STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SMALL CAPITALIZATION EQUITY FUND II
Financial Statements for the Period Ended
September 30, 1998
[STANDISH LOGO]
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
November 25, 1998
Dear Standish Funds Shareholder:
Enclosed you will find the annual statement for your Standish Fund for the
fiscal year ending September 30, 1998.
As of that date, Standish, Ayer & Wood, Inc., the advisor, together with its
affiliate, Standish International Management Company, L.P., had approximately
$45 billion of assets under management including the $6.4 billion of assets
represented by the Standish Funds. Our principal clients are corporate pension
trusts, governmental pension funds, insurance companies, endowments and
foundations, and high net worth individuals. Standish, Ayer & Wood remains
independent and is owned by investment professionals active in the business.
Both assets under management and the professional staff grew considerably over
the past year, while the investment team and the clientele have remained
constant.
During the twelve months ending September 30, 1998, investment returns have
generally been positive. For example, larger capitalization U.S. common stocks
as reflected in the Standard and Poor's 500 Index provided a total return of
9.05%, while higher grade domestic taxable bonds as represented by the Lehman
Aggregate returned 11.49%. However, within the twelve-month period there has
been considerable volatility. The quarter ending September 30, 1998 was a
particularly difficult period for U.S. equities, especially smaller
capitalization U.S. stocks, emerging market bonds, and domestic bonds with
perceived credit risk.
Recent dramatic events have included Russia's de facto default on its debt,
extreme pressures on a very large hedge fund, trading losses by major financial
institutions, and disarray in the currency and credit markets. A major change
has taken place in investor perception of risk and in rapid deleveraging of the
global financial system.
Clearly all financial market participants are operating in a more difficult
environment. Standish, Ayer & Wood is devoted to producing superior long-term
returns through very disciplined investment philosophies designed to uncover
value. We remain confident we have the capability to do a superior job by
adhering to our disciplines.
We appreciate the opportunity to serve you and hope you will find the following
information helpful.
Sincerely yours,
/s/ Ted Ladd
Edward H. Ladd
Chairman
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SMALL CAPITALIZATION EQUITY FUND II
Management Discussion and Analysis
Small capitalization stocks began the year on the upswing, but since April have
turned in one of the weakest performance records in recent history. Not only
have small capitalization stocks performed poorly compared to the stocks of
larger companies, in absolute terms small caps have declined precipitously. For
the full year from October 1, 1997 through September 30, 1998 the Standish Small
Cap II Equity Fund declined 17.84% compared to a decline of 24.83% for the
Russell 2000 Growth Index.
Small cap stocks have underperformed large caps for more than five years, with
some notable sharp rallies as exceptions. In calendar year 1998, while earnings
forecasts have come down in concert with slower expected economic growth, the
stocks have experienced a more extreme correction. Investors have abandoned the
new issues market, raising the bar small companies must jump to raise equity
capital. Mutual fund cash inflows have slowed and in some weeks gone negative,
offsetting the benefits of a slack IPO market. While these trends may continue
in the current risk-averse markets, we believe that small caps have very
attractive characteristics.
Small cap companies, while not isolated from world events, are primarily
domestic in their operations, can grow earnings more rapidly than large caps,
and are often more flexible and entrepreneurial. It is our opinion that small
caps are underowned, oversold, neglected, and subject to very low expectations.
Over the intermediate term we believe the prospects for small caps are
excellent.
Volatility has been above norms, and months like August make analysis of
performance for the year difficult. Our stock selection made a strong
contribution for most of the year, except for the very weakest periods, when the
impact of absolute size was of overriding importance. Our focus on smaller
companies within the small cap segment of the market has hurt performance during
the past year. Our sector emphasis continues to be technology, healthcare, and
business services. Our investments in technology include software, the Internet,
communications, and media companies. In healthcare we are focused on
biotechnology and service companies. Business services include a wide variety of
industries: transaction processing, broadcasting, publishing, transportation,
and education. We target the highest quality companies, defined by business
position, management focus and intensity, balance sheet strength, and
competitive advantage. We then look for favorable valuation to initiate an
investment position. We are very price sensitive in both investing and profit
taking.
The Standish Small Cap investment team is functioning smoothly. Portfolio
management responsibilities are shared by Drew Beja and myself, and research
efforts are directed by Jonathan Stone. We have considerable research expertise
in the key sectors mentioned above, and our team approach ensures that every
investment receives team review. This summer Sarah Griffin joined our team as
our expert in performance attribution, quantitative support, and client liaison.
Sarah has been at Standish in various capacities prior to joining the Small Cap
team. More recently, Michael Fechter has joined Standish and will be part of the
Small Cap team specializing in marketing and client communications. Michael was
at Putnam Investments for seven years where he specialized in client service.
In closing, it is important to remind you of the volatility of small cap
investments, particularly in the growth part of the small cap market. We attempt
to offset this volatility through diversification, sector concentration limits,
and particular attention to business quality, balance sheet strength, and stock
valuation. Nonetheless, we are typically fully invested and therefore are
broadside to market volatility in the small cap arena. We remain optimistic
about the outlook for small cap stocks despite the recent challenges. We are
very appreciative of your support and thank you for your interest in the
Standish Small Cap II Equity Fund.
Sincerely,
/s/ Nicholas S. Battelle /s/ Andrew L. Beja
Nicholas S. Battelle Andrew L. Beja
3
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SMALL CAPITALIZATION EQUITY FUND II
Comparison of Change in Value of $100,000 Investment in
Standish Small Capitalization Fund II,
the S&P 500 Index, the Russell 2000 Index, and the Russell 2000 Growth Index
[The following table was originally a line graph in the printed materials.]
Standish Small
Capitalization Russell 2000 S&P 500 Russell 2000
Equity Fund II Index Index Growth Index
-------------- ------------ ------- ------------
Inception 12/23/96 100000 100000 100000 100000
12/31/96 101900 102020 99170 102396
1/31/97 106850 104061 105369 104954
2/28/97 98950 101538 106195 98616
3/31/97 93000 96746 101831 91656
4/30/97 93900 97016 107901 90593
5/31/97 110800 108814 114472 104209
6/30/97 108850 112439 119600 107742
7/31/97 126500 117668 129120 113258
8/31/97 131550 120362 121890 116656
9/30/97 145651 129173 128569 125965
10/31/97 135297 123498 124275 118400
11/30/97 133647 122699 130029 115577
12/31/97 133301 124847 132262 115642
1/31/98 134163 122876 133725 114099
2/28/98 149189 131962 143370 124173
3/31/98 154791 137404 150711 129382
4/30/98 158399 138164 152228 130175
5/31/98 147035 130722 149611 120718
6/30/98 147250 130997 155688 121952
7/31/98 147250 130997 155688 121952
8/31/98 108149 97012 131761 85973
9/30/98 119675 104609 140202 94690
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Statement of Assets and Liabilities
September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investment in Standish Small Capitalization Equity Portfolio II ("Portfolio"),
at value (Note 1A) $ 11,922,801
Receivable for Fund shares sold 30,255
Receivable from investment adviser (Note 3) 4,858
Other assets 113
-------------
Total assets 11,958,027
Liabilities
Accrued accounting, custody and transfer agent fees $ 2,918
Accrued trustees' fees and expenses (Note 3) 967
Accrued expenses and other liabilities 10,159
------------
Total liabilities 14,044
-------------
Net Assets $ 11,943,983
=============
Net Assets consist of:
Paid-in capital $ 13,451,272
Accumulated distributions in excess of net realized loss (384,658)
Net unrealized depreciation (1,122,631)
-------------
Total Net Assets $ 11,943,983
=============
Shares of beneficial interest outstanding 537,602
=============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 22.22
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Statement of Operations
For the Year Ended September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Interest income allocated from Portfolio $ 25,398
Dividend income allocated from Portfolio 8,756
Expenses allocated from Portfolio (59,876)
-------------
Net investment income from Portfolio (25,722)
Expenses
Accounting, custody and transfer agent fees $ 27,335
Registration fees 13,385
Legal and audit services 9,509
Trustees' fees and expenses (Note 3) 3,110
Insurance expense 181
Miscellaneous 2,500
------------
Total expenses 56,020
Deduct:
Reimbursement of Fund operating expenses (56,020)
------------
Net expenses 0
-------------
Net investment income (25,722)
-------------
Realized and Unrealized Gain
Net realized gain allocated from Portfolio on:
Investment security transactions 36,806
------------
Net realized gain 36,806
Change in unrealized appreciation (depreciation) allocated from
Portfolio on:
Investment securities (2,290,170)
------------
Change in net unrealized appreciation (depreciation) (2,290,170)
-------------
Net realized and unrealized loss (2,253,364)
-------------
Net Decrease in Net Assets from Operations $ (2,279,086)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 23, 1996
Nine Months (commencement of
Year Ended Ended operations) to
September 30, 1998 September 30, 1997 December 31, 1996
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income (loss) $ (25,722) $ 8,488 $ 198
Net realized gain 36,806 129,163 --
Change in net unrealized appreciation
(depreciation) (2,290,170) 1,158,569 8,970
------------ ----------- ---------
Net increase (decrease) in Net Assets from
Investment Operations (2,279,086) 1,296,220 9,168
------------ ----------- ---------
Distributions to Shareholders (Note 2)
From net investment income (12,372) (2,145) --
From net realized gain (165,969) -- --
In excess of net realized gain (384,658) -- --
------------ ----------- ---------
Total distributions to shareholders (562,999) (2,145) --
------------ ----------- ---------
Fund Share (principal) Transactions (Note 5)
Net proceeds from sale of shares 9,955,084 5,177,545 475,000
Value of shares issued to shareholders in payment
of distributions declared 555,593 1,978 --
Cost of shares redeemed (2,038,167) (644,208) --
------------ ----------- ---------
Increase in Net Assets from Fund share
transactions 8,472,510 4,535,315 475,000
------------ ----------- ---------
Total Increase in Net Assets 5,630,425 5,829,390 484,168
Net Assets
At beginning of year 6,313,558 484,168 --
------------ ----------- ---------
At end of year (including undistributed
investment income of $0, $6,541 and $198,
respectively) $11,943,983 $6,313,558 $484,168
============ =========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 23, 1996
Nine Months (commencement of
Year Ended Ended operations) to
September 30, 1998 (1) September 30, 1997 December 31, 1996
------------------------ -------------------- -----------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 29.12 $20.39 $20.00
--------- ------- -------
Investment Operations:
Net investment income (loss) * (0.07) 0.03 --
Net realized and unrealized gain (loss) on
investments (5.01) 8.71 0.39
--------- ------- -------
Total from investment operations (5.08) 8.74 0.39
--------- ------- -------
Less distributions declared to shareholders
From net investment income (0.04) (0.01) --
From net realized gain on investments (0.54) -- --
In excess of net realized gain on investments (1.24) -- --
--------- ------- -------
Total distributions (1.82) (0.01) --
--------- ------- -------
Net Asset Value, End of Year $ 22.22 $29.12 $20.39
========= ======= =======
Total Return (17.84)% 42.94% --(2)
Ratios/Supplemental Data
Expenses (to average daily net assets) * (3) 0.58% 0.00%+ --(2)
Net investment income (loss) (to average daily net
assets) * (0.25)% 0.49%+ --(2)
Net assets, end of year (000's omitted) $ 11,944 $6,314 $ 484
</TABLE>
- -------------------
* For the periods indicated, the investment adviser voluntarily agreed not to
impose all or a portion of its advisory fee on the Portfolio and reimbursed
the Portfolio for a portion of its operating expenses and reimbursed the Fund
for all of its operating expenses. If these voluntary actions had not been
taken, the net investment income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C>
Net investment loss per share $ (0.42) $(0.25) --(2)
Ratios (to average daily net assets):
Expenses (3) 1.94% 3.56%+ --(2)
Net investment income (loss) (1.61)% (3.07)%+ --(2)
</TABLE>
(1) Calculated based on average shares outstanding.
(2) Amounts are not meaningful due to the short period of operations.
(3) Includes the Fund's share of the Standish Small Capitalization Equity II
Portfolio's allocated expenses for the periods since commencement of
operations.
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Notes to Financial Statements
- --------------------------------------------------------------------------------
(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 Small Capitalization Equity Fund II (the "Fund") is a
separate diversified investment series of the Trust.
The Fund invests all of its investable assets in an interest in
Standish Small Capitalization Equity Portfolio II (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 100% at September 30, 1998). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio are included
elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
The following is a summary of significant accounting policies followed
by the Fund in the preparation of the financial statements. The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. Investment security valuations
The Fund records its investment in the Portfolio at value. The method
by which the Portfolio values its securities is discussed in Note 1A of
the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. 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.
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. The Fund elected to defer to its fiscal year ending September 30,
1999 $148,969 losses recognized during the period November 1, 1997 to
September 30, 1998.
D. Other
All net investment income and realized and unrealized gains and losses
of the Portfolio are allocated pro rata among all of 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 differences are primarily due to
differing treatments for futures transactions. Permanent book and tax
basis differences
9
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Fund II
Notes to Financial Statements
- --------------------------------------------------------------------------------
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. SA&W has voluntarily agreed to limit
total Fund operating expenses and its pro-rata share of expenses
allocated from the Portfolio (excluding commissions, taxes and
extraordinary expenses) to 1.00% of the Fund's average daily net assets
for the period April 1, 1998 to September 30, 1998. Prior to April 1,
1998, SA&W had voluntarily agreed to limit total Fund operating
expenses and its pro-rata share of expenses allocated from the
Portfolio to 0.00% of the Fund's average daily net assets. This
agreement is voluntary and temporary and may be discontinued or revised
by SA&W at any time. Pursuant to this agreement, for the year ended
September 30, 1998, SA&W voluntarily reimbursed the Fund for its
operating expenses in the amount of $49,720. The Trust pays no
compensation directly to its trustees who are affiliated with the 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 year ended September 30, 1998 aggregated $9,663,712 and $1,758,185,
respectively.
(5) Shares of Beneficial Interest:
The Declaration of Trust permits the Trust 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>
For the Period
December 23, 1996
(commencement of
Year Ended Nine Months Ended operations) to
September 30, 1998 September 30, 1997 December 31, 1996
--------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Shares sold............................ 373,288 222,940 23,750
Shares issued to shareholders in
payment of distributions declared... 23,472 69 0
Shares redeemed........................ (75,976) (29,941) 0
--------------------- ---------------------- ----------------------
Net increase/(decrease)................ 320,784 193,068 23,750
===================== ====================== ======================
</TABLE>
At September 30, 1998, the Fund had one shareholder of record owning
approximately 18% of the Fund's outstanding voting shares.
10
<PAGE>
Report of Independent Accountants
To the Trustees of Standish, Ayer & Wood Investment Trust and the
Shareholders of Standish Small Capitalization Equity Fund II:
In our opinion the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets and
financial highlights present fairly, in all material respects, the
financial position of Standish, Ayer & Wood Investment Trust: Standish
Small Capitalization Equity Fund II (the "Fund"), at September 30, 1998,
and the results of its operations, the changes in its net assets and the
financial highlights for each of the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (herein referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 18, 1998
11
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Schedule of Investments - September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITIES -- 94.3%
Capital Goods -- 5.1%
AFC Cable Systems, Inc.* 4,900 $ 116,375
Eagle USA Airfreight, Inc.* 4,800 67,200
Heico Corp. 7,000 116,813
Kellstrom Industries, Inc.* 3,100 43,013
Kroll-Ogara Co.* 5,700 133,238
Service Experts Inc.* 4,600 127,938
--------------
604,577
--------------
Consumer Stable -- 2.1%
United Natural Foods Inc.* 9,900 252,449
--------------
Early Cyclical -- 3.2%
Atlantic Coast Airlines, Inc.* 8,600 201,025
Midwest Express Holdings* 5,500 184,250
--------------
385,275
--------------
Energy -- 2.8%
Cal Dive International, Inc.* 7,200 129,600
Dril-Quip* 3,700 64,750
Friede Goldman Intl Inc.* 3,500 55,125
Newpark Resources, Inc.* 11,900 81,813
--------------
331,288
--------------
Financial -- 1.6%
First Republic Bank* 4,300 131,150
First Sierra Financial, Inc.* 7,000 63,438
--------------
194,588
--------------
Growth Cyclical -- 6.3%
Central Garden & Pet Co.* 9,100 168,350
Coach USA Inc.* 7,600 187,625
Gadzooks Inc.* 11,500 105,656
ResortQuest International Inc.* 10,900 96,056
Stein Mart Inc.* 13,100 104,800
Wet Seal, Inc., Class A* 5,100 88,294
--------------
750,781
--------------
Health Care -- 21.4%
Affymetrix Inc.* 4,200 108,150
Alkermes, Inc.* 4,700 68,444
Chirex, Inc.* 11,700 139,669
Coulter Pharmaceutical Inc.* 5,500 136,813
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Schedule of Investments - September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care (continued)
Cytyc Corp.* 9,600 $ 97,200
Daou Systems, Inc.* 14,700 84,525
Guilford Pharmaceuticals Inc.* 5,200 72,800
Impath Inc.* 9,200 273,699
Inhale Therapeutic Systems* 4,700 131,600
Ligand Pharmaceuticals, Class B* 7,500 68,438
Neurogen Corp.* 6,200 102,300
Novoste Corp.* 8,900 114,588
Parexel International Corp.* 5,400 210,599
Pharmaceutical Product Development* 7,200 201,599
Province Healthcare Co.* 2,600 88,563
Quadramed Corp.* 4,100 82,513
Sepracor Inc.* 3,600 236,699
Transition Systems, Inc.* 10,900 91,288
Transkaryotic Therapies Inc.* 5,800 139,200
Vical Inc.* 9,300 102,300
--------------
2,550,987
--------------
Services -- 28.4%
Abacus Direct Corp.* 3,700 188,700
Ambassadors International* 2,800 50,400
Bright Horizons, Inc.* 4,800 102,000
CCC Information Services Group* 4,200 52,500
Computer Horizons Corp.* 2,000 49,875
Computer Task Group, Inc. 5,900 172,944
Devry, Inc.* 6,700 157,031
Emmis Broadcasting Corp., Class A* 3,300 124,575
F.Y.I. Inc.* 5,400 132,300
Gray Communications Systems, Class B 5,100 126,863
Ha-lo Industries, Inc.* 4,200 122,850
Hagler Bailly* 4,300 83,850
Information Management Resources* 3,400 84,150
Inspire Insurance Solutions* 4,650 109,856
Intelligroup, Inc.* 15,800 268,599
Intl Telecomm Data Systems* 4,850 140,650
Metro Networks Inc.* 4,000 146,500
Metzler Group, Inc.* 3,300 113,025
NCO Group Inc.* 4,800 133,500
On Assignment Inc.* 2,500 92,500
Personnel Group of America, Inc.* 8,900 109,581
Peterson Companies, Inc. Class A* 7,800 222,299
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Schedule of Investments - September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Services (continued)
Renaissance Worldwide Inc.* 10,000 $ 131,250
Scandinavian Broadcast Systems Corp.* 17,200 365,499
Wilmar Industries Inc.* 5,200 110,500
--------------
3,391,797
--------------
Technology -- 23.4%
Aspen Technologies, Inc.* 5,500 147,125
ATMI Inc.* 23,900 331,612
Best Software, Inc.* 6,600 158,400
C-Net Inc.* 2,800 128,100
CMG Information Services, Inc.* 2,700 143,775
Datastream Systems, Inc.* 5,300 92,419
Davox Corp.* 10,300 96,563
Exodus Communications, Inc.* 5,500 134,063
HNC Software Inc.* 3,200 130,000
Infinium Software, Inc.* 11,400 106,875
Infoseek Corp.* 6,400 157,600
Lycos Inc.* 3,400 114,963
Micrel, Inc.* 1,900 50,350
National Computer System, Inc. 4,400 129,800
Pegasystems, Inc.* 4,800 73,800
Photronics Inc.* 8,900 113,475
Preview Travel Inc.* 2,500 45,625
PRI Automation, Inc.* 6,300 78,750
Sanmina Corp.* 3,200 90,000
Sportsline USA, Inc.* 2,000 34,875
Transaction Systems Archit, Class A* 3,800 134,900
TSI International Software Ltd.* 4,500 155,813
Unitrode Corp.* 12,700 134,938
--------------
2,783,821
--------------
TOTAL EQUITIES (COST $12,368,195) 11,245,563
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Schedule of Investments - September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS -- 5.1%
Repurchase Agreements -- 5.1%
Prudential-Bache Repurchase Agreement, dated 9/30/98, due 10/1/98, maturity value
of $603,456 and an effective yield of 4.75%, collateralized by a U.S. Treasury
obligation with a rate of 8.125%, a maturity date of 8/15/19 and a market value of
$620,648. $ 603,376
--------------
Total Repurchase Agreements (Cost $603,376) 603,376
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $603,376) 603,376
--------------
TOTAL INVESTMENTS -- 99.4% (COST $12,971,571) $ 11,848,939
Other Assets, Less Liabilities -- 0.6% 73,969
--------------
NET ASSETS -- 100% $ 11,922,908
==============
</TABLE>
Notes to the Schedule of Investments:
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Statement of Assets and Liabilities
September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value (Note 1A) (identified cost, $12,971,571) $ 11,848,939
Cash 152,395
Receivable for investments sold 70,390
Interest and dividends receivable 1,063
Receivable from investment adviser (Note 2) 12,571
Deferred organization costs (Note 1E) 15,335
Prepaid expenses 1,022
-------------
Total assets 12,101,715
Liabilities
Payable for investments purchased $ 156,734
Accrued accounting and custody fees 6,286
Accrued trustees' fees and expenses (Note 2) 1,698
Accrued expenses and other liabilities 14,089
------------
Total liabilities 178,807
-------------
Net Assets (applicable to investors' beneficial interests) $ 11,922,908
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Statement of Operations
For the Year Ended September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1C)
Interest income $ 25,400
Dividend income 8,756
-------------
Total income 34,156
Expenses
Investment advisory fee (Note 2) $ 61,698
Accounting and custody fees 52,239
Trustees' fees and expenses (Note 2) 7,964
Legal and audit services 12,096
Amortization of organization cost (Note 1E) 4,747
Insurance expense 2,447
Miscellaneous 2,250
------------
Total expenses 143,441
------------
Deduct:
Waiver of investment advisory fee (Note 2) (61,698)
Reimbursement of Portfolio operating expenses (21,865)
------------
Total waiver of investment advisory fee and
reimbursement of operating expenses (83,563)
------------
Net expenses 59,878
-------------
Net investment loss (25,722)
-------------
Realized and Unrealized Gain
Net realized gain
Investment security transactions 36,810
------------
Net realized gain 36,810
Change in unrealized appreciation (depreciation)
Investment securities (2,290,197)
------------
Change in net unrealized appreciation (depreciation) (2,290,197)
-------------
Net realized and unrealized loss (2,253,387)
-------------
Net Decrease in Net Assets from Operations $ (2,279,109)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 23, 1996
(commencement of
Year Ended Nine Months Ended operations) to
September 30, 1998 September 30, 1997 December 31, 1996
-------------------- ---------------------- --------------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income (loss) $ (25,722) $ 8,488 $ 198
Net realized gain 36,810 129,166 --
Change in net unrealized appreciation
(depreciation) (2,290,197) 1,158,595 8,970
------------ ----------- ----------
Net increase (decrease) in Net Assets
from Investment Operations (2,279,109) 1,296,249 9,168
------------ ----------- ----------
Capital Transactions
Contributions 9,663,712 5,257,608 475,000
Withdrawals (1,758,185) (741,535) --
------------ ----------- ----------
Increase in Net Assets resulting from
capital transactions 7,905,527 4,516,073 475,000
------------ ----------- ----------
Total Increase in Net Assets 5,626,418 5,812,322 484,168
Net Assets
At beginning of year 6,296,490 484,168 --
------------ ----------- ----------
At end of year $11,922,908 $6,296,490 $ 484,168
============ =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Small Capitalization Equity Portfolio II
Supplemental Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 23, 1996
Nine Months (commencement of
Year Ended Ended operations) to
September 30, 1998 September 30, 1997 December 31, 1996
---------------------- --------------------- --------------------
<S> <C> <C> <C>
Ratios:
Expenses (to average net assets) * 0.58% 0.00%+ --(1)
Net investment income (loss) (to average net assets) * (0.25)% 0.50%+ --(1)
Portfolio turnover 147% 122% --
Net assets, end of year (000's omitted) $11,923 $ 6,296 $484
</TABLE>
- -------------------------
* For the periods indicated, the investment adviser did not impose any of its
investment advisory fee and reimbursed the Portfolio for all of its operating
expenses. If these voluntary actions had not been taken, the ratios would
have been:
<TABLE>
<S> <C> <C> <C>
Ratios (to average daily net assets):
Expenses 1.39% 4.33%+ --(1)
Net investment income (loss) (1.06)% (3.84)%+ --(1)
</TABLE>
+ Computed on an annualized basis.
(1) Amounts are not meaningful due to the short period of operations.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Portfolio II
Notes to Financial Statements
- --------------------------------------------------------------------------------
(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 Small Capitalization Equity Portfolio II (the "Portfolio") is
a separate diversified investment series of the Portfolio Trust. As of
September 30, 1998, the Standish Small Capitalization Equity Fund II's
proportionate interest in the net assets of the Portfolio was
approximately 100%.
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 transactions 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 Sec 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.
20
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Capitalization Equity Portfolio II
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 December, 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 0.60% of the Portfolio's average
daily net assets. SA&W has voluntarily agreed to limit the total
Portfolio's operating expenses (excluding brokerage commissions, taxes,
and extraordinary expenses) to 1.00% of the Portfolio's average daily
net assets for the period April 1, 1998 to September 30, 1998. Prior to
April 1, 1998, SA&W had voluntarily agreed to limit the total
Portfolio's operating expenses to 0.00% of the Portfolio's average
daily net assets. Pursuant to this agreement SAW voluntarily did not
impose $61,698 of its investment advisory fee, and reimbursed the
Portfolio for its operating expenses of $21,865. 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:
Cost of purchases and proceeds from sales of investments, other than
short-term obligations were as follows:
<TABLE>
<CAPTION>
Year Ended
September 30, 1998
----------------------------
Purchases Sales
----------------------------
<S> <C> <C>
U.S. Government Securities $ 0 $ 0
============= =============
Investments (non-U.S. Government Securities) $ 21,363,815 $ 14,137,754
============= =============
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at September 30, 1998, as computed on a
federal income tax basis, were as follows:
<TABLE>
<S> <C>
Aggregate Cost..................................................... $ 13,207,257
=============
Gross unrealized appreciation...................................... $ 968,695
Gross unrealized depreciation...................................... (2,327,013)
-------------
Net unrealized appreciation (depreciation)......................... $ (1,358,318)
=============
</TABLE>
21
<PAGE>
(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 options 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
contract's 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.
If a put option written by the Portfolio is exercised, the premium
reduces the cost basis of the securities purchased by the Portfolio.
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. 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 during the year
ended September 30, 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 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 indices, 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 contract's 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. The Portfolio had no open financial
futures contracts at September 30, 1998.
22
<PAGE>
Independent Auditor's Report
To the Trustees of Standish, Ayer & Wood Master Portfolio and the
Investors of Standish Small Capitalization Equity Portfolio II:
In our opinion the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the supplementary data
present fairly, in all material respects, the financial position of
Standish Small Capitalization Equity Portfolio II (the "Portfolio"), at
September 30, 1998, the results of its operations, the changes in its
net assets and the supplementary data for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
These financial statements and supplementary data (herein referred to
as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates by management, and evaluating
the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30,
1998, by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 18, 1998
23
<PAGE>
[LOGO] STANDISH FUNDS(R)
One Financial Center
Boston, MA 02111-2662
(800) 729-0066
www.standishfunds.com
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Standish,
Ayer & Wood Investment Trust form N-SAR for the period ended September 30, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001012705
<NAME> Standish Small Capitalization Equity Portfolio II
<SERIES>
<NUMBER> 5
<NAME> Standish Small Capitalization Equity Portfolio II
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 12,971,571
<INVESTMENTS-AT-VALUE> 11,848,939
<RECEIVABLES> 84,024
<ASSETS-OTHER> 152,395
<OTHER-ITEMS-ASSETS> 16,357
<TOTAL-ASSETS> 12,101,715
<PAYABLE-FOR-SECURITIES> 156,734
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,073
<TOTAL-LIABILITIES> 178,807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,045,540
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,122,632)
<NET-ASSETS> 11,922,908
<DIVIDEND-INCOME> 8,756
<INTEREST-INCOME> 25,400
<OTHER-INCOME> 0
<EXPENSES-NET> 59,878
<NET-INVESTMENT-INCOME> (25,722)
<REALIZED-GAINS-CURRENT> 36,810
<APPREC-INCREASE-CURRENT> (2,290,197)
<NET-CHANGE-FROM-OPS> (2,279,109)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,626,418
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 61,698
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 143,441
<AVERAGE-NET-ASSETS> 10,299,349
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Standish,
Ayer & Wood Investment Trust form N-SAR for the period ended September 30, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001012705
<NAME> Standish Small Capitalization Equity Fund II Series
<SERIES>
<NUMBER> 16
<NAME> Standish Small Capitalization Equity Fund II Series
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 11,922,801
<RECEIVABLES> 35,113
<ASSETS-OTHER> 113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,958,027
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,044
<TOTAL-LIABILITIES> 14,044
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,451,272
<SHARES-COMMON-STOCK> 537,602
<SHARES-COMMON-PRIOR> 216,818
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (384,658)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,122,631)
<NET-ASSETS> 11,943,983
<DIVIDEND-INCOME> 8,756
<INTEREST-INCOME> 25,398
<OTHER-INCOME> (59,876)
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> (25,722)
<REALIZED-GAINS-CURRENT> 36,806
<APPREC-INCREASE-CURRENT> (2,290,170)
<NET-CHANGE-FROM-OPS> (2,279,086)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,372)
<DISTRIBUTIONS-OF-GAINS> (550,627)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 373,288
<NUMBER-OF-SHARES-REDEEMED> 75,976
<SHARES-REINVESTED> 23,472
<NET-CHANGE-IN-ASSETS> 5,630,425
<ACCUMULATED-NII-PRIOR> 6,541
<ACCUMULATED-GAINS-PRIOR> 129,163
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,020
<AVERAGE-NET-ASSETS> 10,283,049
<PER-SHARE-NAV-BEGIN> 29.12
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> (5.01)
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (1.78)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 22.22
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
