 1.76% 1.52% 1.09% 1.18% 1.30% 2.19% 2.29% 3.90%t
Portfolio turnover 108% 75% 98% 98% 27% 48% 38% 0%
t Computed on an annualized basis.
* Audited by other auditors
+ For the period from August 31, 1988 (start of business) to December 31, 1988.
</TABLE>
Further information about the performance of the Fund is contained in the
Fund's Annual Report, which may be obtained from the Principal Underwriter
without charge.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to obtain long-term capital growth
through investment in a diversified portfolio of foreign equity securities. It
is expected that such capital growth will occur primarily as a result of
appreciation of the equity securities held in the Fund's portfolio; however, the
Fund may also take advantage of changes in currency exchange rates in an effort
to realize further capital appreciation. Any income received on the Fund's
investments will be incidental to the Fund's long-term capital growth objective.
Because of the uncertainty inherent in all investments, no assurance can be
given that the Fund will achieve its investment objective. The Fund's 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 shareholder approval. The Fund's
investment policies and restrictions are described further in the Statement of
Additional Information.
Investment Policies
The Fund follows a disciplined investment strategy, emphasizing stocks and
markets which the Adviser believes offer above average potential for capital
growth. Although the precise application of the discipline varies according to
market conditions, the Adviser uses statistical modeling techniques that utilize
stock and market specific factors to identify equity securities and markets that
are attractive as purchase candidates. These factors include current and
historical price multiple ratios, stability of earnings growth, forecasted
changes in earnings growth, trends in consensus analysis estimates, and measures
of earnings results relative to expectations. Once identified, these securities
and markets are subject to further review by the Adviser's professional staff
before they are included in the Fund's portfolio. Securities selected for
inclusion in the Fund's portfolio will represent various industries and sectors.
Under normal circumstances the Fund invests at least 65% of its total
assets in equity securities of foreign companies. The Fund will normally invest
in issuers in at least five countries. The Fund invests in securities issued by
companies in countries included in the EAFE Index, Canada and, to a lesser
extent, in countries considered by the Adviser to be "Emerging Markets." The
following countries are currently in the EAFE Index: Australia, Austria,
Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
The Netherlands, New Zealand, Norway, Singapore, Malaysia, Spain, Sweden,
Switzerland, and the United Kingdom. However, the Fund is not required to invest
in all such countries and is not required to invest in accordance with the
weightings of the EAFE Index.
The Fund may invest up to 25% of its total assets in securities of issuers
located or principally doing business in countries with emerging economies or
securities markets ("Emerging Markets"), provided that not more than 5% of its
total assets may be invested in the securities of issuers in any one Emerging
Market. Investments in securities of Emerging Markets issuers may, in some
cases, be made through investments in country funds and other investment
companies. The Fund will comply with the requirements of the Investment Company
Act of 1940 when investing in other investment companies The Fund will
<PAGE>
indirectly bear its proportionate share of any expenses paid by other investment
companies in which it invests, in addition to the expenses paid by the Fund.
In addition to purchasing equity securities of foreign issuers in foreign
securities markets, the Fund may invest in sponsored or unsponsored American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs").
Generally, ADRs in registered form are designed for use in the U.S. securities
markets and EDRs in bearer form are designed for use in European securities
markets. ADRs are denominated in U.S. dollars and represent an interest in the
right to receive securities of foreign issuers deposited in a U.S. bank or
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in equity securities of non-U.S. issuers, the Fund will avoid currency
risks during the settlement period for either purchases or sales. EDRs are not
necessarily denominated in the same currency as the underlying securities which
they represent. For purposes of the Fund's investment policies, investments in
ADRs, EDRs and similar instruments will be deemed to be investments in the
underlying equity securities of the foreign issuers. The Fund may acquire
depositary receipts from banks that do not have a contractual relationship with
the issuer of the security underlying the depositary receipt to issue and secure
such depositary receipt. To the extent that the Fund invests in such unsponsored
depositary receipts there may be increased possibility that the Fund may not
become aware of events affecting the underlying security and thus the value of
the related depositary receipt. In addition, certain benefits (i.e., rights
offerings) which may be associated with the security underlying the depositary
receipt may not inure to the benefit of the holder of a depositary receipt.
Although under normal circumstances the Fund invests primarily in common
stocks and other equity securities, it may invest for capital appreciation in
other types of securities, including, but not limited to, convertible bonds and
stocks, preferred stocks, bonds, notes and other debt securities of foreign
issuers (including Euro-dollar securities), warrants, rights, or obligations of
U.S. or foreign governments and their political subdivisions. The Fund will
invest in preferred stocks and other fixed income securities that are "high
grade" (i.e., securities rated, at the time of investment, A or better by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group
("S&P") or, if unrated, determined to be of comparable credit quality by the
Adviser), provided that the Fund may invest in preferred stocks of an issuer of
any credit quality if the common stocks of such issuer are not available to the
Fund for investment. In the case of a security proposed to be purchased by the
Fund that is rated differently by the two rating services, the higher rating is
used in applying the Fund's rating policy.
The Fund may establish and maintain cash balances for liquidity purposes.
The Fund may also establish and maintain cash balances for temporary defensive
purposes without limitation in the event of, or in anticipation of, a general
decline in the market prices of the securities in which it invests. The Fund's
cash balances may be invested in U.S. and foreign high quality short-term money
market instruments, including, but not limited to, government obligations,
certificates of deposit, bankers' acceptances, commercial paper, short-term
corporate debt securities and repurchase agreements.
<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 will attempt to limit its net loss
exposure resulting from Strategic Transactions entered into for such purposes to
not more than 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
anticipates that the Belgian franc will appreciate relative to the French franc,
the Fund may take a long forward currency position in the Belgian franc and a
short foreign currency position in the French franc. Under such circumstances,
any unrealized loss in the Belgian franc position would be netted against any
unrealized gain in the French franc position (and vice versa) for purposes of
calculating the 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.
<PAGE>
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 attempt to
limit its net loss exposure resulting from Strategic Transactions entered into
for non-hedging purposes to not more than 3% of its net assets at any one time.
Futures markets are highly volatile and the use of futures may increase the
volatility of the 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.
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
<PAGE>
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 may also
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 liquid securities, at such a level that the amount
deposited in the account plus the amount deposited with the broker as collateral
will equal the current value of the security sold short or (b) otherwise cover
its short position.
The 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 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 must pay a premium
to the person writing the option and a commission to the broker selling the
option. If the option is exercised by the 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.
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 enter repurchase agreements with commercial banks, brokers and
dealers considered creditworthy by the Adviser and which furnish collateral at
least equal in value to the amount of their repurchase obligation. If the other
party or "seller" of a repurchase agreement defaults, the Fund might suffer a
loss to the extent that the proceeds from the sale of the underlying securities
and other collateral held by the Fund in connection with the related repurchase
<PAGE>
agreement are less than the repurchase price. In addition, in the event of
bankruptcy of the seller or failure of the seller to repurchase the securities
as agreed, a Fund could suffer losses, including loss of interest on or
principal of the security and costs associated with delay and enforcement of the
repurchase agreement. The Fund's investments in repurchase agreements maturing
in more than 7 days are subject to the Fund's 15% limitation on investments in
illiquid securities.
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 placements 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, swap
transactions, 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 or sales
of portfolio securities for a particular year equaled the average monthly value
of portfolio securities owned during the year (excluding securities with a
maturity date of one year or less at the date of acquisition). The Fund's
portfolio turnover rates are listed in the section captioned "Financial
Highlights."
Investment Restrictions
The Fund has adopted certain fundamental policies which may not be changed
without 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
<PAGE>
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 or pledge or mortgage its assets, except that the Fund may borrow
from banks as a temporary measure for extraordinary or emergency purposes (but
not investment purposes) in an amount up to 15% of the current value of its
total assets, and pledge its assets to an extent not greater than 15% of the
current value of its total assets to secure such borrowings; however, the Fund
may not make any additional investments while its outstanding borrowings exceed
5% of the current value of its total assets; or (iii) make loans, except that
the Fund may purchase or hold a portion of an issue of publicly distributed debt
instruments, purchase negotiable certificates of deposit and bankers'
acceptances, and enter into repurchase agreements.
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. Certain non-fundamental policies and 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. Notwithstanding the Fund's ability to diversify
and spread risk by holding securities of a number of issuers, 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, which are generally
denominated in foreign currencies, and the other investment practices of the
Fund involve certain risks of political, economic and legal conditions and
developments not typically associated with investing in U.S. dollar denominated
securities of U.S. companies. Such conditions or developments might include
favorable or 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 U.S.
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 equity securities in the Fund's portfolio are held by
foreign subcustodians that satisfy certain eligibility requirements. However,
foreign subcustodian arrangements are significantly more expensive than domestic
<PAGE>
custody. In addition, foreign settlement of securities transactions is subject
to local law and custom that is not, generally, as well established or as
reliable as U.S. regulation and custom applicable to settlements of securities
transactions and, accordingly, there is generally perceived to be a greater risk
of loss in connection with securities transactions in many foreign countries.
Emerging Markets
Investments in Emerging Markets involves risks in addition to those
generally associated with investments in foreign securities. Political and
economic structures in many Emerging Markets may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristics of more developed countries. As
a result, the risks described above relating to investments in foreign
securities, including the risks of nationalization or expropriation of assets,
may be heightened. In addition, unanticipated political or social developments
may affect the values of the Fund's investments and the availability to the Fund
of additional investments in such Emerging Markets. The small size and
inexperience of the securities markets in certain Emerging Markets and the
limited volume of trading in securities in those markets may make the Fund's
investments in such countries less liquid and more volatile than investments in
countries with more developed securities markets (such as the U.S., Japan and
most Western European countries).
CALCULATION OF PERFORMANCE DATA
From time to time the Fund may advertise its yield and total return. Both
yield and 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
(or any shorter period since inception) 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.
The "yield" of the Fund is computed by dividing the net investment income
per share earned during the period stated in the advertisement by the maximum
offering price per share on the last day of the period (using the average number
of shares entitled to receive dividends). For the purpose of determining net
investment income the calculation includes, among expenses of the Fund, all
recurring fees that are charged to all shareholder accounts and any nonrecurring
charges for the period stated.
From time to time, the Fund may compare its performance with that of other
mutual funds with similar investment objectives, to stock and other relevant
indices, and to performance rankings prepared by recognized mutual fund
statistical services. In addition, the Fund's performance may be compared to
alternative investment or savings vehicles and/or to indices or indicators of
economic activity.
DIVIDENDS AND DISTRIBUTIONS
Dividends on shares of the Fund from net investment income will be declared
and distributed annually. Dividends from short-term and long-term capital gains,
if any, after reduction by capital losses, will be declared and distributed at
<PAGE>
least annually. Dividends from net investment income and 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.
PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Principal
Underwriter, which offers the Fund's 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 in good order by the Principal Underwriter and
payment for the shares is received by the Fund's custodian. Please see the
Fund's account application or call the Principal Underwriter for instructions on
how to make payment of shares to the Fund's custodian. Unless waived by the
Fund, the minimum initial investment is $100,000. Additional investments may be
made in amounts of at least $10,000.
Shares of the Fund may also be purchased through securities dealers. 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 Principal Underwriter or its agent 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, provided that
payment for the shares is also received by the Fund's custodian 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 Principal Underwriter 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, the Principal
Underwriter, or the Adviser.
The Fund's net asset value per share is computed each day on which the New
York Stock Exchange is open as of the close of regular trading on the Exchange
(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 sale prices on the exchange or
national securities market on which they are primarily traded. Securities not
listed on an exchange or national securities market, or securities for which
there were no reported transactions, are valued at the last quoted bid price.
Securities for which quotations are not readily available and all other assets
are valued at fair value as determined in good faith at the direction of the
Trustees. Money market instruments with less than sixty days remaining to
maturity when acquired by the Fund are valued on an amortized cost basis unless
the Trustees determine that amortized cost does not represent fair value. If the
Fund 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. Additional information concerning
the Fund's valuation policies is contained in the Statement of Additional
Information.
<PAGE>
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. The Fund's investment minimums do not apply to
accounts for which the Adviser or any of its affiliates serves as investment
adviser or to employees of the Adviser or any of its affiliates or to members of
such persons' immediate families. The Fund's investment minimums apply to the
aggregate value invested in omnibus accounts rather than to the investment of
the underlying participants in such omnibus accounts.
EXCHANGE OF SHARES
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 Principal Underwriter or its agent.
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
Principal Underwriter or its agent 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 Principal Underwriter 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 the Fund may be exchanged by written order to the Principal
Underwriter, One Financial Center, Boston, Massachusetts 02111. A written
exchange request must (a) state the name of the current Fund, (b) state the name
of the 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 (e) 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 elect telephonic privileges may exchange shares by calling
the Principal Underwriter at (800) 221-4795. Telephonic privileges are not
available to shareholders automatically. Proper identification will be required
for each telephonic exchange. Please see "Telephone Transactions" below for more
information regarding telephonic transactions.
<PAGE>
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 by
the Fund's custodian. 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.
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 by the Principal
Underwriter or its agent 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.
Written Redemption
Shares of the Fund may be redeemed by written order to the Principal
Underwriter, One Financial Center, 26th Floor, Boston, Massachusetts 02111. A
written redemption request must (a) state the name of the Fund and 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(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 that are not
individuals. Redemption proceeds will normally be paid by check mailed within
three business days of receipt by the Principal Underwriter 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 in the case of
payments made by check.
Telephonic Redemption
Shareholders who elect telephonic privileges may redeem shares by calling
the Principal Underwriter at (800) 221-4795. Telephonic privileges are not
<PAGE>
available to shareholders automatically. Redemption proceeds will be mailed or
wired in accordance with the shareholder's instruction on the account
application to a pre-designated account. Redemption proceeds will normally be
paid promptly after receipt of telephonic instructions, but no later than three
business days thereafter, except as described above for shares purchased by
check. 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. Wire charges, if any,
will be deducted from redemption proceeds. Proper identification will be
required for each telephonic redemption.
Repurchase Order
In addition to telephonic and written redemption of Fund shares, the
Principal Underwriter may accept telephone orders from brokers or dealers for
the repurchase of Fund shares. The repurchase price is the net asset value per
share next determined after receipt of the repurchase order by the Principal
Underwriter and the payment for the shares by the Fund's custodian. Brokers and
dealers are obligated to transmit repurchase orders to the Principal Underwriter
prior to the close of the Principal Underwriter's business day (normally 4:00
p.m.). Brokers and dealers may charge for their services in connection with a
repurchase of Fund shares, but neither the Fund nor the Principal Underwriter
imposes a charge for share repurchases.
Telephone Transactions
By maintaining an account that is eligible for telephonic exchange and
redemption privileges, the shareholder authorizes the Adviser, the Principal
Underwriter, the Fund and the Fund's custodian to act upon instructions of any
person to redeem and/or exchange shares from the shareholder's account. Further,
the shareholder acknowledges that, as long as the Fund employs reasonable
procedures to confirm that telephonic instructions are genuine, and follows
telephonic instructions that it reasonably believes to be genuine, neither the
Adviser, nor the Principal Underwriter, nor the Trust, nor the Fund, 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
or exchange, 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. All telephone transaction requests will
be recorded. Shareholders may experience delays in exercising telephone
transaction privileges during periods of abnormal market activity. Accordingly,
during periods of volatile economic and market conditions, shareholders may wish
to consider transmitting redemption and exchange requests in writing.
* * * *
<PAGE>
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 which has a value of 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. The Fund may eliminate duplicate mailings of Fund materials
to shareholders that have the same address of record.
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.
Investment Adviser
Standish International Management Company, L.P. (the "Adviser"), One
Financial Center, Boston, MA 02111, serves as investment adviser to the Fund
pursuant to an investment advisory agreement and manages the Fund's investments
and affairs subject to the supervision of the Trustees of the Trust. The Adviser
is a Delaware limited partnership which was organized in 1991 and is a
registered investment adviser under the Investment Advisers Act of 1940. The
general partner of the Adviser is Standish, Ayer & Wood, Inc. ("Standish"), One
Financial Center, Boston, MA 02111, which holds a 99.98% partnership interest.
The limited partners, who each hold a 0.01% interest in the Adviser, are Walter
M. Cabot, Sr., Chairman of the Board of the Adviser and a Director of and a
Senior Adviser to Standish, and D. Barr Clayson, the President of the Adviser
and a Managing Director of Standish. Richard S. Wood, a Vice President and
Director of Standish and the President of the Trust, is the Executive Vice
President of the Adviser.
Standish and the Adviser provide fully discretionary management services
and counseling and advisory services to a broad range of clients throughout the
United States and abroad. As of March 31, 1996, Standish or the Adviser served
as the investment adviser to each of the following fourteen funds in the
Standish, Ayer & Wood family of funds:
<PAGE>
Net Assets
Fund (March 31, 1996)
- --------------------------------------------------------------------------------
Standish Controlled Maturity Fund $ 9,042,346
Standish Equity Portfolio 98,282,505
Standish Fixed Income Portfolio 2,299,158,500
Standish Fixed Income Fund II 10,102,031
Standish Global Fixed Income Portfolio 149,048,965
Standish Intermediate Tax Exempt Bond Fund 31,199,236
Standish International Equity Fund 51,980,946
Standish International Fixed Income Fund 761,073,675
Standish Massachusetts Intermediate
Tax Exempt Bond Fund 32,270,691
Standish Securitized Fund 53,357,787
Standish Short-Term Asset Reserve Fund 272,188,970
Standish Small Capitalization Equity Portfolio 196,260,876
Standish Small Cap Tax-Sensitive Equity Fund 1,588,743
Standish Tax-Sensitive Equity Fund 1,261,111
Corporate pension funds are the largest asset under active management by
Standish. Standish's clients also include charitable and educational endowment
funds, financial institutions, trusts and individual investors. As of March 31,
1996, Standish managed approximately $29 billion in assets.
The Fund's portfolio manager is Remi J. Browne, who has been primarily
responsible for the day-to-day management of the Fund's portfolio since December
1996. During the past five years, Mr. Browne has served as Vice President of the
Adviser since 1996 and as Managing Director of Ark Asset Management Company, New
York, prior thereto.
Subject to the supervision and direction of the Trustees, 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, administers the affairs of
the Fund and permits the Fund to use the identifying name "Standish." For these
services, the Fund pays a fee monthly at the annual rate of 0.80% of its average
daily net asset value. The Adviser believes that this fee is generally
competitive with fees of other investment companies which primarily invest in
foreign equity securities; because of the complexity of managing the Fund's
portfolio, the fee is higher than that paid by most other investment companies
investing primarily in U.S. securities. For the fiscal year ended December 31,
1995, advisory fees paid to the Adviser represented 0.80% of the Fund's average
net daily assets.
<PAGE>
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 shareholders; registration and
reporting fees and expenses; and Trustees' fees and expenses. The Principal
Underwriter bears 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 Standish and the Adviser in an equitable
manner. The Adviser has voluntarily agreed to limit the Fund's total operating
expenses to not more than 1.60% of the Fund's average daily net assets and will
reduce its fee or make other arrangements to the extent that expenses would
otherwise exceed such limit. The Adviser may discontinue or modify such
limitation in the future at its discretion, although it has no current intention
to do so. The Adviser has also agreed to limit the Fund's total operating
expenses (excluding brokerage commissions, taxes and extraordinary expenses) to
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, 1995, expenses
borne by the Fund represented 1.22% of the Fund's average daily net assets.
Portfolio Transactions
Subject to the supervision of the Trustees, the Adviser selects the brokers
and dealers that execute orders to purchase and sell portfolio securities for
the Fund. The Adviser will generally 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 services 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. The Adviser will
use various computer software programs and their output developed by investment
banking firms (including Morgan Stanley Capital International) to analyze and
evaluate particular foreign securities and to perform fundamental securities
analysis, which considers macroeconomic factors as well as the long-term
earnings prospects of particular companies. The receipt and use of such computer
programs by the Adviser may also be considered a factor in the selection of
brokers for portfolio transactions 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 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 a 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
<PAGE>
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. No portion of such dividends is expected to
qualify for the corporate dividends received deduction 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 will be subject to foreign withholding taxes
or other foreign taxes on income (possibly including capital gains) on certain
of its foreign investments, which will reduce the yield or return from those
investments. Such taxes may be reduced or eliminated pursuant to an income tax
treaty in some cases.
The Fund may qualify to make an election to pass the qualifying foreign
taxes it pays through to its shareholders, who would then include their share of
such taxes in their gross incomes (in addition to the actual dividends and
capital gain distributions received from the Fund) and might be entitled,
subject to certain conditions and limitations under the Code, to a federal
income tax credit or deduction for their share of such taxes. Tax-exempt
shareholders generally will not benefit from this election. If the Fund makes
this election, it will provide necessary information to its shareholders
regarding any foreign taxes passed through to them. If the Fund does not make
this election, it may deduct the foreign taxes it pays in computing the net
income it must distribute to shareholders to satisfy the Code's distribution
requirements.
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
<PAGE>
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.
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 non-assessable. 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 fourteen series that currently offer their shares
to the public and may establish additional series at any time. Each series is a
separate taxpayer, eligible to qualify as a separate regulated investment
company for federal income tax purposes. The calculation of the net asset value
of a series and 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 at
least 1% of the outstanding shares, whichever is less, apply to the Trustees in
<PAGE>
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 Principal
Underwriter at the address and telephone number listed on the cover of this
Prospectus.
CUSTODIAN
Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York
11201, serves as custodian of all cash and securities of the Fund.
TRANSFER AGENT AND SHAREHOLDER
SERVICING AGENT
Investors Bank & Trust Company, 24 Federal Street, Boston, Massachusetts
02110, serves as the Fund's transfer and shareholder servicing agent and
provides the calculation of the Fund's net asset value.
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 and Standish.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
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 TIN-related
certifications contained in the Account Purchase Application (Application) or
you are otherwise subject to backup withholding. The Fund will not impose backup
withholding as a result of your failure to make any certification, except the
certifications in the Application that directly relate to your TIN and backup
withholding status. 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 adviser.
<PAGE>
STANDISH INTERNATIONAL EQUITY FUND
Investment Adviser
Standish International Management
Company, L.P.
One Financial Center
Boston, Massachusetts 02111
Principal Underwriter
Standish Fund Distributors, L.P.
One Financial Center
Boston, Massachusetts 02111
Custodian
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
