Standish, Ayer & Wood Investment Trust
Standish Equity 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) $ 230,329,787
Receivable for Fund shares sold 334,224
Other assets 9,717
--------------
Total assets 230,673,728
Liabilities
Distribution payable $ 75,045
Payable for Fund shares redeemed 14,973
Accrued trustees' fees (Note 3) 2,404
Accrued accounting, custody & transfer agent fees 216
Accrued expenses and other liabilities 5,302
------------
Total liabilities 97,940
--------------
Net Assets $ 230,575,788
==============
Net Assets consist of:
Paid-in capital $ 174,939,432
Accumulated net realized gain 13,986,058
Undistributed net investment income 152,276
Net unrealized appreciation 41,498,022
==============
Total Net Assets $ 230,575,788
==============
Shares of beneficial interest outstanding 4,893,337
==============
Net asset value, offering and redemption price per share
(Net assets/Shares outstanding) $ 47.12
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Statement of Operations
For the Six Months Ended March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Dividend income allocated from Portfolio (net of withholding taxes of $0) $ 1,127,797
Interest income allocated from Portfolio 276,664
Expenses allocated from Portfolio (631,678)
-------------
Net investment income from Portfolio 772,783
Expenses
Accounting, custody and transfer agent fees 24,469
Registration fees 23,278
Legal and audit services 4,099
Trustees' fees (Note 3) 2,404
Insurance expense 158
Miscellaneous 1,301
-----------
Total expenses 55,709
Deduct:
Reimbursement of Fund operating expenses (36,748)
-----------
Net expenses 18,961
-------------
Net investment income 753,822
-------------
Realized and Unrealized Gain (Loss)
Net realized gain allocated from Portfolio on:
Investment security transactions 16,458,514
Financial futures contracts 704,109
-----------
Net realized gain 17,162,623
Change in unrealized appreciation allocated from Portfolio on:
Investment securities 7,099,833
Financial futures contracts 364,342
-----------
Change in net unrealized appreciation 7,464,175
-------------
Net realized and unrealized gain on investments 24,626,798
-------------
Net increase in net assets resulting from operations $ 25,380,620
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Nine Months
March 31, 1998 Ended Year Ended
(Unaudited) September 30, 1997 December 31, 1996
----------- ------------------ -----------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 753,822 $ 939,068 $ 1,549,680
Net realized gain 17,162,623 22,264,592 16,774,749
Change in net unrealized appreciation 7,464,175 16,959,255 6,696,912
-------------- -------------- --------------
Net increase in net assets from operations 25,380,620 40,162,915 25,021,341
-------------- -------------- --------------
Distributions to Shareholders
From net investment income (579,559) (1,248,360) (1,481,454)
In excess of net investment income --(21,987)--
From net realized gain (25,188,077) (7,692,777) (11,604,448)
-------------- -------------- --------------
Total distributions to shareholders (25,767,636) (8,963,124) (13,085,902)
-------------- -------------- --------------
Fund share (principal) Transactions (Note 5)
Net proceeds from sale of shares 55,594,479 42,813,303 21,565,418
Net asset value of shares issued to shareholders
in payment of distributions declared 24,243,189 8,649,462 12,463,945
Cost of shares redeemed (19,044,660) (18,347,542) (28,642,403)
-------------- -------------- --------------
Increase in net assets from Fund share
transactions 60,793,008 33,115,223 5,386,960
-------------- -------------- --------------
Net increase in net assets 60,405,992 64,315,014 17,322,399
Net Assets
At beginning of period 170,169,796 105,854,782 88,532,383
-------------- -------------- --------------
At end of period (including undistributed net
investment income of $152,276, distributions in excess
of net investment income of $21,987 and undistributed
net investment income of $88,950, respectively) $ 230,575,788 $ 170,169,796 $ 105,854,782
============= ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Nine Months
March 31, Ended Year Ended December 31,
1998 Sept. 30, ----------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993 1992 +
-------------- ------------ ---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 48.81 $ 38.79 $ 34.81 $ 28.66 $ 30.89 $ 26.28 $ 25.66
--------- ---------- ---------- --------- --------- -------- --------
Income from operations:
Net investment income * 0.16 0.39 0.60 0.76 0.45 0.50 0.56
Net realized and
unrealized gain (loss)
on investments 5.32 12.79 8.52 9.94 (1.62) 5.57 1.81
--------- ---------- ---------- --------- --------- -------- --------
Total from investment
operations 5.48 13.18 9.12 10.70 (1.17) 6.07 2.37
--------- ---------- ---------- --------- --------- -------- --------
Less distributions declared
to shareholders
From net investment income (0.13) (0.43) (0.56) (0.78) (0.44) (0.47) (0.54)
From net realized gain on
investments (7.04) (2.73) (4.58) (3.77) (0.62) (0.99) (1.19)
From paid-in capital -- -- ---- -- -- (0.02)
--------- ---------- ---------- --------- --------- -------- --------
Total distributions (7.17) (3.16) (5.14) (4.55) (1.06) (1.46) (1.75)
--------- ---------- ---------- --------- --------- -------- --------
Net asset value, end of
period $ 47.12 $ 48.81 $ 38.79 $ 34.81 $ 28.66 $ 30.89 $ 26.28
========= ========== ========== ========= ========= ======== ========
Total return 13.59% 35.13% 26.84% 37.55% (3.78)% 20.79% 9.52%
Ratios (to average daily net assets)/Supplemental Data:
Net assets, end of period
(000's omitted) $230,576 $ 170,170 $ 105,855 $ 88,532 $ 86,591 $72,916 $14,679
Expenses * (1) 0.71%++ 0.70%++ 0.71% 0.69% 0.70% 0.80% --
Net investment income * 0.82%++ 0.95%++ 1.53% 2.05% 1.55% 1.29% 2.52%
Portfolio turnover (2) -- -- 41% 159% 182% 192% 92%
Average broker commission
rate (2) -- -- $ 0.0499 -- -- -- --
- ----------
* The investment adviser did not impose a portion of its advisory fee and/or
reimbursed a portion of the Fund'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 $ 0.16 $ 0.38 $ 0.59 -- -- $ 0.47 $ 0.34
Ratios (to average daily net
assets):
Expenses (1) 0.75%++ 0.72%++ 0.72% -- -- 0.97% 1.00%
Net investment income 0.78%++ 0.93%++ 1.52% -- -- 1.12% 1.52%
</TABLE>
+ Audited by other auditors.
(1) Includes the Fund's share of Standish Equity Portfolio's allocated
expenses for periods since May 3, 1996.
++ Computed on an annualized basis.
(2) Portfolio turnover and average broker commission rate represents activity
while the Fund was investing directly in securities. The portfolio
turnover and average broker commission rate for the period since the Fund
transferred substantially all of its investable assets to the Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity 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 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
99.7% 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 it's 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. Currently, 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. Prior to the Fund's investment in the Portfolio,
the Fund held its investments directly. For investments held directly,
interest income was determined on the basis of interest accrued, dividend
income was recorded on the ex-dividend date and realized gains and losses
from securities sold were recorded on the identified cost basis.
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 all the 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 the 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. These
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
differences are primarily due to differing treatments for futures
transactions. 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
gains (losses).
(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, Inc. ("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 operating expenses of the Fund and Portfolio
(excluding commissions, taxes and extraordinary expenses) to 0.71% 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 it's operating
expenses of $36,748 for the period ended March 31, 1998. The 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
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 decreases in the Fund's investment in the Portfolio for the
six months ended March 31, 1998 aggregated $55,348,510 and $20,560,148,
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:
<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended Year Ended
March 31, 1998 September 30, 1997 December 31, 1996
------------------ ------------------ ------------------
<S> <C> <C> <C>
Shares sold 1,241,658 979,248 561,325
Shares issued to shareholders in
payment of distributions declared 594,703 202,060 325,504
Shares redeemed (429,627) (423,446) (701,269)
------------------ ------------------ ------------------
Net increase 1,406,734 757,862 185,560
================== ================== ==================
</TABLE>
7
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
----------------
</TABLE>
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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
</TABLE>
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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
----------------
</TABLE>
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>
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
