As filed with the Securities and Exchange Commission on May 1, 1998
Registration Nos. 33-8214
811-4813
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. | |
Post-Effective Amendment No. 89 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 93 |X|
(Check appropriate box or boxes.)
---------------
Standish, Ayer & Wood Investment Trust
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
--------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 375-1760
ERNEST V. KLEIN, Esq.
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
---------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
|X| Immediately upon filing pursuant to Rule 485(b)
|_| On [Date] pursuant to Rule 485(b)
|_| 60 days after filing pursuant to Rule 485(a)(1)
|_| On [Date] pursuant to Rule 485(a)(1)
|_| 75 days after filing pursuant to Rule 485(a)(2)
|_| On [Date] pursuant to Rule 485(a)(2)
----------------------
This Post-Effective Amendment has been executed by Standish, Ayer & Wood
Master Portfolio.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST*
Cross-Reference Sheet Pursuant to Rule 495(a)
Part A Prospectus
Form Item Cross-Reference
- --------- ---------------
Item 1 Cover Page Cover Page
Item 2 Synopsis "Expense Information"
Item 3 Condensed Financial Not Applicable
Item 4 General Description Cover Page, "The Funds and Their
of Registrant Shares", "Investment Objective and
Policies", "Description of Securities
and Related Risks", "Investment
Techniques and Related Risks" and
"Information about the Master-Feeder
Structure"
Item 5 Management of the Fund "Management" and "Custodian,
Transfer Agent and Dividend
Disbursing Agent"
Item 6 Capital Stock and "The Funds and Their Shares",
Other Securities "Purchase of Shares", "Redemption of
Shares", "Dividends and Distributions"
and "Federal Income Taxes"
Item 7 Purchase of Securities Cover Page and "Purchase of
Being Offered Shares"
Item 8 Redemption or Repurchase "Redemption of Shares"
Item 9 Pending Legal Proceedings Not Applicable
- --------
*This Post-Effective Amendment to the Registrant's Registration Statement
is being filed with respect to the following series of the Registrant: Standish
Equity Asset Fund, Standish Small Capitalization Equity Asset Fund, Standish
Fixed Income Asset Fund and Standish Global Fixed Income Asset Fund. The
Prospectuses and Statements of Additional Information for the other series of
the Registrant are not effected hereby and, therefore, are not included
herewith.
<PAGE>
Statement of Additional
-----------------------
Part B Information Cross-
- ------ ------------------
Form Item Reference
- --------- ---------
Item 10. Cover Page Cover Page
Item 11. Table of Contents "Contents"
Item 12. General Information
and History Not Applicable
Item 13. Investment Objectives "Investment Objective and
and Policies and Policies" and "Investment
Restrictions"
Item 14. Management of the Fund "Management"
Item 15. Control Persons and "Management"
Principal Holders
of Securities
Item 16. Investment Advisory and "Management"
Other Services
Item 17. Brokerage Allocation "Portfolio Transactions"
Item 18. Capital Stock and "The Funds and Their Shares"
Other Securities
Item 19. Purchase, Redemption "Redemption of Shares" and
and Pricing of Securities "Determination of Net Asset
Being Offered Value"
Item 20. Tax Status "Taxation"
Item 21. Underwriters Not Applicable
Item 22. Calculation of "Calculation of Performance
Performance Data Data"
Item 23. Financial Statements "Experts and Financial Statements"
<PAGE>
[STANDISH LOGO] STANDISH FUNDS(SM)
- --------------------------
The Standish
Group of
Asset Funds
Prospectus
Standish Equity
Asset Fund
Standish Small
Capitalization
Equity Asset Fund
Standish Fixed Income
Asset Fund
Standish Global Fixed
Income Asset Fund
- --------------------------
May 1, 1998
<PAGE>
Standish Group of Asset Funds
- --------------------------------------------------------------------------------
The Standish Group of Asset Funds includes the Standish Equity Asset Fund
(the "Equity Fund"), Standish Small Capitalization Equity Asset Fund (the "Small
Cap Fund"), Standish Fixed Income Asset Fund (the "Fixed Income Fund") and the
Standish Global Fixed Income Asset Fund (the "Global Fixed Income Fund"). The
Equity, Small Cap and Fixed Income Funds are each organized as a separate
diversified investment series of Standish, Ayer & Wood Investment Trust (the
"Trust"), an open end investment company. The Global Fixed Income Fund is
organized as a separate non-diversified investment series of the Trust. Each
Fund is a feeder fund in the master-feeder structure and invests exclusively in
a master fund, an open-end investment company of similar name (each, a
"Portfolio"). Standish, Ayer & Wood, Inc. ("Standish") is the investment adviser
to the Equity Portfolio, Small Capitalization Equity Portfolio and the Fixed
Income Portfolio and its affiliate, Standish International Management Company,
L.P. ("SIMCO"), is the investment adviser to the Global Fixed Income Portfolio.
Standish and SIMCO are referred to in the Prospectus as the "Adviser" or the
"Advisers."
Prospective investors can obtain more information about the Funds,
including an application and Investor Guide, by calling Standish Fund
Distributors, L.P. at (800) 729-0066 or by visiting our Website at
www.standishfunds.com.
Standish has been providing investment counseling to mutual funds, other
institutional investors and high net worth individuals for more than sixty
years. Standish offers a broad array of investment services that includes U.S.,
international and global management of fixed income and equity securities for
mutual funds and separate accounts. SIMCO serves as Standish's international
research and investment arm for both debt and equity securities in all countries
outside of the United States. Privately held by twenty-one employee/directors
and headquartered in Boston, Massachusetts, Standish employs over eighty
investment professionals with a total staff of more than two hundred.
This Prospectus, dated May 1, 1998, sets forth concisely the information
about the Funds that a prospective investor should know before investing and
should be retained for future reference. Additional information has been filed
with the Securities and Exchange Commission in a Statement of Additional
Information dated November 26, 1997, as amended or supplemented from time to
time. The Statement of Additional Information is incorporated by reference into
this Prospectus and is available without charge upon request by calling (800)
729-0066. The SEC maintains a Website (http://www.sec.gov) that contains the SAI
and other information regarding the Funds and the Portfolios.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. An investment in shares of the Funds involves
investment risks, including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Shares of the Funds may be purchased by entities ("Account
Administrators") that provide omnibus accounting services for groups of
individuals who beneficially own Fund shares ("Omnibus Accounts"). Omnibus
Accounts include pension and retirement plans (such as 401(k) plans, 457 plans
and 403(b) plans), and programs through which personal and or account
maintenance services are provided to groups of individuals -- whether or not
such individuals invest on a tax-deferred basis. Individual investors may only
purchase Fund shares through their Omnibus Account Administrators. See "Purchase
of Shares" on page 18 for further information.
No sales commissions or other transaction charges are imposed by the Trust
or Standish Fund Distributors, although Account Administrators may impose such
charges and the Funds may compensate Account Administrators for providing
services for the benefit of participants in the Omnibus Accounts. Unless waived
by the Funds, the minimum initial investment by an Omnibus Account is $100,000.
Shares of the funds are not available for sale in every state. This Prospectus
is not intended to be an offer to sell shares, nore may an offer to purchase
shares be accepted from investors, in thos states where shares of the Funds may
not legally be sold. Contact Standish Fund Distributors to determine whether the
Funds are available in your state.
Standish Group of Asset Funds 2 May 1, 1998
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund Comparison Highlights ................................................ 4
Expense Information ....................................................... 6
Investment Objectives and Policies ........................................ 7
The Equity Asset Fund .................................................. 8
The Small Capitalization Equity Asset Fund ............................. 8
The Fixed Income Asset Fund ............................................ 9
The Global Fixed Income Asset Fund ..................................... 9
Description of Securities and Related Risks ............................... 9
General Risks .......................................................... 9
Specific Risks ......................................................... 11
Investment Techniques and Related Risks ................................... 14
Information about the Master-Feeder Structure ............................. 17
Calculation of Performance Data ........................................... 17
Dividends and Distributions ............................................... 18
Purchase of Shares ........................................................ 18
Net Asset Value ........................................................... 19
Exchange of Shares ........................................................ 19
Redemption of Shares ...................................................... 20
Management ................................................................ 21
Federal Income Taxes ...................................................... 23
The Funds and Their Shares ................................................ 23
Principal Underwriter ..................................................... 23
Custodian, Transfer Agent and Dividend Disbursing Agent ................... 23
Independent Accountants ................................................... 24
Legal Counsel ............................................................. 24
Tax-Certification Instructions ............................................ 24
- --------------------------------------------------------------------------------
[STANDISH LOGO]
Standish Group of Asset Funds 3 May 1, 1998
<PAGE>
Fund Comparison Highlights
- --------------------------------------------------------------------------------
The following table highlights information contained in this Prospectus
and is qualified in its entirety by the more detailed information contained
within. For a complete description of each Fund's distinct investment objective
and policies, see "Investment Objectives and Policies," "Description of
Securities and Related Risks" and "Investment Techniques and Related Risks."
There can be no assurance that a Fund's investment objective will be achieved.
- --------------------------------------------------------------------------------
Small Capitalization
Equity Asset Fund Equity Asset Fund
- --------------------------------------------------------------------------------
Investment Objective Long-term growth of Long-term growth of
capital through capital through
investment primarily in investment primarily in
equity and equity and
equity-related equity-related
securities of companies securities of small
which appear to be capitalization companies
undervalued
- --------------------------------------------------------------------------------
Key Strategy Emphasize stocks Emphasize rapidly
believed to offer above growing, high quality
average potential for companies with market
capital growth through capitalizations less
the use of statistical than $700 million that
modeling techniques and are involved with value
fundamental analysis added products or
services
- --------------------------------------------------------------------------------
Market Capitalization of No limit; general range $700 million or less
Companies Focused on by is medium to large
the Fund capitalization
- --------------------------------------------------------------------------------
Foreign Securities Yes; no limit for Yes; limited to 15% of
securities listed on a total assets
U.S. exchange or traded
in the U.S.
over-the-counter ("OTC")
market but limited to
10% of total assets for
foreign securities which
are not so listed or
traded
- --------------------------------------------------------------------------------
Benchmark Index S&P 500 Russell 2000, Russell
2000 Growth and S&P 500
Standish Group of Asset Funds 4 May 1, 1998
<PAGE>
Fund Comparison Highlights
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fixed Income Asset Global Fixed Income
Fund Asset Fund
- --------------------------------------------------------------------------------
Investment Achieve a high level of Maximize total return while
Objective current income, realizing a market level of
consistent with income consistent with
conserving principal and preserving principal and
liquidity, and liquidity
secondarily to seek
capital appreciation when
changes in interest rates
or other economic
conditions indicate that
capital appreciation may
be available without
significant risk to
principal
- --------------------------------------------------------------------------------
Primary Types of Fixed income securities Fixed income securities of (i)
Obligations of (i) U.S. and foreign foreign and U.S. governments
governments, and (ii) and (ii) foreign and U.S.
U.S. and foreign corporations
corporations
- --------------------------------------------------------------------------------
Credit Quality Primarily investment grade Primarily investment grade
- --------------------------------------------------------------------------------
Below Investment Yes, up to 15% of total Yes, up to 15% of total assets
Grade assets
- --------------------------------------------------------------------------------
Average Portfolio Aa/AA In range of AA/Aa to A/A
Quality
- --------------------------------------------------------------------------------
Foreign Yes; up to 20% of total Under normal market conditions,
Securities assets (including issuers 65% or more of total assets in
Selected located in emerging fixed income securities of
markets), no more than issuers located in at least
10% of total assets not three countries (one of which
subject to currency may be the U.S.)
hedging
- --------------------------------------------------------------------------------
Intended Country Primarily U.S. No fewer than three different
Diversification countries
- --------------------------------------------------------------------------------
Currency Strategy Will hedge currencies to Will hedge currencies to seek
seek to protect the U.S. to protect the U.S. dollar
dollars value of at least value of the Fund's assets
half the Fund's foreign
investments.
- --------------------------------------------------------------------------------
Benchmark Lehman Brothers Aggregate J.P. Morgan Global Government
Bond Index Bond Index (Hedged)
Standish Group of Asset Funds 5 May 1, 1998
<PAGE>
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
Total operating expenses are estimated and are based on expenses expected
to be incurred by the Equity and Small Cap Funds for the fiscal years ending
September 30, 1998, and the Fixed Income and Global Fixed Income Funds for the
fiscal years ending December 31, 1997, and include estimated expenses of each
Fund and its corresponding Portfolio.
- --------------------------------------------------------------------------------
Global
Small Fixed Fixed
Equity Cap Income Income
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None None None
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load None None None None
Redemption Fees None None None None
Exchange Fee None None None None
Annual Operating Expenses
(as a percentage
of average net assets)
Management Fees 0.50% 0.60% 0.32% 0.40%
12b-1 Fees None None None None
Service Fees 0.25% 0.25% 0.25% 0.25%
Other Expenses (After Expense Limitation)*+ 0.21% 0.15% 0.06% 0.26%
----- ----- ----- -----
Total Operating Expenses
(After Expense Limitation)* 0.96% 1.00% 0.63% 0.91%
===== ===== ===== =====
* The Advisers have voluntarily agreed to limit each Fund's Total Operating
Expenses (excluding litigation, indemnification, taxes and other extraordinary
expenses) to the following percentages of average daily net assets for the
Equity and Small Cap Funds' fiscal years ending September 30, 1998: Equity Fund
- -- 0.96%; Small Cap Fund -- 1.00%; and for the Fixed Income and Global Fixed
Income Funds' fiscal years ending December 31, 1997: Fixed Income Fund 0.63%;
Global Fixed Income Fund -- 0.91%. These agreements are voluntary and temporary
and may be discontinued or revised by the -- Advisers at any time after
September 30, 1998 for the Equity and Small Cap Funds and December 31, 1997 for
the Fixed Income and Global Fixed Income Funds. In the absence of such
agreements, Other Expenses and Total Operating Expenses of the Funds are
estimated to be: Equity Fund -- 1.02% and 1.52%; Small Cap Fund -- 0.57% and
1.42%; Fixed Income Fund -- 0.39% and 0.96%; and Global Fixed Income Fund--
0.68% and 1.33%.
+ Other expenses include custodian and transfer agent fees, registration costs,
payments for insurance, and audit and legal services.
Example
Hypothetically assume that each Fund's annual return is 5% and that its
total operating expenses are exactly as described. For every $1,000 invested, an
investor would have paid the following expenses if an account were closed after
the number of years indicated:
+
- --------------------------------------------------------------------------------
Global
Small Fixed Fixed
Equity Cap Income Income
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
After 1 Year $10 $10 $6 $9
After 3 Years $31 $32 $20 $29
The purpose of the above table is to assist investors in understanding the
various costs and expenses that an investor in each Fund will bear directly or
indirectly. The Funds are newly organized and have no operating history. The
example is included solely for illustrative purpose and should not be considered
a representation of future performance of expenses. Actual expenses may be more
or less than those shown. See "Management" for additional information about each
Fund's expenses.
Standish Group of Asset Funds 6 May 1, 1998
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Each Fund seeks to achieve its investment objective by investing all of
its investable assets in its corresponding Portfolio which has the same
investment objective as the Fund. This structure, where one fund invests all of
its investable assets in another investment company, is described under the
caption "Information About the Master-Feeder Structure" below. Since the
investment characteristics of each Fund relate directly to those of its
corresponding Portfolio, the following is a discussion of the various
investments and investment policies of the Portfolios.
Investment Strategy for the Equity Portfolios
The Equity and Small Cap Portfolios are actively managed diversified
portfolios consisting primarily of equity and equity-related securities. Each
Portfolio is managed to achieve long-term growth of capital. The Equity
Portfolio seeks to achieve its objective by investing primarily in equity and
equity-related securities of companies which appear to be undervalued. The Small
Cap Portfolio seeks to achieve its objective by focusing on equity and
equity-related securities of small capitalization companies. The Small Cap
Portfolio invests primarily in securities of companies with market
capitalizations less than $700 million.
Standish seeks to add value to portfolios of equity securities by finding
companies with improving business momentum whose securities have reasonable
valuations. For the Equity Portfolio, Standish utilizes both quantitative and
fundamental analysis to find stocks whose estimates of earnings are being
revised upwards but whose valuation does not yet reflect this positive trend.
For the Small Cap Portfolio, Standish emphasizes small capitalization companies
that have developed strong sector or industry positions and have produced solid
balance sheets.
Equity Securities. The equity and equity-related securities in which the
Equity and Small Cap Portfolios invest include exchange-traded and
over-the-counter common and preferred stocks but may also include warrants,
rights, convertible securities, depositary receipts, depositary shares, trust
certificates, shares of other investment companies and real estate investment
trusts ("REITs"), limited partnership interests and equity participations. These
equity securities may be issued by U.S. or foreign companies, although these
Portfolios may not invest to the same extent in securities of foreign issuers.
Investment Strategy for the Fixed Income Portfolios
The Fixed Income Portfolio is an actively managed diversified portfolio
consisting primarily of fixed income securities of U.S. issuers. The Fixed
Income Portfolio is managed to achieve a high level of current income,
consistent with conserving principal and liquidity, and secondarily to seek
capital appreciation when changes in interest rates or other economic conditions
indicate that capital appreciation may be available without significant risk to
principal The Global Fixed Income Portfolio is an actively managed
non-diversified portfolio consisting primarily of fixed income securities
denominated in foreign currencies and the U.S. dollar. The Global Fixed Income
Portfolio is managed to maximize total return while realizing a market level of
income consistent with preserving principal and liquidity.
The Adviser's primary investment management and research focus is at the
security and industry/sector level. The Adviser seeks to add value to each
Portfolio's portfolio by selecting undervalued investments, rather than by
varying the average maturity of a Portfolio's portfolio to reflect interest rate
forecasts. The Adviser utilizes fundamental credit and sector valuation
techniques to evaluate what it considers to be less efficient markets and
sectors of the fixed income marketplace in an attempt to select securities with
the potential for the highest return. With respect to the Global Fixed Income
Portfolio, SIMCO emphasizes intermediate-term economic fundamentals relating to
foreign countries and emerging markets, rather than focusing on day-to-day
fluctuations in a particular currency or in the fixed income markets.
Fixed Income Securities. The Fixed Income and Global Fixed Income
Portfolios may invest in all types of fixed income securities including bonds,
notes (including structured or hybrid notes), mortgage-backed securities,
asset-backed securities, convertible securities, Eurodollar and Yankee Dollar
instruments, preferred stocks (including convertible preferred stock), listed
and unlisted warrants and money market instruments. These fixed income
securities may be issued by U.S. and foreign corporations or entities, foreign
governments and their political subdivisions, the U.S. Government, its agencies,
authorities, instrumentalities or sponsored enterprises and supranational
entities. Supranational entities include international organizations designated
or supported by governmental entities to promote economic reconstruction or
development, and international banking institutions and related government
agencies.
Credit Quality. The Fixed Income and Global Fixed Income Portfolios each
invest primarily in investment grade fixed income securities, i.e., securities
rated at the time of purchase at least Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Group ("Standard & Poor's"),
Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc. ("Fitch") or IBCA,
Ltd., or, if unrated, determined by the Adviser to be of comparable credit
quality. If a security is rated differently by two or more rating agencies, the
Adviser uses the highest rating to compute a Portfolio's credit quality and also
to determine the security's rating category. In determining whether unrated
securities are of equivalent credit quality, the Adviser may take into account,
but will not rely entirely on, ratings assigned by foreign rating agencies. If
the rating of a security held by a Portfolio is downgraded below the minimum
rating required for the particular Portfolio, the Adviser will determine whether
to retain that security in a Portfolio's portfolio.
Standish Group of Asset Funds 7 May 1, 1998
<PAGE>
Securities rated within the top three investment grade ratings (i.e., Aaa,
Aa, A or P-1 by Moody's or AAA, AA, A, A-1 or Duff-1 by Standard & Poor's, Duff,
Fitch or IBCA) are generally regarded as high grade obligations. Securities
rated Baa or P-2 by Moody's or BBB, A-2 or Duff-2 by Standard & Poor's, Duff,
Fitch or IBCA are generally considered medium grade obligations and have some
speculative characteristics. Adverse changes in economic conditions or other
circumstances are more likely to weaken the medium grade issuer's capability to
pay interest and repay principal than is the case for high grade securities. The
Fixed Income and Global Fixed Income Portfolios may also invest up to 15% of
their total assets in below investment grade fixed income securities. Below
investment grade securities, commonly referred to as "junk bonds," carry a
higher degree of risk than investment grade securities and are considered
speculative by the rating agencies. The Adviser attempts to select for the
Portfolios those medium grade and non-investment grade fixed income securities
that have the potential for upgrade.
* * *
Each Fund's specific investment objective and policies are set forth below
and will assist the investor in differentiating each Fund's unique
characteristics. Because of the uncertainty inherent in all investments, no
assurance can be given that a Fund will achieve its investment objective. See
"Description of Securities and Related Risks" and "Investment Techniques and
Related Risks" below for additional information.
The Equity Asset Fund
Investment Objective. The Equity Portfolio's investment objective is to
achieve long-term growth of capital through investment primarily in equity and
equity-related securities of companies which appear to be undervalued.
Principal Investments. Under normal circumstances, at least 80% of the
Equity Portfolio's total assets are invested in equity and equity-related
securities.
Investment Strategies. The Equity Portfolio follows a disciplined
investment strategy, emphasizing stocks which Standish believes offer above
average potential for capital growth. Although the precise application of the
discipline will vary according to market conditions, Standish intends to use
statistical modeling techniques that utilize stock specific factors (e.g.,
current price earnings ratios, stability of earnings growth, trends in consensus
analysts' estimates and measures of earnings results relative to expectations)
to identify equity securities that are attractive as purchase candidates. Once
identified, these securities will be subject to further fundamental analysis by
Standish's professional staff before they are included in the Equity Portfolio's
holdings. Securities selected for inclusion in the Equity Portfolio's holdings
will represent various industries and sectors.
Other Investments. The Equity Portfolio may invest without limit in equity
and equity-related securities of foreign issuers that are listed on a United
States securities exchange or traded in the U.S. over-the-counter ("OTC")
market. The Portfolio may not invest more than 10% of its total assets in such
securities which are not so listed or traded.
The Equity Portfolio may invest in debt securities and preferred stocks
which are convertible into, or exchangeable for, common stocks. These securities
will be rated Aaa, Aa or A by Moody's, or AAA, AA, or A by Standard & Poor's,
Duff or Fitch, or, if unrated, determined by Standish to be of comparable credit
quality. Up to 5% of the Equity Portfolio's total assets invested in convertible
debt securities and preferred stocks may be rated Baa by Moody's or BBB by
Standard & Poor's, Duff, or Fitch. The Equity Portfolio may enter into
repurchase agreements, engage in short selling and invest in restricted and
illiquid securities, although it intends to invest in restricted and illiquid
securities on an occasional basis only. The Equity Portfolio may purchase and
sell put and call options, enter into futures contracts on U.S. equity indices,
purchase and sell options on such futures contracts and engage in currency
transactions. See "Description of Securities and Related Risks" and "Investment
Techniques and Related Risks" below for additional information.
The Small Capitalization Equity Asset Fund
Investment Objective. The Small Cap Portfolio's investment objective is to
achieve long-term growth of capital through investment primarily in equity and
equity-related securities of small capitalization companies.
Principal Investments. Under normal circumstances, at least 80% of the
Small Cap Portfolio's total assets are invested in equity and equity-related
securities of small capitalization companies. The Small Cap Portfolio will focus
its investments in small capitalization companies that have market
capitalizations less than $700 million. When Standish believes that securities
of small capitalization companies are overvalued, the Small Cap Portfolio may
invest in securities of larger, more mature companies, provided that such
investments do not exceed 20% of the Portfolio's total assets. The Small Cap
Portfolio may participate in initial public offerings for previously privately
held companies which are expected to have market capitalizations less than $700
million after the consummation of the offering, and whose securities are
expected to be liquid after the offering.
Investment Strategies. The Small Cap Portfolio will pursue investments in
rapidly growing, high quality companies that are involved with value added
products or services. These companies will have market capitalizations less than
$700 million, although the Small Cap Portfolio may include securities of larger,
more mature companies. Companies with small market capitalizations may have more
limited operating histories and/or less experienced management than larger
capitalization companies and may pose additional risks.
Other Investments. The Small Cap Portfolio may invest up to 15% of its
total assets in equity and equity-related securities of foreign issuers,
including issuers located in emerging markets. The Small Cap Portfolio may enter
into repurchase agreements, engage in short selling and invest in restricted and
illiquid securities, although it intends to invest in restricted and illiquid
securities on an occasional basis only. The Small Cap Portfolio may purchase and
sell put and call options, enter into futures
Standish Group of Asset Funds 8 May 1, 1998
<PAGE>
contracts, purchase and sell options on such futures contracts and engage in
currency transactions. See "Description of Securities and Related Risks" and
"Investment Techniques and Related Risks" below for additional information.
The Fixed Income Asset Fund
Investment Objective. The Portfolio's investment objective is primarily to
achieve a high level of current income, consistent with conserving principal and
liquidity, and secondarily to seek capital appreciation when changes in interest
rates or other economic conditions indicate that capital appreciation may be
available without significant risk to principal.
Securities. Under normal market conditions, substantially all, and at
least 65%, of the Portfolio's total assets are invested in investment grade
fixed income securities. The Portfolio may invest up to 20% of its total assets
in fixed income securities of foreign corporations and foreign governments and
their political subdivisions, including securities of issuers located in
emerging markets. No more than 10% of the Portfolio's total assets will be
invested in foreign securities not subject to currency hedging transactions back
into U.S. dollars.
The Fixed Income Portfolio purchases securities that pay interest on a
fixed, variable, floating, inverse floating, contingent, in-kind or deferred
basis. The Portfolio may enter into repurchase agreements and forward dollar
roll transactions, purchase zero coupon and deferred-payment securities, buy
securities on a when-issued or delayed delivery basis, engage in short sales and
purchase shares of other investment companies and REITs. The Portfolio may also
enter into various forward foreign currency exchange transactions and foreign
currency futures transactions and utilize OTC options to seek to manage the
Portfolio's foreign currency exposure. See "Description of Securities and
Related Risks" and "Investment Techniques and Related Risks" below for
additional information.
Credit Quality. The Portfolio invests primarily in investment grade fixed
income securities. The Portfolio may, however, invest up to 15% of its total
assets in securities rated below investment grade, or, if unrated, determined by
Standish to be of comparable credit quality. The average dollar-weighted credit
quality of the Portfolio's portfolio is expected to be Aa according to Moody's
or AA according to Standard & Poor's, Duff or Fitch.
Maturity. Under normal market conditions, the Portfolio's average
dollar-weighted effective portfolio maturity will vary from five to thirteen
years.
The Global Fixed Income Asset Fund
Investment Objective. The Portfolio's investment objective is to maximize
total return while realizing a market level of income consistent with preserving
principal and liquidity.
Securities. Under normal market conditions, the Portfolio invests at least
65% of its total assets in fixed income securities of foreign governments or
their political subdivisions and companies located in countries around the
world, including the United States.
The Global Fixed Income Portfolio purchases securities that pay interest
on a fixed, variable, floating, inverse floating, contingent, in-kind or
deferred basis. The Portfolio may enter into repurchase agreements and forward
dollar roll transactions, purchase zero coupon and deferred-payment securities,
buy securities on a when-issued or delayed delivery basis, lend portfolio
securities, engage in short sales and purchase shares of other investment
companies and REITs. The Portfolio may also enter into various forward foreign
currency exchange transactions and foreign currency futures transactions and
utilize OTC options to seek to manage the Portfolio's foreign currency exposure.
See "Description of Securities and Related Risks" and "Investment Techniques and
Related Risks" below for additional information.
Country Selection. Under normal market conditions, the Portfolio's assets
are invested in securities of issuers located in at least three different
countries, one of which may be the United States. The Portfolio intends,
however, to invest in no fewer than eight foreign countries. The Portfolio may
invest a substantial portion of its assets in one or more of those eight
countries. The Portfolio may also invest up to 10% of its total assets in
emerging markets generally and may invest up to 3% of its total assets in any
one emerging market.
Credit Quality. The Portfolio invests primarily in investment grade fixed
income securities. The Portfolio may, however, invest up to 15% of its total
assets in below investment grade securities or, if not rated, judged by SIMCO to
be of equivalent credit quality. The average dollar-weighted credit quality of
the Portfolio's portfolio is expected to be in a range of Aa to A according to
Moody's or AA to A according to Standard & Poor's, Duff, Fitch or IBCA.
Description of Securities and Related Risks
General Risks
Investments in the Funds involve certain risks. The Fixed Income Portfolio
and the Global Fixed Income Portfolio invest primarily in fixed income
securities and are subject to risks associated with investments in such
securities. These risks include interest rate risk, default risk, and call and
extension risk. These Portfolios are also subject to risks associated with
investments in below investment grade fixed income securities. The Equity
Portfolio and the Small Cap Portfolio invest primarily in equity and
equity-related securities and are subject to the risks associated with
investments in such securities. Each of the Portfolios is also subject to the
risks associated with direct investments in foreign securities.
Interest Rate Risk. When interest rates decline, the market value of fixed
income securities tends to increase. Conversely, when interest rates increase,
the market value of fixed income securities tends to decline. The volatility of
a security's market value will differ depending upon the security's duration,
the issuer and the type of instrument.
Default Risk/Credit Risk. Investments in fixed income securities are
subject to the risk that the issuer of the security could default on its
obligations causing a Portfolio to sustain losses on such investments. A default
could impact both interest and principal payments.
Standish Group of Asset Funds 9 May 1, 1998
<PAGE>
Call Risk and Extension Risk. Fixed income securities may be subject to
both call risk and extension risk. Call risk exists when the issuer may exercise
a right to pay principal on an obligation earlier than scheduled which would
cause cash flows to be returned earlier than expected. This typically results
when interest rates have declined and a Portfolio will suffer from having to
reinvest in lower yielding securities. Extension risk exists when the issuer may
exercise a right to pay principal on an obligation later than scheduled which
would cause cash flows to be returned later than expected. This typically
results when interest rates have increased and a Portfolio will suffer from the
inability to invest in higher yield securities.
Investing in Foreign Securities. The Global Fixed Income Portfolio invests
primarily, and the other Portfolios invest to a lesser extent, in securities of
foreign issuers. Investing in the securities of foreign issuers involves risks
that are not typically associated with investing in U.S. dollar-denominated
securities of domestic issuers. Investments in foreign issuers may be affected
by changes in currency rates, changes in foreign or U.S. laws or restrictions
applicable to such investments and in exchange control regulations (e.g.,
currency blockage). A decline in the exchange rate of the currency (i.e.,
weakening of the currency against the U.S. dollar) in which a portfolio security
is quoted or denominated relative to the U.S. dollar would reduce the value of
the portfolio security. Commissions on transactions in foreign securities may be
higher than those for similar transactions on domestic stock markets. In
addition, clearance and settlement procedures may be different in foreign
countries and, in certain markets, such procedures have on occasion been unable
to keep pace with the volume of securities transactions, thus making it
difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers. There may be less publicly available information about a foreign issuer
than about a U.S. issuer. In addition, there is generally less government
regulation of foreign markets, companies and securities dealers than in the U.S.
Most foreign securities markets may have substantially less trading volume than
U.S. securities markets and securities of many foreign issuers are less liquid
and more volatile than securities of comparable U.S. issuers. Furthermore, with
respect to certain foreign countries, there is a possibility of nationalization,
expropriation or confiscatory taxation, imposition of withholding or other taxes
on divided or interest payments (or in some cases, capital gains), limitations
on the removal of funds or other assets, political or social instability or
diplomatic developments which could affect investment in those countries.
Currency Risks. The U.S. dollar value of securities denominated in a
foreign currency will vary with changes in currency exchange rates, which can be
volatile. Accordingly, changes in the value of the currency in which a
Portfolio's investments are denominated relative to the U.S. dollar will affect
the Portfolio's net asset value. Exchange rates are generally affected by the
forces of supply and demand in the international currency markets, the relative
merits of investing in different countries and the intervention or failure to
intervene of U.S. or foreign governments and central banks. Some emerging market
countries also may have managed currencies, which are not free floating against
the U.S. dollar. In addition, emerging markets are subject to the risk of
restrictions upon the free conversion of their currencies into other currencies.
Any devaluations relative to the U.S. dollar in the currencies in which a
Portfolio's securities are quoted would reduce the Portfolio's net asset value
per share.
Each Portfolio may enter into forward foreign currency exchange contracts
and cross currency forward contracts with banks or other foreign currency
brokers or dealers to purchase or sell foreign currencies at a future date and
may purchase and sell foreign currency futures contracts and cross-currency
futures contracts to seek to hedge against changes in foreign currency exchange
rates, although the Equity and the Small Cap Portfolios have no current
intention to engage in such transactions. A forward foreign currency exchange
contract is a negotiated agreement between the contracting parties to exchange a
specified amount of currency at a specified future time at a specified rate. A
cross-currency forward contract is a forward contract that uses one currency
which historically moves in relation to a second currency to hedge against
changes in that second currency. See "Strategic Transactions" within the
"Investment Techniques and Related Risks" section for a further discussion of
the risks associated with currency transactions.
Emerging Markets. Although each Portfolio invests primarily in securities
of established issuers based in developed foreign countries, each Portfolio may
also invest in securities of issuers in emerging markets, including issuers in
Asia (including Russia), Eastern Europe, Latin and South America, the
Mediterranean and Africa. The Fixed Income Portfolio may invest up to 20% of its
total assets and the Global, Equity and Small Cap Portfolios may each invest up
to 10% of their total assets in issuers located in emerging markets generally
and up to 3% of their total assets in issuers of any one specific emerging
market country. The Portfolios may also invest in currencies of such countries
and may engage in strategic transactions in the markets of such countries.
Investment in securities of issuers in emerging markets may involve a high
degree of risk and may be considered speculative. These investments carry all of
the risks of investing in securities of foreign issuers to a heightened degree.
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization and less social, political and economic stability;
(ii) the small current size of the markets for securities of emerging market
issuers and the currently low or nonexistent volume of trading combined with
frequent artificial limits on daily price movements, resulting in lack of
liquidity and in price uncertainty; (iii) certain national policies which may
restrict a Portfolio's investment opportunities, including limitations on
aggregate holdings by foreign investors and restrictions on investing in issuers
or industries deemed sensitive to relevant national interests; and (iv) the
absence of developed legal structures governing private or foreign investment in
private property.
Standish Group of Asset Funds 10 May 1, 1998
<PAGE>
Specific Risks
The following sections include descriptions of specific risks that are
associated with a Portfolio's purchase of a particular type of security or the
utilization of a specific investment technique.
Common Stocks. The Equity and Small Cap Portfolios purchase common stocks.
Common stocks are shares of a corporation or other entity that entitle the
holder to a pro rata share of the profits of the corporation, if any, without
preference over any other shareholder or class of shareholders, including
holders of the entity's preferred stock and other senior equity. Common stock
usually carries with it the right to vote and frequently an exclusive right to
do so.
Small Capitalization Stocks. The Small Cap Portfolio invests primarily,
and the Equity Portfolio may invest to a lesser extent, in securities of small
capitalization companies. Although investments in small capitalization companies
may present greater opportunities for growth, they also involve greater risks
than are customarily associated with investments in larger, more established
companies. The securities of small companies may be subject to more volatile
market movements than securities of larger, more established companies. Smaller
companies may have limited product lines, markets or financial resources, and
they may depend upon a limited or less experienced management group. The
securities of small capitalization companies may be traded only on the OTC
market or on a regional securities exchange and may not be traded daily or in
the volume typical of trading on a national securities exchange. As a result,
the disposition by a Portfolio of securities in order to meet redemptions or
otherwise may require the Portfolio to sell securities at a discount from market
prices, over a longer period of time or during periods when disposition is not
desirable.
Convertible Securities. Each Portfolio may invest in convertible debt and
preferred stock. Convertible debt securities and preferred stock entitle the
holder to acquire the issuer's stock by exchange or purchase for a predetermined
rate. Convertible securities are subject both to the credit and interest rate
risks associated with fixed income securities and to the stock market risk
associated with equity securities.
Warrants. Each Portfolio may purchase warrants. Warrants acquired by a
Portfolio entitle it to buy common stock from the issuer at a specified price
and time. Warrants are subject to the same market risks as stocks, but may be
more volatile in price. A Portfolio's investment in warrants will not entitle it
to receive dividends or exercise voting rights and will become worthless if the
warrants cannot be profitably exercised before the expiration dates.
Corporate Debt Obligations. The Fixed Income and Global Fixed Income
Portfolios may invest in corporate debt obligations and zero coupon securities
issued by financial institutions and corporations. Corporate debt obligations
are subject to the risk of an issuer's inability to meet principal and interest
payments on the obligations and may also be subject to price volatility due to
such factors as market interest rates, market perception of the creditworthiness
of the issuer and general market liquidity.
U.S. Government Securities. Each Portfolio may invest in U.S. Government
securities. Generally, these securities include U.S. Treasury obligations and
obligations issued or guaranteed by U.S. Government agencies, instrumentalities
or sponsored enterprises which are supported by (a) the full faith and credit of
the U.S. Treasury (such as the Government National Mortgage Association
("GNMA"), (b) the right of the issuer to borrow from the U.S. Treasury (such as
securities of the Student Loan Marketing Association ("SLMA"), (c) the
discretionary authority of the U.S. Government to purchase certain obligations
of the issuer (such as the Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC"), or (d) only the credit of the
agency. No assurance can be given that the U.S. Government will provide
financial support to U.S. Government agencies, instrumentalities or sponsored
enterprises in the future. U.S. Government securities also include Treasury
receipts, zero coupon bonds, U.S. Treasury inflationary index bonds, deferred
interest securities and other stripped U.S. Government securities, where the
interest and principal components of stripped U.S. Government securities are
traded independently ("STRIPS").
Sovereign Debt Obligations. The Global Fixed Income and Fixed Income
Portfolios may invest in sovereign debt obligations. Investment in sovereign
debt obligations involves special risks not present in corporate debt
obligations. The issuer of the sovereign debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or pay interest when due, and a Portfolio may have limited recourse in
the event of a default. During periods of economic uncertainty, the market
prices of sovereign debt, and a Portfolio's net asset value, may be more
volatile than prices of U.S. debt obligations. In the past, certain emerging
markets have encountered difficulties in servicing their debt obligations,
withheld payments of principal and interest and declared moratoria on the
payment of principal and interest on their sovereign debts.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
to reduce principal and interest arrearages on their debt. The failure of a
sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.
Brady Bonds. The Global Fixed Income and Fixed Income Portfolios may
purchase Brady Bonds. Brady Bonds are securities created through the exchange of
existing commercial bank loans to public and private entities in certain
emerging markets for new bonds in connection with debt restructurings. In light
of the history of defaults of countries issuing Brady Bonds on
Standish Group of Asset Funds 11 May 1, 1998
<PAGE>
their commercial bank loans, investments in Brady Bonds may be viewed as
speculative. Brady Bonds may be fully or partially collateralized or
uncollateralized, are issued in various currencies (but primarily in U.S.
dollars) and are actively traded in OTC secondary markets. Incomplete
collateralization of interest or principal payment obligations results in
increased credit risk. U.S. dollar-denominated collateralized Brady Bonds, which
may be fixed-rate bonds or floating-rate bonds, are generally collateralized by
U.S. Treasury zero coupon bonds having the same maturity as the Brady Bonds.
Obligations of Supranational Entities. The Global Fixed Income and Fixed
Income Portfolios may invest in obligations of supranational entities designated
or supported by governmental entities to promote economic reconstruction or
development and of international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the "World Bank"), the Asian Development Bank and the
Inter-American Development Bank. Each supranational entity's lending activities
are limited to a percentage of its total capital (including "callable capital"
contributed by its governmental members at the entity's call), reserves and net
income. There is no assurance that participating governments will be able or
willing to honor their commitments to make capital contributions to a
supranational entity.
Depositary Receipts and Depositary Shares. The Equity and Small Cap
Portfolios may purchase depository receipts and depository shares. Depositary
receipts and depositary shares are typically issued by a U.S. or foreign bank or
trust company and evidence ownership of underlying securities of a U.S. or
foreign issuer. Unsponsored programs are organized independently and without the
cooperation of the issuer of the underlying securities. As a result, available
information concerning the issuer may not be as current as for sponsored
depositary instruments and their prices may be more volatile than if they were
sponsored by the issuers of the underlying securities. Examples of such
investments include, but are not limited to, American Depositary Receipts and
Shares ("ADRs" and "ADSs"), Global Depositary Receipts and Shares ("GDRs" and
GDSs") and European Depositary Receipts and Shares ("EDRs" and EDSs").
Eurodollar and Yankee Dollar Investments. The Fixed Income and Global
Fixed Income Portfolios may invest in Eurodollar and Yankee Dollar instruments.
Eurodollar instruments are bonds of foreign corporate and government issuers
that pay interest and principal in U.S. dollars generally held in banks outside
the United States, primarily in Europe. Yankee Dollar instruments are U.S.
dollar denominated bonds typically issued in the U.S. by foreign governments and
their agencies and foreign banks and corporations. The Fixed Income and Global
Fixed Income Portfolios may invest in Eurodollar Certificates of Deposit
("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee Certificates of Deposit
("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit issued
by foreign branches of domestic banks; ETDs are U.S. dollar-denominated deposits
in a foreign branch of a U.S. bank or in a foreign bank; and Yankee CDs are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the U.S. These investments involve risks that are different
from investments in securities issued by U.S. issuers, including potential
unfavorable political and economic developments, foreign withholding or other
taxes, seizure of foreign deposits, currency controls, interest limitations or
other governmental restrictions which might affect payment of principal or
interest.
Below Investment Grade Securities. Both the Fixed Income and the Global
Fixed Income Portfolios may invest up to 15% of their total assets in securities
rated below investment grade. Fixed income securities rated below investment
grade generally offer a higher yield, but may be subject to a higher risk of
default in interest or principal payments than higher rated securities. The
market prices of below investment grade securities are generally less sensitive
to interest rate changes than higher rated securities, but are generally more
sensitive to adverse economic or political changes or, in the case of corporate
issuers, to individual company developments. Below investment grade securities
also may have less liquid markets than higher rated securities, and their
liquidity, as well as their value, may be more severely affected by adverse
economic conditions. Adverse publicity and investor perceptions of the market,
as well as newly enacted or proposed legislation, may also have a negative
impact on the market for below investment grade securities. See the Statement of
Additional Information for a detailed description of the ratings assigned to
fixed income securities by Moody's, Standard & Poor's, Duff, Fitch and IBCA.
For the fiscal year ended December 31, 1996, the Fixed Income Portfolio's
and Global Fixed Incomes Portfolio's investments, on an average dollar weighted
basis, calculated at the end of each month, had the following credit quality
characteristics:
Fixed Income Portfolio's
Investments Percentage
U.S. Government Securities 27.3%
U.S. Government Agency
Securities 21.4%
Corporate Bonds:
Aaa or AAA 5.8%
Aa or AA 3.5%
A 10.1%
Baa or BBB 18.5%
Ba or BB 13.4%
------
100.0%
Global Fixed Income Portfolio's
Investments Percentage
U.S. Government Securities 6.5%
U.S. Government Agency 5.1%
Corporate Bonds:
Aaa or AAA 31.5%
Aa or AA 16.8%
A 11.8%
Baa or BBB 16.6%
Ba or BB 11.7%
------
100.0%
Standish Group of Asset Funds 12 May 1, 1998
<PAGE>
Mortgage-Backed Securities. The Fixed Income and Global Fixed Income
Portfolios may invest in privately issued mortgage-backed securities and
mortgage-backed securities issued or guaranteed by foreign entities or the U.S.
Government or any of its agencies, instrumentalaties or sponsored enterprises.
Mortgage-backed securities represent direct or indirect participations in, or
are collateralized by and payable from, mortgage loans secured by real property.
Mortgagors can generally prepay interest or principal on their mortgages
whenever they choose. Therefore, mortgage-backed securities are often subject to
more rapid repayment than their stated maturity date would indicate as a result
of principal prepayments on the underlying loans. This can result in
significantly greater price and yield volatility than is the case with
traditional fixed income securities. During periods of declining interest rates,
prepayments can be expected to accelerate, and thus impair a Portfolio's ability
to reinvest the returns of principal at comparable yields. Conversely, in a
rising interest rate environment, a declining prepayment rate will extend the
average life of many mortgage-backed securities, increase a Portfolio's exposure
to rising interest rates and prevent a Portfolio from taking advantage of such
higher yields.
GNMA securities are backed by the full faith and credit of the U.S.
Government, which means that the U.S. Government guarantees that the interest
and principal will be paid when due. FNMA securities and FHLMC securities are
not backed by the full faith and credit of the U.S. Government; however, these
enterprises have the ability to obtain financing from the U.S. Treasury.
Multiple class securities include collateralized mortgage obligations
("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or
participation certificates. CMOs provide an investor with a specified interest
in the cash flow from a pool of underlying mortgages or other mortgage-backed
securities. CMOs are issued in multiple classes, each with a specified fixed or
floating interest rate and a final scheduled distribution date. In most cases,
payments of principal are applied to the CMO classes in the order of their
respective stated maturities, so that no principal payments will be made on a
CMO class until all other classes having an earlier stated maturity date are
paid in full. A REMIC is a CMO that qualifies for special tax treatment under
the Internal Revenue Code of 1986, as amended ("Code"), and invests in certain
mortgages principally secured by interests in real property and other permitted
investments. The Portfolios do not intend to purchase residual interests in
REMICs.
Stripped mortgage-backed securities ("SMBS") are derivative multiple class
mortgage-backed securities. SMBS are usually structured with two different
classes; one that receives 100% of the interest payments and the other that
receives 100% of the principal payments from a pool of mortgage loans. If the
underlying mortgage loans experience prepayments of principal at a rate
different from what was anticipated, a Portfolio may fail to recoup fully its
initial investment in these securities. Although the market for SMBS is
increasingly liquid, certain SMBS may not be readily marketable and will be
considered illiquid for purposes of each Portfolio's limitation on investments
in illiquid securities. The market value of the class consisting entirely of
principal payments generally is unusually volatile in response to changes in
interest rates. The yields on a class of SMBS that receives all or most of the
interest from mortgage loans are generally higher than prevailing market yields
on other mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not be
fully recouped.
Asset-Backed Securities. The Fixed Income and Global Fixed Income
Portfolios may invest in asset-backed securities issued by foreign or U.S.
entities. The principal and interest payments on asset-backed securities are
collateralized by pools of assets such as auto loans, credit card receivables,
leases, installment contracts and personal property. Such asset pools are
securitized through the use of special purpose trusts or corporations. Payments
or distributions of principal and interest on asset-backed securities may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit or a pool insurance policy issued by a financial institution; however,
privately issued obligations collateralized by a portfolio of privately issued
asset-backed securities do not involve any government-related guaranty or
insurance. Like mortgage-backed securities, asset-backed securities are subject
to more rapid prepayment of principal than indicated by their stated maturity
which may greatly increase price and yield volatility. Asset-backed securities
generally do not have the benefit of a security interest in collateral that is
comparable to mortgage assets and there is the possibility that recoveries on
repossessed collateral may not be available to support payments on these
securities.
Zero Coupon and Deferred Payment Securities. The Fixed Income and Global
Fixed Income Portfolios may invest in zero coupon and deferred payment
securities. Zero coupon securities are securities sold at a discount to par
value and on which interest payments are not made during the life of the
security. Upon maturity, the holder is entitled to receive the par value of the
security. A Portfolio is required to accrue income with respect to these
securities prior to the receipt of cash payments. Because a Fund will distribute
its allocable share of this accrued income to shareholders, to the extent that
shareholders elect to receive dividends in cash rather than reinvesting such
dividends in additional shares, the Fund may need to withdraw cash from the
Portfolio, which then will have fewer assets with which to purchase income
producing securities. Deferred payment securities are securities that remain
zero coupon securities until a predetermined date, at which time the stated
coupon rate becomes effective and interest becomes payable at regular intervals.
Zero coupon and deferred payment securities may be subject to greater
fluctuation in value and may have less liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular
interest payment periods.
Structured or Hybrid Notes. The Fixed Income and Global Fixed Income
Portfolios may invest in structured or hybrid notes. The distinguishing feature
of a structured or hybrid note is that the amount of interest and/or principal
payable on the note is based on the performance of a benchmark asset or market
other than fixed income securities or interest rates. Examples of these
benchmarks include stock prices, currency
Standish Group of Asset Funds 13 May 1, 1998
<PAGE>
exchange rates and physical commodity prices. Investing in a structured note
allows a Portfolio to gain exposure to the benchmark security while fixing the
maximum loss that it may experience in the event that the security does not
perform as expected. Depending on the terms of the note, a Portfolio may forego
all or part of the interest and principal that would be payable on a comparable
conventional note; the Portfolio's loss cannot exceed this foregone interest
and/or principal. An investment in structured or hybrid notes involves risks
similar to those associated with a direct investment in the benchmark security.
Inverse Floating Rate Securities. The Fixed Income and Global Fixed Income
Portfolios may invest in inverse floating rate securities. The interest rate on
an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher the degree of leverage of an inverse floater, the greater
the volatility of its market value.
Tax-Exempt Securities. Each Portfolio is managed without regard to
potential tax consequences. If the Adviser believes that tax-exempt securities
will provide competitive returns, the Fixed Income Portfolio may invest up to
10% of its total assets in tax-exempt securities. The Fixed Income Fund's
distributions of its share of interest earned from these investments will be
taxable.
Money Market Instruments and Short-Term Securities. Although the Equity
and Small Cap Portfolios intend to stay invested in equity and equity-related
securities to the extent practical in light of their objectives, each Portfolio
may, under normal market conditions, establish and maintain cash balances and
purchase money market instruments with maturities of less than one year and
short-term interest-bearing fixed income securities with maturities of one to
three years ("Short-Term Obligations") to maintain liquidity to meet
redemptions. The Small Cap Portfolio may hold up to 20% of its total assets in
money market instruments and Short-Term Obligations without regard to the
liquidity needs of its portfolio.
Money market instruments in which the Equity and Small Cap Portfolios
invest will be rated at the time of purchase P-1 by Moody's or A-1 or Duff-1 by
Standard & Poor's, Duff and Fitch or, if unrated, determined by the Adviser to
be of comparable quality. Money market instruments and Short-Term Obligations
include obligations issued or guaranteed by the U.S. Government or any of its
agencies and instrumentalities, U.S. and foreign commercial paper, bank
obligations, repurchase agreements and other debt obligations of U.S. and
foreign issuers. At least 95% of the Equity and Small Cap Portfolios' assets
that are invested in Short-Term Obligations must be invested in obligations
rated at the time of purchase Aaa, Aa, A or P-1 by Moody's or AAA, AA, A, A-1 or
Duff-1 by Standard & Poor's, Duff or Fitch or, if unrated, determined by the
Adviser to be of comparable credit quality. Up to 5% of their total assets
invested in Short-Term Obligations may be invested in obligations rated Baa by
Moody's or BBB by Standard & Poor's, Duff or Fitch or, if unrated, determined by
the Adviser to be of comparable credit quality. See "Credit Quality" under
"Investment Strategy for the Fixed Income Portfolios" for a general discussion
of these rating categories.
Investment Techniques and Related Risks
Strategic Transactions. Each Portfolio may, but is not required to,
utilize various investment strategies to seek to hedge market risks (such as
interest rates, currency exchange rates and broad or specific equity or fixed
income market movements), to manage the effective maturity or duration of fixed
income securities (Fixed Income and Global Fixed Income Portfolios only) or to
enhance potential gain. Such strategies are generally accepted as part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments used by each Portfolio may
change over time as new instruments and strategies are developed or regulatory
changes occur.
In the course of pursuing their investment objectives, each Portfolio may
purchase and sell (write) exchange-listed and OTC put and call options on
securities, equity indices (Equity and Small Cap Portfolios only), fixed income
indices (Fixed Income and Global Fixed Income Portfolios only), and other
financial instruments; purchase and sell financial futures contracts and options
thereon; enter into various interest rate transactions such as caps, swaps,
floors and collars (Fixed Income and Global Fixed Income Portfolios only); and,
to the extent a Portfolio invests in foreign securities or without limit with
respect to the Global Fixed Income Portfolio, enter into currency transactions
such as forward foreign currency exchange contracts, cross-currency forward
contracts, currency futures contracts, currency swaps and options on currencies
or currency futures (collectively, all the above are called "Strategic
Transactions"). Strategic Transactions may be used to seek to protect against
possible changes in the market value of securities held in or to be purchased
for a Portfolio's portfolio resulting from securities markets or currency
exchange rate fluctuations, to seek to protect a Portfolio's unrealized gains in
the value of portfolio securities, to facilitate the sale of such securities for
investment purposes, to seek to manage the effective maturity or duration of the
Fixed Income or Global Fixed Income Porfolios' portfolio or to establish a
position in the derivatives markets as a temporary substitute for purchasing or
selling particular securities. In addition to the hedging transaction referred
to in the preceding sentence, Strategic Transactions may also be used to enhance
potential gain in circumstances where hedging is not involved.
The ability of a Portfolio to utilize Strategic Transactions successfully
will depend on the Adviser's ability to predict pertinent market and currency
and interest rate movements, which cannot be assured. Each Portfolio will comply
with applicable regulatory requirements when implementing these strategies,
techniques and instruments. The Portfolios' activities involving Strategic
Transactions may be limited in order to enable the Funds to satisfy the
requirements of the Code for qualification as a regulated investment company.
Strategic Transactions have risks associated with them including possible
default by the other party to the transaction,
Standish Group of Asset Funds 14 May 1, 1998
<PAGE>
illiquidity and, to the extent the Adviser's view as to certain market, interest
rate or currency movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. The
writing of put and call options may result in losses to a Portfolio, force the
purchase or sale, respectively, of portfolio securities at inopportune times or
for prices higher than (in the case of purchases due to the exercise of put
options) or lower than (in the case of sales due to the exercise of call
options) current market values, limit the amount of appreciation a Portfolio can
realize on its investments or cause a Portfolio to hold a security it might
otherwise sell or sell a security it might otherwise hold.
The use of options and futures transactions entails certain other risks.
Futures markets are highly volatile and the use of futures may increase the
volatility of a Portfolio's net asset value. In particular, the variable degree
of correlation between price movements of futures contracts and price movements
in the related portfolio position of a Portfolio creates the possibility that
losses on the hedging instrument may be greater than gains in the value of the
Portfolio's position. The writing of options could significantly increase a
Portfolio's portfolio turnover rate and associated brokerage commissions or
spreads. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the counter options may have no markets. As a
result, in certain markets, a Portfolio might not be able to close out a
transaction without incurring substantial losses. Losses resulting from the use
of Strategic Transactions could reduce a Portfolio's net asset value and the net
result may be less favorable than if the Strategic Transactions had not been
utilized. Although the use of futures and options transactions for hedging
should tend to minimize the risk of loss due to a decline in the value of the
position, at the same time, such transactions can limit any potential gain which
might result from an increase in value of such position. The loss incurred by a
Portfolio in writing options on futures and entering into futures transactions
is potentially unlimited.
The use of currency transactions can result in a Portfolio incurring
losses as a result of a number of factors including the imposition of exchange
controls, suspension of settlements, or the inability to deliver or receive a
specified currency. Each Portfolio will attempt to limit its net loss exposure
resulting from Strategic Transactions entered into for non-hedging purposes to
3% of net assets. In calculating a Portfolio's net loss exposure from such
Strategic Transaction, an unrealized gain from a particular Strategic
Transaction position would be netted against an unrealized loss from a related
position. See the Statement of Additional Information for further information
regarding the use of Strategic Transactions.
When-Issued and Delayed Delivery Securities. The Fixed Income Porfolio may
invest up to 15% of its net assets and the Global Fixed Income Portfolio may
invest up to 25% of its total assets in when-issued and delayed delivery
securities. Although a Portfolio will generally purchase securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, the Portfolios may dispose of these securities prior to
settlement, if the Adviser deems it appropriate to do so. The payment obligation
and interest rate on these securities is fixed at the time a Portfolio enters
into the commitment, but no income will accrue to the Portfolio until they are
delivered and paid for. Unless a Portfolio has entered into an offsetting
agreement to sell the securities, cash or liquid assets equal to the amount of
the Portfolio's commitment must be segregated and maintained with the
Portfolio's custodian to secure the Portfolio's obligation and to partially
offset the leverage inherent in these securities. The market value of the
securities when they are delivered may be less than the amount paid by the
Portfolio.
Portfolio Diversification and Concentration. The Global Fixed Income
Portfolio is non-diversified which means that it may invest more than 5% of its
total assets in the securities of a single issuer. The other Portfolios are
diversified. Investing a significant amount of the Global Fixed Income
Portfolio's assets in the securities of a small number of foreign issuers will
cause the Portfolio's net asset value to be more sensitive to events affecting
those issuers. No Portfolio will concentrate (invest 25% or more of its total
assets) in the securities of issuers in any one industry. For purposes of this
limitation, the staff of the Securities and Exchange Commission (the "SEC")
considers (a) all supranational organizations as a group to be a single industry
and (b) each foreign government and its political subdivisions to be a single
industry.
Repurchase Agreements. The Equity, Small Cap, Fixed Income and Global
Fixed Income Portfolios may invest up to 10%, 10%, 5% and 25%, respectively, of
their net assets in repurchase agreements. In a repurchase agreement, a
Portfolio buys a security at one price and simultaneously agrees to sell it back
at a higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent. Repurchase agreements acquired by a
Portfolio will always be fully collateralized as to principal and interest by
money market instruments and will be entered into only with commercial banks,
brokers and dealers consider creditworthy by the Adviser.
Forward Roll Transactions. To seek to enhance current income, the Fixed
Income Portfolio may invest up to 10% of its net assets and the Global Fixed
Income Portfolio may invest up to 5% of its total assets in forward roll
transactions involving mortgage-backed securities. In a forward roll
trans-action, a Portfolio sells a mortgage-backed security to a financial
institution, such as a bank or broker-dealer, and simultaneously agrees to
repurchase a similar security from the institution at a later date at an
agreed-upon price. The mortgage-backed securities that are repurchased will bear
the same interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different prepayment histories than those
sold. During the period between the sale and repurchase, the Portfolio will not
be entitled to receive interest and principal payments on the securities sold.
Proceeds of the sale will be invested in short-term instruments, such as
repurchase agreements or other short-term securities, and the income from these
investments, together with any additional fee income received on the sale and
the amount gained by repurchasing the securities in the future at a lower price,
will generate income and gain for the Portfolio which is intended to exceed the
yield on the
Standish Group of Asset Funds 15 May 1, 1998
<PAGE>
securities sold. Forward roll transactions involve the risk that the market
value of the securities sold by the Portfolio may decline below the repurchase
price of those securities. At the time that a Portfolio enters into a forward
roll transaction, it will place cash or liquid assets in a segregated account
that is marked to market daily having a value equal to the repurchase price
(including accrued interest).
Leverage. The use of forward roll transactions and reverse repurchase
agreements involves leverage. Leverage allows any investment gains made with the
additional monies received (in excess of the costs of the forward roll
transaction or reverse repurchase agreement) to increase the net asset value of
a Portfolio faster than would otherwise be the case. On the other hand, if the
additional monies received are invested in ways that do not fully recover the
costs of such transactions to a Portfolio, the net asset value of the Portfolio
would fall faster than would otherwise be the case.
Short Sales. Each Portfolio may engage in short sales and short sales
against the box. In a short sale, a Portfolio sells a security it does not own
in anticipation of a decline in the market value of the security. In a short
sale against the box, a Portfolio either owns or has the right to obtain at no
extra cost the security sold short. The broker holds the proceeds of the short
sale until the settlement date, at which time the Portfolio delivers the
security (or an identical security) to cover the short position. The Portfolio
receives the net proceeds from the short sale. When a Portfolio enters into a
short sale other than against the box, the Portfolio must first borrow the
security to make delivery to the buyer and must place cash or liquid assets in a
segregated account with the Portfolio's custodian that is marked to market
daily. Short sales other than against the box involve unlimited exposure to
loss. No securities will be sold short if, after giving effect to any such short
sale, the total market value of all securities sold short would exceed 5% of the
value of a Portfolio's net assets.
Securities Loans. To seek to realize additional income, the Global Fixed
Income Portfolio may lend a portion of the securities in its portfolio to
broker-dealers and financial institutions, who are seeking securities to
consummate transactions they are obligated to perform under contract. The market
value of securities loaned by the Portfolio may not exceed 20% of the value of
the Portfolio's total assets, with a 10% limit for any single borrower. In order
to secure their obligations to return securities borrowed from the Portfolio,
borrowers will deposit collateral equal to at least 100% of the market value of
the borrowed securities, which will be marked to market daily. As is the case
with any extension of credit, lending portfolio securities involves certain
risks in the event a borrower should fail financially, including delays or
inability to recover the loaned securities or foreclose against the collateral.
The Adviser, under the supervision of the Boards of Trustees, monitors the
creditworthiness of the parties to whom the Portfolio makes securities loans.
Restricted and Illiquid Securities. Each Portfolio may invest up to 15% of
its net assets in illiquid securities; however, the Equity Portfolio and the
Small Cap Portfolio invest in these securities only on an occasional basis.
Illiquid securities are those that are not readily marketable, repurchase
agreements maturing in more than seven days, time deposits with a notice or
demand period of more than seven days, certain SMBS, swap transactions, certain
OTC options and certain restricted securities. Based upon continuing review of
the trading markets for a specific restricted security, the security may be
determined to be eligible for resale to qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933 and, therefore, to be liquid.
Also, certain illiquid securities may be determined to be liquid if they are
found to satisfy relevant liquidity requirements.
The Boards of Trustees have adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity of
portfolio securities, including restricted and illiquid securities. The Boards
of Trustees however retain oversight and are ultimately responsible for such
determinations. The purchase price and subsequent valuation of illiquid
securities normally reflect a discount, which may be significant, from the
market price of comparable securities for which a liquid market exists.
Investments in Other Investment Companies. Each Portfolio is permitted to
invest up to 10% of its total assets in shares of investment companies and up to
5% of its total assets in any one investment company as long as that investment
does not represent more than 3% of the total voting stock of the acquired
investment company. Investments in the securities of other investment companies
may involve duplication of advisory fees and other expenses. Because certain
emerging markets are closed to investment by foreigners, a Portfolio may invest
in issuers in those markets primarily through specifically authorized investment
funds. In addition, the Portfolios may invest in investment companies that are
designed to replicate the composition and performance of a particular index. For
example, Standard & Poor's Depositary Receipts ("SPDERs") are exchange-traded
shares of a closed-end investment company designed to replicate the price
performance and dividend yield of the Standard & Poor's 500 Composite Stock
Price Index. Another example is World Equity Benchmark Series ("WEBS") which are
exchange traded shares of open-end investment companies designed to replicate
the composition and performance of publicly traded issuers in particular
countries. Investments in index baskets involve the same risks associated with a
direct investment in the types of securities included in the baskets.
Investments in REITs. Each Porfolio may invest in shares of real estate
investment trusts, which are pooled investment vehicles that invest in real
estate or real estate loans or interests. Investing in REITs involves risks
similar to those associated with investing in equity securities of small
capitalization companies. REITs are dependent upon management skills, are not
diversified, and are subject to risks of project financing, default by
borrowers, self-liquidation, and the possibility of failing to qualify for the
exemption from taxation under the Code.
Portfolio Turnover. A high rate of portfolio turnover (100% or more)
involves correspondingly higher transaction costs which must be borne directly
by a Fund and thus indirectly by its shareholders. It may also result in a
Fund's realization of larger amounts of short-term capital gains, distributions
from which
Standish Group of Asset Funds 16 May 1, 1998
<PAGE>
================================================================================
are taxable to shareholders as ordinary income and may, under certain
circumstances, make it more difficult for the Fund to qualify as a regulated
investment company under the Code.
Short-Term Trading. Each Portfolio will sell a portfolio security without
regard to the length of time such security has been held if, in the Adviser's
view, the security meets the criteria for disposal.
Temporary Defensive Investments. Each Portfolio may adopt a temporary
defensive position during adverse market conditions by investing without limit
in U.S. and non-U.S. dollar (Global Fixed Income Portfolio only) denominated
high quality money market instruments and Short-Term Obligations. The Fixed
Income Portfolio may purchase commercial paper of foreign issuers rated P-1 or
its equivalent.
Investment Restrictions. The investment objectives of the Funds and
Portfolios are not fundamental and may be changed by the Boards of Trustees
without the approval of shareholders. If there is a change in a Fund's
investment objectives, shareholders should consider whether the Fund remains an
appropriate investment in light of their current financial situation. Each
Portfolio's and Fund's investment policies set forth in this Prospectus are
non-fundamental and may be changed without shareholder approval. Each Fund and
Portfolio has adopted fundamental policies which may not be changed without the
approval of the applicable Fund's shareholders. See "Investment Restrictions" in
the Statement of Additional Information. If any percentage restriction is
adhered to at the time of investment, a subsequent increase or decrease in the
percentage resulting from a change in the value of a respective Fund's or
Portfolio's assets will not constitute a violation of the restriction.
Information about the Master-Feeder Structure
Each Fund seeks to achieve its investment objective by investing all of
its investable assets in its corresponding Portfolio, which has an identical
investment objective. Each Fund is a feeder fund and its corresponding Portfolio
is the master fund in a so-called master-feeder structure.
In addition to the Funds, other feeder funds invest in these Portfolios,
and information about these other feeder funds is available from Standish Fund
Distributors. The other feeder funds invest in the Portfolios on the same terms
as the Funds and bear a proportionate share of the Portfolios' expenses. The
other feeder funds may sell shares on different terms and under a different
pricing structure than the Funds, which may produce different investment
results.
There are certain risks associated with an investment in a master-feeder
structure. Large scale redemptions by other feeder funds in a Portfolio may
reduce the diversification of a Portfolio's investments, reduce economies of
scale and increase a Portfolio's operating expenses. If the Portfolio Trust's
Board of Trustees approves a change to the investment objective of a Portfolio
that is not approved by the Trust's Board of Trustees, a Fund would be required
to withdraw its investment in the Portfolio and engage the services of an
investment adviser or find a substitute master fund. Withdrawal of a Fund's
interest in its Portfolio, which may be required by the Trust's Board of
Trustees without shareholder approval, might cause the Fund to incur expenses it
would not otherwise be required to pay.
If a Fund is requested to vote on a matter affecting the Portfolio in
which it invests, the Fund will call a meeting of its shareholders to vote on
the matter. The Fund will then vote on the matter at the meeting of the
Portfolio's investors in the same proportion that the Fund's shareholders voted
on the matter. The Fund will vote those shares held by its shareholders who did
not vote in the same proportion as those Fund shareholders who did vote on the
matter.
A majority of the Trustees who are not "interested persons" (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Trust or
the Portfolio Trust, as the case may be, have adopted procedures reasonably
appropriate to deal with potential conflicts of interest arising from the fact
that the same individuals are trustees of the Trust and of the Portfolio Trust.
Calculation of Performance Data
From time to time each Fund may advertise its average annual total return
and the Fixed Income Fund and the Global Fixed Income Fund may also advertise
their yields. Average annual total return is determined by computing the average
annual percentage change in the value of $1,000 invested at the maximum public
offering price for specified periods ending with the most recent calendar
quarter, assuming reinvestment of all dividends and distributions at net asset
value. The total return calculation assumes a complete redemption of the
investment at the end of the relevant period. Each Fund may also from time to
time advertise total return on a cumulative, average, year-by-year or other
basis for various specified periods by means of quotations, charts, graphs or
schedules.
The "yield" of a Fund is computed by dividing the net investment income
per share earned during the period stated in the advertisement by the maximum
offering price per share on the last day of the period (using the average number
of shares entitled to receive dividends). For the purpose of determining net
investment income, the calculation includes among expenses of the Funds all
recurring fees that are charged to all shareholder accounts and any nonrecurring
charges for the period stated.
From time to time, a Fund may compare its performance in publications with
that of other mutual funds with similar investment objectives, to stock, bond
and other relevant indices, and to performance rankings prepared by recognized
mutual fund statistical services. In addition, a Fund's performance may be
compared to alternative investment or savings vehicles or to indices or
indicators of economic activity.
The Equity and Small Cap Funds
The S&P 500 Index. The S&P 500 Index is a market weighted compilation of
500 common stocks selected on a statistical basis by Standard & Poor's. Total
return for the S&P 500 Index assumes reinvestment of dividends. The S&P 500
Index is typically composed of issues in the following sectors: industrial,
financial, public utilities and transportation. Most stocks that comprise the
S&P 500 Index are traded on the New York Stock Exchange, although some are
traded on the American Stock Exchange and in the OTC market.
Standish Group of Asset Funds 17 May 1, 1998
<PAGE>
The Russell 2000 Index. The Russell 2000 Index is composed of
approximately 2,000 small capitalization common stocks and is generally
representative of unmanaged small capitalization stocks in the U.S. markets. A
company's stock market capitalization is the total market value of its floating
outstanding shares.
The Russell 2000 Growth Index. The Russell 2000 Growth Index is composed
of approximately 2,000 small capitalization common stocks and is generally
considered to be representative of those Russell 2000 companies with higher
price-to-book ratios and forecasted growth.
Fixed Income Fund
Lehman Government/Corporate Index. This index is considered to be
representative of the performance of all domestic, U.S. dollar denominated,
fixed rate investment grade bonds.
Lehman Brothers Aggregate Index. This index is composed of securities from
the Lehman Brothers Government/Corporate Bond Index, the Mortgage-Backed
Securities Index and the Yankee Bond Index, and is generally considered to be
representative of all unmanaged, domestic, U.S. dollar denominated, fixed rate
investment grade bonds.
Global Fixed Income Fund
J.P. Morgan Non-U.S. Government Bond Index (Hedged). This index is
generally considered to be representative of unmanaged government bonds in
foreign markets.
J.P. Morgan Global Index. This index is generally considered to be
representative of the performance of fixed rate, domestic government bonds from
eleven countries.
DIVIDENDS AND DISTRIBUTIONS
The Equity, Fixed Income and Global Fixed Income Funds' dividends from net
investment income will be declared and distributed quarterly. The Small Cap
Fund's dividends from net investment income, if any, will be declared and
distributed at least annually. Each Fund's dividends from realized capital
gains, if any, after reduction by capital losses, will be declared and
distributed at least annually. In determining the amounts of its dividends, each
Fund will take into account its share of the income, gain or loss, expense, and
any other tax items of its corresponding Portfolio. Dividends from net
investment income and from capital gains, if any, are automatically reinvested
in additional shares of the applicable Fund unless the shareholder elects to
receive them in cash.
The Funds are designed primarily for investors in Omnibus Accounts who
seek to maximize total return and who may be in a position to benefit from the
reinvestment of the income dividends (if any), paid by the Fixed Income and
Global Fixed Income Funds, and any capital gains distributions paid by the Funds
on a tax deferred basis. The Funds may also be suitable for other investors,
depending upon their investment goals and financial and tax positions. The
companies in which the Equity and Small Cap Portfolios invest generally reinvest
their earnings, and dividend distributions by the Equity and Small Cap Funds
should not be expected.
Purchase of Shares
Who may purchase Fund shares?
Shares of the Funds may be purchased only for the account of Omnibus
Accounts. Because individuals may not purchase Fund shares directly, all orders
to purchase Fund shares must be made through the Account Administrator of your
Omnibus Account. If the monies you wish to invest in the Funds are maintained in
a retirement plan sponsored by your employer, please consult with your employer
for information about how to purchase Fund shares. If the monies you wish to
invest in the Funds are maintained in a self-administered retirement plan,
please consult with your Account Administrator for information about how to
purchase Fund shares.
How may Account Administrators invest in the Funds for the account of their
Omnibus Accounts?
In order to make an initial investment in a Fund, Account Administrators
must establish an account with the Funds by furnishing to Standish Fund
Distributors the information in the Account Application Form included with this
Prospectus. Account Administrators may purchase Fund shares for Omnibus Accounts
from the Standish Fund Distributors on any day during which the Funds and the
New York Stock Exchange (the "NYSE") are open for business (a "Business Day").
What is the minimum investment in Fund Shares?
Unless waived by the Trust, the minimum initial investment by an Omnibus
Account in each Fund is $100,000.
The Funds' investment minimums do not apply to accounts for which the
Adviser or any of its affiliates serves as investment adviser. The Funds'
investment minimums apply to the aggregate value invested in Omnibus Accounts
rather than to the investment of the underlying participants in the Omnibus
Accounts.
At what price are Fund shares offered?
Fund shares are sold at the net asset value per share next computed after
the purchase order is received in good order by Standish Fund Distributors or
its agent (including certain Account Administrators); provided that payment for
such shares is received by the Custodian by 1:00 p.m., New York City Time on the
next Business Day.
Orders for the purchase of Fund shares received by broker-dealers by the
close of regular trading on the NYSE on any Business Day and transmitted to
Standish Fund Distributors or its agent (including certain Accounts
Administrators) by the close of its Business Day (normally 4:00 p.m., New York
City time) will be effected as of the close of regular trading on the NYSE on
that day, provided that payment for such shares is received by the Custodian by
1:00 p.m., New York City time on the next Business Day. It is the responsibility
of broker-dealers to transmit orders so they will be received by Standish Fund
Distributors before the close of its Business Day.
Standish Group of Asset Funds 18 May 1, 1998
<PAGE>
May Fund shares be acquired in exchange for securities?
In the sole discretion of the Trust, each Fund may accept securities
instead of cash for the purchase of Fund shares. The Trust will ask the Adviser
to determine that any securities acquired by a Fund in this manner are
consistent with the investment objective, policies and restrictions of the
Fund's corresponding Portfolio. The securities will be valued in the manner
stated below with respect to how the Portfolios value their portfolio
securities. The purchase of Fund shares for securities instead of cash may cause
an investor who contributed them to recognize a taxable gain or loss with
respect to the securities transferred to the Fund. Consequently, prospective
investors should consult with their own tax advisers before acquiring Fund
shares in exchange for appreciated or depreciated securities in order to
evaluate fully the effect on their particular tax situations.
Other Purchase Information.
The Trust reserves the right in its sole discretion (i) to suspend the
offering of each Fund's shares, (ii) to reject purchase orders when in the best
interest of a Fund, (iii) to modify or eliminate the minimum initial investment
in Fund shares and (iv) to eliminate duplicative mailings of Fund materials to
shareholders who reside at the same address. Fund shares purchased by Account
Administrators for Omnibus Accounts or through broker-dealers may be subject to
transaction fees, no part of which will be received by the Funds, Standish Fund
Distributors or the Adviser.
Net Asset Value
Each Fund's net asset value per share is computed each Business Day as of
the close of regular trading on the NYSE (normally 4:00 p.m., New York City
time). Each Fund's net asset value per share is calculated by determining the
value of its assets (i.e., the value of its investment in its corresponding
Portfolio and other assets), subtracting all of its liabilities and dividing the
result by the total number of shares outstanding. Equity securities are valued
at the last sales prices, on the valuation date, on the NYSE or national
securities market on which they are primarily traded. Fixed income securities
(other than money market instruments) for which accurate market prices are
readily available are valued at their current market value on the basis of
quotations, which may be furnished by pricing services or provided by dealers in
such securities. Securities not listed on an NYSE or national securities market,
certain mortgaged-backed and asset-backed securities and securities for which
there were no reported transactions, are valued at the last quoted bid prices.
Equity and fixed income securities for which accurate market prices are not
readily available and other assets are valued at fair value as determined in
good faith by the Adviser in accordance with procedures approved by the Trustees
of the Portfolio Trust, which may include the use of yield equivalents or matrix
pricing for fixed income securities. Money market instruments with less than
sixty days remaining to maturity when acquired by a Portfolio are valued on an
amortized cost basis unless the Trustees determine that amortized cost does not
represent fair value. If a Portfolio acquires a money market instrument with
more than sixty days remaining to its maturity, it is valued at current market
value until the sixtieth day prior to maturity and will then be valued at
amortized cost based upon the value on such date unless the Trustees determine
during such sixty-day period that amortized cost does not represent fair value.
Portfolio securities traded on more than one U.S. national securities
exchange or on a U.S. exchange and a foreign securities exchange are valued at
the last sale price, from the exchange representing the principal market for
such securities, on the business day when such value is determined. The value of
all assets and liabilities expressed in foreign currencies is converted into
U.S. dollar values at currency exchange rates determined by Investors Bank &
Trust Company, the Funds' transfer agent, to be representative of fair rates of
exchange at times prior to the close of trading on the NYSE. If such rates are
not available, the rate of exchange will be determined in good faith under
procedures established by the Trustees. Trading in securities on European and
Asian securities exchanges and over-the-counter markets is normally completed
well before the close of business on the NYSE and may not take place on all
business days that the NYSE is open and may take place on days when the NYSE is
closed. Events affecting the values of portfolio securities that occur between
the time their prices are determined and the close of regular trading on the
NYSE will not be reflected in the Funds' calculation of net asset values unless
the Adviser determines that the particular event would materially affect net
asset value, in which case an adjustment will be made.
EXCHANGE OF SHARES
May Fund shares be exchanged for shares of other mutual funds?
Subject to the terms of your Omnibus Account, shares of any Fund may be
exchanged for shares of any other Fund described in this Prospectus on any
Business Day. Please consider the differences in investment objectives and
expenses of a Fund as described in this Prospectus before making an exchange.
Do sales charges apply to exchanges?
As is the case with initial purchases of Fund shares, exchanges of Fund
shares are made without the imposition of a sales charge.
How may I make an exchange?
Because Fund shares are held for the account of Omnibus Accounts only, all
orders to exchange Fund shares must be made through your Account Administrator.
If the Fund shares you wish to exchange are held for the account of a retirement
plan sponsored by your employer, please consult with your employer for
information about how to exchange Fund shares. If the Fund shares you wish to
exchange are maintained in a self-administered retirement plan, please consult
with your Account Administrator for information about how to exchange Fund
shares.
Standish Group of Asset Funds 19 May 1, 1998
<PAGE>
General Exchange Information
Exchange requests received by Standish Fund Distributors or its agent
prior to the close of regular trading of the NYSE (normally 4:00 p.m., New York
City time) will be effective on that Business Day. All exchanges are subject to
the following exchange restrictions: (i) the Fund into which shares are being
exchanged must be registered for sale in your state; (ii) exchanges may be made
only between Fund accounts that are registered in the same name, address and, if
applicable, taxpayer identification number; and (iii) unless waived by the
Trust, the amount to be exchanged must satisfy the minimum account size of the
Fund to be exchanged into. Exchange requests will not be processed until payment
for the shares of the current Fund has been received by the Custodian. The
exchange privilege may be changed or discontinued and may be subject to
additional limitations upon sixty (60) days' notice to shareholders, including
certain restrictions on purchases by market-timer accounts.
Telephone Exchanges
Omnibus Accounts are automatically authorized to have telephonic exchange
privileges unless the Account Administrator indicates otherwise on the Account
Application or by writing to Standish Fund Distributors. Account Administrators
may exchange shares by calling Standish Fund Distributors at (800) 221-4795.
Proper identification will be required for each telephonic exchange. Please see
"Telephone Transactions" below for more information regarding telephonic
transactions.
Written Exchanges
Account Administrators may exchange Fund shares by written order to
Standish Fund Distributors, Attn: Mutual Funds Department, P.O. Box 1407,
Boston, Massachusetts 02205-1407. A written exchange request must (a) state the
name of the current Fund, (b) state the name of the Fund into which the current
Fund shares will be exchanged, (c) state the number of shares or the dollar
amount to be exchanged, (d) identify the shareholder's account numbers in both
Funds and (e) be signed by each registered owner exactly as the shares are
registered. Signature(s) must be guaranteed as listed under "Written Redemption"
below.
Redemption of Shares
How may Fund shares be redeemed?
Subject to the restrictions (if any) imposed by your Omnibus Account, you
can arrange to sell or "redeem" some or all of your shares on any Business Day.
All orders to redeem Fund shares must be made through your Account
Administrator. If the Fund shares you wish to redeem are held for the account of
a retirement plan sponsored by your employer, please consult with your employer
for information about how to redeem Fund shares. If the Fund shares you wish to
redeem are maintained in an IRA or other self-administered retirement plan,
please consult with your Account Administrator for information about how to
redeem Fund shares.
Account Administrators may redeem Fund shares by any of the methods
described below at the net asset value per share next determined after receipt
by Standish Fund Distributors or its agent of a redemption request in proper
form. Redemptions will not be processed until a completed Share Purchase
Application and payment for the shares to be redeemed have been received.
Telephonic Redemption
Omnibus Accounts are automatically authorized to have telephonic
redemption privileges unless the Account Administrator indicates otherwise on
the Account Application or by writing to Standish Fund Distributors. Account
Administrators may redeem shares by calling Standish Fund Distributors at (800)
221-4795. Redemption proceeds will be mailed or wired in accordance with the
Account Administrator's instruction on the account application to a
predesignated account. Redemption proceeds will normally be paid promptly after
receipt of telephonic instructions, but no later than three Business Days
thereafter. Redemption proceeds will be sent only by check payable to the
Omnibus Account of record at the address of record, unless the Account
Administrator has indicated, in the initial application for the purchase of
shares, a commercial bank to which redemption proceeds may be sent by wire.
These instructions may be changed subsequently only in writing, accompanied by a
signature guarantee and additional documentation. Wire charges, if any, will be
deducted from redemption proceeds. Proper identification will be required for
each telephonic redemption.
Written Redemption
Account Administrators may redeem Fund shares by written order to Standish
Fund Distributors, Attn: Mutual Funds Department, P.O. Box 1407, Boston,
Massachusetts 02205-1407. A written redemption request must (a) state the name
of the Fund and the number of shares or the dollar amount to be redeemed, (b)
identify the Omnibus Account's account number with the Fund and (c) be signed by
each registered owner exactly as the shares are registered. Signature(s) must be
guaranteed by a member of either the Securities Transfer Association's STAMP
program or the NYSE's Medallion Signature Program or by any one of the following
institutions, provided that such institution meets credit standards established
by Investors Bank and Trust Company, the Funds' transfer agent: (i) a bank; (ii)
a securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or has net capital
of at least $100,000; (iii) a credit union having authority to issue signature
guaranties; (iv) a savings and loan association, a building and loan
association, a cooperative bank, or a federal savings bank or association; or
(v) a national securities exchange, a registered securities exchange or a
clearing agency. Additional supporting documents may be required. Redemption
proceeds will normally be paid by check, mailed within three Business Days of
receipt by Standish Fund Distributors of a written redemption request in proper
form.
Standish Group of Asset Funds 20 May 1, 1998
<PAGE>
Telephone Transactions
By maintaining an account that is eligible for telephonic exchange and
redemption privileges, the Account Administrator authorizes the Adviser,
Standish Fund Distributors, the Trust and the Custodian to act upon instructions
of any person to redeem and/or exchange shares from the shareholder's account.
Further, the Account Administrator acknowledges on behalf of the Omnibus Account
that, as long as the Funds employ reasonable procedures to confirm that
telephonic instructions are genuine, and follow telephonic instructions that
they reasonably believe to be genuine, neither the Adviser, nor Standish Fund
Distributors, nor the Trust, nor the Funds, nor the Custodian, nor their
respective directors, officers or employees, will be liable for any loss,
expense or cost arising out of any request for a telephonic redemption or
exchange, even if such transaction results from any fraudulent unauthorized
instructions. Depending upon the circumstances, the Funds intend to employ
personal identification or written confirmation of transactions procedures, and
if they do not, the Funds may be liable for any losses due to unauthorized or
fraudulent instructions. All telephone transaction requests will be recorded.
Account Administrators may experience delays in exercising telephone transaction
privileges during periods of abnormal market activity. Accordingly, during
periods of volatile economic and market conditions, Account Administrators may
wish to consider transmitting redemption and exchange requests in writing.
****
The proceeds paid upon redemption or repurchase may be more or less than
the cost of the shares, depending upon the market value of the applicable
Portfolio's portfolio investments at the time of redemption or repurchase. Each
Fund intends to pay cash for all shares redeemed, but under certain conditions,
the Funds may make payments wholly or partially in portfolio securities
withdrawn from the applicable Portfolio for this purpose. Please see the
Statement of Additional Information for further information regarding the Funds'
ability to satisfy redemption requests in-kind.
Because of the cost of maintaining shareholder accounts, the Funds may
redeem, at net asset value, the shares in any account if the value of such
shares has decreased to less than $50,000 as a result of redemptions or
transfers. Before doing so, the applicable Fund will notify the Account
Administrator that the value of the shares in the account is less than the
specified minimum and will allow the shareholder 30 days to make an additional
investment in an amount which will increase the value of the account to at least
$50,000. Each Fund may eliminate duplicate mailings of Fund materials to
shareholders that have the same address of record.
Management
Trustees. Each Fund is a separate investment series of Standish, Ayer &
Wood Investment Trust, a Massachusetts business trust. Under the terms of the
Agreement and Declaration of Trust establishing the Trust, the Trustees of the
Trust are ultimately responsible for the management of its business and affairs.
Each Portfolio is a separate investment series of Standish, Ayer & Wood Master
Portfolio ("Portfolio Trust"), a master trust fund organized under the laws of
the State of New York. Under the terms of the Declaration of Trust each
Portfolio's affairs are managed under the supervision of the Portfolio Trust's
Trustees. See "Management" in the Statement of Additional Information for more
information about the Trustees and officers of the Trust and the Portfolio
Trust.
Investment Advisers. Standish, One Financial Center, Boston, Massachusetts
02111, serves as investment adviser to the Equity, Small Cap and Fixed Income
Portfolios pursuant to separate investment advisory agreements. Standish is a
Massachusetts corporation incorporated in 1933 and is a registered investment
adviser under the Investment Advisers Act of 1940.
SIMCO, One Financial Center, Boston, Massachusetts 02111, serves as
investment adviser to the Global Fixed Income Portfolio pursuant to an
investment advisory agreement and manages the Global Fixed Income Fund's
investments and affairs subject to the supervision of the Trustees of the Trust.
SIMCO is a Delaware limited partnership which was organized in 1991 and is a
registered investment adviser under the Investment Advisers Act of 1940. The
general partner of SIMCO is Standish, which holds a 99.98% partnership interest.
The limited partners, who each hold a 0.01% interest in SIMCO, are Walter M.
Cabot, Sr., Director and Senior Adviser to Standish, and D. Barr Clayson,
Chairman of the Board and Vice President of SIMCO and a Managing Director and
Vice President of Standish. Ralph S. Tate, a Managing Director of Standish, is
President and a Director of SIMCO. Richard S. Wood, Vice President and a
Managing Director and Vice President of Standish and the President of the Trust,
is the Executive Vice President of SIMCO.
Standish and SIMCO provide fully discretionary management services and
counseling and advisory services to a broad range of clients throughout the
United States and abroad. Corporate pension funds are the largest asset under
active management by Standish and SIMCO. Standish's and SIMCO's clients also
include charitable and educational endowment funds, financial institutions,
trusts and individual investors. As of September 30, 1997, Standish or SIMCO
managed approximately $34 billion of assets.
The Equity Portfolio's portfolio managers are Ralph S. Tate and David C.
Cameron. Mr. Tate and Mr Cameron have been primarily responsible for the
day-to-day management of the Portfolio's portfolio since January 1991 (which,
prior to May 3, 1996, included the direct management of Standish Equity Fund's
portfolio). During the past five years, Mr. Tate has served as a Managing
Director of Standish (since 1995) and President of SIMCO (since 1996) and both
Messrs. Tate and Cameron have served as a Director and Vice President of
Standish and a Director of SIMCO (since 1995 for Mr. Cameron).
The Small Capitalization Equity Portfolio's portfolio manager is Nicholas
S. Battelle. Mr. Battelle has been primarily responsible for the day-to-day
management of the Portfolio's
Standish Group of Asset Funds 21 May 1, 1998
<PAGE>
portfolio since August, 1990 (which, prior to May 3, 1996, included the direct
management of Standish Small Capitalization Equity Fund's portfolio). During the
past five years, Mr. Battelle has served as a Vice President as well as a
Director of Standish.
The Fixed Income Portfolio's portfolio manager is Caleb F. Aldrich. Mr.
Aldrich has been primarily responsible for the day-to-day management of the
Fixed Income Portfolio's portfolio since January 1, 1993 (which, prior to May 3,
1996, included the direct management of Standish Fixed Income Fund's portfolio).
During the past five years, Mr. Aldrich has served as a Director and Vice
President of Standish.
The Global Fixed Income Portfolio's portfolio managers are Richard S. Wood
and W. Charles Cook II (since June 1997). Mr. Wood has been primarily
responsible for the day-to-day management of the Global Fixed Income Portfolio's
portfolio since January 3, 1994 (which, prior to May 3, 1996, included the
direct management of Standish Global Fixed Income Fund's portfolio). During the
past five years, Mr. Wood has served as Vice President and a Managing Director
(since 1995) of Standish, President of the Trust and Executive Vice President of
SIMCO (since 1996) and the Portfolio Trust. During the past five years, Mr. Cook
has served as a Vice President and Associate Director of Standish and a Vice
President of SIMCO. Prior to serving as co-portfolio manager of the Global Fixed
Income Portfolio, Mr. Cook served as an analyst.
Subject to the supervision and direction of the Trustees of the Portfolio
Trust, the applicable Adviser manages each Portfolio in accordance with its
stated investment objective and policies, recommends investment decisions for
the Portfolios, places orders to purchase and sell securities on behalf of the
Portfolios and allows the Portfolios to use the name "Standish." For its
advisory services to the Portfolios, the applicable Adviser receives a monthly
fee at a stated annual percentage rate of each Portfolio's average daily net
asset value:
Contractual Advisory Fee Annual Rate
Actual Annual
Contractual Rate aid for
Advisory Fee the Year Ended
Annual Rate Dec. 31, 1996
----------- -------------
Equity
Portfolio 0.50% 0.49%
Small Cap
Portfolio 0.60% 0.59%
Fixed Income 0.40% of the
Portfolio first $250 million; 0.32%
0.35% of the
next $250
million; and
0.30% of
average
daily net
assets in
excess of
$500 million
Global Fixed
Income Portfolio 0.40% 0.40%
Administrator of the Funds
Standish serves as administrator to each Fund pursuant to an
administration agreement. As administrator, Standish manages the affairs of
these Funds, provides all necessary office space and services of executive
personnel for administering the affairs of the Funds, and allows these Funds to
use the name "Standish." For these services, Standish currently does not receive
any additional compensation. The Trustees of the Trust may determine in the
future to compensate Standish for its administrative services.
Service Plans
The Trust, on behalf of each Fund, has adopted a service plan pursuant to
which each Fund pays service fees at an aggregate annual rate of up to 0.25% of
a Fund's average daily net assets. The service fee is payable for the benefit of
the participants in the Omnibus Accounts that are shareholders in the Funds and
is intended to be compensation to Account Administrators for providing personal
services and/or account maintenance services to participants in Omnibus Accounts
who are the beneficial owners of Fund shares. The Trust, on behalf of the
applicable Fund, will make quarterly payments to Account Administrators, for the
benefit of their Omnibus Accounts, based on the average net asset value of the
Fund shares that are attributable to the Omnibus Accounts. Account
Administrators that are fiduciaries or parties in interest to Omnibus Accounts
subject to the Employee Retirement Income Security Act of 1974 should consult
with their legal advisers regarding the receipt of service fees. See the
Statement of Additional Information for further information.
Expenses. Each Portfolio and each Fund bears the expenses of its
respective operations other than those incurred by the respective Adviser under
the investment advisory agreements or the administration agreement.
Each Portfolio pays investment advisory fees; bookkeeping, share pricing
and custodian fees and expenses; expenses of notices and reports to interest
holders; and expenses of the Portfolio's administrator (if any). Each Fund pays
shareholder servicing fees and expenses, expenses of prospectuses, statements of
additional information and shareholder reports which are furnished to existing
shareholders. Each Fund and its corresponding Portfolio pays legal and auditing
fees; registration and reporting fees and expenses. Expenses of the Trust which
relate to more than one series are allocated among such series by Standish in an
equitable manner.
Standish Fund Distributors bears the distribution expenses attributable to
the offering and sale of Fund shares without subsequent reimbursement.
Portfolio Transactions. Subject to the supervision of the Trustees of the
Trust and the Portfolio Trust, the Advisers select the brokers and dealers that
execute orders to purchase and sell portfolio securities for the Portfolios. The
Advisers will generally seek to obtain the best available price and most
favorable execution with respect to all transactions for the Portfolios The
Advisers may also consider the extent to which a broker or dealer provides
research to the Advisers and the number of Fund shares sold by the broker or
dealer in making their selection.
Standish Group of Asset Funds 22 May 1, 1998
<PAGE>
FEDERAL INCOME TAXES
Each Fund is a separate entity for federal tax purposes and intends to
qualify for each taxable year for taxation as a "regulated investment company"
under the Code. If it qualifies as a regulated investment company, each Fund
will not be subject to federal income tax on income (including capital gains)
distributed to shareholders in the form of dividends or capital gain
distributions in accordance with certain timing requirements of the Code.
Shareholders which are taxable entities or persons will be subject to
federal income tax on dividends and capital gain distributions made by the
Funds. Dividends paid by a Fund from net investment income, certain net foreign
currency gains, and any excess of net short-term capital gain over net long-term
capital loss will be taxable to shareholders as ordinary income, whether
received in cash or reinvested in Fund shares. A portion of such dividends paid
by the Equity and Small Cap Funds will generally qualify for the corporate
dividends received deduction under the Code, subject to certain requirements and
limitations under the Code. Only a small portion, if any, of such dividends paid
by the Fixed Income or Global Fixed Income Funds is expected to qualify for the
corporate dividends received deduction under the Code. Dividends paid by a Fund
from net capital gain (the excess of net long-term capital gain over net
short-term capital loss), called "capital gain distributions," will be taxable
to shareholders as capital gains, whether received in cash or reinvested in Fund
shares and without regard to how long the shareholder has held shares of the
Fund. Capital gain distributions may be taxable at different maximum rates,
lower than the maximum rate applicable to ordinary income, and the applicable
rates may depend on the holding periods for the assets with respect to which the
gains were recognized. Capital gain distributions do not qualify for the
corporate dividends received deduction. Dividends and capital gain distributions
may also be subject to state and local or foreign taxes. Redemptions (including
exchanges) and repurchases of shares are taxable events for taxable
shareholders.
Each Portfolio may be subject to foreign taxes with respect to income or
gains from certain foreign investments, which will reduce the yield or return
from such investments. The Global Fixed Income Fund may, but the other Funds are
not likely to, qualify to elect to pass its share of certain qualifying foreign
taxes through to shareholders. If this election is made, shareholders would
include their shares of qualified foreign taxes in their gross incomes (in
addition to any actual dividends and distributions) and might be entitled to a
corresponding federal income tax credit or deduction, subject to various
conditions and limitations under the Code. Shareholders will receive appropriate
information from the Trust if this election is made for any year.
Individuals and certain other classes of shareholders may be subject to
31% backup withholding of federal income tax on dividends, capital gain
distributions, and the proceeds of redemptions or repurchases of shares, if they
fail to furnish the applicable Fund with their correct taxpayer identification
number and certain certifications or if they are otherwise subject to backup
withholding. Individuals, corporations and other shareholders that are not U.S.
persons under the Code are subject to different tax rules and may be subject to
nonresident alien withholding at the rate of 30% (or a lower rate provided by an
applicable tax treaty) on amounts treated as ordinary dividends from the Funds
and, unless a current IRS Form W-8 or an acceptable substitute is furnished to
the applicable Fund, to backup withholding on certain payments from that Fund.
After the close of each calendar year, the Funds will send a notice to
shareholders that provides information about the federal tax status of
distributions to shareholders for such calendar year.
The Funds and Their Shares
The Trust was organized on August 13, 1986 as a Massachusetts business
trust. In addition to the Funds offered in this Prospectus, the Trust offers
other series to the public. Shareholders of each Fund are entitled to one full
or fractional vote for each share of that Fund. There is no cumulative voting
and shares have no preemption or conversion rights. All series of the Trust vote
together except as provided in the 1940 Act or the Declaration of Trust. The
Trust does not intend to hold annual meetings of shareholders. The Trustees will
call special meetings of shareholders to the extent required by the Trust's
Declaration of Trust or the 1940 Act. The 1940 Act requires the Trustees, under
certain circumstances, to call a meeting to allow shareholders to vote on the
removal of a Trustee and to assist shareholders in communicating with each
other. Certificates for Fund shares are not issued.
The Portfolio Trust was organized on January 18, 1996 as a New York trust.
In addition to the Portfolios, the Portfolio Trust offers interests in other
series to certain qualified investors. See "Information about the Master-Feeder
Structure" above for additional information about the Portfolio Trust.
At October 29, 1997, 22 & Co., c/o Eastern Bank and Trust Co., 225
Essex Street, Salem, MA 01970 had sole voting and investment power with respect
to more than 25% of the then outstanding shares of the Equity Fund. Accordingly,
this shareholder was deemed to control the Equity Fund.
Inquiries concerning the Funds should be made by contacting Standish Fund
Distributors at the address and telephone number listed on the back cover of
this Prospectus.
Principal Underwriter
Standish Funds Distributor, L.P., One Financial Center, 26th Floor,
Boston, Massachusetts 02111, serves as the Trust's principal underwriter.
Custodian, Transfer Agent and Dividend Disubursing Agent
Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Funds' transfer agent, dividend disbursing
agent and custodian for all cash and securities of the Portfolios and the Funds.
Investors Bank & Trust, Boston and Toronto, Canada, also provides accounting
services to the Funds.
Standish Group of Asset Funds 23 May 1, 1998
<PAGE>
Indeptendent Accountants
Coopers & Lybrand L.L.P, One Post Office Square, Boston, Massachusetts
02109 and Coopers & Lybrand, P.O. Box 219, Grand Cayman, Grand Cayman Islands,
BWI, serve as independent accountants for the Trust and the Portfolio Trust,
respectively, and will audit the Funds' and the Portfolios' financial statements
annually.
Legal Counsel
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, is legal
counsel to the Trust, the Portfolio Trust and the Adviser and the Adviser's
affiliates.
Tax-Certification Instructions
Federal law requires that taxable distributions and proceeds of
redemptions and exchanges be reported to the IRS and that 31% be withheld if you
fail to provide your correct Taxpayer Identification Number ("TIN") and the
TIN-related certifications contained in the Account Purchase Application
("Application") or you are otherwise subject to backup withholding. A Fund will
not impose backup withholding as a result of your failure to make any
certification, except the certifications in the Application that directly relate
to your TIN and backup withholding status. Amounts withheld and forwarded to the
IRS can be credited as a payment of tax when completing your Federal income tax
return.
For most individual taxpayers, the TIN is the social security number.
Special rules apply for certain accounts. For example, for an account
established under the Uniform Gift to Minors Act, the TIN of the minor should be
furnished. If you do not have a TIN, you may apply for one using forms available
at local offices of the Social Security Administration or the IRS, and you
should write "Applied For" in the space for a TIN on the Application.
Recipients exempt from backup withholding, including corporations and
certain other entities, should provide their TIN and underline "exempt" in
section 2(a) of the TIN section of the Application to avoid possible erroneous
withholding. Non-resident aliens and foreign entities may be subject to
withholding of up to 30% on certain distributions received from the Funds and
must provide certain certifications on IRS Form W-8 to avoid backup withholding
with respect to other payments. For further information, see Code Sections 1441,
1442 and 3406 and/or consult your tax adviser.
Standish Group of Asset Funds 24 May 1, 1998
<PAGE>
STANDISH EQUITY ASSET FUND
STANDISH SMALL CAPITALIZATION
EQUITY ASSET FUND
STANDISH FIXED INCOME ASSET FUND
STANDISH GLOBAL FIXED INCOME ASSET FUND
- --------------------------------------------------------------------------------
Investment Adviser
(Equity, Small Cap and Fixed Income Portfolios)
Standish, Ayer & Wood, Inc.
One Financial Center
Boston, Massachusetts 02111
Investment Adviser
(Global Fixed Income Portfolio)
Standish International Management Company, L.P.
One Financial Center
Boston, Massachusetts 02111
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Independent Accountants
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, Massachusetts 02109
(The Funds)
Coopers & Lybrand
P.O. Box 219
Grand Cayman Island, BWI
(The Portfolios)
Principal Underwriter
Standish Fund Distributors, L.P.
One Financial Center
Boston, Massachusetts 02111
Legal Counsel
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
- --------------------------------------------------------------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this Prospectus or
in the Statement of Additional Information, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Trust. This Prospectus does not constitute an offering in any
jurisdiction in which such offering may not be lawfully made.
Standish Group of Asset Funds 25 May 1, 1998
<PAGE>
(This page intentionally left blank.)
Standish Group of Asset Funds 26 May 1, 1998
<PAGE>
(This page intentionally left blank.)
Standish Group of Asset Funds 27 May 1, 1998
<PAGE>
[STANDISH LOGO] STANDISH FUNDS(SM)
One Financial Center
Boston, Massachusetts 02111-2662
(800) 729-0066
www.standishfunds.com
<PAGE>
Statement of Additional Information
The combined statement of additional information for the Standish Equity Asset
Fund, Standish Small Capitalization Equity Asset Fund, Standish Fixed Income
Asset Fund and Standish Global Fixed Income Asset Fund is incorporated by
reference into this Registration Statement and was filed electronically with the
Securities and Exchange Commission on November 26, 1997, SEC File No. 33-8214,
ascession number 0001005477-97-002640.
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Statement of Assets and Liabilities
March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investment in Standish Equity Portfolio ("Portfolio"), at value (Note 1A) $ 604,598
Receivable from investment adviser (Note 3) 32
Other assets 5,604
----------
Total assets 610,234
Liabilities
Accrued trustees' fees (Note 3) $ 2,286
Accrued expenses and other liabilities 2,555
------------
Total liabilities 4,841
----------
Net Assets $ 605,393
==========
Net Assets consist of:
Paid-in capital $ 550,605
Accumulated net realized gain 45,755
Distributions in excess of net investment income (48)
Net unrealized appreciation 9,081
==========
Total Net Assets $ 605,393
==========
Shares of beneficial interest outstanding 27,510
==========
Net asset value, offering and redemption price per share
(Net assets/Shares outstanding) $ 22.01
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Statement of Operations
For the period October 8, 1997
(commencement of operations)
to March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Dividend income allocated from Portfolio $ 2,957
Interest income allocated from Portfolio 721
---------
Total investment income allocated from Portfolio 3,678
Expenses
Accounting and transfer agent fees $ 5,741
Legal and audit services 5,559
Trustees fees (Note 3) 2,286
Registration fees 53
Miscellaneous 964
Expenses allocated from Portfolio 1,666
---------
Total expenses 16,269
Deduct:
Reimbursement of Fund operating expenses (Note 3) (16,269)
---------
Net expenses 0
---------
Net investment income 3,678
---------
Realized and Unrealized Gain (Loss)
Net realized gain allocated from Portfolio on:
Investment security transactions $ 44,086
Financial futures contracts 1,669
---------
Net realized gain 45,755
Change in unrealized appreciation allocated from Portfolio on:
Investment securities 8,539
Financial futures contracts 542
---------
Change in net unrealized appreciation 9,081
---------
Net realized and unrealized gain on investments 54,836
---------
Net increase in net assets resulting from operations $ 58,514
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period October 8, 1997
(commencement of operations)
to March 31, 1998 (Unaudited)
-------------------------------
<S> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 3,678
Net realized gain 45,755
Change in net unrealized appreciation 9,081
----------
Net increase in net assets from operations 58,514
----------
Distributions to Shareholders (Note 2)
From net investment income (3,726)
----------
Fund share (principal) transactions (Note 5)
Net proceeds from sale of shares 546,879
Net asset value of shares issued to shareholders in payment of
distributions declared 3,726
Cost of shares redeemed --
----------
Increase in net assets from Fund share transactions 550,605
----------
Net increase in net assets 605,393
Net Assets
At beginning of period --
----------
At end of period (including distributions in excess of net
investment income of $48) $ 605,393
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period October 8, 1997
(commencement of operations)
to March 31, 1998 (Unaudited)
-------------------------------
<S> <C>
Net asset value, beginning of period $20.00
-------
Income from operations:
Net investment income * 0.15+
Net realized and unrealized gain on investments 1.92
-------
Total from investment operations 2.07
-------
Less distributions declared to shareholders:
From net investment income (0.06)
-------
Total distributions (0.06)
-------
Net asset value, end of period $22.01
=======
Total return 10.81%
Ratios (to average daily net assets)/Supplemental Data
Net assets, end of period (000's omitted) $ 605
Expenses * (1) 0.00%++
Net investment income * 1.46%++
</TABLE>
- ----------
* For the period October 8, 1997 (commencement of operations) to March 31,
1998, the investment adviser reimbursed the Fund's and Portfolio's operating
expenses. If this voluntary reduction had not been taken, the net investment
income per share and the ratios would have been:
Net investment income per share $(0.50)
Ratios (to average daily net assets):
Expenses (1) 6.45%++
Net investment income (4.99)%++
+ Calculated based on average shares outstanding.
(1) Includes the Fund's share of Standish Equity Portfolio's allocated
expenses for the period from October 8, 1997 to March 31, 1998.
++ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) Significant Accounting Policies:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish Equity Asset Fund (the "Fund") is a separate
diversified investment series of the Trust.
The Fund invests all of its investable assets in an interest of the
Standish Equity Portfolio ( the "Portfolio"), a subtrust of Standish,
Ayer & Wood Master Portfolio ( the "Portfolio Trust"), which is
organized as a New York trust, and has the same investment objective as
the Fund. The value of the Fund's investment in the Portfolio reflects
the Fund's proportionate interest in the net assets of the Portfolio
(approximately 0.3% at March 31, 1998). The performance of the Fund is
directly affected by the performance of the Portfolio. The financial
statements of the Portfolio are included elsewhere in this report and
should be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies followed
by the Fund in the preparation of the financial statements. The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. Investment security valuations
The Fund records its investment in the Portfolio at value. The method
by which the Portfolio values its securities is discussed in Note 1A of
the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. The Fund's
net investment income consists of the Fund's pro rata share of the net
investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted
accounting principles.
C. Federal taxes
As a qualified regulated investment company under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal
year.
D. Other
All net investment income and realized and unrealized gains and losses
of the Portfolio are allocated pro rata among the respective investors
in the Portfolio.
(2) Distributions to Shareholders:
The Fund's dividends from short-term and long-term capital gains, if
any, after reduction of capital losses will be declared and distributed
at least annually, as will dividends from net investment income. In
determining the amounts of its dividends, the Fund will take into
account its share of the income, gains or losses, expenses, and any
other tax items of the Portfolio. Dividends from net investment income
and capital gains distributions, if any, are reinvested in additional
shares of the Fund unless a shareholder elects to receive them in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted
accounting principles. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications
between paid-in capital, undistributed net investment income and
accumulated net realized gain (loss).
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Asset Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(3) Investment Advisory Fee:
The Fund does not directly pay any investment advisory fees, but
indirectly bears its pro rata share of the compensation paid by the
Portfolio to Standish, Ayer & Wood (SA&W) for such services. See Note 2
of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. For the period ended March 31, 1998, SA&W
voluntarily agreed to limit the operating expenses of the Fund and the
Portfolio (excluding brokerage commissions, taxes and extraordinary
expenses) to 0.00% of the Fund's average daily net assets. This
agreement is voluntary and temporary and may be discontinued or revised
by SA&W at any time. Pursuant to this agreement, SA&W voluntarily
reimbursed the Fund for $16,269 of operating expenses for the period
ended March 31, 1998. The Fund pays no compensation directly to its
trustees who are affiliated with SA&W or to its officers, all of whom
receive remuneration for their services to the Trust from SA&W. Certain
of the trustees and officers of the Trust are directors or officers of
SA&W.
(4) Investment Transactions:
Increases and decrease in the Fund's investment in the Portfolio for
the period from October 8, 1997 (commencement of operations) to March
31, 1998 aggregated $563,118 and $15,368, respectively.
(5) Shares of Beneficial Interest:
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of beneficial interest having a
par value of one cent per share. Transactions in Fund shares were as
follows:
For the period October 8, 1997
(commencement of operations)
to March 31, 1998
------------------------------
Shares sold 27,326
Shares issued to shareholders in
payment of distributions declared 184
Shares redeemed 0
------------------------------
Net increase 27,510
==============================
7
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
EQUITIES -- 92.5%
Basic Industry -- 3.9%
Dexter Corp. 29,500 $ 1,220,563
Lyondell Petro Chemical 101,100 3,443,718
Southdown, Inc. 28,400 1,979,125
USX-US Steel Group, Inc. 64,100 2,419,775
----------------
9,063,181
----------------
Capital Goods -- 10.1%
Aeroquip-Vickers Inc. 52,500 3,035,156
Caterpiller Tractor, Inc. 44,000 2,422,750
Crane Company 24,100 1,277,300
Deere & Co. 51,400 3,183,588
Ingersoll Rand Co. 52,650 2,523,909
Navistar International* 73,100 2,558,500
Precision Castparts Corp. 33,600 1,988,700
Sundstrand Corp. 38,400 2,323,200
Timken Co. 56,400 1,907,025
US Freightways Corp. 56,100 2,019,600
----------------
23,239,728
----------------
Consumer Stable -- 10.1%
Albertsons, Inc. 18,300 963,038
Dole Food Company 54,900 2,655,788
Interstate Bakeries Corp. 97,800 3,160,163
Kroger Co. 24,600 1,136,213
Owens Illinois* 76,200 3,295,649
Philip Morris Companies Inc. 51,600 2,151,075
Richfood Holdings, Inc. 45,800 1,465,600
Safeway, Inc. 100,400 3,708,524
Supervalu, Inc. 29,100 1,356,788
Sysco Corp. 63,800 1,634,875
Universal Foods Corp. 36,300 1,778,700
----------------
23,306,413
----------------
Early Cyclical -- 5.4%
AMR Corp. 11,600 1,660,975
Ford Motor Co. 63,600 4,122,074
Furniture Brands Intl Inc.* 32,400 1,042,875
Kaufman And Broad Home 35,500 1,155,969
Lear Corp.* 19,200 1,082,400
U.S. Airways Group, Inc.* 26,300 1,949,488
USG Corp.* 26,300 1,425,131
----------------
12,438,912
----------------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Energy -- 5.9%
British Petroleum Co. PLC ADR 39,526 $ 3,401,705
Camco International, Inc. 17,600 1,064,800
Chevron Corporation 11,600 931,625
Coastal Corp. 24,200 1,576,025
Ensco International, Inc. 54,600 1,515,150
Global Marine Inc.* 67,600 1,673,100
Pennzoil 26,400 1,706,100
Tidewater, Inc. 40,200 1,761,263
----------------
13,629,768
----------------
Financial -- 13.4%
Americredit* 34,300 943,250
Amsouth Bancorp 34,600 2,043,563
Comerica, Inc. 18,600 1,968,113
Conseco, Inc. 71,000 4,020,374
Golden West Financial Corp. 26,800 2,567,775
Northfork Bancorp 58,300 2,251,838
Old Republic International Corp. 33,500 1,484,469
Protective Life Corp. 18,400 1,343,200
Reliastar Financial Corp. 57,400 2,643,988
Republic New York Corp. 15,900 2,120,663
Southtrust Corp. 48,300 2,022,563
Sunamerica, Inc. 39,000 1,867,125
The PMI Group, Inc. 28,600 2,309,450
Torchmark Corp. 48,200 2,208,163
Webster Financial Corp. 16,000 1,112,000
----------------
30,906,534
----------------
Growth Cyclical -- 6.7%
G Tech Holdings Corp.* 50,000 1,943,750
Jones Apparel Group, Inc.* 26,500 1,459,156
Liz Claiborne 24,500 1,221,938
Nautica Enterprises Inc.* 96,100 2,955,075
Ross Stores, Inc. 60,700 2,678,388
TJX Cos, Inc. 28,700 1,298,675
Tommy Hilfiger Corp.* 47,900 2,876,994
VF Corp. 20,700 1,088,044
----------------
15,522,020
----------------
Health Care -- 10.0%
Amerisource Distribution Corp. 1,500 90,188
ATL Ultrasound, Inc.* 500 25,438
Bergen Brunswig Corp., Class A 52,750 2,248,469
Biomet, Inc. 47,300 1,419,000
Health Care & Retirement* 48,300 2,073,881
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Health Care (continued)
Hillenbrand Industries, Inc. 16,100 $ 991,156
Integrated Health Services 26,800 1,053,575
Merck & Co., Inc. 38,100 4,891,087
Physician Sales & Service* 67,800 1,593,300
Schering-Plough Corp. 71,100 5,807,980
Steris Corp.* 27,800 1,501,200
Sybron Corp. 54,800 1,431,650
----------------
23,126,924
----------------
Real Estate -- 2.1%
Duke Realty Investments, REIT 43,500 1,060,313
Felcor Suite Hotels Inc., REIT 21,200 785,725
Prentiss Properties Trust, REIT 49,800 1,301,025
Starwood Lodging Trust, REIT 33,200 1,774,125
----------------
4,921,188
----------------
Services -- 14.2%
Ameritech Corp. 106,000 5,240,374
AT&T Corporation 37,100 2,434,688
Bellsouth Corp. 75,500 5,100,968
Century Telephone Enterprise 38,600 2,359,425
Deluxe Corp. 47,300 1,557,944
Gannett Co., Inc. 58,500 4,204,687
Omnicom Group 41,500 1,953,094
SBC Communications, Inc. 98,900 4,314,512
Service Corp. International 25,300 1,073,669
Shared Medical Systems 18,700 1,465,613
Xerox Corp. 29,500 3,139,906
----------------
32,844,880
----------------
Technology -- 9.9%
Computer Associates International, Inc. 55,650 3,213,787
Harris Corp., Inc. 38,200 1,991,175
Networks Associates Inc.* 32,900 2,179,625
Sci Sys, Inc. 69,700 2,483,063
Storage Technology Corp.* 55,100 4,191,043
Sun Microsystems, Inc.* 76,800 3,203,995
Symantec* 115,600 3,113,975
Tech Data Corp.* 63,200 2,433,200
----------------
22,809,863
----------------
Utilities -- 0.8%
FPL Group Inc. 26,500 1,702,625
----------------
TOTAL EQUITIES (COST $172,332,475) 213,512,036
----------------
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS AND NOTES -- 0.4%
U.S. Government -- 0.4%
FNMA Discount+ 0.000% 6/5/1998 $ 1,000,000 $ 990,070
----------------
Total U.S. Government (Cost $990,241) 990,070
----------------
TOTAL BONDS AND NOTES (COST $990,241) 990,070
----------------
SHORT-TERM INVESTMENTS -- 5.7%
Repurchase Agreements -- 5.7%
Prudential-Bache Repurchase Agreement, dated 3/31/98, due 4/1/98, with a
maturity value of $11,490,920 and an effective yield of 5.42%, collateralized by
U.S. Government Agency Obligations with rates of 6.86% and 7.43%, with maturity
dates of 11/1/27 and 6/1/27 and with an aggregate market value of $11,719,026 11,489,214 11,489,214
Cantor Fitzgerald Repurchase Agreement, dated 3/31/98, due 4/1/98, with a
maturity value of $1,663,411 and an effective yield of 4.95%, collateralized by
a U.S. Government Agency Obligation with a rate of 6.625%, with a maturity date
of 6/3/01 and with an aggregate market value of $1,697,125 1,663,183 1,663,183
----------------
Total Repurchase Agreements (Cost $13,152,397) 13,152,397
----------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,152,397) 13,152,397
----------------
TOTAL INVESTMENTS-- 98.6% (COST $186,475,113) $ 227,654,503
Other Assets, Less Liabilities-- 1.4% 3,280,063
----------------
NET ASSETS-- 100% $ 230,934,566
================
</TABLE>
Notes to the Schedule of Investments:
* Non-income producing security.
+ Denotes all or part of security pledged as collateral to cover margin
requirements on open financial futures contracts (Note 5).
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Statement of Assets and Liabilities
March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value (Note 1A) (identified cost, $186,475,113) $ 227,654,503
Receivable for investments sold 6,927,301
Interest and dividends receivable 234,678
Receivable for daily variation margin on open financial futures contracts (Note 5) 61,200
Deferred organization costs (Note 1E) 45,942
--------------
Total assets 234,923,624
Liabilities
Payable for investments purchased $ 3,955,622
Accrued trustees' fees (Note 2) 3,135
Accrued accounting and custody fees 4,339
Accrued expenses and other liabilities 25,962
------------
Total liabilities 3,989,058
--------------
Net Assets (applicable to investors' beneficial interests) $ 230,934,566
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Statement of Operations
For the Six Months Ended March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1C)
Dividend income $ 1,130,754
Interest income 277,386
--------------
Total income 1,408,140
Expenses
Investment advisory fee (Note 2) $ 459,185
Accounting and custody fees 96,691
Legal and audit services 36,874
Amortization of organization cost (Note 1E) 7,447
Insurance expense 4,324
Registration fees 3,999
Miscellaneous 24,824
------------
Total expenses 633,344
--------------
Net investment income 774,796
--------------
Realized and Unrealized Gain (loss)
Net realized gain
Investment security transactions 16,502,615
Financial futures contracts 705,778
------------
Net realized gain 17,208,393
Change in unrealized appreciation
Investment securities 7,108,377
Financial futures contracts 364,885
------------
Change in net unrealized appreciation 7,473,262
--------------
Net realized and unrealized gain 24,681,655
--------------
Net increase (decrease) in net assets from operations $ 25,456,451
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
Six Months May 3, 1996
Ended Nine Months (commencement of
March 31, 1998 Ended operations) to
(Unaudited) September 30, 1997 December 31, 1996
----------------- --------------------- -------------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 774,796 $ 978,216 1,091,670
Net realized gain 17,208,393 22,264,615 13,302,616
Change in net unrealized appreciation 7,473,262 16,959,272 3,404,699
------------- ------------- --------------
Net increase in net assets from operations 25,456,451 40,202,103 17,798,985
------------- ------------- --------------
Capital transactions
Assets contributed by Standish Equity Fund
at commencement
(including unrealized gain of
$13,669,897) -- -- 97,994,616
Contributions 55,911,626 42,815,799 15,564,794
Withdrawals (20,575,516) (19,153,531) (25,080,761)
------------- ------------- --------------
Increase in net assets resulting from
capital transactions 35,336,110 23,662,268 88,478,649
------------- ------------- --------------
Total increase in net assets 60,792,561 63,864,371 106,277,634
Net Assets
At beginning of period 170,142,005 106,277,634 --
------------- ------------- --------------
At end of period $230,934,566 $170,142,005 $ 106,277,634
============= ============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Supplementary Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
Six Months May 3, 1996
Ended Nine Months (commencement of
March 31, 1998 Ended operations) to
(Unaudited) September 30, 1997 December 31, 1996
---------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Ratios (to average daily net assets):
Expenses 0.69%+ 0.66%+ 0.69%+
Net investment income 0.84%+ 0.99%+ 1.58%+
Portfolio Turnover 70% 75% 78%
Average broker commission per share (1) $ 0.0476 $ 0.0465 $ 0.0483
Net assets, end of period (000's omitted) $230,935 $ 170,142 $106,278
</TABLE>
- ----------
+ Computed on an annualized basis.
(1) Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) Significant Accounting Policies:
Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") was
organized as a master trust fund under the laws of the State of New
York on January 18, 1996 and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company.
Standish Equity Portfolio (the "Portfolio") is a separate diversified
investment series of the Portfolio Trust.
The following is a summary of significant accounting policies followed
by the Portfolio in the preparation of the financial statements. The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. Investment security valuations
Securities for which quotations are readily available are valued at the
last sale price, or if no sale, at the closing bid price in the
principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are
not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
Short-term instruments with less than sixty-one days remaining to
maturity when acquired by the Portfolio are valued on an amortized cost
basis. If the Portfolio acquires a short-term instrument with more than
sixty days remaining to its maturity, it is valued at current market
value until the sixtieth day prior to maturity and will then be valued
at amortized cost based upon the value on such date unless the trustees
determine during such sixty-day period that amortized cost does not
represent fair value.
B. Repurchase agreements
It is the policy of the Portfolio to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the
Portfolio to monitor on a daily basis, the market value of the
repurchase agreement's underlying investments to ensure the existence
of a proper level of collateral.
C. Securities transaction and income
Securities transactions are recorded as of the trade date. Interest
income is determined on the basis of interest accrued. Dividend income
is recorded on the ex-dividend date. Realized gains and losses from
securities sold are recorded on the identified cost basis.
D. Income Taxes
The Portfolio is treated as a partnership for federal tax purposes. No
provision is made by the Portfolio for federal or state taxes on any
taxable income of the Portfolio because each investor in the Portfolio
is ultimately responsible for the payment of any taxes. Since some of
the Portfolio's investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolio, the
Portfolio normally must satisfy the source of income and
diversification requirements applicable to regulated investment
companies (under the Internal Revenue Code) in order for its investors
to satisfy them. The Portfolio will allocate at least annually among
its investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of
income, gain, loss deduction or credit.
16
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. Deferred Organizational Expenses
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight-line basis
through April, 2001.
(2) Investment Advisory Fee:
The investment advisory fee paid to Standish, Ayer & Wood, Inc.
("SA&W") for overall investment advisory and administrative services is
paid monthly at the annual rate of 0.50% of the Portfolio's average
daily net assets. The Portfolio Trust pays no compensation directly to
its trustees who are affiliated with SA&W or to its officers, all of
whom receive remuneration for their services to the Portfolio Trust
from SA&W. Certain of the trustees and officers of the Portfolio Trust
are directors or officers of SA&W.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than purchased
option transactions and short-term obligations, were as follows:
<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
March 31, 1998 September 30, 1997
----------------------------------- -----------------------------------
Purchases Sales Purchases Sales
----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
U.S. Government Securities $ 1,978,414 $ 0 $ 740,421 $ 0
============= ============= ============= =============
Investments (non-U.S. Government Securities) $ 152,314,277 $ 124,068,209 $ 161,249,954 $ 141,898,028
============= ============= ============= =============
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 1998, as computed on a federal
income tax basis, were as follows:
Aggregate Cost $ 186,475,113
=================
Gross unrealized appreciation $ 42,636,313
Gross unrealized depreciation $ (1,456,923)
-----------------
Net unrealized appreciation (depreciation) $ 41,179,390
=================
17
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(5) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to seek to
enhance potential gain in circumstances where hedging is not involved.
The nature, risks and objectives of these investments are set forth
more fully in Parts A and B of the Portfolio Trust's registration
statement.
The Portfolio trades the following financial instruments with
off-balance sheet risk:
Options
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before
a certain date. The Portfolio may use options to seek to hedge against
risks of market exposure and changes in securities prices and foreign
currencies, as well as to seek to enhance returns. Writing puts and
buying calls tend to increase the Portfolio's exposure to the
underlying instrument. Buying puts and writing calls tend to decrease
the Portfolio's exposure to the underlying instrument, or hedge other
portfolio investments. Options, both held and written by the Portfolio,
are reflected in the accompanying Statement of Assets and Liabilities
at market value. The underlying face amount at value of any open
purchased option is shown in the Schedule of Investments. This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the
contracts' terms.
Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are
exercised or are closed are added to or offset against the proceeds or
amount paid on the transaction to determine the realized gain or loss.
Realized gains and losses on purchased options are included in realized
gains and losses on investment securities, except purchased options on
foreign currency which are included in realized gains and losses on
foreign currency transactions. If a put option written by the Portfolio
is exercised, the premium reduces the cost basis of the securities
purchased by the Portfolio. The Portfolio, as a writer of an option,
has no control over whether the underlying securities may be sold
(call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option. The Portfolio entered into no such transactions for the period
ended March 31, 1998.
Futures Contracts
The Portfolio may enter into financial futures contracts for the
delayed sale or delivery of securities or contracts based on financial
indices at a fixed price on a future date. Pursuant to the margin
requirements, the Portfolio deposits either in cash or securities an
amount equal to a certain percentage of the contract amount. Subsequent
payments are made or received by the Portfolio each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for financial statement purposes as unrealized gains or losses
by the Portfolio. There are several risks in connection with the use of
futures contracts as a hedging device. The change in value of futures
contracts primarily corresponds with the value of their underlying
instruments or index, which may not correlate with changes in value of
the hedged investments. Buying futures tends to increase the
Portfolio's exposure to the underlying instrument, while selling
futures tends to decrease the Portfolio's exposure to the underlying
instrument or hedge other portfolio investments. In addition, there is
the risk that the Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market. Losses may arise
if there is an illiquid secondary market or if the counterparties do
not perform under the contracts' terms. The Portfolio enters into
financial futures transactions primarily to seek to manage its exposure
to certain markets and to changes in securities prices and foreign
currencies. Gains and losses are realized upon the expiration or
closing of the futures contracts. At March 31, 1998, the Portfolio had
entered into the following financial futures contracts:
18
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
Futures Contracts -- continued
<TABLE>
<CAPTION>
Underlying
Face/amount at Unrealized
Contract Position Expiration Date value Gain/(Loss)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S & P 500 (51 Contracts) Long 6/18/98 14,158,875 327,740
=======
</TABLE>
At March 31, 1998, the Portfolio had segregated sufficient cash and/or
securities to cover margin requirements on open futures contracts.
19
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The following unaudited financial statements of Standish Equity Asset
Fund, a series of Standish, Ayer & Wood Investment Trust (the "Registrant"), are
incorporated by reference into the combined prospectus and statement of
additional information of the Standish Equity Asset Fund, Standish Small
Capitalization Equity Asset Fund, Standish Fixed Income Asset Fund and Standish
Global Fixed Income Asset Fund.
Schedule of Portfolio Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
(b) Exhibits:
(1) Agreement and Declaration of Trust dated
August 13, 1986***
(1A) Certificate of Designation of Standish Fixed Income Fund***
(1B) Certificate of Designation of Standish International Fund***
(1C) Certificate of Designation of Standish Securitized Fund***
(1D) Certificate of Designation of Standish Short-Term Asset Reserve
Fund***
(1E) Certificate of Designation of Standish Marathon Fund***
(1F) Certificate of Amendment dated November 21, 1989***
(1G) Certificate of Amendment dated November 29, 1989***
(1H) Certificate of Amendment dated April 24, 1990***
(1I) Certificate of Designation of Standish Equity Fund***
C-1
<PAGE>
(1J) Certificate of Designation of Standish International Fixed Income
Fund***
(1K) Certificate of Designation of Standish Intermediate Tax Exempt Bond
Fund***
(1L) Certificate of Designation of Standish Massachusetts Intermediate
Tax Exempt Bond Fund***
(1M) Certificate of Designation of Standish Global Fixed Income Fund***
(1N) Certificate of Designation of Standish Controlled Maturity Fund and
Standish Fixed Income Fund II***
(1O) Certificate of Designation of Standish Tax-Sensitive Small Cap
Equity Fund and Standish Tax-Sensitive Equity Fund***
(1P) Form of Certificate of Designation of Standish Equity Asset Fund,
Standish Small Capitalization Equity Asset Fund, Standish Fixed
Income Asset Fund and Standish Global Fixed Income Asset Fund***
(1Q) Form of Certificate of Designation of Standish Small Capitalization
Equity Fund II***
(1R) Certificate of Designation of Standish Small Capitalization Equity
Asset Fund II, Standish Diversified Income Fund, Standish
Diversified Income Asset Fund*
(2) Bylaws of the Registrant***
(3) Not applicable
(4) Not applicable
(5A) Form of Investment Advisory Agreement between Registrant and
Standish, Ayer & Wood, Inc. relating to Standish International
Fund***
(5B) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Securitized Fund***
(5C) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish International Fixed Income
Fund***
C-2
<PAGE>
(5D) Assignment of Investment Advisory Agreement between the Registrant
and Standish, Ayer & Wood, Inc. relating to Standish International
Fixed Income Fund***
(5E) Form of Investment Advisory Agreement between the Registrant and
Standish, Ayer & Wood, Inc. relating to Standish Intermediate Tax
Exempt Bond Fund***
(5F) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Massachusetts Intermediate
Tax Exempt Bond Fund***
(5G) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Controlled Maturity Fund***
(5H) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Fixed Income Fund II***
(5I) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Small Cap Tax-Sensitive
Equity Fund***
(5J) Investment Advisory Agreement between the Registrant and Standish,
Ayer & Wood, Inc. relating to Standish Tax-Sensitive Equity Fund***
(5K) Form of Assignment of Investment Advisory Agreement***
(6A) Underwriting Agreement between the Registrant and Standish Fund
Distributors, L.P.***
(6B) Most recently dated/filed revised Appendix A to Underwriting
Agreement between the Registrant and Standish Fund Distributors,
L.P.*
(7) Not applicable
(8A) Master Custody Agreement between the Registrant and Investors Bank
& Trust Company***
(8B) Most recently dated/filed revised Appendix A to Master Custody
Agreement between the Registrant and Investors Bank & Trust Company*
(8C) Custody Agreement between Registrant with respect to Standish
International Equity Fund and Morgan Stanley Company***
C-3
<PAGE>
(8D) Master Custody Agreement between the Registrant and Morgan Stanley
Trust Company***
(9A) Transfer Agency and Service Agreement between the Registrant and
Investors Bank & Trust Company***
(9B) Most recently dated/filed revised Exhibit A to Transfer Agency and
Service Agreement between the Registrant and Investors Bank & Trust
Company*
(9C) Master Administration Agreement between the Registrant and Investors
Bank & Trust Company***
(9D) Most recently dated/filed revised Exhibit A to Master Administration
Agreement between the Registrant and Investors Bank & Trust
Company***
(9E) Form of Administrative Services Agreement between Standish, Ayer &
Wood, Inc. and the Registrant***
(9F) Most recently dated/filed revised Exhibit A to Administrative
Services Agreement between Standish, Ayer & Wood, Inc. and the
Registrant***
(10) Opinion and Consent of Counsel for the Registrant**
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15) Not applicable
(16) Performance Calculations
(17) Financial Data Schedule of Standish Equity Asset Fund ~
(18) Not applicable
(19A) Power of Attorney for Registrant (Richard S. Wood)^
(19B) Power of Attorney for Registrant (Samuel C. Fleming)^
C-4
<PAGE>
(19C) Power of Attorney for Registrant (Benjamin M. Friedman)^
(19D) Power of Attorney for Registrant (John H. Hewitt)^
(19E) Power of Attorney for Registrant (Edward H. Ladd)^
(19F) Power of Attorney for Registrant (Caleb Loring III)^
(19G) Power of Attorney for Registrant (D. Barr Clayson)^
(19H) Power of Attorney for Registrant (Paul G. Martins)**
(19I) Power of Attorney for Portfolio Trust (Richard S. Wood)^
(19J) Power of Attorney for Portfolio Trust (Samuel C. Fleming, Benjamin
M. Friedman, John H. Hewitt, Edward H. Ladd, Caleb Loring III,
Richard S. Wood and D. Barr Clayson)+
(19K) Power of Attorney for Portfolio Trust (Paul G. Martins)**
- --------------------
^ Filed as an exhibit to Registration Statement No. 33-8214 and
incorporated herein by reference thereto.
+ Filed electronically as an exhibit to Registration Statement No.
811-07603 and incorporated herein by reference thereto.
* Filed electronically as an exhibit to Registration Statement No.
33-8214 (Post-Effective Amendment No. 81) and incorporated herein by
reference thereto.
** Filed electronically as an exhibit to Registration Statement No.
33-8214 (Post-Effective Amendment No. 82) and incorporated herein by
reference thereto.
*** Filed electronically as an exhibit to Registration Statement No.
33-8214 (Post-Effective Amendment No. 88) and incorporated herein by
reference thereto.
~ Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
No person is directly or indirectly controlled by or under common control
with the Registrant.
Item 26. Number of Holders of Securities
C-5
<PAGE>
Set forth below is the number of record holders, as of April 1, 1998, of
the shares of each series of the Registrant.
Number of Record
Title of Class Holders
-------------- ----------------
Shares of beneficial interest,
par value $.01, of:
Standish Fixed Income Fund 518
Standish Securitized Fund 7
Standish Short-Term Asset 92
Reserve Fund
Standish International Fixed 238
Income Fund
Standish Global Fixed Income Fund 74
Standish Equity Fund 201
Standish Small Capitalization 282
Equity Fund
Standish Massachusetts Intermediate 104
Tax Exempt Bond Fund
Standish Intermediate Tax Exempt 164
Bond Fund
Standish International Equity Fund 133
Standish Controlled Maturity Fund 18
Standish Fixed Income Fund II 13
Standish Small Cap Tax-Sensitive 258
Equity Fund
Standish Tax-Sensitive Equity Fund 156
Standish Equity Asset Fund 1
Standish Small Capitalization 1
Equity Asset Fund
Standish Fixed Income Asset Fund 0
Standish Global Fixed Income Asset Fund 0
Standish Small Capitalization Equity Fund II 67
Standish Diversified Income Fund 18
Standish Diversified Income Asset Fund 0
Item 27. Indemnification
Under the Registrant's Agreement and Declaration of Trust, any past or
present Trustee or officer of the Registrant is indemnified to the fullest
extent permitted by law against liability and all expenses reasonably incurred
by him in
C-6
<PAGE>
connection with any action, suit or proceeding to which he may be a party or is
otherwise involved by reason of his being or having been a Trustee or officer of
the Registrant. The Agreement and Declaration of Trust of the Registrant does
not authorize indemnification where it is determined, in the manner specified in
the Declaration, that such Trustee or officer has not acted in good faith in the
reasonable belief that his actions were in the best interest of the Registrant.
Moreover, the Declaration does not authorize indemnification where such Trustee
or officer is liable to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by any such Trustee, officer or controlling person
against the Registrant in connection with the securities being registered, and
the Commission is still of the same opinion, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisers
The business and other connections of the officers and Directors of
Standish, Ayer & Wood, Inc. ("Standish, Ayer & Wood"), the investment adviser to
certain series of the Registrant, are listed on the Form ADV of Standish, Ayer &
Wood as currently on file with the Commission (File No. 801-584), the text of
which is hereby incorporated by reference.
The business and other connections of the officers and partners of
Standish International Management Company, L.P. ("SIMCO"), the investment
adviser to certain other series of the Registrant, are listed on the Form ADV of
SIMCO as currently on file with the Commission (File No. 801-639338), the text
of which is hereby incorporated by reference.
The following sections of each such Form ADV are incorporated herein by
reference:
(a) Items 1 and 2 of Part 2;
C-7
<PAGE>
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) Standish Fund Distributors, L.P. serves as the principal
underwriter of each of the series of the Registrant as listed in Item 26 above.
(b) Directors and Officers of Standish Fund Distributors, L.P.:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
James E. Hollis, III Chief Executive Officer Vice President
Beverly E. Banfield Chief Operating Officer Vice President
The General Partner of Standish Fund Distributors, L.P. is Standish, Ayer
& Wood, Inc.
(c) Not applicable.
Item 30. Location of Accounts and Records
The Registrant maintains the records required by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3 inclusive thereunder at
its principal office, located at One Financial Center, Boston, Massachusetts
02111. Certain records, including records relating to the Registrant's
shareholders and the physical possession of its securities, may be maintained
pursuant to Rule 31a-3 at the main offices of the Registrant's transfer and
dividend disbursing agent and custodian.
Item 31. Management Services
Not applicable
Item 32. Undertakings
(a) Not applicable.
C-8
<PAGE>
(b) With respect to Standish Equity Asset Fund, Standish Small
Capitalization Equity Asset Fund, Standish Fixed Income Asset
Fund and Standish Global Fixed Income Asset Fund, the
Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from the effective date of the applicable
Post-Effective Amendment to its Registration Statement
registering shares of such Funds.
(c) The Registrant undertakes to furnish each person to whom a
Prospectus is delivered a copy of Registrant's latest annual
report to shareholders, upon request and without charge.
C-9
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts on the 1st day of May, 1998.
STANDISH, AYER & WOOD
INVESTMENT TRUST
/s/ Paul G. Martins
----------------------------------------------
Paul G. Martins, Treasurer
The term "Standish, Ayer & Wood Investment Trust" means and refers to the
Trustees from time to time serving under the Agreement and Declaration of Trust
of the Registrant dated August 13, 1986, a copy of which is on file with the
Secretary of State of The Commonwealth of Massachusetts. The obligations of the
Registrant hereunder are not binding personally upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Registrant, but
bind only the trust property of the Registrant, as provided in the Agreement and
Declaration of Trust of the Registrant. The execution of this Registration
Statement has been authorized by the Trustees of the Registrant and this
Registration Statement has been signed by an authorized officer of the
Registrant, acting as such, and neither such authorization by such Trustees nor
such execution by such officer shall be deemed to have been made by any of them,
but shall bind only the trust property of the Registrant as provided in its
Declaration of Trust.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
C-10
<PAGE>
Signature Title Date
Richard S. Wood* Trustee and President May 1, 1998
- ------------------------ (principal executive officer)
Richard S. Wood
/s/ Paul G. Martins Treasurer (principal May 1, 1998
- ------------------------ financial and accounting
Paul G. Martins officer)
D. Barr Clayson* Trustee May 1, 1998
- ------------------------
D. Barr Clayson
Samuel C. Fleming* Trustee May 1, 1998
- ------------------------
Samuel C. Fleming
Benjamin M. Friedman* Trustee May 1, 1998
- ------------------------
Benjamin M. Friedman
John H. Hewitt* Trustee May 1, 1998
- ------------------------
John H. Hewitt
Edward H. Ladd* Trustee May 1, 1998
- ------------------------
Edward H. Ladd
Caleb Loring III* Trustee May 1, 1998
- ------------------------
Caleb Loring III
*By: /s/ Paul G. Martins
-------------------
Paul G. Martins
Attorney-In-Fact
C-11
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Standish, Ayer & Wood Master Portfolio has duly
caused this Post-Effective Amendment to the Registration Statement of Standish,
Ayer & Wood Investment Trust to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hamilton, Bermuda, on the 28th day of
February, 1998.
STANDISH, AYER & WOOD
MASTER PORTFOLIO
/s/ Richard S. Wood
------------------------------------
Richard S. Wood, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of Standish, Ayer & Wood
Investment Trust has been signed by the following persons in their capacities
with Standish, Ayer & Wood Master Portfolio and on the date indicated.
Signature Title Date
Richard S. Wood* Trustee and President February 28, 1998
- --------------------- (principal executive
Richard S. Wood officer)
Paul G. Martins* Treasurer (principal February 28, 1998
- --------------------- financial and accounting
Paul G. Martins officer)
D. Barr Clayson* Trustee February 28, 1998
- ---------------------
D. Barr Clayson
Samuel C. Fleming* Trustee February 28, 1998
- ---------------------
Samuel C. Fleming
Benjamin M. Friedman* Trustee February 28, 1998
- ---------------------
Benjamin M. Friedman
C-12
<PAGE>
John H. Hewitt* Trustee February 28, 1998
- ---------------------
John H. Hewitt
Edward H. Ladd* Trustee February 28, 1998
- ---------------------
Edward H. Ladd
Caleb Loring III* Trustee February 28, 1998
- ---------------------
Caleb Loring III
*By: /s/ James E. Hollis III
-----------------------
James E. Hollis, III
Attorney-In-Fact
C-13
<PAGE>
EXHIBIT INDEX
Exhibit
(17) Financial Data Schedule of Standish Equity Asset Fund
C-12
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Standish, Ayer & Wood Investment Trust
form lN-SAR for the period ended March 31, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Standish Equity Portfolio
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 186,475,113
<INVESTMENTS-AT-VALUE> 227,654,503
<RECEIVABLES> 7,223,179
<ASSETS-OTHER> 45,942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 234,923,624
<PAYABLE-FOR-SECURITIES> 3,955,622
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,436
<TOTAL-LIABILITIES> 3,989,058
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203,097,333
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,837,233
<NET-ASSETS> 230,934,566
<DIVIDEND-INCOME> 1,130,754
<INTEREST-INCOME> 277,386
<OTHER-INCOME> 0
<EXPENSES-NET> 633,344
<NET-INVESTMENT-INCOME> 774,796
<REALIZED-GAINS-CURRENT> 17,208,393
<APPREC-INCREASE-CURRENT> 7,473,262
<NET-CHANGE-FROM-OPS> 25,456,451
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 60,792,561
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 459,185
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 633,344
<AVERAGE-NET-ASSETS> 184,512,691
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Standish, Ayer & Wood Investment Trust
form lN-SAR for the period ended March 31, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 18
<NAME> Standish Equity Asset Fund
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 604,598
<RECEIVABLES> 32
<ASSETS-OTHER> 5,604
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 610,234
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,841
<TOTAL-LIABILITIES> 4,841
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 550,605
<SHARES-COMMON-STOCK> 27,510
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (48)
<ACCUMULATED-NET-GAINS> 45,755
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,081
<NET-ASSETS> 605,393
<DIVIDEND-INCOME> 2,957
<INTEREST-INCOME> 721
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 3,678
<REALIZED-GAINS-CURRENT> 45,755
<APPREC-INCREASE-CURRENT> 9,081
<NET-CHANGE-FROM-OPS> 58,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,726)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,326
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 184
<NET-CHANGE-IN-ASSETS> 605,393
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,269
<AVERAGE-NET-ASSETS> 505,831
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 1.92
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 22.01
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
