INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Definitive Proxy Statement
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|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
Standish, Ayer & Wood Investment Trust
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(Name of Person(s) Filing Proxy Statement
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Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
<PAGE>
Standish, Ayer & Wood Investment Trust
One Financial Center
Boston, MA 02111
(800) 221-4795
November 8, 1999
Re. Standish Small Cap Tax-Sensitive Equity Fund
Dear Shareholder:
I am writing to ask for your vote on a proposal to approve a new management
contract between your fund (Standish Small Cap Tax-Sensitive Equity Fund) and
Standish, Ayer & Wood, Inc. ("Standish"), your fund's investment adviser,
increasing the rate at which management fees are payable to Standish from 0.60%
to 0.80% of the fund's average daily net assets.
The increased fee rate is proposed only after a great deal of thought and
analysis on the part of Standish and your fund's Board of Trustees. Standish and
the Board of Trustees have carefully examined the management fees, investment
performance and expense ratios of your fund compared with those of similar
funds. Your fund has had above average performance for its most recent one-year,
three-year and since-inception periods. Nevertheless, the management fee rate
payable to Standish by the fund is significantly lower than that payable by the
majority of similar funds.
The importance of updating the fund's management fee rate is underscored by the
increased complexity in recent years of the domestic small capitalization equity
market, and increased competition among small cap institutional funds. In this
environment, Standish must be able to attract and retain quality investment
personnel and to capitalize on advances in technology and research. Standish
believes that the fee rate increase is necessary in order for your fund to
maintain and enhance the resources needed to permit the fund to compete
effectively with other funds in its peer group. Standish and your fund's Board
of Trustees recommend that you vote in favor of this proposal.
The enclosed proxy statement therefore solicits your vote in favor of the new
management fee rate, which Standish and your fund's Board of Trustees believe is
fair and reasonable compared to the fees paid by similar funds to high quality
fund managers. In fact, if you approve the proposed management contract, the new
management fee rate payable to Standish (0.80% of average daily net assets)
would still be lower than the median fee rate payable to the mutual funds
included in the Lipper Small Cap Institutional Funds universe (0.83% of average
daily net assets).
We urge you to read carefully the more detailed explanation of these proposals
in the enclosed proxy statement. In addition, we would be happy to talk with you
about the proposal. Please call your investment manager at Standish or Michael
Fechter, Vice President of Client Service, or Lavinia Chase, Director of Client
Service for the Standish Mutual Funds, at (800) 221-4795.
Your vote is important to us. In order for us to obtain a quorum at the meeting,
it is important that your shares be represented. Therefore, I urge you to cast
your vote on the proposal contained in the Proxy Statement and return our
completed proxy card promptly in the enclosed self-addressed return envelope.
Sincerely,
Richard S. Wood
President
Standish, Ayer & Wood Investment Trust
<PAGE>
Standish, Ayer & Wood Investment Trust
One Financial Center
Boston, MA 02111
(800) 221-4795
November 8, 1999
Re. Standish Small Cap Tax-Sensitive Equity Fund
Dear Shareholder:
I am writing to ask for your vote on a proposal to approve a new management
contract between your fund (Standish Small Cap Tax-Sensitive Equity Fund) and
Standish, Ayer & Wood, Inc. ("Standish"), your fund's investment adviser,
increasing the rate at which management fees are payable to Standish from 0.60%
to 0.80% of the fund's average daily net assets.
The increased fee rate is proposed only after a great deal of thought and
analysis on the part of Standish and your fund's Board of Trustees. Standish and
the Board of Trustees have carefully examined the management fees, investment
performance and expense ratios of your fund compared with those of similar
funds. Your fund has had above average performance for its most recent one-year,
three-year and since-inception periods. Nevertheless, the management fee rate
payable to Standish by the fund is significantly lower than that payable by the
majority of similar funds.
The importance of updating the fund's management fee rate is underscored by the
increased complexity in recent years of the domestic small capitalization equity
market, and increased competition among small cap institutional funds. In this
environment, Standish must be able to attract and retain quality investment
personnel and to capitalize on advances in technology and research. Standish
believes that the fee rate increase is necessary in order for your fund to
maintain and enhance the resources needed to permit the fund to compete
effectively with other funds in its peer group. Standish and your fund's Board
of Trustees recommend that you vote in favor of this proposal.
The enclosed proxy statement therefore solicits your vote in favor of the new
management fee rate, which Standish and your fund's Board of Trustees believe is
fair and reasonable compared to the fees paid by similar funds to high quality
fund managers. In fact, if you approve the proposed management contract, the new
management fee rate payable to Standish (0.80% of average daily net assets)
would still be lower than the median fee rate payable to the mutual funds
included in the Lipper Small Cap Institutional Funds universe (0.83% of average
daily net assets).
We urge you to read carefully the more detailed explanation of these proposals
in the enclosed proxy statement. In addition, we encourage you to discuss this
proxy with your investment advisor and/or call us directly with any questions.
Standish representatives may be reached at (800) 221-4795.
Your vote is important to us. In order for us to obtain a quorum at the meeting,
it is important that your shares be represented. Therefore, I urge you to cast
your vote on the proposal contained in the Proxy Statement and return our
completed proxy card promptly in the enclosed self-addressed return envelope.
Sincerely,
Richard S. Wood
President
Standish, Ayer & Wood Investment Trust
<PAGE>
STANDISH SMALL CAP TAX-SENSITIVE EQUITY FUND
a series of
Standish Ayer & Wood Investment Trust
One Financial Center
Boston, Massachusetts 02111
1.800.221.4795
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR DECEMBER 20, 1999
This is the formal agenda for your fund's shareholder meeting. It tells
you the matters that you will be asked to vote on and the time and place of the
meeting, in case you want to attend in person.
To the shareholders of Standish Small Cap Tax-Sensitive Equity Fund:
A meeting of shareholders of your fund will be held at the offices of
Standish, Ayer & Wood, Inc., One Financial Center, 26th Floor, Boston,
Massachusetts 02111, on December 20, 1999, at 2:00 p.m.,EST, to consider the
following:
1. A proposal to approve a new management contract between the fund and
Standish, Ayer & Wood, Inc., your fund's investment adviser ("Standish"),
increasing the rate at which management fees are payable to Standish.
2. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on October 18, 1999 are
entitled to vote at the meeting and any related follow-up meetings.
By order of the Board of Trustees
Anne P. Herrmann, Secretary
Boston, Massachusetts
November 8, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD.
<PAGE>
PROXY STATEMENT
OF
STANDISH SMALL CAP TAX-SENSITIVE EQUITY FUND
a series of
Standish Ayer & Wood Investment Trust
One Financial Center
Boston, Massachusetts 02111
1.800.221.4795
SPECIAL MEETING OF SHAREHOLDERS
This proxy statement contains the information that you should have before
voting on the proposals as summarized below.
Standish Small Cap Tax-Sensitive Equity Fund will furnish without charge a
copy of its annual report or semiannual report to any shareholder upon request.
Shareholders who want to obtain a copy of these reports should direct all
written requests to the attention of the fund, at the address listed above, or
should call 1.800.221.4795.
INTRODUCTION
This proxy statement is being used by the board of trustees of Standish,
Ayer & Wood Investment Trust (the "Trust") to solicit proxies to be voted at a
special meeting of shareholders of your fund. This meeting will be held at the
offices of Standish, Ayer & Wood, Inc., One Financial Center, 26th Floor,
Boston, Massachusetts 02111, at 2:00 p.m., EST on Monday, December 20, 1999, and
at any adjournments of the meeting to a later date.
The purpose of this meeting is to consider:
1. A proposal to approve a new management contract between the fund and
Standish, Ayer & Wood, Inc., your fund's investment adviser ("Standish"),
increasing the rate at which management fees are payable to Standish;
2. Any other business that may properly come before the meeting.
This proxy statement and proxy are being mailed to shareholders on or
about November 8, 1999. The annual and semi-annual reports for the fund for the
fiscal periods ended September 30, 1998 and March 31, 1999 were previously
mailed to shareholders.
Who is eligible to vote?
Shareholders of record as of the close of business on October 18, 1999
(the "record date") are entitled to vote on all of the fund's business at the
meeting or any adjournments thereof. Each share is entitled to one vote and each
fractional share is entitled to a corresponding fractional vote. Shares
represented by properly executed proxies, unless revoked before or at the
meeting, will be voted according to Shareholders' instructions. If you sign a
proxy, but do not fill in a vote, your shares will be voted to approve the
proposals. If any other business comes before the meeting, your shares will be
voted at the discretion of the persons named as proxies.
1
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PROPOSAL 1
APPROVAL OF A NEW MANAGEMENT CONTRACT
Summary
Standish, Ayer & Wood, Inc. ("Standish"), One Financial Center, Boston,
Massachusetts 02111, has served as investment adviser to the fund since its
inception on January 2, 1996 pursuant to an investment advisory agreement of
that date (the "existing contract"). Standish is a Massachusetts corporation
incorporated in 1933 and is registered as an investment adviser under the
Investment Advisers Act of 1940.
Standish provides fully discretionary management services and counseling
and advisory services to a broad range of clients throughout the United States,
including mutual funds, pension plans, endowments, foundations, and high net
worth individuals. Together with its affiliate, Standish International
Management Company, L.P., Standish has over $45 billion in assets under
management for clients. Standish is independently owned and operated by
twenty-three investment and other professionals employed by the firm. See the
Appendix to this proxy statement for more information concerning the ownership
and control of Standish.
At a meeting of the board of trustees held on October 12, 1999, the
trustees, including all of the trustees who are not "interested persons" of the
fund or Standish, unanimously approved and voted to recommend that the
shareholders of the fund approve a proposal to adopt a new management contract
between Standish and the fund (the "proposed contract"). Under the proposed
contract, there would be an increase in the rate of management fees paid by the
fund to Standish. Specifically, the fee payable by Standish would be increased
from 0.60% to 0.80% of the fund's average daily net assets or 20 cents per $100
invested in the fund.
Standish believes the proposed management fee is appropriate for the
following reasons:
o the fund has significantly outperformed both its benchmark and the
median comparable mutual fund since its inception
o the fund's existing advisory fee of 0.60% of the fund's average
daily net assets is well below the 0.83% median fee paid by
comparable mutual funds
o the proposed fee of 0.80%, and the resulting total expense ratio of
the fund would also be lower than the median fee and median total
expense ratio of comparable mutual funds
o there has been a significant increase in the complexity,
competitiveness and costs involved in managing a mutual fund
focusing on domestic small capitalization stocks
o the proposed fee will provide Standish with the resources necessary
to attract and retain high quality investment professionals and to
invest in the advanced technology and systems needed to maintain and
enhance the present level of service to the fund's shareholders
Discussion
Rationale for the Increase in Management Fee
Strong Performance. Standish believes the proposed increase in management
fee is justified in part by the fund's strong historical performance. The
following table compares the total return of the fund for the periods ended
September 30, 1999 to the total return during the same periods for the Russell
2000 Growth Index, the fund's benchmark, and for the investment companies in the
Lipper Institutional Small Cap Funds universe, which consists of funds that have
a small capitalization growth orientation similar to the fund's. As indicated
below the fund has
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significantly outperformed both its benchmark and the median fund in its
competitive universe.
Standish
Small Cap
Tax-Sensitive Russell 2000 Lipper
Equity Fund Growth Index Universe
----------- ------------ --------
One year 57.03% 32.64% 27.17%
Three years 20.19% 7.14% 8.89%
Since Inception (1/2/96) 21.07% 8.65% 11.99%
Below Average Advisory Fee and Expense Ratio. Standish also believes the
proposed fee increase is reasonable and appropriate in light of the fees and
expenses incurred by other funds. The fund pays Standish an advisory fee that is
significantly lower than the median fee paid by similar funds. During the 12
months ended September 30, 1999, the fund paid Standish a management fee at an
annual rate of 0.60% of average daily net assets. The median management fee for
investment companies in the Lipper Small Cap Institutional Funds group universe
is 0.83% of average daily net assets. If the proposed increase in the fund's
management fee is approved, the fund would pay Standish a fee of 0.80% annually
of average daily net assets. Consequently, the fund currently pays at a rate
that is substantially below the median for its peer group and, if the proposed
contract is approved, the fund would pay Standish a fee that is still below the
median fee for the fund's peer group.
Further, the fund's total expense ratio (0.79% at September 30, 1999) is
also well below the 1.00% median expense ratio of funds in the Lipper universe.
If the fee increase is approved, the resulting expense ratio of 0.99% would be
in line with the Lipper universe median.
Increased Complexity, Competition and Costs. Standish also believes the
proposed increase is necessary in light of the increased complexity, competition
and costs involved in managing a mutual fund focusing on domestic small cap
stocks.
The complexity arises in part from the growth in the number of issues in
the small cap sector, including significant growth in the number of initial
public offerings. This complexity is heightened by the need for Standish to
search continually for new investment opportunities as many such companies
appreciate beyond the small cap sector. Finally, the small capitalization sector
is increasingly dominated by companies offering technologically complex products
and services. Investing successfully in this sector requires a deep
understanding of the industries in which these companies compete, and the often
highly technical factors relating to product or service design and supply and
demand, making some companies more likely to outperform their competitors.
The growth of the small cap sector has in turn led to a significant
increase in the number of funds focusing on this market. To continue to grow,
the fund must compete for assets by seeking to outperform an ever-increasing
number of funds.
These factors have in turn resulted in greater costs to Standish of
managing the fund. Standish must increasingly invest in technology and personnel
to analyze individual companies and industry trends in this growing and rapidly
changing high-technology oriented market. The growth in the number of funds has
also placed upward pressure on compensation levels for qualified portfolio
managers and analysts in this area. To retain and attract high quality
professionals, Standish must remain competitive in its compensation and benefits
structure. Partly as a result of these cost-related pressures, Standish has
incurred a net loss (advisory fee revenues less operations expenses) in managing
the fund since its inception. Standish receives no revenues from the fund other
than its advisory fee. Accordingly, the advisory fee alone compensates Standish
for providing the personnel, equipment and office space necessary for the
management of the fund's investments, compliance with regulatory requirements,
and a variety of administrative
3
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functions.
Standish does not believe the existing fee will over time provide for the
appropriate resources to enable it to attract and retain the quality personnel
and to provide the advanced technology and systems necessary to maintain and
enhance the present level of service and performance to the fund's shareholders.
Standish believes the proposed increase in fee would provide the resources
necessary to better enable Standish to address these challenges.
The fee increase is proposed only after careful consideration by Standish
and your board of trustees. Standish and your fund's board of trustees,
including the trustees who are not interested persons of the fund or Standish,
have determined that the proposed fee increase is fair and reasonable. (For a
discussion of the deliberations of the board, see "Factors Considered by the
Trustees" below.) Standish and your board recommend that you vote in favor of
this proposal.
Terms of existing and proposed contracts
Except for the different advisory fee rates, effective dates and renewal
dates, the terms of the existing and proposed contracts are substantially
identical. A copy of the proposed contract is attached to this proxy statement
(Exhibit A). The following summary of the terms of the proposed contract is
qualified in its entirety by reference to this copy of the proposed contract.
Advisory Services. Under the terms of both the existing and proposed
contracts Standish is responsible for providing continuously an investment
program for the fund, consistent with the fund's investment objective, policies
and restrictions and subject to the supervision and approval of the trustees.
Specifically, Standish is required to determine what investments shall be
purchased, held, sold or exchanged by the fund and what portion, if any, of the
fund's assets will be held uninvested and to make changes in the Fund's
investments. Standish also manages, supervises and conducts the other affairs
and business of the fund.
The fund's portfolio manager is Nicholas S. Battelle, who has been
primarily responsible for the day-to-day management of the fund's portfolio
since the fund's inception in January 1996. Whether or not the proposed contract
is approved, it is intended that Mr. Battelle would continue to serve as the
fund's portfolio manager. During the past five years, Mr. Battelle has served as
a Director of Standish.
Standard of care. Under each contract, Standish is not liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under the contract or for any losses which may be sustained in the
acquisition, holding or disposition of any security or other investment unless
resulting from Standish's willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under the contract.
Expenses. Under the terms of both the existing and proposed contract, the
fund bears the expenses of its operations, including among other things, legal
and auditing services, taxes and governmental fees, certain insurance premiums,
costs of notices and reports to interest holders, preparation and filing of
registration and financial statements, bookkeeping and share pricing expenses,
fees and disbursements of the fund's custodian, or interest and other like
expenses properly payable by the fund.
Standish may from time to time voluntarily agree not to impose all or a
portion of its fee or otherwise take action to reduce expenses of the fund. Any
such fee voluntary limitation or expense reduction may be discontinued or
modified by Standish at any time.
Standish has temporarily and voluntarily agreed to limit the fund's
expenses to 1.00% of the fund's average daily net assets.
Advisory Fees: Existing contract. As noted above, as compensation for its
management services and certain expenses which Standish incurs on behalf of the
fund, the fund pays Standish an annual management fee under the existing
contract equal to 0.60% of the fund's average daily net assets. This fee is
computed daily and paid monthly.
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Advisory Fees: Proposed contract. Under the proposed contract, as
compensation for its management services and certain expenses which Standish
incurs on behalf of the fund, the fund would pay Standish an annual management
fee equal to 0.80% of the fund's average daily net assets. The fee would be
computed daily and paid monthly. Accordingly, this fee represents an increase in
the management fee rate payable to Standish of 0.20% annually over the rate
under the existing contract. For information on management fees paid by other
funds managed by Standish with similar objectives, see the Appendix to this
proxy statement.
The effective date of the proposed contract is expected to be January 31,
2000 (the "effective date"). Accordingly, the new fee will take effect on the
effective date if the proposed contract is approved at the meeting of
shareholders.
Effect of the new management fee
Set forth below is a table showing the dollar amount of actual management
fees paid during the fund's fiscal year ended September 30, 1999 under the
existing contract and the dollar amount of fees that would have been paid under
the proposed contract. The table also shows the differences (expressed as a
percentage of the existing fee and in dollar terms) between the amount that
would have been paid under the proposed contract and the amount actually paid
under the existing contract. Also set forth below is a comparative fee table
showing the amount of fees and expenses paid by the fund under the existing
contract as a percentage of average daily net assets and the amount of fees and
expenses shareholders would have paid if the proposed contract had been in
effect. The figures shown for the new fee represent the amounts that actually
would have been paid under the proposed contract during the 12 months ended
September 30, 1999. At September 30, 1999, the fund had net assets of
approximately $143 million.
DOLLAR AMOUNT OF MANAGEMENT FEES PAID
(fiscal year ended September 30, 1999)
<TABLE>
<CAPTION>
Difference from Amount Paid under
Existing Contract
----------------------------------
Existing Proposed as a percentage of
Contract Contract the existing fee in dollars
-------- -------- ---------------- ----------
<S> <C> <C> <C> <C>
Amount of Fees Paid or that Would Have Been Paid $673,023 $897,363 +33.3% +$224,340
Amount of Fees Paid or that Would Have Been Paid $659,422 $845,092 +28.16% +$194,670
(After waiver)*
</TABLE>
The increase would amount to 20 cents on each $100 invested in the fund.
- -----------------
* Due to voluntary expense limitations in place during the fiscal year ended
September 30, 1999, Standish reduced its advisory fee payable by the fund and
reimbursed certain of the fund's other expenses.
5
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COMPARATIVE FEE TABLE
(fiscal year ended September 30, 1999)
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Existing Proposed
Contract Contract
-------- --------
Management Fee 0.60% 0.80%
Distribution and Service (12b-1) Fee 0.00% 0.00%
Other Expenses 0.19% 0.19%
-------- --------
Total Annual Fund Operating Expenses 0.79% 0.99%
Examples
The following examples help you compare the costs of investing in the fund
currently under the existing contract and after giving effect to the fee
increase reflected in the proposed contract with the cost of investing in other
mutual funds. They assumes that: a) you invest $10,000 in the fund for the time
periods shown, b) you reinvest all dividends and distributions, c) your
investment has a 5% return each year and d) the fund's operating expenses remain
the same.
Number of years you
own your shares Existing Contract Proposed Contract
1 year $81 $101
3 years $252 $315
5 years $439 $547
10 years $978 $1,213
Other provisions of the existing and proposed contracts
Miscellaneous
The existing contract was first approved by your fund's board on November
8, 1995 and was approved by Standish, as the fund's sole initial shareholder on
January 2, 1996 in connection with the fund's organization. Its renewal was most
recently approved by the board at a meeting held October 12, 1999 with such
renewal to expire on the earlier of one year or, if approved by shareholders,
the effective date of the proposed contract. The existing contract is renewable
annually by the vote of a majority of the fund's board, including a majority of
the trustees who are not "interested persons" (as defined in the 1940 Act) of
the fund or Standish, cast in person at a meeting called for the purpose of
voting on such renewal.
If approved, the proposed contract will become effective on January 31,
2000 (or if approved after that date, on the first day of the first month
following the approval date) and will continue in effect until January 31, 2002
and thereafter will continue from year to year subject to annual approval by the
board of trustees in the same manner as the existing contract. The existing
contract and the proposed contract terminate if assigned (as defined in the 1940
Act) and may be terminated without penalty by either party, (in the case of the
fund by vote of its board or by a vote of a majority
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of the outstanding voting securities of the fund) upon 60 days' written notice.
Additional information pertaining to Standish
For additional information concerning the management, ownership structure,
affiliations, brokerage policies and certain other matters pertaining to
Standish, see the Appendix to this proxy statement.
Factors considered by the trustees
The trustees determined that the terms of the proposed contract are fair
and reasonable and that approval of the proposed contract on behalf of the fund
is in the best interests of the fund and its shareholders. In their discussions,
the trustees who are not "interested" persons of the fund or Standish were
advised by their own legal counsel. Prior to approving the proposed contract,
the trustees who are not "interested" persons of the fund or Standish first met
privately with their counsel on September 21, 1999. These trustees again met
privately with their counsel in the course of the October 12, 1999 meeting of
the full board of trustees.
In connection with their deliberations, the trustees requested and were
furnished with substantial information to assist in their evaluation. This
information included a comparison of the fund's present and proposed investment
management fees and expense ratios with those of other mutual funds in its peer
group. This information indicated that the fund's present fee and expense ratio
were well below the median among mutual funds in its competitive universe and
that, with the proposed fee increase, the fund's investment management fee would
still be somewhat below the median and its expense ratio would be equal to that
of the median fund. Standish also provided information comparing the fund's
investment performance with the fund's benchmark, the Russell 2000 Growth Index,
and with competitive funds which indicated that the fund had generally
outperformed the benchmark and the median fund in its competitive universe.
In addition, Standish provided information indicating that it is incurring
losses in managing the fund at the current fee level and that the current
domestic small capitalization equity market is marked by various factors which
tend to increase Standish's costs. These factors include, (i) growing complexity
(both in the increasing number of issuers Standish must follow, including
significant growth in the number of initial public offerings, and the highly
technical nature of products and services most of these companies provide); (ii)
a high level of competition among a growing number of funds in this category for
assets, top performance rankings and quality investment personnel; and (iii)
steeply rising costs related to the employment of additional quality investment
consultants, investments in information technology and the effect of competition
on compensation packages necessary to attract and retain quality personnel.
As a result of their deliberations, and taking into consideration the
information provided, the trustees determined that Standish's request for a fee
increase was reasonable.
Trustees' recommendation
At the meeting on October 12, 1999, including all of the trustees who are
not "interested persons" of the fund or Standish, unanimously concluded that the
fee was fair and reasonable and in the best interests of the fund's
shareholders, and by a vote cast at the meeting, unanimously approved and voted
to recommend to the shareholders of the fund that they approve the proposal to
adopt the proposed contract.
Required vote
Adoption of this Proposal requires the approval of a majority of the
outstanding voting securities of the fund, which under the 1940 Act, means the
affirmative vote of the lesser of (i) 67% or more of the shares of the fund
represented at the meeting, if at least 50% of all outstanding shares of the
fund are represented at the meeting, or (ii) 50% or more of the outstanding
shares of the fund entitled to vote at the meeting (a "1940 Act majority vote").
If this Proposal is not approved by the shareholders of the fund, the
existing contract will continue in effect.
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For the reasons set forth above, the trustees of your fund recommend that
shareholders vote in favor of the proposed contract.
INFORMATION CONCERNING THE MEETING
Outstanding shares and quorum
As of October 18, 1999, 3,560,755.988 shares of beneficial interest of the
fund were outstanding. Only shareholders of record on October 18, 1999 are
entitled to notice of and to vote at the meeting. A majority of the outstanding
shares of the fund that are entitled to vote will be considered a quorum for the
transaction of business.
Ownership of shares of the fund
To the knowledge of the fund, as of October 18, 1999, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
the fund.
Number of shares owned and
Shareholder percentage of total shares outstanding
- ----------- --------------------------------------
Charles Schwab & Co. 649,942.087 18%
BDG & Co. 461,344.581 13%
Shareholder proposals
Your fund is not required to hold annual meetings of shareholders and does
not currently intend to hold a meeting of shareholders in 2000. A shareholder
proposal intended to be presented at a future annual meeting must be received by
the fund a reasonable time before the fund prepares proxy materials relating to
such a meeting.
Proxies, quorum and voting at the meeting
Any shareholder who has given his or her proxy to someone has the power to
revoke that proxy at any time prior to its exercise by executing a superceding
proxy or by submitting a notice of revocation to the secretary of the fund. In
addition, although mere attendance at the meeting will not revoke a proxy, a
shareholder present at the meeting may vote in person and, by voting in person,
shall be deemed to have revoked any previously granted proxy. All properly
executed and unrevoked proxies received in time for the meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the proposals described above and will use their best judgment in
connection with the transaction of such other business as may properly come
before the meeting or any adjournment thereof.
In the event that at the time any session of the meeting is called to
order a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the meeting
to a later date. In the event that a quorum is present but sufficient votes in
favor of any of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies with respect to such proposal. Any such adjournment will
require the affirmative vote of more than one half of the shares of the fund
present in person or by proxy at the session of the meeting to be adjourned. The
persons named as proxies will vote those proxies which they are entitled to vote
in favor of any such proposal in favor of such an adjournment and will vote
those proxies required to be voted against any such proposal against any such
adjournment. A shareholder vote may be taken on one or more of the proposals in
the proxy statement prior to such adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate. Such vote will be
considered final regardless of whether the meeting is adjourned to permit
additional solicitation with respect to any other proposal.
Shares of your fund represented in person or by proxy, including shares
which abstain or do not vote with respect to a proposal, will be counted for
purposes of determining whether there is a quorum at the meeting. Accordingly,
an abstention from voting has the same effect as a vote against a proposal.
8
<PAGE>
However, if a broker or nominee holding shares in "street name" indicates
on the proxy card that it does not have discretionary authority to vote on a
proposal, those shares will not be considered present and entitled to vote on
that proposal. Thus, a "broker non-vote" has no effect on the voting in
determining whether a proposal has been adopted in accordance with a vote that
may be approved by less than a majority of the outstanding share of the fund, if
more than 50% of the outstanding shares (excluding the "broker non-votes") are
present or represented at the meeting. However, for purposes of determining
whether a proposal has been adopted in accordance with a vote that requires
approval by holders of at least a majority of the outstanding shares of the
fund, a "broker non-vote" has the same effect as a vote against that proposal
because shares represented by a "broker non-vote" are considered to be
outstanding shares.
Other business
While the meeting has been called to transact any business that may
properly come before it, the only matters that the trustees intend to present is
the investment management contract proposal stated in the attached notice of
special meeting of shareholders and described in this proxy statement. However,
if any additional matters properly come before the meeting, and on all matters
incidental to the conduct of the meeting, it is the intention of the persons
named in the enclosed proxy to vote the proxy in accordance with their judgment
on such matters unless instructed to the contrary.
Method of solicitation and expenses
The cost of preparing, assembling and mailing this proxy statement, the
attached notice and the accompanying proxy card will be borne by Standish. In
addition to soliciting proxies by mail, Standish may, at Standish's expense,
have one or more of the fund's officers, representatives or compensated
third-party agents, aid in the solicitation of proxies by personal interview or
telephone and telegraph and may request brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of the shares held of record by such persons.
Persons holding shares as nominees will be reimbursed by Standish, upon
request, for the reasonable expenses of mailing soliciting materials to the
principals of the accounts.
9
<PAGE>
APPENDIX
Additional information pertaining to Standish
Ownership and Control of Standish. Edward H. Ladd is the Chairman of the
Board of Directors and Managing Director of Standish. George W. Noyes is the
President, Chief Executive Officer and a Managing Director of Standish. Paul W.
Martins is the Vice President-Finance and Treasurer of Standish. The following,
constituting all of the Directors and all of the shareholders of Standish, are
Standish's controlling persons: Caleb F. Aldrich, Nicholas S. Battelle, David H.
Cameron, Karen K. Chandor, D. Barr Clayson, W. Charles Cook, Joseph M. Corrado,
Richard C. Doll, Dolores S. Driscoll, Maria D. Furman, James E. Hollis III,
Raymond J. Kubiak, Edward H. Ladd, Laurence A. Manchester, George W. Noyes,
Arthur H. Parker, Howard B. Rubin, Austin C. Smith, Thomas P. Sorbo, David C.
Stuehr, Ralph S. Tate, Michael W. Thompson and Richard S. Wood.
The trustees and officers of the fund who are also directors, officers or
employees of Standish are listed below. The address of each such person, and of
each person who is an officer or director of Standish, is c/o Standish, Ayer &
Wood, Inc., One Financial Center, Boston, Massachusetts 02111.
Directors, officers and employees of Standish who are also trustees and officers
of the fund:
<TABLE>
<CAPTION>
Name Position held With the Fund Position with Standish
- -------------------------- ----------------------------------- -----------------------------------------
<S> <C> <C>
D. Barr Clayson Vice President and Trustee Vice President and Managing Director
Edward H. Ladd Vice President and Trustee Chairman of the Board and Managing
Director
Richard S. Wood President, Chief Executive Officer Vice President, Secretary and
and Trustee Managing Director
James E. Hollis III Executive Vice President Vice President and Director
Paul G. Martins Vice President, Treasurer and Chief Vice President - Finance and
Financial Officer Treasurer
Beverly E. Banfield Vice President Associate Director, Vice President
and Chief Compliance Officer
Lavinia B. Chase Vice President Vice President and Associate Director
Anne P. Herrmann Vice President and Secretary Assistant Vice President and Senior
Fund Administration Manager
Denise B. Kneeland Vice President Vice President and Manger, Mutual
Fund Operations
Tami M. Pester Vice President Assistant Compliance Manager and
Compliance Officer
Rosalind J. Lillo Vice President Broker/Dealer Administrator
Deborah Rafferty-Maple Vice President Financial Planner and Registered
Investment Networks Marketing Manager
</TABLE>
The principal occupation of each principal executive officer and director of
Standish is as an employee of Standish.
10
<PAGE>
Services provided to the fund by affiliates of Standish
Standish Funds Distributor, L.P. ("SFD") serves as the fund's principal
underwriter. SFD receives no compensation for these services. The address of SFD
is One Financial Center, Boston, Massachusetts 02111.
Similar funds managed by Standish
Standish serves as the investment manager to the following funds with
investment objectives similar to your fund's objective:
<TABLE>
<CAPTION>
Name of fund
(net assets as of 9/30/99) Assets Annual Management Fee Fee After Waivers
- -------------------------- ------ --------------------- -----------------
<S> <C> <C> <C>
Small Cap Equity Fund $147,476,031 0.60%* 0.55%
Small Capitalization Equity Portfolio II $43,880,830 0.60% 0.42%
</TABLE>
*On October 12, 1999 the board of trustees of Small Capitalization Equity
Portfolio II also approved, and recommended to the shareholders of Small
Capitalization Equity Portfolio II that they approve, an increase in this fee
from 0.60% to 0.80%.
Portfolio Transactions. All orders for the purchase or sale of portfolio
securities are placed on behalf of the fund by Standish pursuant to authority
contained in the existing and proposed contracts. In selecting brokers or
dealers, Standish considers factors relating to execution on the best overall
terms available, including, but not limited to, the size and type of the
transaction; the nature and character of the markets of the security to be
purchased or sold; the execution efficiency, settlement capability and financial
condition of the dealer; the dealer's execution services rendered on a
continuing basis; and the reasonableness of any dealer spreads.
Standish may select broker-dealers which provide brokerage and/or research
services to the fund and/or other investment companies or institutional or other
accounts managed by Standish. Such research services must provide lawful and
appropriate assistance to Standish in the performance of its investment
decision-making responsibilities and could include advice concerning the value
of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analysis, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement).
In circumstances in which two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the fund. This policy does not imply a commitment to execute all
portfolio transactions through all broker-dealers that sell shares of the fund.
In addition, if Standish determines in good faith that the amount of commissions
charged by a broker-dealer is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, the fund may pay
commissions to such broker-dealer in an amount greater than the amount another
firm may charge. This information might be useful to Standish in providing
services to the fund as well as to other investment companies or accounts
managed by Standish, although not all of such research may be useful to the
fund. Conversely, such information provided to Standish by brokers and dealers
through whom other clients of Standish effect securities transactions might be
useful to Standish in providing services to the fund. The receipt of such
research is not expected to reduce Standish's normal independent research
activities; however, it enables Standish to avoid the additional expense which
might otherwise be incurred if it were to attempt to develop comparable
information through its own staff.
11
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 31st day of January, between Standish, Ayer &
Wood Investment Trust, an unincorporated business trust organized under the laws
of The Commonwealth of Massachusetts (the "Trust"), and Standish, Ayer & Wood,
Inc., a Massachusetts corporation (the "Adviser".)
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the assets held by the Trustees of the Trust may be divided into
separate funds, each with its own separate investment portfolio, investment
objectives, policies and purposes; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services, and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to Standish Small Cap Tax-Sensitive Equity Fund (the "Fund"),
a separate fund of the Trust, and the Adviser is willing to furnish such
services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of the Adviser. The Trust hereby appoints the Adviser to
act as investment adviser of the Fund for the period and on the terms herein set
forth. The Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided. The Adviser shall for
all purposes herein be deemed an independent contractor and shall, unless
expressly otherwise provided, have no authority to act for or represent the Fund
in any way nor shall otherwise be deemed an agent of the Fund.
2. Duties of the Adviser.
(a) The Adviser, at its expense, will furnish continuously an
investment program for the Fund, will determine, subject to the overall
supervision and review of the Trustees of the Trust, what investments shall be
purchased, held, sold or exchanged by the Fund and what portion, if any, of the
assets of the Fund will be held uninvested, and shall, on behalf of the Trust,
make changes in the investments of the Fund. Subject always to the supervision
of the Trustees of the Trust and to the provisions of the Trust's Agreement and
Declaration of Trust and Bylaws and of the 1940 Act, the Adviser will also
manage, supervise and conduct the other affairs and business of the Fund and
matters incidental thereto. The Adviser, and any affiliates thereof, shall be
free to render similar services to other investment companies and other clients
and to engage in other activities, so long as the services rendered hereunder
are not impaired.
(b) The Adviser shall provide, without cost to the Trust, all
necessary office space and the services of executive personnel for administering
the affairs of the Fund.
(c) The Fund shall bear the expenses of its operations, including
legal and auditing services, taxes and governmental fees, certain insurance
premiums, costs of shareholder notices and reports, typesetting and printing of
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders, bookkeeping and share pricing expenses,
fees and disbursements of the Trust's custodian, transfer and dividend
disbursing agent or registrar, or interest and other like expenses properly
payable by the Trust.
A-1
<PAGE>
3. Compensation of the Adviser.
(a) As full compensation for the services and facilities furnished
by the Adviser under this Agreement, the Trust agrees to pay to the Adviser a
fee at the annual rate of 0.80% of the Fund's average daily net asset value.
Such fees shall be accrued when computed and payable monthly. For purposes of
calculating such fees, the Fund's average daily net asset value shall be
determined by taking the average of all determinations of net asset value made
in the manner provided in the Fund's current prospectus and statement of
additional information.
(b) The compensation payable to the Adviser hereunder for any period
less than a full month during which this Agreement is in effect shall be
prorated according to the proportion which such period bears to a full month.
4. Limitation of Liability of the Adviser. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with any investment policy or the purchase, sale or retention of
any securities on the recommendation of the Adviser; provided, however, that
nothing herein contained shall be construed to protect the Adviser against any
liability to the Fund by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties under this Agreement.
5. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall remain in full force and
effect for two years from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long as each
such continuance is approved annually (i) by either the Trustees of the Trust or
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, and, in either event, (ii) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment
of any penalty by vote of the Trustees of the Trust or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Fund or by
the Adviser, on sixty days' written notice to the other parties.
(c) This Agreement shall automatically and immediately terminate in
the event of its assignment as defined in the 1940 Act.
6. Limitation of Liability. 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 Trust dated August 13, 1986, as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the trust property of
the Trust as provided in the Agreement and Declaration of Trust of the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and this Agreement has been signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them, but shall bind only the trust property of the Trust as
provided in the Agreement and Declaration of Trust.
A-2
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
STANDISH, AYER & WOOD INVESTMENT TRUST
Attest:
By:
- -------------------------- -------------------------------------
Its:
-------------------------------------
STANDISH, AYER & WOOD, INC.
Attest:
By:
- -------------------------- -------------------------------------
Its:
-------------------------------------
A-3
<PAGE>
PROXY BALLOT
STANDISH SMALL CAP TAX-SENSITIVE EQUITY FUND
a series of
STANDISH, AYER & WOOD INVESTMENT TRUST
PROXY PROXY
- --------------------------------------------------------------------------------
The undersigned, revoking all prior proxies, hereby appoints Beverly E.
Banfield, Edward H. Ladd and Richard S. Wood, or any of them individually, as
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Standish Small Cap Tax-Sensitive Fund (the
"Fund"), a series of Standish, Ayer & Wood Investment Trust (the "Trust"), to be
held at the offices of Standish, Ayer & Wood, Inc., One Financial Center, 26th
Floor, Boston, Massachusetts 02111, on December 20, 1999, at 2:00 p.m., or at
any adjournment thereof, notice of which meeting and the Proxy Statement
accompanying the same have been received by the undersigned, upon the following
matters as described in the Notice of Special Meeting and accompanying Proxy
Statement:
(a) TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN STANDISH, AYER & WOOD INVESTMENT TRUST, ON BEHALF OF
ITS SERIES, STANDISH SMALL CAP TAX-SENSITIVE EQUITY FUND, AND STANDISH, AYER &
WOOD, INC. INCREASING THE RATE AT WHICH FEES ARE PAID TO STANDISH.
|_| FOR |_| AGAINST |_| ABSTAIN
(b) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR THE PROPOSAL UNLESS AUTHORITY TO DO SO IS SPECIFICALLY
WITHHELD IN THE MANNER PROVIDED.
Dated:___________________, 1999
-----------------------------------
-----------------------------------
[Label identifying shareholder account] -----------------------------------
-----------------------------------
Signature(s)
-----------------------------------
Print name, title
In signing, please write name(s) exactly as your account is registered.
When signing as attorney, executor, administrator or other fiduciary, please
give your full title as such. Joint owners should each sign personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED
