SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
---
Filed by a party other than the Registrant
Check appropriate box:
___ Preliminary proxy statement
X Definitive proxy statement
- ---
___ Definitive additional materials
X Solicitation material
___
Standish, Ayer & Wood Investment Trust
(Name of Registrant as Specified in Its Charter)
Board of Trustees of Standish, Ayer & Wood Investment Trust
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
Not Applicable
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[LOGO]
STANDISH SHORT-TERM ASSET RESERVE FUND
A Series of
STANDISH, AYER & WOOD INVESTMENT TRUST
Notice of Special Meeting of Shareholders
To Be Held on December 17, 1997
To Our Shareholders:
A Special Meeting (the "Meeting") of Shareholders of Standish Short-Term
Asset Reserve Fund (the "Fund"), a series of Standish, Ayer & Wood Investment
Trust (the "Trust"), will be held on Wednesday, December 17, 1997, at 10:00 a.m.
(Boston time) at the offices of the Trust located at One Financial Center, 26th
Floor, Boston, MA 02111 for the following purposes:
(1) To consider and act upon a proposal to adopt and to implement a new
investment policy to authorize the Fund to invest all of its investable assets
in a specific corresponding open-end management investment company (the
"Portfolio") having substantially the same investment objective, policies and
restrictions as the Fund, and to amend certain investment restrictions to permit
such investment;
(2) To consider and act upon proposals to authorize the Trust to vote as a
holder of an interest in the Portfolio (A) to elect Trustees of Standish, Ayer &
Wood Master Portfolio; (B) to ratify the selection of Coopers & Lybrand, L.L.P.
as the independent accountants of the Portfolio; and (C) to approve the
Investment Advisory Agreement between the Portfolio and its investment adviser,
Standish, Ayer & Wood, Inc.;
(3) To consider and act upon proposals to amend and to restate the Fund's
investment restrictions; and
(4) To consider and act upon any matters incidental to the foregoing purposes
or any of them, and any other matters which may properly come before the Meeting
or any adjourned session thereof.
The proposals referred to above are discussed in the accompanying Proxy
Statement. Each shareholder is invited to attend the Meeting in person.
Shareholders of record at the close of business on November 7, 1997 have the
right to receive notice of and to vote at the Meeting. We urge you to complete,
date, sign and promptly return the enclosed proxy card in order that the Meeting
may be held and the Fund may avoid the additional expense of further
solicitation.
Anne P. Herrmann
Secretary
November 18, 1997
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
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STANDISH SHORT-TERM ASSET RESERVE FUND
A SERIES OF
STANDISH, AYER & WOOD INVESTMENT TRUST
One Financial Center
Boston, Massachusetts 02111
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Trustees") of Standish, Ayer & Wood
Investment Trust (the "Trust"). The proxies will be voted at the Special Meeting
of Shareholders of Standish Short-Term Asset Reserve Fund (the "Fund"), a series
of the Trust, to be held on Wednesday, December 17, 1997, at 10:00 a.m. (Boston
time) at the offices of the Trust located at One Financial Center, 26th Floor,
Boston, MA 02111 (such meeting and any adjournment or postponement thereof are
referred to as the "Meeting").
The purposes of the Meeting are set forth in the accompanying Notice of
Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Meeting. Should other business properly be brought before the Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This Proxy Statement and the enclosed proxy card are expected to be
mailed on or about November 14, 1997 to shareholders of record at the close of
business on November 7, 1997 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote at
the Meeting. On the Record Date, there were 12,207,691.527 shares of beneficial
interest of the Fund outstanding and entitled to vote at the Meeting. (The
shares are referred to individually as a "Share" and collectively as the
"Shares".) Each Share is entitled to one vote, and a fractional Share is
entitled to a proportionate share of one vote.
The executive offices of the Trust are located at One Financial Center,
Boston, Massachusetts 02111. The Fund's Annual Report to Shareholders for its
fiscal year ended December 31, 1996 may be obtained free of charge by writing to
the Trust at the address set forth above or by calling 1-800-221-4795 (toll
free).
It is essential that shareholders complete, date and sign the enclosed proxy
card.
In order that your Shares may be represented at the Meeting, you are
requested to:
o indicate your instructions on the enclosed proxy card;
o date and sign the proxy card;
o mail the proxy card promptly in the enclosed envelope, which requires no
postage if mailed in the United States; and
o allow sufficient time for the proxy card to be received by 10:00 a.m. on
December 17, 1997.
PROPOSAL 1: TO APPROVE AND TO IMPLEMENT A NEW INVESTMENT POLICY AND TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
Summary
The Trustees of the Trust have approved, and are submitting to the
shareholders of the Fund for approval, the adoption and implementation of a new
investment policy for the Fund and the amendment of certain of the Fund's
fundamental investment restrictions to permit the Fund to invest all of its
investable assets ("Investable Assets") in the Standish Short-Term Asset Reserve
Portfolio (the "Portfolio"). The Portfolio, a series of Standish, Ayer & Wood
Master Portfolio (the "Portfolio Trust"), has substantially the same investment
objective, policies and restrictions as the Fund. If this Proposal is approved
by the Fund's shareholders, the Trustees intend to invest all the Fund's
Investable Assets in the Portfolio, thereby converting the Fund to the
master-feeder fund structure.
The Trustees of the Trust recommend that shareholders of the Fund vote to
approve this Proposal 1. The Trustees believe that the Fund's conversion to the
master-feeder fund structure will be advantageous to the shareholders of the
Fund in several respects. Please see "Recommendation of the Board of Trustees"
on page 5 of this Proxy Statement for a discussion of the Trustees'
recommendation.
New Investment Policy
The Trustees recommend that the shareholders of the Fund approve the adoption
and implementation of a new investment policy for the Fund, i.e., to invest all
of the Fund's Investable Assets in the Portfolio. The Portfolio is a series of
the Portfolio Trust, a New York trust registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Portfolio has substantially the same investment objective,
policies and restrictions as the Fund. Standish, Ayer & Wood, Inc. ("Standish"
or the "Adviser") serves as the Fund's investment adviser and, subject to
shareholder approval, will serve as the Portfolio's investment adviser. In the
master-feeder fund structure, the Fund would seek to achieve its investment
objective by investing in the Portfolio, rather than through investing directly
in securities. The Portfolio in turn would invest in securities in accordance
with its investment objective, policies and restrictions. Interests in the
Portfolio are not available for purchase directly by members of the general
public.
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To the extent required by applicable law or the Trust's Declaration of Trust,
the approval by Fund shareholders of this Proposal will authorize the Trustees
of the Trust to implement the Fund's conversion to the master-feeder fund
structure. If this Proposal is approved by the shareholders of the Fund, the
Trustees intend to convert the Fund to the master-feeder fund structure on or
about the close of business on January 1, 1998 or such other date as the
Trustees may approve.
The Trustees expect to implement the Fund's conversion to the master-feeder
fund structure by causing the Fund to exchange all of its Investable Assets
(securities and cash) as well as certain other assets (including receivables for
securities sold and interest on securities) for an interest in the Portfolio.
The value of a shareholder's investment in the Fund will be the same immediately
after the Fund's investment in the Portfolio as immediately before that
investment. Of course, the value of a shareholder's investment in the Fund may
fluctuate thereafter.
The Investment Adviser and Administrator
To the extent that the Fund invests all of its Investable Assets in the
Portfolio, the Fund would no longer directly require investment advisory
services. For this reason, if shareholders of the Fund approve the changes in
investment restrictions and adopt and authorize the implementation of the new
investment policy described in this Proposal, and the Fund invests all of its
Investable Assets in the Portfolio, the Fund will terminate its investment
advisory agreement with the Adviser. The investment advisory function will then
be performed by the Adviser under an investment advisory contract with the
Portfolio Trust. The Fund will, therefore, indirectly bear its proportionate
share of the advisory fees paid by the Portfolio pursuant to its investment
advisory agreement with the Adviser rather than pay the Adviser directly for
advisory services.
Pursuant to the Portfolio's investment advisory agreement, the Adviser will
be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund. For information about the Adviser, the
identity of its directors and its other contractual arrangements with the Trust,
see page 16 of this Proxy Statement.
Upon exchange of its Investable Assets for an interest in the Portfolio, the
Fund will retain the services of Standish under an administration agreement.
Under the administration agreement, Standish would provide the Fund with general
office facilities, supervise the overall administration of the Fund and allow
the Fund to use the name "Standish." For these services, Standish currently will
not receive any additional compensation. The Trustees may, however, determine in
the future to compensate Standish for its services under the administration
agreement.
Comparative Expenses
The following table shows the actual expenses of the Fund for the six months
ended June 30, 1997 and a pro forma adjustment thereof assuming that the Fund
had invested all of its Investable Assets in the Portfolio for the six month
period then ended. The pro forma adjustment includes the estimated costs of
operating the Fund in the master-feeder fund structure. The pro forma adjustment
assumes that: (i) there were no holders of interests in the Portfolio other than
the Fund; (ii) the average daily net assets of the Fund and the Portfolio were
equal to the actual average daily net assets of the Fund during the period and
(iii) that the average daily net assets invested by the Fund in the Portfolio
were $244,594,223.
Actual Annual Fund Aggregate Pro
Operating Expenses Forma Expenses
- --------------------------------------------------------------------------------
Management Fees 0.25% 0.21%*
12b-1 Distribution Expenses none none
Other Expenses 0.10% 0.14%
----- -----
Total Operating Expenses 0.35% 0.35%*
----- -----
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*After expense limitation. See "Expense Limitation" below.
Expense Limitation. Standish has voluntarily agreed to limit the
master-feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the master-feeder fund structure, which may be higher
or lower than the June 30, 1997 ratio set forth above. The expense ratio
considered to be in effect immediately prior to the conversion for this purpose
will be calculated using the actual expenses incurred by the Fund during the
three months immediately prior to conversion and annualizing this amount. In the
absence of this agreement, Management Fees and Total Operating Expenses are
estimated to be on a pro forma combined basis approximately 0.25% and 0.39%,
respectively. Standish may discontinue or modify such limitation in the future
at its discretion, although it has no current intention to do so.
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Example:
Hypothetically assume that the Fund's annual return is 5% and that its total
operating expenses are exactly as described in the column captioned "Aggregate
Pro Forma Expenses." For every $1,000 invested, an investor would have paid the
following expenses if an account were closed after the number of years
indicated:
1 yr. 3 yrs. 5 yrs. 10 yrs.
----- ------ ------ -------
$4 $11 $20 $44
The purpose of the table is to assist shareholders in understanding the
various costs and expenses that a shareholder in the Fund will bear directly and
indirectly. The example is included solely for illustrative purposes and should
not be considered a representation of future performance or expenses. Actual
expenses may be more or less than those shown.
If the Fund is converted to the master-feeder fund structure, actual Total
Operating Expenses to be incurred may vary from the pro forma Total Operating
Expenses indicated above due to changes in the Fund's expenses and net asset
value between June 30, 1997 and the conversion date. Assuming that the Fund was
the only holder of an interest in the Portfolio and that the Fund was fully
invested therein, the net asset value per share, distributions per share and net
investment income per share of the Fund would have been approximately the same
on a pro forma basis as the actual net asset value, distributions and net
investment income per share of the Fund during the period indicated.
Tax Considerations
The Trust anticipates that its contribution of the Fund's Investable Assets
to the Portfolio in exchange for an interest in the Portfolio in the manner
contemplated will not result in the recognition of gain or loss to the Fund for
federal income tax purposes.
As a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), the Fund does not pay federal income or excise taxes to
the extent that it distributes to shareholders its net investment income and net
realized capital gains in accordance with the timing requirements imposed by the
Code. Under current law, so long as the Fund qualifies as a regulated investment
company for federal income tax purposes, the Fund itself is not liable for any
income, corporate excise or franchise taxes in the Commonwealth of
Massachusetts. The Portfolio is organized and intends to conduct its operations
in a manner such that (i) it also will not be required to pay any federal or
Massachusetts income or excise taxes and (ii) the Fund, by investing all of its
Investable Assets in the Portfolio, will be able to continue to qualify as a
regulated investment company under the Code.
Description of the Portfolio
The Portfolio Trust was organized as a master trust fund under New York law
on January 18, 1996. The investment objective of the Portfolio is the same as
the investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy. The
approval of the Portfolio's investors (i.e., the Fund and other holders of
interests in the Portfolio) would be required to change any of its fundamental
investment policies or restrictions; however, any change in non-fundamental
investment policies or restrictions would not require such approval. The Fund
would be able to withdraw its investment in the Portfolio at any time if the
Trustees determine, without shareholder approval, that it is in the best
interests of the Fund to do so (including if the Fund's and the Portfolio's
investment objectives, policies and restrictions were not substantially the
same). Upon any such withdrawal, the Trustees would consider what action might
be taken, including investing all the Investable Assets of the Fund in another
pooled investment entity having substantially the same investment objective as
the Fund or the retention of an investment adviser to manage directly the Fund's
assets in accordance with its investment objective (as is presently the case).
Like the Fund, the Portfolio determines its net asset value on each day on
which the New York Stock Exchange is open. The net asset value is determined as
of the close of regular trading on the New York Stock Exchange (normally 4:00
p.m., New York City time). The Portfolio's net asset value is computed by
determining the value of the Portfolio's total assets (the securities it holds
plus any cash or other assets, including interest accrued but not yet received),
and subtracting all of the Portfolio's liabilities (including accrued expenses).
The Fund's net asset value is determined at the same time and on the same
days that the net asset value of the Portfolio is calculated. The Fund's net
asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting all
of the Fund's liabilities (including accrued expenses), and dividing the result
by the total number of shares outstanding at such time.
Interests in the Portfolio Trust have no preemptive or conversion rights, and
are fully paid and non-assessable. The Portfolio Trust normally will not hold
meetings of holders of such interests except as required under the 1940 Act. The
Portfolio Trust would be required to hold a meeting of holders in the event that
at any time less than a majority of its Trustees holding office have been
elected by holders. The Trustees of the Portfolio Trust continue to hold office
until their successors are elected and have qualified. Holders holding a
specified percentage of interests in the Portfolio Trust may call a meeting of
holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the
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Portfolio Trust qualified to vote in the election. The 1940 Act requires the
Portfolio Trust to assist its holders in calling such a meeting. Upon
liquidation of the Portfolio, holders in the Portfolio would be entitled to
share pro rata in the net assets of the Portfolio available for distribution to
holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its shareholders and will cast its votes proportionately as
instructed by Fund shareholders that voted at the Fund meeting. Fund
shareholders who do not vote at the Fund meeting will not affect the Fund's
votes at the Portfolio meeting. The percentage of the Fund's votes representing
Fund shareholders not voting will be voted by the Trustees of the Trust in the
same proportion as the Fund shareholders who do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund would
not be required to request a vote of its shareholders with respect to (a) any
proposal relating to the Portfolio, which proposal, if made with respect to the
Fund, would not require the vote of the shareholders of the Fund, or (b) any
proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Fund. Any proposal submitted to holders in the Portfolio that is not required to
be voted on by shareholders of the Fund would nonetheless be voted on by the
Trustees of the Trust.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable under the
Portfolio Trust's declaration of trust for the obligations of the Portfolio only
up to the amount of its interest in the Portfolio. In addition, holders in the
Portfolio may be held personally liable as partners for the Portfolio's
obligations. However, because the Portfolio Trust's declaration of trust
disclaims holder liability and provides for indemnification against such
liability, the risk of a holder in the Portfolio incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
As such, it is unlikely that the Fund would experience liability from the new
investment structure itself. In any event, shareholders of the Fund will
continue to remain shareholders of a Massachusetts business trust, and the risk
of such a person incurring liability by reason of being a shareholder of the
Fund is remote.
The Portfolio has its own Board of Trustees, including a majority of Trustees
who are not "interested persons" (as defined in the 1940 Act) of the Portfolio
(the "Independent Trustees"). The Trustees of the Portfolio Trust are identical
to the present Trustees of the Trust and are listed on page 7 of this Proxy
Statement.
Proposed Amendment of Certain Investment Restrictions
The Trustees have approved, subject to a shareholder vote, the amendment of
the investment restrictions of the Fund to permit the Fund to invest all of its
Investable Assets in the Portfolio. The proposed amendments to the Fund's
fundamental investment restrictions are subject to approval by the Fund's
shareholders. Certain of the Fund's investment restrictions may be deemed to
prohibit the Fund from seeking its investment objective by investing all of its
Investable Assets in the Portfolio. (See current investment restrictions 2, 6, 7
and 9 in Exhibit A.)
The investment restrictions for the Fund would be amended to provide that
"Notwithstanding the current investment restrictions, the Fund may invest
substantially all of its assets (other than assets which are not "investment
securities," as defined in the 1940 Act, or are excepted by the SEC) in an
open-end management investment company with substantially the same investment
objective as the Fund".
Additional changes are necessary to certain non-fundamental investment
restrictions of the Fund in order to make the Fund's current restrictions
consistent with the foregoing exception. The complete list of the Fund's current
and proposed investment restrictions, revised as described in Proposal 3, is
attached as Exhibit A.
Recommendation of the Board of Trustees
The Trustees of the Trust recommend that shareholders of the Fund vote to
approve this Proposal 1. The Trustees believe, based primarily on their
discussions with the Adviser, that the master-feeder fund structure will permit
other collective investment vehicles having different distribution arrangements
to invest in the Portfolio. Since certain of these other vehicles would not
otherwise invest in the Fund due to tax and other reasons, additional assets
should be attracted to the Portfolio, thus increasing the Portfolio's asset
base. This anticipated larger asset base will be advantageous to the
shareholders of the Fund in several respects. The following and other factors
were considered by the Board in approving the Fund's conversion to the
master-feeder fund structure.
First, because certain expenses of operating an investment portfolio are
relatively fixed, those expenses should decline as a percentage of net asset
value as a result of an increased asset base following the conversion to the
master-feeder fund structure. Currently, the Fund bears these expenses alone.
After the conversion, these expenses would be borne in whole or in part by the
Portfolio and shared pro rata by the Fund and other investors in the Portfolio.
Second, to the extent that the Portfolio will have a larger asset base than
that of the Fund, greater diversification of its investment portfolio can be
achieved than is currently possible for the Fund. Greater diversification is
expected to be beneficial to shareholders of the Fund and other investors in the
Portfolio because it may reduce the negative effect which the adverse
performance of any one portfolio security may have on the performance of the
entire investment portfolio.
Third, the larger anticipated size of the Portfolio would permit the purchase
of investments in larger denominations than the Fund currently is able to
purchase.
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Although these benefits could be realized by the direct growth of the Fund's
assets, the Trustees believe that growth is more likely to be achieved through
investments in the Portfolio by entities in addition to the Fund. In considering
the prospects for asset growth resulting from the structure, the Trustees
reviewed the Adviser's marketing plans for the Fund and the Portfolio, including
the Adviser's discussions with an institution considering the possibility of
sponsoring a new feeder fund which would invest in the Portfolio. There can,
however, be no assurance that either an increase in assets of the Portfolio or
the benefits or the possibility of a third party feeder fund arrangement
described above will be realized and, in any event, no such benefits are
anticipated until other investors invest their assets in the Portfolio.
The Trustees also recognized that the Adviser could benefit from the proposed
master-feeder fund structure because such structure could enable the Adviser to
increase its assets under management through the development of new vehicles to
attract investor assets to the Adviser. These additional investors may include
other investment companies or advisory accounts advised by the Adviser. In
addition, this structure could attract corollary advisory and related fees to
the Adviser with less economic risk of limited success in early years.
The Trustees believe that over time the aggregate per share expenses of the
Fund and the Portfolio should not be more than the expenses that would be
incurred by the Fund if it continued to retain the services of an investment
adviser and invested directly in securities, although there can be no assurance
that any expense savings will be realized. The Trustees also considered risks
associated with an investment in the Portfolio. The Trustees believe that the
Portfolio's investment policies and restrictions involve substantially the same
risks as are associated with the Fund's direct investment in securities.
In recommending that the shareholders authorize the conversion of the Fund to
the master-feeder fund structure, the Trustees have taken into account and
evaluated the possible effects that increased assets in the Portfolio may have
on the expense ratio of the Fund and have considered the expense limitation
voluntarily agreed to by Standish. After weighing the costs involved against the
anticipated benefits of converting the Fund to the master-feeder fund structure,
the Trustees recommend that the shareholders of the Fund vote to approve
Proposal 1.
Based on their consideration, analysis and evaluation of the above factors
and other information deemed by them to be relevant to this Proposal, the
Trustees (including the Independent Trustees) have concluded that it would be in
the best interests of the Fund and its shareholders to approve the adoption and
implementation of a new investment policy and the amendment of certain
investment restrictions to enable the Fund to invest all of its Investable
Assets in the Portfolio.
Required Vote
Approval by the shareholders of the Fund of this Proposal requires the
affirmative "vote of a majority of the outstanding voting securities" of the
Fund. Under the 1940 Act, this means that to be approved, the Proposal must
receive the affirmative vote of the lesser of (a) 67% of the shares of the Fund
present at the Meeting if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy at the Meeting or (b) more than
50% of the outstanding shares of the Fund.
The Trustees of the Trust unanimously recommend that the shareholders of the
Fund vote to approve Proposal 1.
In the event the shareholders of the Fund fail to approve this Proposal, the
Trustees would continue to retain Standish as the investment adviser for the
Fund to manage the Fund's assets through directly investing in securities, and
the advisory agreement with Standish would continue in effect in its current
form.
PROPOSAL 2: AUTHORIZATION TO VOTE AS A
PORTFOLIO INVESTOR
Shareholders of the Fund are being asked to vote on certain matters with
respect to the Portfolio because the Portfolio Trust is expected to ask the
Fund, as an initial holder in the Portfolio, to vote on such matters. Any vote
is expected to take place just after the Fund's investment in the Portfolio.
Specifically, it is expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of Coopers & Lybrand, L.L.P. as the independent
accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement between the Portfolio Trust, on
behalf of the Portfolio, and its investment adviser, Standish, Ayer & Wood, Inc.
The Trust on behalf of the Fund will cast its votes on each matter in the
same proportions as the votes cast by the Fund's shareholders. At the present
time it is anticipated that there will be at least two holders of interests with
respect to the Portfolio. However, the Fund is expected initially to own
substantially all of the interests in the Portfolio.
PROPOSAL 2(A): AUTHORIZATION TO ELECT
TRUSTEES OF THE PORTFOLIO TRUST
It is the present intention that the enclosed proxy will, unless marked to
the contrary, be used for the purpose of authorizing the Trust to vote FOR the
election of the seven nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Portfolio
Trust's Declaration of Trust. Please note that each of the nominees currently
serves as a Trustee of both the Trust and the Portfolio Trust. Pursuant to the
Declaration of Trust of the Portfolio Trust, the Trustees have the power to
establish and alter the number and the terms of office of the Trustees (subject
to certain removal procedures, including a vote by holders of interests), to
appoint successor Trustees and to fill vacancies, including vacancies existing
by reason of an increase in the number of Trustees, provided that always at
least a requisite majority of the Trustees has been elected by the holders of
interests. Generally, there will not be meetings of holders of interests for the
purpose of electing Trustees.
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Should any Trustee of the Portfolio Trust resign or otherwise be unable to
serve (an event not now anticipated), the Trust will vote FOR the election of
such substitute nominee as the Board of Trustees of the Portfolio Trust may
recommend (unless authority to vote for election of one or more nominees is
specifically withheld by executing the proxy in the manner stated thereon or a
decision is made to reduce the number of Trustees serving on the Board). The
following table sets forth certain information about the Trustees:
Business Experience
Name Age During Past Five Years
- --------------------------------------------------------------------------------
D. Barr Clayson* 62 Vice President and Managing Director,
Standish, Ayer & Wood, Inc.; Chairman of
the Board and Vice President, Standish
International Management Company, L.P.
Samuel C. Fleming 57 Chairman of the Board and Chief Executive
Officer, Decision Resources, Inc.
Benjamin M. Friedman 53 William Joseph Maier Professor of
Political Economy, Harvard University
John H. Hewitt 62 Trustee, The Peabody Foundation; Trustee,
Visiting Nurse Alliance of Vermont and
New Hampshire
Edward H. Ladd* 59 Chairman of the Board and Managing
Director, Standish, Ayer & Wood, Inc.
Caleb Loring III 53 Trustee, Essex Street Associates (family
investment trust office); Director,
Holyoke Mutual Insurance Company
Richard S. Wood* 43 Vice President and Managing Director
(since 1995), Standish, Ayer & Wood,
Inc.; Executive Vice President, Standish
International Management Company, L.P.
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*Interested person" (as defined in the 1940 Act) of the Portfolio Trust by
reason of his affiliation with the Adviser and the Trust's principal
underwriter.
Three meetings of the Trustees of the Portfolio Trust and the Committee of
Independent Trustees of the Portfolio Trust were held during the year ended
December 31, 1996. No Trustee attended fewer than seventy-five percent of all
meetings of the Board of Trustees and of any committee of which he was a member.
Messrs. Fleming, Friedman, Hewitt and Loring, each of whom is an Independent
Trustee, are members of the Committee of the Independent Trustees of the
Portfolio Trust which is chaired by Mr. Hewitt. The Committee of the Independent
Trustees, among other things, (1) serves as the liaison between the independent
auditors and the Portfolio Trust's management as their duties relate to assuring
the integrity of the Portfolio's financial reporting and the safeguarding of
each Portfolio's assets; (2) assures the independence of the auditors, the
integrity of management and the adequacy of disclosures to holders of interests;
(3) reviews the scope of the audit, the financial results of each series of the
Portfolio Trust for the year and the auditors' evaluation of the overall
adequacy of internal controls and thereby assists the Board of Trustees in
fulfilling its fiduciary responsibilities as to accounting policies and
reporting practices and (4) selects and elects for appointment and election
candidates to serve as Independent Trustees. The Committee may, but need not,
consider recommendations for Trustees from interest-holders.
As of September 30, 1997, no officer or Trustee of either the Trust or the
Portfolio Trust, individually or as a group, directly or indirectly owned
beneficially more than 1% of the outstanding shares of the Fund or the
Portfolio.
No fees have been paid by the Portfolio to date to the nominees for election
as Trustees of the Portfolio Trust. The following table estimates the amount of
compensation to be paid to the Portfolio Trust's Trustees by the Portfolio for
the fiscal year ending December 31, 1998. In addition, each Trustee will be
reimbursed for out-of-pocket expenses associated with attending Trustee
meetings.
7
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Pension or Total
Retirement Compensation
Aggregate Benefits from Portfolio
Compensation Accrued as and Other
from the Part of Funds in
Name of Trustee Portfolio* Portfolio's Expenses Complex**
- --------------------------------------------------------------------------------
D. Barr Clayson $0 $0 $0
Samuel C. Fleming 2,631 0 52,625
Benjamin M. Friedman 2,631 0 52,625
John H. Hewitt 2,694 0 53,875
Edward H. Ladd 0 0 0
Caleb Loring, III 2,631 0 52,625
Richard S. Wood 0 0 0
- ------------
* Estimated. The Portfolio is newly organized and has not paid any Trustee's
fees.
** As of the date of this Proxy Statement, there were 26 mutual funds in the
fund complex. Total compensation is based on compensation paid for the year
ended December 31, 1996.
Required Vote
Approval of the election of the Trustees of the Portfolio Trust requires the
affirmative vote of a majority of the outstanding interests in the Portfolio
Trust.
The Trustees of the Trust recommend that the shareholders of the Fund vote to
approve Proposal 2(A).
PROPOSAL 2(B): RATIFICATION OF
SELECTION OF ACCOUNTANTS
It is expected that the Trustees of the Portfolio Trust, including a majority
of the Independent Trustees, will select Coopers & Lybrand, L.L.P., One Post
Office Square, Boston, Massachusetts 02109, as independent accountants for the
fiscal year ending December 31, 1998. The employment of such auditors will be
expressly conditioned upon the right of the Portfolio by the "vote of a majority
of the outstanding voting securities" (as defined above in Proposal 1) of the
Portfolio at any meeting called for the purpose to terminate such employment
forthwith without any penalty. Such selection will be made pursuant to
provisions of Section 32(a) of the 1940 Act, and is subject to ratification or
rejection by the holders of interests in the Portfolio at the meeting of such
holders. Coopers & Lybrand, L.L.P. currently serves as the independent
accountants of the Fund. The Fund will be informed that no member of Coopers &
Lybrand, L.L.P. has any direct or material indirect interest in the Fund or the
Portfolio.
The Portfolio Trust's independent accountants provide customary professional
services in connection with the audit function for a management investment
company such as the Portfolio Trust, and their fees for such services include
fees for work leading to the expression of opinions on the financial statements
included in annual reports to the holders of interests in the Portfolio Trust,
opinions on the financial statements and other data included in the Portfolio's
annual report to the Securities and Exchange Commission, opinions on financial
statements included in amendments to the Portfolio Trust's registration
statement, and preparation of the Portfolio's federal and state income tax
returns.
Representatives of Coopers & Lybrand, L.L.P. are not expected to be present
at the Meeting but have been given the opportunity to make a statement if they
so desire and will be available should any matter arise requiring their
presence. If the Trust receives a written request from any shareholder at least
five days prior to the Meeting stating that the shareholder will be present in
person at the Meeting and desires to ask questions of the accountants, the Trust
will arrange to have a representative of Coopers & Lybrand, L.L.P. present at
the Meeting who will respond to appropriate questions and have an opportunity to
make a statement.
It is intended that proxies, unless marked to the contrary, will be voted in
favor of authorizing the Trust to ratify the selection of Coopers & Lybrand,
L.L.P. as the independent accountants employed by the Portfolio Trust to sign or
to certify financial statements required to be signed or to be certified by
independent accountants and filed with the Securities and Exchange Commission in
respect of all or part of the fiscal year ending December 31, 1998.
Required Vote
Approval of the selection of Coopers & Lybrand, L.L.P. as independent
accountants of the Portfolio Trust requires the affirmative vote of a majority
of the outstanding interests in the Portfolio Trust.
The Trustees of the Trust recommend that the shareholders of the Fund vote to
approve Proposal 2(B).
PROPOSAL 2(C): AUTHORIZE THE TRUST TO
APPROVE AN INVESTMENT ADVISORY
AGREEMENT BETWEEN THE PORTFOLIO TRUST
AND STANDISH, AYER & WOOD, INC.
Standish, Ayer & Wood, Inc. (the "Adviser" or "Standish"), One Financial
Center, Boston, Massachusetts 02111, is expected to serve as investment adviser
to the Portfolio pursuant to an investment advisory agreement (the "Proposed
Advisory Agreement") between the Adviser and the Portfolio Trust and to manage
the Portfolio's investments and
8
<PAGE>
affairs subject to the supervision of the Trustees of the Portfolio Trust. The
Adviser is a Massachusetts corporation incorporated in 1933 and is a registered
investment adviser under the Investment Advisers Act of 1940.
Edward H. Ladd is the Chairman of the Board of Directors and Managing
Director of Standish. The following, constituting all of the Directors and all
of the shareholders of the Adviser, are the Adviser's controlling persons: Caleb
F. Aldrich, Nicholas S. Battelle, Walter M. Cabot, Sr., David H. Cameron, Karen
K. Chandor, D. Barr Clayson, Richard C. Doll, Dolores S. Driscoll, Mark A.
Flaherty, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
Ladd, Laurence A. Manchester, George W. Noyes, Arthur H. Parker, Howard B.
Rubin, Austin C. Smith, David C. Stuehr, Ralph S. Tate and Richard S. Wood.
Please see Exhibit B to this Proxy Statement for a list of each officer and
Trustee of the Portfolio Trust who is an officer, employee or director of
Standish. Standish Fund Distributors, L.P., an affiliate of Standish, serves as
the Fund's principal underwriter without compensation.
The Adviser provides fully discretionary management services and counseling
and advisory services to a broad range of clients throughout the United States
and abroad. As of September 30, 1997, the Adviser managed approximately $37
billion of assets.
In recommending that the shareholders of the Fund authorize the Fund to
approve the Proposed Advisory Agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing the
Fund (as the equivalent of the Portfolio for this purpose) with other investment
companies of similar size and with similar investment objectives. The Trustees
conducted a review of the various documents, reports and other materials
submitted to them by the Adviser, information that they were familiar with as
Trustees, and information obtained from independent sources such as Lipper
Analytical Services, Inc. The Trustees' review and evaluation of certain of
these materials was made with respect to the Fund in September and October 1997.
Terms of the Proposed Advisory Agreement
The terms of the Proposed Advisory Agreement are substantially the same as
the terms of the current investment advisory agreement between the Adviser and
the Trust on behalf of the Fund (the "Current Advisory Agreement"), except the
date of execution and the initial term. The approval by Fund shareholders of
this Proposal will not result in an increase in the rate at which the advisory
fee will be indirectly borne by the Fund after the proposed conversion to the
master-feeder fund structure.
The following description of the terms of the Proposed Advisory Agreement is
qualified in its entirety by reference to the copy of the Proposed Advisory
Agreement attached to this Proxy Statement as Exhibit C.
Advisory Fees and Expense Limitation. The rate at which the advisory fee is
payable by the Portfolio under the Proposed Advisory Agreement is the same as
the rate at which the advisory fee is payable by the Fund under the Current
Advisory Agreement. The advisory fee under the Current Advisory Agreement is
payable by the Fund at a rate equal on an annual basis to 0.25% of the Fund's
average daily net assets. The fee is computed daily and paid monthly. For the
fiscal year ended December 31, 1996, the advisory fee paid by the Fund amounted
to $643,488, which represented 0.25% of the Fund's average daily net assets. No
other amounts were paid by the Fund to Standish during the last fiscal year.
The advisory fee under the Proposed Advisory Agreement will be payable
monthly by the Portfolio at a rate equal on an annual basis to 0.25% of the
Portfolio's average daily net assets. Upon conversion of the Fund to the
master-feeder fund structure, the Current Advisory Agreement with the Fund will
be terminated and the advisory function will be performed by the Adviser under
the Proposed Advisory Agreement. As such, although the Fund will not directly
pay any advisory fees to the Adviser, it will indirectly bear its proportionate
share of the advisory fees paid by the Portfolio to the Adviser pursuant to the
Proposed Advisory Agreement.
As discussed in Proposal 1, Standish has voluntarily agreed to limit the
master-feeder aggregate annual operating expenses of the Fund and the Portfolio
(excluding brokerage commissions, taxes and extraordinary expenses) to the
Fund's ratio of expenses to average net assets in effect immediately prior to
the Fund's conversion to the master-feeder fund structure. The expense ratio
considered to be in effect immediately prior to the conversion for this purpose
will be calculated using the actual expenses incurred by the Fund during the
three months immediately prior to conversion and annualizing this amount.
Standish may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so.
Advisory Services. Pursuant to the Proposed Advisory Agreement and subject to
the supervision and approval of the Trustees of the Portfolio Trust, Standish is
responsible for providing continuously an investment program for the Portfolio,
consistent with the Portfolio's investment objective, policies and restrictions.
Specifically, Standish will be required to determine what investments shall be
purchased, held, sold or exchanged by the Portfolio and what portion, if any, of
the Portfolio's assets will be held uninvested and make changes in the
Portfolio's investments. Standish will also manage, supervise and conduct the
other affairs and business of the Portfolio and matters incidental thereto.
The Fund's portfolio manager is Jennifer A. Pline, who is primarily
responsible for the day-to-day management of the Fund's portfolio and has served
as a portfolio manager to the Fund since January 1, 1991. If the Proposed
Advisory Agreement is approved, it is currently intended that Ms. Pline would
serve as the Portfolio's portfolio manager. During the past five years, Ms.
Pline has served as a Vice President of the Adviser.
Expenses. Under the Proposed Advisory Agreement, the Portfolio bears the
expenses of its operations, including among other things legal and auditing
services, taxes and governmental fees, certain insurance premiums, costs of
notices
9
<PAGE>
and reports to interest-holders, preparation and filing of registration and
financial statements, bookkeeping and share pricing expenses, fees and
disbursements the Portfolio Trust's custodian, and other like expenses properly
payable by the Portfolio Trust.
Approval and Termination Provisions. If approved by the affirmative vote of a
"majority of the outstanding voting securities" (as defined in Proposal 1) of
the Portfolio ("Majority Investor Vote"), the Proposed Advisory Agreement will
remain in full force and effect for two years from the date of such Proposed
Advisory Agreement and will continue in full force and effect indefinitely
thereafter, but only as long as such continuance is specifically approved at
least annually (i) by a vote of a majority of the Trustees of the Portfolio
Trust cast in person at a meeting called for the purpose of voting on such
approval or (ii) by a Majority Investor Vote. The Proposed Advisory Agreement
may be terminated at any time without penalty by a vote of a majority of the
Independent Trustees of the Portfolio Trust or by a Majority Investor Vote or by
the Adviser on 60 days' written notice to the other party. In addition, the
Proposed Advisory Agreement will terminate immediately and automatically if
assigned.
Standard of Care. The Proposed Advisory Agreement provides that the Adviser
shall not be liable for any loss incurred in connection with the performance of
its duties, or action taken or omitted under the Proposed Advisory Agreement in
the absence of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties thereunder, or for any losses which may be sustained in
the acquisition, holding or disposition of any security or other investment.
Expenses
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
Standish under the Proposed Advisory Agreement with the Portfolio or the
administration agreement with the Fund. Among other expenses, the Portfolio will
pay investment advisory fees; bookkeeping, share pricing and custodian fees and
expenses; and expenses of notices and reports to interest-holders. The Fund will
pay fees and disbursements of the Fund's transfer agent and dividend disbursing
agent or registrar, shareholder servicing fees and expenses; expenses of
prospectuses, statements of additional information and shareholder reports which
are furnished to shareholders. Each of the Fund and Portfolio will pay legal and
auditing fees; registration and reporting fees and expenses; and Trustees' fees
and expenses. Expenses of the Trust or the Portfolio Trust which relate to more
than one of their respective series are allocated among such series by the
Adviser in an equitable manner, primarily on the basis of relative net asset
values. For the fiscal year ended December 31, 1996, expenses borne by the Fund
amounted to $884,920, which represented 0.35% of the Fund's average daily net
assets.
Required Vote
Approval of the Portfolio Trust's Proposed Advisory Agreement with the
Adviser requires a Majority Investor Vote as defined above.
The Trustees of the Trust, including a majority of the Independent Trustees,
recommend that the shareholders of the Fund vote to approve Proposal 3(C).
In the event that the shareholders of the Fund fail to approve this Proposal,
the Trustees of the Trust will consider what further action should be taken.
PROPOSALS 3(A)-(H): TO AMEND AND RESTATE
THE FUND'S INVESTMENT RESTRICTIONS
General
The Trustees recommend to shareholders of the Fund that they approve
proposals to amend and restate the Fund's investment restrictions. These
investment restrictions are fundamental policies that may be changed by the Fund
only with the affirmative "vote of a majority of the outstanding voting
securities" (as defined in Proposal 1) of the Fund. The restated investment
restrictions, assuming that each of the proposed amendments is adopted, for the
Fund are set forth in Exhibit A to this Proxy Statement. Also set forth in
Exhibit A are the Fund's current investment restrictions.
One reason for these Proposals 3(A)-(H) is to adopt insofar as possible a
modern and uniform statement of investment restrictions for the funds in the
Standish Group of Funds. As new types of investment instruments and techniques
become available to mutual funds and regulatory policies change to address
changing markets, older restrictions drafted prior to such changes may unduly
impair a fund's investment operations and overly constrain its ability to take
advantage of opportunities available to similar funds. In addition, uniformity
would facilitate comparison of different funds' investment restrictions as well
as administration of the restrictions. Approval of this proposal would also
result in a clearer and simpler statement of the Fund's restrictions.
Another reason for restating the Fund's investment restrictions is to delete
the policies adopted in response to state "Blue Sky" laws and regulations
restricting certain types of investment company practices and investments.
Previously, the Fund was subject to a myriad of individual investment
restrictions imposed under the laws and regulations of these various states in
which the Fund's shares were sold. In many instances the Fund was required, as a
practical matter, to conform its operations to the most restrictive of these
states, even though none of the restrictions was required by the 1940 Act or
related SEC regulations. The states no longer have the power to impose these
restrictions and the Fund need only comply with restrictions imposed by the 1940
Act and SEC regulations. The elimination of the state imposed restrictions will
enhance the Fund's investment flexibility and may expand the range of investment
opportunities and techniques available in connection with the management of the
Fund's portfolio.
The final reason for restating the Fund's investment restrictions is to
recharacterize certain previously adopted fundamental policies as
non-fundamental. Certain of the investment restrictions are being liberalized to
the extent permitted under the 1940 Act. This recharacterization and
liberalization will grant the Trustees of the Trust the ability to
10
<PAGE>
change these non-fundamental policies as circumstances change, without seeking
approval from shareholders and the Fund incurring the costs incidental thereto.
The following is a summary of the proposed changes to each of the investment
restrictions. The restrictions are summarized individually below and will be
voted upon separately. In order to fully achieve the benefits set forth above,
the Trustees recommend that shareholders approve each of the Proposals.
PROPOSAL 3(A): INVESTMENT POLICY
ON ISSUER DIVERSIFICATION
To be diversified under the 1940 Act, the Fund must not, with respect to 75%
of its total assets, invest more than 5% of its total assets in the securities
of any one issuer or acquire more than 10% of the outstanding voting securities
of any one issuer. These restrictions apply only at the time of investment. The
Fund may invest up to 25% of its total assets without regard to these
restrictions. In addition, these restrictions do not apply to holdings of or
investments in cash, cash items, U.S. Government securities or securities of
other investment companies. The current investment restriction of the Fund is
slightly more restrictive than required by the 1940 Act in that it does not
except securities of other investment companies. The Trustees have proposed
amending the Fund's investment restriction to be uniform and relative to other
funds in the Standish Group of Funds and to require diversification only to the
extent that is required under the 1940 Act. Additional diversification
requirements are required for the Fund to be treated as a regulated investment
company for federal tax purposes. These tax-based requirements are not required
to be reflected in the proposed investment restriction and will not be affected
by this Proposal. The Trustees propose that the Fund adopt the following
investment restriction in lieu of its current fundamental policy:
The Fund may not with respect to 75% of its total assets, purchase securities
of an issuer (other than the U.S. Government, its agencies, instrumentalities
or authorities or repurchase agreements collateralized by U.S. Government
securities and other investment companies), if: (a) such purchase would cause
more than 5% of the Fund's total assets taken at market value to be invested
in the securities of such issuer; or (b) such purchase would at the time
result in more than 10% of the outstanding voting securities of such issuer
being held by the Fund.
PROPOSAL 3(B): INVESTMENT POLICY ON
INDUSTRY CONCENTRATION
The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, stating whether 25% or more of
the investment company's assets can be invested (concentrated) in the securities
of issuers in any one industry. The limitation does not apply to investments in
U.S. Government securities. The Fund has adopted a policy not to concentrate in
the securities of issuers in any one industry. While not representing a change
in investment policy, the Trustees have determined that it would be in the best
interest of the Fund to conform the wording of its investment policy on industry
concentration. As proposed, the Fund's policy would be as follows:
The Fund may not invest more than 25% of its total assets in the securities
of one or more issuers conducting their principal business activities in the
same industry (excluding the U.S. Government or its agencies or
instrumentalities).
If this Proposal is approved by shareholders, the Fund will adopt the
following non-fundamental policy (which may be changed in the future by the
Trustees of the Trust without shareholder approval):
For the purposes of this restriction, state and municipal governments and
their agencies, authorities and instrumentalities are not deemed to be
industries; telephone companies are considered to be a separate industry from
water, gas or electric utilities; personal credit finance companies and
business credit finance companies are deemed to be separate industries; and
wholly-owned finance companies are considered to be in the industry of their
parents if their activities are primarily related to financing the activities
of their parents. This restriction does not apply to investments in municipal
securities which have been pre-refunded by the use of obligations of the U.S.
Government or any of its agencies or instrumentalities. For purposes of this
restriction, the industry classification of an asset-backed security is
determined by its underlying assets. For example, certificates for automobile
receivables and certificates for amortizing revolving debts constitute two
different industries.
PROPOSAL 3(C): INVESTMENT POLICIES ON
BORROWING, MARGIN PURCHASES AND
PLEDGING ASSETS
The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on borrowing. The Fund currently
has a limitation upon borrowing. The 1940 Act prohibits an open-end investment
company from issuing any senior security (including debt), except that an
open-end investment company may borrow from banks in an amount not exceeding 33
1/3% of its total assets. (The SEC considers reverse repurchase agreements to be
a form of borrowing.) The Trustees have recommended that the Fund adopt a
uniform borrowing policy permitting borrowing up to the maximum allowed by the
1940 Act. For purposes of the Fund's policy on borrowing, the Fund does not
consider certain investments and practices to be borrowings, including short
sales, roll transactions, futures contracts, options on futures contracts,
securities or indices and forward commitment transactions.
The Fund also has a fundamental investment policy limiting the purchase of
securities on margin. Margin purchases involve the purchase of securities with
money borrowed from a broker. "Margin" is the cash or eligible securities that
the borrower places with its broker as collateral for this loan. The Fund's
current fundamental policy prohibits the Fund from purchasing securities on
margin, except to obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities. Mutual funds are also permitted
to make initial and variation margin payments
11
<PAGE>
in connection with the purchase and sale of futures contracts and options on
futures contracts. With these exceptions, mutual funds are prohibited from
entering into most types of margin purchases.
The fundamental policies on borrowing and margin purchases, if adopted, would
provide as follows:
The Fund may not borrow money, except (i) in amounts not to exceed 33 1/3% of
the value of the Fund's total assets (including the amount borrowed) taken at
market value from banks or through reverse repurchase agreements or forward
roll transactions, (ii) up to an additional 5% of its total assets for
temporary purposes, (iii) in connection with short-term credits as may be
necessary for the clearance of purchases and sales of portfolio securities
and (iv) the Fund may purchase securities on margin to the extent permitted
by applicable law. For purposes of this investment restriction, investments
in short sales, roll transactions, futures contracts, options on futures
contracts, securities or indices and forward commitments, entered into in
accordance with the Fund's investment policies, shall not constitute
borrowing.
If this Proposal is approved by shareholders, the Fund will adopt the
following non-fundamental policy (which may be changed in the future by the
Trustees of the Trust without shareholder approval):
The Fund may invest up to 15% of its net assets in reverse repurchase
agreements.
The Fund's fundamental policy on pledging its assets was a requirement
imposed by state securities laws that no longer applies to the Fund.
Consequently, it is proposed that such restriction be eliminated.
PROPOSAL 3(D): INVESTMENT POLICY ON LOANS
The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on loans. The Fund's current
investment policy is more restrictive than required by the 1940 Act in that,
among other things, it does not permit the Fund to lend its portfolio
securities. Under the 1940 Act, an investment company may make loans, including
of its portfolio securities, in amounts up to 33 1/3% of its total assets. As
restated, the Fund's investment restriction would provide as follows:
The Fund may not make loans, except that the Fund (1)
may lend portfolio securities in accordance with the Fund's investment
policies up to 33 1/3% of the Fund's total assets taken at market value, (2)
enter into repurchase agreements, and (3) purchase all or a portion of an
issue of debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original issuance of
the securities.
PROPOSAL 3(E): INVESTMENT POLICY
ON REAL ESTATE
The 1940 Act requires that each investment company adopt a policy, which
cannot be changed without shareholder approval, on acquiring interests in real
estate. The proposed policy does not represent a material change in investment
policy for the Fund. As restated, the Fund's investment restriction would
provide as follows:
Purchase or sell real estate except that the Fund may (i) acquire or lease
office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that
are secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.
PROPOSAL 3(F): INVESTMENT POLICY ON
COMMODITIES
The 1940 Act requires that the Fund have a fundamental investment policy
regarding investments in commodities. While the Fund does not invest in physical
commodities or physical commodity contracts, the Fund may enter into financial
futures contracts, options on futures and, in certain limited cases, currency
contracts. Any financial futures contract or related option is considered to be
a commodity contract. Other types of financial instruments such as forward
commitments might also be deemed to be commodity contracts. The amendment, which
does not represent a material change in investment policy, is being proposed to
enable the Fund to continue to enter into financial futures contracts and
related options for hedging and other permissible purposes and to clarify that
certain practices permissible for investment companies are not subject to this
restriction.
As amended, the Fund's investment restriction with respect to commodities
would be as follows:
The Fund may not purchase or sell commodities or commodity contracts, except
the Fund may purchase and sell options on securities, securities indices and
currency, futures contracts on securities, securities indices and currency
and options on such futures, forward foreign currency exchange contracts,
forward commitments, securities index put or call warrants and repurchase
agreements entered into in accordance with the Fund's investment policies.
PROPOSAL 3(G): INVESTMENT POLICY ON
SENIOR SECURITIES
The 1940 Act restricts the ability of an open-end investment company to issue
"senior securities" as defined in the 1940 Act and requires that an investment
company adopt a fundamental policy with respect to the issuance of such
securities. The proposed amendment would make the investment restriction on
senior securities uniform among the Standish funds and clarify that the Fund is
permitted to issue senior securities to the extent permitted by applicable law.
As discussed above, under the 1940 Act an open-end fund is not permitted to
issue senior securities except for borrowings from banks. In addition to
permitting the borrowing contemplated above, the amendment clarifies that the
Fund does not consider certain investment practices, such as forward purchases
of securities and currencies, options and futures transactions, which may have a
leverage effect on the Fund to be senior securities if such practices are
conducted in a manner
12
<PAGE>
consistent with current law and the interpretive positions of the SEC. As
amended, the investment restriction of the Fund would provide as follows:
The Fund may not issue senior securities. For purposes of this restriction,
borrowing money, making loans, the issuance of shares of beneficial interest
in multiple classes or series, the deferral of trustees' fees, the purchase
or sale of options, futures contracts, forward commitments and repurchase
agreements entered into in accordance with the Fund's investment policies,
are not deemed to be senior securities.
PROPOSAL 3(H): INVESTMENT POLICY
CONCERNING OTHER INVESTMENT COMPANIES
The Fund has a fundamental investment policy regarding investments in
securities issued by other investment companies. The 1940 Act limits the extent
to which investment companies, such as the Fund, may invest in other investment
companies. The 1940 Act does not, however, require investment companies to have
a policy regarding investments in other investment companies that cannot be
changed without shareholder approval. The Fund currently has a fundamental
policy regarding investments in other investment companies that is more
restrictive than the 1940 Act. For example, the Fund's current policy does not
permit the Fund to organize in the master-feeder fund structure as described in
Proposal 1. The Fund's current policy also reflects restrictions imposed by
state law that are no longer required. The Trustees recommend that shareholders
vote to eliminate the Fund's current fundamental policy. If this proposal is
adopted, the Fund would be subject to the following non-fundamental policy,
which could be changed without a vote of shareholders. If this Proposal is not
adopted but Proposal 1 is adopted, the Fund's current policy would be revised
only to the extent described in Proposal 1 to permit the Fund to organize in the
master-feeder fund structure.
The Fund may not purchase the securities of any other investment company
except to the extent permitted by the 1940 Act.
Trustees' Recommendation
The Trustees believe that each proposed amendment to the Fund's investment
restrictions will more clearly reflect current regulatory practice, will provide
a more complete range of investment opportunities and will clarify and simplify
the Fund's restrictions.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE
"FOR" THE ADOPTION OF EACH OF THE PROPOSED AMENDED INVESTMENT RESTRICTIONS.
ADDITIONAL INFORMATION
Beneficial Owners
At the close of business on September 30, 1997, no person owned, to the
knowledge of management, 5% or more of the outstanding shares of the Fund,
except for the following shareholders:
Percentage of
Shares Beneficially
Owned as of
Shareholder September 30, 1997
- --------------------------------------------------------------------------------
The Nature Conservancy Endowment Fund 14%
The Nature Conservancy
1815 N. Lynn Street
Arlington, VA 22209
The Metropolitan Museum of Art 10%
1000 Fifth Avenue
New York, NY 10028
University of Rochester 9%
Administration Building #263
Rochester, NY 14627
St. Joseph's Healthcare Center 7%
P. O. Box 4227
Tampa, FL 33677
Portfolio Transactions
Subject to the supervision of the Trustees of the Portfolio Trust, the
Adviser selects the brokers and dealers that execute orders to purchase and sell
portfolio securities for the Portfolio. The Adviser will generally seek to
obtain the best available price and most favorable execution with respect to all
transactions for the Portfolio. Standish may also consider the extent to which a
broker or dealer provides research to Standish and the number of Fund shares
sold by the broker or dealer in making its selection.
Other Matters
The Trust is not required, and does not intend, to hold annual meetings of
shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Standish, Ayer & Wood Investment Trust, One Financial
Center, Boston, Massachusetts 02111, c/o Richard S. Wood, President, so that
they are received within a reasonable time before any such meeting.
No business other than the matters described above is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment or postponement of the Meeting, the
persons named on the enclosed proxy card will vote on such matters according to
their best judgment in the interests of the Fund. If shareholders desire
additional information about the matters proposed for action, the Trust's
management will be pleased to hear from them and provide further information.
Proxies, Quorum and Voting at the Meeting
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Trust. In addition, although mere attendance
at the Meeting will not revoke a proxy, a shareholder present at the Meeting may
withdraw his or her proxy and vote in person. All properly executed and
unrevoked proxies received in time for
13
<PAGE>
the Meeting will be voted in accordance with the instructions contained in the
proxies. If no instruction is given, the persons named as proxies will vote the
shares represented thereby in favor of the matters set forth in the attached
Notice.
In the event that, at the time any session of the Meeting is called to order,
a quorum is not present at the Meeting, or in the event that a quorum is present
at the Meeting but sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting (with respect to all or some of the proposals) to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those Shares affected by the adjournment represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR all such
proposals in favor of such an adjournment, and will vote those proxies required
to be voted AGAINST any such proposal against any adjournment. A shareholder
vote may be taken on one or more of the proposals in this Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval.
Under the Declaration of Trust of the Trust, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the issued and
outstanding Shares of the Trust entitled to vote at the Meeting except that
where the holders of any series of Shares are to vote as a series, then the
presence in person or by proxy of the holders of a majority of the Shares of
such series issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of such business.
Shares of the Fund (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions from voting will be treated as shares that are present and entitled
to vote for purposes of determining the number of shares that are present and
entitled to vote with respect to a proposal, but will not be counted as a vote
in favor of that proposal. Accordingly, an abstention from voting has the same
effect as a vote against a proposal.
Adoption by the shareholders of the Fund of each proposal requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any proposal, those shares will not be
considered as present and entitled to vote as to that proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether a proposal
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether a proposal has been adopted pursuant to item (ii) above, because shares
are represented by a "broker non-vote" are considered outstanding shares, a
"broker non-vote" has the same effect as a vote against such proposal.
Expenses and Methods of Solicitation
The costs of the Meeting, including the solicitation of proxies will be paid
by Standish. Persons holding shares as nominees will be reimbursed by Standish,
upon request, for their reasonable expenses of forwarding soliciting material to
the principals of the accounts. In addition to the mailing of these proxy
materials, proxies may be personally solicited by Trustees, officers and
employees of the Trust, by personnel of Standish and of the Fund's transfer
agent, Investors Bank & Trust Company, or by a professional solicitation
organization in person or by telephone.
Dated: November 18, 1997
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
14
<PAGE>
EXHIBIT A
Current Fundamental Investment Restrictions of Standish Short-Term Asset Reserve
Fund
As a matter of fundamental policy, the Fund may not:
1. Issue senior securities, borrow money or securities, enter into reverse
repurchase agreements or pledge or mortgage its assets, except that the Fund may
(a) borrow money from banks as a temporary measure for extraordinary or
emergency purposes (but not for investment purposes) in an amount up to 15% of
the current value of its total assets, (b) enter into forward roll transactions,
(c) enter into reverse repurchase agreements in an amount up to 15% of the
current value of its total assets, and (d) 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 bank borrowings exceed 5% of the current value of its total assets.
2. Underwrite the securities of other issuers, except to the extent that, in
connection with the disposition of portfolio securities, the Fund may be deemed
to be an underwriter under the Securities Act of 1933.
3. Purchase real estate or real estate mortgage loans, although the Fund may
purchase CMOs, mortgage-backed pass-through securities and marketable securities
of companies which deal in real estate.
4. Purchase or sell commodities or commodity contracts except that the Fund
may engage in financial futures contracts and related options transactions.
5. Make loans of portfolio securities, except that the Fund may enter into
repurchase agreements with respect to 25% of the value of its net assets.
6. Invest, with respect to at least 75% of its total assets, more than 5% in
the securities of any one issuer (other than the U.S. Government, its agencies
or instrumentalities) or acquire more than 10% of the outstanding voting
securities of any issuer.
7. Invest more than 25% of its total assets in a single industry except that
this restriction shall not apply to government securities. For purposes of this
restriction, the industry classification of an asset-backed security is
determined by its underlying assets. For example, certificates for automobile
receivables and certificates for amortizing revolving debts constitute two
different industries.
8. Purchase securities on margin (except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities).
9. Purchase the securities of other investment companies, provided that the
Fund may make such a purchase (a) in the open market involving no commission or
profit to a sponsor or dealer (other than the customary broker's commission),
provided that immediately thereafter (i) not more than 10% of the Fund's total
assets would be invested in such securities, (ii) not more than 5% of the Fund's
total assets would be invested in the securities of any one investment company
and (iii) not more than 3% of the voting stock of any one investment company
would be owned by the Fund, or (b) as part of a merger, consolidation, or
acquisition of assets.
- -----------------------
Proposed Fundamental Investment Restrictions of Standish Short-Term Asset
Reserve Fund
As a matter of fundamental policy, the Fund may not:
1. Issue senior securities. For purposes of this restriction, borrowing money
in accordance with paragraph 3 below, making loans in accordance with paragraph
7 below, the issuance of shares of beneficial interest in multiple classes or
series, the deferral of trustees' fees, the purchase or sale of options, futures
contracts, forward commitments and repurchase agreements entered into in
accordance with the Fund's investment policies or within the meaning of
paragraph 5 below, are not deemed to be senior securities.
2. Borrow money, except (i) in amounts not to exceed 33 1/3% of the value of
the Fund's total assets (including the amount borrowed) taken at market value
from banks or through reverse repurchase agreements or forward roll
transactions, (ii) up to an additional 5% of its total assets for temporary
purposes, (iii) in connection with short-term credits as may be necessary for
the clearance of purchases and sales of portfolio securities and (iv) the Fund
may purchase securities on margin to the extent permitted by applicable law. For
purposes of this investment restriction, investments in short sales, roll
transactions, futures contracts, options on futures contracts, securities or
indices and forward commitments, entered into in accordance with the Fund's
investment policies, shall not constitute borrowing.
3. Underwrite the securities of other issuers, except to the extent that, in
connection with the disposition of portfolio securities, the Fund may be deemed
to be an underwriter under the Securities Act of 1933.
15
<PAGE>
4. Purchase or sell real estate except that the Fund may (i) acquire or lease
office space for its own use, (ii) invest in securities of issuers that invest
in real estate or interests therein, (iii) invest in securities that are secured
by real estate or interests therein, (iv) purchase and sell mortgage-related
securities and (v) hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
5. Purchase or sell commodities or commodity contracts, except the Fund may
purchase and sell options on securities, securities indices and currency,
futures contracts on securities, securities indices and currency and options on
such futures, forward foreign currency exchange contracts, forward commitments,
securities index put or call warrants and repurchase agreements entered into in
accordance with the Fund's investment policies.
6. Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets taken at market value, (2) enter into repurchase agreements, and (3)
purchase all or a portion of an issue of debt securities, bank loan
participation interests, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities.
7. With respect to 75% of its total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or authorities
or repurchase agreements collateralized by U.S. Government securities and other
investment companies), if: (a) such purchase would cause more than 5% of the
Fund's total assets taken at market value to be invested in the securities of
such issuer; or (b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held by the Fund.
8. Invest more than 25% of its total assets in the securities of one or more
issuers conducting their principal business activities in the same industry
(excluding the U.S. Government or its agencies or instrumentalities).
Notwithstanding any fundamental policy, the Fund may invest all of its assets
(other than assets which are not "investment securities" (as defined in the 1940
Act) or are excepted by the SEC) in an open-end management investment company
with substantially the same investment objective as the Fund.
16
<PAGE>
EXHIBIT B
Trustees and officers of the Portfolio Trust
The Trustees and officers of the Portfolio Trust who are also directors,
officers or employees of Standish are listed below. The address of each such
person is c/o Standish, Ayer & Wood, Inc., One Financial Center, Boston,
Massachusetts 02111.
Position Held with Position with
Name the Portfolio Trust Standish
- -----------------------------------------------------------------------------
D. Barr Clayson Vice President Vice President and
and Trustee Managing Director
Edward H. Ladd Trustee and Chairman of the Board
Vice President and Managing Director
Richard S. Wood President Vice President,
and Trustee Secretary and Managing
Director
James E. Hollis III Executive Vice Vice President and
President Director
Beverly E. Banfield Vice President Vice President and
Compliance Officer
Lavinia B. Chase Vice President Vice President
Anne P. Herrmann Vice President Mutual Fund
and Secretary Administrator
David C. Stuehr Vice President Vice President and
Director
Denise B. Kneeland Vice President Senior Operations
Manager
Rosalind J. Lillo Vice President Broker/Dealer
Administrator
Paul G. Martins Vice President and Vice President and
Treasurer Director of Finance
Sarah Walcott Abramson Vice President Compliance
Administrator
Kathleen M. Broccoli Vice President Assistant Vice President,
Manager, Portfolio
Accounting Department
Thomas J. Hanlon Vice President Assistant Vice President,
Manager, Trade
Settlement/Pricing
Department
17
<PAGE>
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the close of business this 1st day of January, 1998, by
and between Standish, Ayer & Wood Master Portfolio, an unincorporated trust
organized under the laws of the State of New York (the "Portfolio Trust") and
Standish, Ayer & Wood, Inc., a Massachusetts corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Portfolio Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Portfolio Trust may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio Trust desires to retain the Adviser to furnish
investment advisory services to the Standish Short-Term Asset Reserve Portfolio
(the "Portfolio"), a separate fund of the Portfolio Trust, and the Adviser is
willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of the Adviser. The Portfolio Trust hereby appoints the
Adviser to act as investment adviser of the Portfolio for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided. The
Adviser shall for all purposes herein be deemed an independent contractor and
shall, unless expressly otherwise provided, have no authority to act for or
represent the Portfolio in any way nor shall otherwise be deemed an agent of the
Portfolio.
2. Duties of the Adviser.
a. The Adviser, at its expense, will furnish continuously an investment
program for the Portfolio, will determine, subject to the overall supervision
and review of the Trustees of the Portfolio Trust what investments shall be
purchased, held, sold or exchanged by the Portfolio and what portion, if any, of
the assets of the Portfolio will be held uninvested, and shall, on behalf of the
Portfolio Trust, make changes in the investments of the Portfolio. Subject
always to the supervision of the Trustees of the Portfolio Trust and to the
provisions of the Portfolio Trust's Agreement and Declaration of Trust and
Bylaws and of the 1940 Act, the Adviser will also manage, supervise and conduct
the other affairs and business of the Portfolio and matters incidental thereto.
The Adviser, and any affiliate thereof, shall be free to render similar services
to other investment companies and other clients and to engage in other
activities, so long as the services rendered hereunder are not impaired.
b. The Portfolio shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of notices and reports to interest-holders, typesetting and
printing of registration and financial statements for regulatory purposes and
for distribution to existing and prospective interest-holders, bookkeeping and
interest pricing expenses, fees and disbursements of the Portfolio Trust's
custodian, administrator, transfer and dividend disbursing agent or registrar,
or interest and other like expenses properly payable by the Portfolio Trust.
3. Compensation of the Adviser.
a. As full compensation for the services and facilities furnished by the
Adviser under this Agreement, the Portfolio Trust agrees to pay to the Adviser a
fee equal at an annual rate to 0.25% of the Portfolio's average daily net
assets. Such fees shall be accrued when computed and payable monthly. For
purposes of calculating such fee, the Portfolio's average daily net asset value
shall be determined by taking the average of all determinations of net asset
value made in the manner provided in the Portfolio's current prospectus and
statement of additional information.
b. The compensation payable to the Adviser hereunder for any period less
than a full month during which this Agreement is in effect shall be prorated
according to the proportion which such period bears to a full month.
4. Limitation of Liability of Adviser. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolio Trust in connection with any investment policy or the purchase, sale
or retention of any securities on the recommendation of the Adviser; provided,
however, that nothing herein contained shall be construed to protect the Adviser
against any liability to the Portfolio Trust by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
5. Term and Termination.
a. This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall remain in full force and
effect until December 31, 1999 and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is approved annually (1) by either the Trustees of the Portfolio
Trust or by vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Portfolio, and, in either event, and (ii) by vote of a
majority of the Trustees of the Portfolio Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
b. This Agreement may be terminated at any time without the payment of any
penalty by vote of the Trustees of the Portfolio Trust or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of the
Portfolio or by the Adviser, on sixty days' written notice to the other party.
c. This Agreement shall automatically and immediately terminate in the
event of its assignment as defined in the 1940 Act.
18
<PAGE>
6. Limitation of Liability. The phrase "Standish, Ayer & Wood Master
Portfolio" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Portfolio Trust dated January 18,
1996, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Portfolio Trust
hereunder shall not be binding upon any of the Trustees, interest-holders,
nominees, officers, agents or employees of the Portfolio Trust, personally, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust of the Portfolio Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
interest-holders of the Portfolio and this Agreement has been signed by an
authorized officer of the Portfolio Trust, acting as such, and neither such
authorization by such Trustees and interest-holders nor such execution and
delivery by such officer shall be deemed to have been made by any of them, but
shall bind only the trust property of the Portfolio Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
STANDISH, AYER & WOOD MASTER PORTFOLIO,
on behalf of STANDISH SHORT-TERM ASSET
RESERVE PORTFOLIO
Attest
___________________________________ By:____________________________________
Richard S. Wood, President
Attest: STANDISH, AYER & WOOD, INC.
___________________________________ By:____________________________________
Its:___________________________________
19
<PAGE>
[LOGO]
Standish, Ayer & Wood Investment Trust
One Financial Center
Boston, MA 02111
(800) 221-4795
97-313
<PAGE>
November 17, 1997
Dear :
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 certain of our mutual funds for purposes which require a different
structure for these funds. We have had several inquiries concerning the offering
of the STAR Fund on a private label basis, as part of a family of mutual funds.
Other institutions have wanted to offer our funds offshore or as part of a
401(k) plan, which requires an administrative fee to cover record keeping costs.
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.
As illustrated at right, the master-feeder structure allows for otherwise
separately managed pools of assets with substantially identical objectives and
restrictions to be managed in a central "master" portfolio with "feeder" funds
representing different distribution options. These "feeder" funds could include
no-load SEC registered institutional mutual funds--such as your existing
Standish Short-Term Asset Reserve Fund--mutual funds with special distribution
and administration fees--such as those geared toward use in cash management fund
packages and offshore funds. The master portfolio will be operated in such a
manner as to avoid U.S. taxation of offshore feeder funds.
[GRAPHIC OMITTED]
Each feeder fund holds an interest in the master portfolio representing its pro
rata share of the portfolio assets and bears its pro rata share of master
portfolio expenses. All additional fees are charged at the feeder fund level and
are incurred solely by the relevant feeder fund. Due to an undertaking by
Standish to cap your Standish Short-Term Asset Reserve Fund's expense ratio (as
described in the proxy
<PAGE>
materials), shareholders of the Standish Short-Term Asset Reserve 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, Inc. and the Board of Trustees of the
Standish, Ayer & Wood Investment Trust recommend that shareholders approve the
proposals set forth in the enclosed proxy material, which would permit your
Standish Short-Term Asset Reserve Fund to become a feeder fund in a
master-feeder structure.
Proposal 1 would allow the assets of the current Standish Short-Term Asset
Reserve Fund to be transferred into Standish Short-Term Asset Reserve Portfolio,
or master portfolio, which would be managed exactly as the Fund has historically
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 invest in only one vehicle--the master portfolio,
which in turn will hold a diversified portfolio of securities.
Proposal 2 would allow the Trust to act, on behalf of the Fund, as an interest
holder in the master portfolio in electing Trustees of the master portfolio,
ratifying the selection of the accountant of the master portfolio, and approving
the retention of Standish, Ayer & Wood, Inc. as investment adviser to the master
portfolio.
Proposal 3 is not related to the conversion of the Fund to the master-feeder
structure but would allow the Fund to modernize its fundamental investment
restrictions, delete those that are no longer required by states in which the
Fund is qualified for sale, and make the Fund's restrictions conform to
restrictions of other funds within the Standish, Ayer & Wood group of funds.
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 master-feeder 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.
The continuing interest of the shareholders in the affairs of the Fund is
gratefully acknowledged. Whether or not you expect to attend the meeting, it is
important that your shares be represented. Therefore, I urge you to vote for
each of the proposals contained in the Proxy Statement and to return our
completed proxy card promptly using the enclosed self-addressed return envelope.
Sincerely,
/s/ Richard S. Wood
Richard S. Wood
President
Standish, Ayer & Wood Investment Trust
<PAGE>
[LOGO] Standish, Ayer & Wood
INVESTMENT TRUST
Q&A
On the Master-Feeder Structure
- --------------------------------------------------------------------------------
Will the investment philosophy or strategies of the Standish Short-Term Asset
Reserve 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. Certain proposed modernizing changes in investment policy are
separately set forth in Proposal 3. These are unrelated to the Master-Feeder
structure, and for this reason, are to be voted on separately.
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 Master-Feeder structure allows Standish to manage what we
hope will be a growing pool of assets without changing materially our marketing
or client service effort.
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
Master-Feeder 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
master portfolio.
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 master-feeder funds.
How are the current shareholders expected to benefit from this new structure?
As a feeder 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.
97-311
<PAGE>
[LOGO] Standish, Ayer & Wood
Investment Trust
Proxy Ballot
Standish Short-Term Asset Reserve Fund
a series of
Standish, Ayer & Wood Investment Trust
- --------------------------------------------------------------------------------
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, James E. Hollis and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Short-Term Asset Reserve Fund (the
"Fund"), a series of Standish, Ayer & Wood Investment Trust (the "Trust"), to be
held at the offices of the Trust, One Financial Center, 26th Floor, Boston,
Massachusetts 02111, on December 17, 1997, at 10:00 a.m. or at any adjournment
thereof, notice of which meeting and the Proxy Statement accompanying the same
have been received by the undersigned, upon the following matters as described
in the Notice of Special Meeting and accompanying Proxy Statement:
1. To consider and act upon a proposal to adopt and to implement a new
investment policy to authorize the Fund to invest substantially all of its
assets in a portfolio (the "Portfolio"), a series of a separate open-end
management investment company (the "Portfolio Trust") having substantially
the same investment objective, policies and restrictions as the Fund, and to
amend certain investment restrictions to permit such investment.
|_| FOR |_| AGAINST |_| ABSTAIN
2. To consider and act upon proposals to authorize the Trust to vote as a holder
of an interest in the Portfolio to:
A. Elect Trustees of the Portfolio Trust;
|_| For all Nominees listed below
|_| Vote withheld for all Nominees listed below
|_| For all Nominees listed below (except as marked to the contrary below
by striking out the name of a nominee)
D. Barr Clayson, Samuel C. Fleming, Benjamin M. Friedman, John H. Hewitt,
Edward H. Ladd, Caleb Loring III and Richard S. Wood
B. Ratify the selection of Coopers & Lybrand, L.P.P. as the independent
accountants of the Portfolio; and
|_| FOR |_| AGAINST |_| ABSTAIN
C. Approve the investment advisory agreement between the Portfolio and its
investment adviser, Standish, Ayer & Wood, Inc.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Amend and restate the Fund's investment restrictions.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for each of the Nominees listed above and for Proposals 1, 2B, 2C,
3 and 4 unless authority to do so is specifically withheld in the manner
provided.
Dated:____________________________,1997
_______________________________________
Account #: _______________________________________
_______________________________________
Signature(s)
In signing, please write name(s) exactly as your account is registered. When
signing as attorney, executor, administrator or other fiduciary, please give
your full title as such. Joint owners should each sign personally.
This proxy is solicited on behalf of the Board of Trustees and should be
returned as soon as possible in the envelope provided.
97-312
