STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY FUND
Financial Statements for the
Six Months Ended March 31, 1999
(Unaudited)
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY FUND
Financial Statements
Table of Contents
Page
Statements of Assets and Liabilities...........................2
Statements of Operations.......................................3
Statements of Changes in Net Assets............................4
Financial Highlights...........................................5
Notes to Financial Statements.................................6\
Schedule of Investments........................................8
Statement of Assets and Liabilities (Portfolio)...............12
Statement of Operations (Portfolio)...........................13
Statement of Changes in Net Assets (Portfolio)................14
Supplemental Data (Portfolio).................................15
Notes to Financial Statements.................................16
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Statement of Assets and Liabilities
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investment in Standish Equity Portfolio ("Portfolio"), at value (Note 1A) $ 195,498,067
Receivable for Fund shares sold 2,230
Prepaid expenses 18,317
-------------
Total assets 195,518,614
Liabilities
Payable for Fund shares redeemed $ 312,887
Accrued trustees' fees and expenses (Note 3) 995
Accrued accounting, custody & transfer agent fees 6,415
Accrued expenses and other liabilities 6,049
-----------
Total liabilities 326,346
-------------
Net Assets $ 195,192,268
=============
Net Assets consist of:
Paid-in capital $ 188,565,085
Distributions in excess of net realized gains (1,257,463)
Undistributed net investment income 323,950
Net unrealized appreciation 7,560,696
-------------
Total Net Assets $ 195,192,268
=============
Shares of beneficial interest outstanding 5,214,010
=============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 37.44
=============
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Dividend income allocated from Portfolio (net of withholding
taxes of $1,011) $ 1,101,661
Interest income allocated from Portfolio 600,688
Expenses allocated from Portfolio (621,788)
------------
Net investment income from Portfolio 1,080,561
Expenses
Accounting, custody and transfer agent fees $ 24,577
Registration fees 13,680
Legal and audit services 10,303
Trustees' fees and expenses (Note 3) 1,010
Insurance expense 499
Miscellaneous 7,760
-----------
Total expenses 57,829
------------
Net investment income 1,022,732
------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) allocated from Portfolio on:
Investment security transactions (6,893,387)
Financial futures contracts 9,854,447
-----------
Net realized gain 2,961,060
Change in unrealized appreciation (depreciation) allocated from Portfolio on:
Investment securities 18,482,044
Financial futures contracts (173,347)
-----------
Change in net unrealized appreciation (depreciation) 18,308,697
------------
Net realized and unrealized gain 21,269,757
------------
Net Increase in Net Assets from Operations $ 22,292,489
============
</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 Year Ended
March 31, 1999 September 30,
(Unaudited) 1998
------------------- ----------------
<S> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 1,022,732 $ 1,388,585
Net realized gain 2,961,060 20,431,195
Change in net unrealized appreciation (depreciation) 18,308,697 (44,781,848)
------------ ------------
Net increase (decrease) in Net Assets from Investment Operations 22,292,489 (22,962,068)
------------ ------------
Distributions to Shareholders (Note 2)
From net investment income (640,936) (1,388,585)
In excess of net investment income -- (35,859)
From net realized gain (21,379,747) (25,188,077)
------------ ------------
Total distributions to shareholders (22,020,683) (26,612,521)
------------ ------------
Fund Share (principal) Transactions (Note 5)
Net proceeds from sale of shares 29,336,239 120,195,070
Value of shares issued to shareholders in payment of distributions declared 21,498,015 24,950,939
Cost of shares redeemed (54,235,564) (67,419,444)
------------ ------------
Increase (Decrease) in Net Assets from Fund share transactions (3,401,310) 77,726,565
------------ ------------
Total Increase (Decrease) in Net Assets (3,129,504) 28,151,976
Net Assets
At beginning of period 198,321,772 170,169,796
------------ ------------
At end of period (including undistributed net investment income of $323,950
and distributions in excess of net investment income of $57,846,
respectively) $195,192,268 $198,321,772
============ ============
</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 Year Ended
March 31, September 30, Year Ended December 31,
1999 --------------------- ----------------------------------------------
(Unaudited) 1998 1997* 1996 1995 1994 1993
----------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 37.47 $ 48.81 $ 38.79 $ 34.81 $ 28.66 $ 30.89 $ 26.28
-------- -------- -------- -------- ------- ------- -------
Investment Operations:
Net investment income ** 0.20 0.30 0.39 0.60 0.76 0.45 0.50
Net realized and unrealized gain (loss)
on investments 4.13 (4.30) 12.79 8.52 9.94 (1.62) 5.57
-------- -------- -------- -------- ------- ------- -------
Total from investment operations 4.33 (4.00) 13.18 9.12 10.70 (1.17) 6.07
-------- -------- -------- -------- ------- ------- -------
Less distributions declared
to shareholders
From net investment income (0.13) (0.29) (0.43) (0.56) (0.78) (0.44) (0.47)
In excess of net investment income -- (0.01) -- -- -- -- --
From net realized gain on investments (4.23) (7.04) (2.73) (4.58) (3.77) (0.62) (0.99)
-------- -------- -------- -------- ------- ------- -------
Total distributions (4.36) (7.34) (3.16) (5.14) (4.55) (1.06) (1.46)
-------- -------- -------- -------- ------- ------- -------
Net Asset Value, End of Period $ 37.44 $ 37.47 $ 48.81 $ 38.79 $ 34.81 $ 28.66 $ 30.89
======== ======== ======== ======== ======= ======= =======
Total Return 10.91% (9.33)% 35.13% 26.84% 37.55% (3.78)% 20.79%
Ratios/Supplemental Data:
Expenses (to average daily net
assets)** (1) 0.65%+ 0.71% 0.71%+ 0.71% 0.69% 0.70% 0.80%
Net investment income (to average daily
net assets)** 0.97%+ 0.69% 0.95%+ 1.53% 2.05% 1.55% 1.29%
Portfolio turnover (2) -- -- -- 41% 128% 100% 89%
Net assets, end of period
(000's omitted) $195,192 $198,322 $170,170 $105,855 $88,532 $86,591 $72,916
</TABLE>
- --------------------
** For the periods indicated, 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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income per share -- -- $ 0.38 $ 0.59 -- -- $ 0.47
Ratios (to average daily net assets):
Expenses (1) -- -- 0.72%+ 0.72% -- -- 0.97%
Net investment income -- -- 0.93%+ 1.52% -- -- 1.12%
</TABLE>
* For the nine moths ended September 30, 1997.
+ Computed on an annualized basis.
(1) Includes the Fund's share of Standish Equity Portfolio's allocated
expenses for periods since May 3, 1996.
(2) Portfolio turnover represents the rate of portfolio activity for the
period while the Fund was investing directly in securities. The portfolio
turnover 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
73% at March 31, 1999). 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. 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, 1999 aggregated $29,543,891 and $55,169,231
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>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
---------------------------- --------------------------------
<S> <C> <C>
Shares sold 731,377 2,736,286
Shares issued to shareholders in
payment of distributions declared 543,840 611,487
Shares redeemed (1,354,590) (1,540,993)
---------------------------- --------------------------------
Net increase (decrease) (79,373) 1,806,780
============================ ================================
</TABLE>
7
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITIES -- 98.9%
Basic Industry -- 2.4%
Air Products & Chemicals 55,300 $ 1,894,025
LaFarge Corp. 40,500 1,134,000
Southdown, Inc. 60,800 3,264,200
------------
6,292,225
------------
Capital Goods -- 9.5%
Cordant Technologies, Inc. 51,400 2,046,363
Crane Co. 53,650 1,297,659
Ingersoll Rand Co. 83,150 4,126,318
Navistar International* 156,900 6,305,418
Precision Castparts Corp. 40,400 1,626,100
Trinity Industries 59,100 1,736,063
United Technologies Corp. 42,700 5,783,180
US Freightways Corp. 78,300 2,574,113
------------
25,495,214
------------
Consumer Stable -- 10.2%
American Greetings Corp., Class A 36,300 921,113
Earthgrains Co. 53,500 1,187,031
Flowers Industries, Inc. 83,300 2,051,263
Heinz H J Co. 49,600 2,349,800
IBP, Inc. 63,500 1,182,688
Kroger Co.* 61,600 3,688,300
Philip Morris Cos., Inc. 85,500 3,008,531
Safeway, Inc.* 91,300 4,684,830
Sara Lee Corp. 54,300 1,343,925
Stewart Enterprises, Inc., Class A 135,600 2,178,075
Suiza Foods Corp.* 34,100 1,148,744
Supervalu, Inc. 98,900 2,039,813
Universal Foods Corp. 79,300 1,635,563
------------
27,419,676
------------
Early Cyclical -- 2.5%
Alaska Air Group, Inc.* 29,800 1,415,500
Centex Corp. 55,800 1,862,325
Comair Holdings, Inc. 52,650 1,243,856
Kaufman And Broad Home 92,100 2,078,006
------------
6,599,687
------------
Energy -- 7.8%
Ashland Oil, Inc. 37,500 1,535,156
BP Amoco PLC ADR 56,935 5,746,876
Chevron Corp. 20,200 1,786,438
Coastal Corp. 96,200 3,174,600
El Paso Energy Corp. 105,400 3,445,263
Exxon Corp. 53,900 3,803,319
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Energy (continued)
Seacor Smit, Inc.* 27,000 $ 1,452,938
------------
20,944,590
------------
Financial -- 13.4%
Allstate Corp. 69,400 2,572,138
AMBAC Inc. 5,300 286,200
Americredit* 119,600 1,569,750
Amsouth Bancorp 61,400 2,793,700
Comerica, Inc. 22,800 1,423,575
Conseco, Inc. 125,200 3,865,550
Countrywide Credit Inc. 35,200 1,320,000
Cullen/Frost Bankers, Inc. 39,800 1,907,913
Dime Bancorp, Inc. 53,200 1,233,575
Federal National Mortgage Association 40,000 2,770,000
First Tennessee National Corp. 76,700 2,809,138
Fleet Financial Group, Inc. 33,900 1,275,488
Golden West Financial Corp. 30,500 2,912,750
Hibernia Corp., Class A 130,500 1,712,813
Northfork Bancorp 66,400 1,402,700
Protective Life Corp. 22,900 867,338
Reliastar Financial Corp. 33,900 1,444,988
The PMI Group, Inc. 49,300 2,286,288
Webster Financial Corp. 48,300 1,394,663
------------
35,848,567
------------
Growth Cyclical -- 7.8%
Brinker International, Inc.* 52,600 1,357,738
Jones Apparel Group, Inc.* 143,200 4,000,650
May Department Stores 31,500 1,232,438
Office Depot* 44,200 1,627,113
Ross Stores, Inc. 55,100 2,414,069
TJX Cos, Inc. 152,600 5,188,399
Tommy Hilfiger Corp.* 48,300 3,326,663
VF Corp. 39,100 1,845,031
------------
20,992,101
------------
Health Care -- 13.4%
Amerisource Health Corp., Class A* 95,200 3,254,650
Amgen, Inc.* 110,100 8,243,737
Bergen Brunswig Corp., Class A 106,800 2,136,000
Eli Lilly & Co. 31,000 2,631,125
HCR Manor Care, Inc.* 86,800 1,980,125
Henry Schein, Inc.* 28,200 712,050
Mylan Labs, Inc. 78,700 2,159,331
Omnicare, Inc. 87,800 1,673,688
Orthodontic Centers of America* 47,700 751,275
Schering-Plough Corp. 96,000 5,309,999
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care (continued)
Steris Corp.* 48,800 $ 1,299,300
Sybron International Corp.* 102,200 2,555,000
Waters Corp.* 16,600 1,744,038
Watson Pharmaceutical, Inc.** 34,500 1,522,313
------------
35,972,631
------------
Real Estate -- 1.9%
Equity Office Properties, REIT 45,900 1,167,581
Liberty Property Trust, REIT 58,000 1,203,500
Prentiss Properties Trust, REIT 72,400 1,348,450
Starwood Hotels and Resorts, REIT 45,200 1,291,025
------------
5,010,556
------------
Services -- 14.3%
AT&T Corp. 48,700 3,886,869
Bell Atlantic Corp. 99,900 5,163,580
Bellsouth Corp. 162,800 6,522,174
Century Telephone Enterprise 82,000 5,760,499
Interim Services, Inc.* 88,900 1,333,500
Knight Ridder, Inc. 81,900 4,095,000
Omnicom Group 56,100 4,484,493
Robert Half Intl, Inc.* 66,700 2,188,594
Xerox Corp. 92,600 4,942,524
------------
38,377,233
------------
Technology -- 14.3%
American Power Conversion Corp.* 93,900 2,535,300
Apple Computer, Inc.* 67,500 2,425,781
BMC Software, Inc.* 57,900 2,145,919
Brightpoint, Inc.* 149,500 882,992
Diebold, Inc. 66,300 1,591,200
DSP Communications, Inc.* 139,800 2,219,325
Networks Associates, Inc.* 64,200 1,970,138
Oracle Corp.* 170,950 4,508,805
Sun Microsystems, Inc.* 83,700 10,457,268
Symbol Technologies, Inc. 58,900 2,650,500
Synopsys, Inc.* 73,100 3,929,125
Unisys Corp.* 107,700 2,981,944
------------
38,298,297
------------
Utilities -- 1.4%
DTE Energy Co. 44,600 1,714,313
FPL Group, Inc. 37,300 1,986,225
------------
3,700,538
------------
TOTAL EQUITIES (COST $247,773,378) $264,951,315
------------
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENTS -- 0.2%
Repurchase Agreements -- 0.2%
Prudential-Bache Repurchase Agreement, dated 3/31/99, due 4/1/99, with a maturity value of
$628,026 and an effective yield of 4.15%, collateralized by a U.S. Government Agency Obligation
with a rate of 6.28%, a maturity date of 3/6/06 and a market value of $643,251. $ 627,953
------------
Total Repurchase Agreements (Cost $627,953) 627,953
------------
TOTAL SHORT-TERM INVESTMENTS (COST $627,953) 627,953
------------
TOTAL INVESTMENTS -- 99.1% (COST $248,401,331) $265,579,268
Other Assets, Less Liabilities -- 0.9% 2,339,723
------------
NET ASSETS -- 100% $267,918,991
============
</TABLE>
Notes to the Schedule of Investments:
ADR - American Depositary Receipt
REIT - Real Estate Investment Trust
* Non-income producing security.
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value (Note 1A) (identified cost, $248,401,331) $265,579,268
Receivable for investments sold 3,483,168
Interest and dividends receivable 356,352
Miscellaneous receivable 2,155
Tax reclaim receivable 1,899
Deferred organization costs (Note 1E) 31,213
Prepaid expenses 1,854
------------
Total assets 269,455,909
Liabilities
Payable for investments purchased $ 1,489,337
Accrued trustees' fees and expenses (Note 2) 3,432
Accrued accounting and custody fees 21,032
Accrued expenses and other liabilities 23,117
-----------
Total liabilities 1,536,918
------------
Net Assets (applicable to investors' beneficial interests) $267,918,991
============
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1C)
Dividend income (net of witholding taxes of $1,196) $ 1,534,214
Interest income 850,460
-----------
Total income 2,384,674
Expenses
Investment advisory fee (Note 2) $ 732,729
Accounting and custody fees 80,444
Legal and audit services 24,990
Trustees fees and expenses (Note 2) 8,514
Amortization of organization cost (Note 1E) 7,447
Registration fees 3,989
Insurance expense 3,790
Miscellaneous 3,994
-----------
Total expenses 865,897
-----------
Net investment income 1,518,777
-----------
Realized and Unrealized Gain (loss)
Net realized gain (loss)
Investment security transactions (9,643,942)
Financial futures contracts 13,802,531
-----------
Net realized gain 4,158,589
Change in unrealized appreciation (depreciation)
Investment securities 29,225,985
Financial futures contracts 127,071
-----------
Change in net unrealized appreciation (depreciation) 29,353,056
-----------
Net realized and unrealized gain 33,511,645
-----------
Net Increase in Net Assets from operations $35,030,422
===========
</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>
Six Months Ended
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
-------------------- ----------------------
<S> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 1,518,777 $ 1,534,621
Net realized gain 4,158,589 19,645,359
Change in net unrealized appreciation
(depreciation) 29,353,056 (46,208,987)
------------ ------------
Net increase (decrease) in Net Assets
from Investment Operations 35,030,422 (25,029,007)
------------ ------------
Capital Transactions
Contributions 112,446,917 131,734,295
Withdrawals (87,170,171) (69,235,470)
------------ ------------
Increase in Net Assets resulting from
capital transactions 25,276,746 62,498,825
------------ ------------
Total Increase in Net Assets 60,307,168 37,469,818
Net Assets
At beginning of period 207,611,823 170,142,005
------------ ------------
At end of period $267,918,991 $207,611,823
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Supplemental Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
Six Months Nine Months May 3, 1996
Ended Year Ended Ended (commencement of
March 31, 1999 September 30, September 30, operations) to
(Unaudited) 1998 1997 December 31, 1996
------------------- ----------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
Ratios
Expenses (to average
daily net assets) 0.59%+ 0.65% 0.66%+ 0.69%+
Net investment income
(to average daily
net assets) 1.04%+ 0.75% 0.99%+ 1.58%+
Portfolio Turnover 37% 144% 75% 78%
Net assets, end of period
(000's omitted) $267,919 $207,612 $170,142 $106,278
</TABLE>
- ----------
+ Computed on an annualized basis.
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 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 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
March 31, 1999
------------------------------------
Purchases Sales
---------------- ----------------
<S> <C> <C>
U.S. Government Securities $ 2,746,655 $ 0
================ ================
Investments (non-U.S. Government Securities) $ 142,021,176 $ 92,960,823
================ ================
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned for the six months ended March 31, 1999, as
computed on a federal income tax basis, were as follows:
Aggregate Cost $ 248,401,331
=================
Gross unrealized appreciation $ 39,151,579
Gross unrealized depreciation $ (21,973,642)
-----------------
Net unrealized appreciation $ 17,177,937
=================
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 six months ended March 31, 1999.
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, 1999, the Portfolio had
no open financial futures contracts.
18
