STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
Financial Statements for the Year Ended
December 31, 1998
[LOGO]
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STANDISH, AYER & WOOD INVESTMENT TRUST
February 25, 1999
Dear Standish, Ayer and Wood Investment Trust Shareholder:
We are writing to provide you with a review of developments at Standish, Ayer &
Wood, as they relate to the activities of the Investment Trust.
The financial markets had a wild year in 1998. Following the disarray in Asia
and, more directly, the de facto Russian default in mid-August, a large part of
the world's financial markets simply shut down. Many sectors of the U.S. markets
were paralyzed. Spurred by a second easing of monetary policy by the Federal
Reserve in mid-October, the markets reopened and staged a dramatic recovery.
Performance within subsets of the major asset classes varied greatly. Bonds
generally produced positive returns, but less liquid issues with any degree of
perceived credit risk underperformed. Emerging market securities were
eviscerated during the third quarter spasm and recovered only partially in the
fourth. By far the best returns in the U.S. equity markets were registered by a
relatively narrow group of higher price/earnings ratio, larger capitalization
stocks. The disparity in return between the larger cap stocks and smaller cap
stocks, as measured by the Standard & Poor's 500 and the Russell 2000 indexes
was an astounding 31%!
While some funds managed by Standish did well relative to their benchmarks and
most funds produced good absolute returns, too many underperformed their
benchmarks in 1998. In bonds, our holdings of corporate credits and mortgages
underperformed U.S. Treasury securities, the latter representing a significant
portion of the major indexes. In equities, our preference for lower
price/earnings ratios led to an overweighting in mid cap stocks that suffered
relative to larger cap stocks with significantly higher valuations.
We have expended considerable time and effort trying to learn the correct
lessons from 1998. We have determined that much of the underperformance was
generic to our style and that 1998 was an aberrant year, with valuation on
holiday in many sectors. We are deeply committed to the view that valuation is
extremely important in making investment judgments. We are dedicated to our
philosophy and unalterably convinced that our strategy of buying securities that
are inexpensive relative to their fundamentals is an excellent path to
sustainable excess returns over the long term.
Notwithstanding the chaotic markets, we are pleased that Standish has benefited
from extraordinary stability of both our clients and our professional team. At
the end of 1998, total assets under management for our clients were $46.2
billion, compared with $39.3 billion at the end of 1997. We have experienced
growth in virtually all asset categories, especially equities. The Standish
Funds increased assets from $5.7 billion to $6.5 billion during the year, with
about 75% of the growth representing additions from existing clients.
The Standish team has also grown significantly, from 232 members at the
beginning of 1998 to 276 members at the end of the year. Our 97 investment
officers have average investment experience of 15 years. Fifty-six officers have
advanced degrees (typically an MBA) and 65 have some advanced professional
accreditation (virtually all Chartered Financial Analysts). There have been no
changes in the 24 individuals (all with CFAs) who own Standish, Ayer & Wood.
1
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At the end of 1998, the Standish Board of Directors elected four new associate
directors: Susan Coan, one of the key managers in our taxable client group;
David Horsfall, head of our large bond trading operation; Phil Leonardi, a major
contributor to expanding our equity assets; and Jennifer Pline, who holds major
responsibilities for serving large, fixed income clients. We have elected 13 new
vice presidents and 17 new assistant vice presidents of Standish, Ayer & Wood.
In this environment, there are no shortages of challenges and opportunities. Our
first priority remains to produce superior long-term investment performance for
our clients. We believe we have the investment disciplines and the professional
team to achieve that goal. In those asset classes in which our returns were
subpar in 1998, we have a special impetus to produce superior results in the
future. With our portfolios attractively priced compared to the relevant
benchmarks, we see potential for significant excess return when the markets
become more focused on investment value.
We believe that we are in partnership with our clients. We would like to assure
you of our dedication to fulfilling your needs while expressing our great
appreciation for your confidence in Standish.
Sincerely yours,
/s/ Ted Ladd /s/ George Noyes
Edward H. Ladd, Chairman George W. Noyes, President
2
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
Management Discussion and Analysis
Short maturity bonds performed well in 1998, reflecting the trend of declining
of interest rates. The STAR Fund generated 5.75%, outperforming the 5.09% return
of the IBC Money Fund Average by 66 basis points. Primarily, the Fund benefited
from the longer maturity structure and yield curve positioning, allowing it to
outperform money markets with minimal additional volatility.
The first half of 1998 was characterized by stable to slightly rising interest
rates as the domestic economic growth was offset by declining inflation and
continued weakness in Asia. During this period the yield on the one year
Treasury bill averaged 5.35%. Returns on non-Treasury holdings (particularly
floating rate notes and asset-backed securities) generated significant
outperformance for the Fund.
The second half of the year saw yields decline due to a "flight to quality" as
unrest in emerging markets and the collapse of hedge funds crossed the
headlines. Uncertainty about corporate profitability and new fears that the U.S.
economy would head toward recession caused credit related securities to
underperform. The high premium for liquidity further contributed to
underperformance by all securities other than the most recently issued U.S.
Treasury notes. In an attempt to restore investor confidence and liquidity to
the market, as well as to fight the slowing global economic trends, the Federal
Reserve reduced overnight interest rates from 5.5% to 4.75%. Reflecting this
activity, the yield on the one year Treasury bill traded as low as 3.85% in
October, from 5.37% on June 30, before finishing the year at 4.52%. For the last
six months of the year the Fund's longer average maturity provided significant
excess return. This performance offset the lag from credit related securities
during the third quarter.
Throughout 1998 the average maturity of the Fund was held fairly constant at
approximately one year. Our general strategy is to avoid making major changes in
duration over the short term, having a longer term outlook and making modest
changes as conditions warrant. The Fund began the year with a larger position in
Treasuries and agencies. The Treasury holdings were reduced later in the year in
favor of agencies, high quality corporates and commercial paper as these
valuations became more attractive.
For a highly volatile environment, the Fund fared exceptionally well. With a
yield advantage over standard money markets in a stable to declining interest
rate environment, enhanced cash portfolios offer attractive alternative with
(slight) attendant additional risk. We are dedicated in our efforts to
continuing to add value for our shareholders and appreciate your continued
support.
Sincerely yours,
/s/ Barbara J. McKenna /s/ Jennifer A. Pline
Barbara J. McKenna Jennifer A. Pline
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
Comparison of Change in Value of $100,000 Investment in
Standish STAR Fund and IBC Donoghue Average
[The following table was originally a line chart in the printed material.]
Standish IBC Donoghue
STAR Fund Index
--------- -----
Inception 1/3/1989 1000000 1000000
Jan-1989 1005600 1007100
Feb-1989 1010089 1013646
Mar-1989 1015754 1021350
Apr-1989 1027279 1029010
May-1989 1037566 1037036
Jun-1989 1051606 1044607
Jul-1989 1063908 1052232
Aug-1989 1062778 1059703
Sep-1989 1069559 1067227
Oct-1989 1082056 1074698
Nov-1989 1089131 1081791
Dec-1989 1095012 1089039
Jan-1990 1097612 1096226
Feb-1990 1104281 1102694
Mar-1990 1109701 1109861
Apr-1990 1113371 1116854
May-1990 1127304 1124113
Jun-1990 1138171 1131195
Jul-1990 1149490 1138548
Aug-1990 1154650 1145835
Sep-1990 1163002 1152824
Oct-1990 1169373 1160087
Nov-1990 1181649 1167047
Dec-1990 1193350 1174166
Jan-1991 1202052 1181094
Feb-1991 1209627 1186881
Mar-1991 1218431 1193053
Apr-1991 1228855 1198780
May-1991 1235455 1204414
Jun-1991 1242382 1209834
Jul-1991 1252919 1215399
Aug-1991 1265366 1220990
Sep-1991 1275024 1226240
Oct-1991 1286814 1231513
Nov-1991 1296627 1236316
Dec-1991 1305613 1241138
Jan-1992 1303945 1245482
Feb-1992 1310047 1249218
Mar-1992 1316574 1253216
Apr-1992 1324245 1256975
May-1992 1333962 1260746
Jun-1992 1344076 1264276
Jul-1992 1344676 1267816
Aug-1992 1351987 1271113
Sep-1992 1360161 1274163
Oct-1992 1353218 1277221
Nov-1992 1352389 1280159
Dec-1992 1362353 1283231
Jan-1993 1374096 1286311
Feb-1993 1382891 1289012
Mar-1993 1388260 1291977
Apr-1993 1395987 1294819
May-1993 1396818 1297668
Jun-1993 1403584 1300523
Jul-1993 1407996 1303384
Aug-1993 1415953 1306251
Sep-1993 1420485 1309125
Oct-1993 1424728 1312136
Nov-1993 1427046 1315023
Dec-1993 1431637 1318047
Jan-1994 1439587 1321079
Feb-1994 1437189 1323853
Mar-1994 1432455 1327030
Apr-1994 1430065 1330348
May-1994 1430865 1334206
Jun-1994 1433312 1338209
Jul-1994 1442707 1342491
Aug-1994 1448863 1347055
Sep-1994 1452009 1351635
Oct-1994 1456658 1356636
Nov-1994 1457963 1361792
Dec-1994 1464055 1367375
Jan-1995 1474266 1373391
Feb-1995 1486063 1379160
Mar-1995 1494313 1385642
Apr-1995 1503807 1392016
May-1995 1517571 1398558
Jun-1995 1526043 1404852
Jul-1995 1533692 1411454
Aug-1995 1541387 1417806
Sep-1995 1549702 1423902
Oct-1995 1559695 1430168
Nov-1995 1568926 1436317
Dec-1995 1578991 1442637
Jan-1996 1589988 1448841
Feb-1996 1591780 1454346
Mar-1996 1596122 1460163
Apr-1996 1602020 1465858
May-1996 1608016 1471135
Jun-1996 1617038 1476873
Jul-1996 1623946 1482928
Aug-1996 1630988 1489008
Sep-1996 1641397 1494964
Oct-1996 1653610 1501093
Nov-1996 1662341 1507098
Dec-1996 1667703 1513277
Jan-1997 1675743 1519481
Feb-1997 1680058 1525103
Mar-1997 1684069 1531356
Apr-1997 1694531 1537635
May-1997 1705434 1544095
Jun-1997 1714435 1550424
Jul-1997 1725503 1557090
Aug-1997 1732316 1563786
Sep-1997 1743424 1570197
Oct-1997 1753023 1576792
Nov-1997 1758162 1583257
Dec-1997 1766688 1590065
Jan-1998 1779442 1596902
Feb-1998 1784420 1603130
Mar-1998 1793693 1610024
Apr-1998 1801395 1616625
May-1998 1810089 1623415
Jun-1998 1818707 1630295
Aug-1998 1841512 1644345
Sep-1998 1851617 1651087
Oct-1998 1857962 1657692
Nov-1998 1858953 1664488
Dec-1998 186830 167098
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Assets and Liabilities
December 31, 1998
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<TABLE>
<S> <C> <C>
Assets
Investment in Standish Short-Term Asset Reserve Portfolio
("Portfolio"), at value (Note 1A) $ 260,723,259
Receivable for Fund shares sold 2,521,686
Prepaid expenses 245
-------------
Total assets 263,245,190
Liabilities
Payable for Fund shares redeemed $ 3,012,469
Distributions payable 207,881
Accrued accounting and transfer agent fees 3,178
Accrued expenses and other liabilities 17,586
-----------
Total liabilities 3,241,114
-------------
Net Assets $ 260,004,076
=============
Net Assets consist of:
Paid-in capital $ 271,932,991
Accumulated net realized loss (11,156,682)
Distributions in excess of net investment income (251,900)
Net unrealized depreciation (520,333)
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Total Net Assets $ 260,004,076
=============
Shares of beneficial interest outstanding 13,376,420
=============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 19.44
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Operations
For the Year Ended December 31, 1998
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<TABLE>
<S> <C> <C>
Investment Income (Note 1B)
Interest income allocated from Portfolio $ 17,303,788
Expenses allocated from Portfolio (878,874)
------------
Net investment income allocated from Portfolio 16,424,914
Expenses
Accounting and transfer agent fees $ 33,399
Legal and audit services 31,039
Registration fees 14,451
Insurance expense 3,549
Miscellaneous 16,355
---------
Net expenses 98,793
------------
Net investment income 16,326,121
------------
Realized and Unrealized Gain (Loss)
Net realized gain allocated from Portfolio on:
Investment security transactions $ 68,452
---------
Net realized gain 68,452
Change in unrealized appreciation (depreciation) allocated from Portfolio on:
Investment securities (634,230)
---------
Change in net unrealized appreciation (depreciation) (634,230)
------------
Net realized and unrealized loss on investments (565,778)
------------
Net Increase in Net Assets from Operations $ 15,760,343
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1998 1997
---------------- ---------------
<S> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 16,326,121 $ 13,722,244
Net realized gain (loss) 68,452 (544,274)
Change in net unrealized appreciation (depreciation) (634,230) 355,566
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Net increase in Net Assets from Investment Operations 15,760,343 13,533,536
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Distributions to Shareholders
From net investment income (16,326,120) (13,714,508)
------------- -------------
Total distributions to shareholders (16,326,120) (13,714,508)
------------- -------------
Fund Share (principal) Transactions (Note 5)
Net proceeds from sale of shares 293,554,353 227,565,089
Value of shares issued to shareholders in payment of distributions
declared 12,854,947 9,749,484
Cost of shares redeemed (291,596,448) (185,450,205)
------------- -------------
Increase in Net Assets from Fund share transactions 14,812,852 51,864,368
------------- -------------
Total Increase in Net Assets 14,247,075 51,683,396
Net Assets
At beginning of year 245,757,001 194,073,605
------------- -------------
At end of year (including distributions in excess of net investment income
of $251,900 and $159,329, respectively) $ 260,004,076 $ 245,757,001
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Financial Highlights
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<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
1998 (1) 1997 1996 1995 1994
---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 19.48 $ 19.50 $ 19.55 $ 19.22 $ 19.79
--------- --------- -------- -------- --------
Investment Operations:
Net investment income 1.13 1.15 1.11 1.13 1.01
Net realized and unrealized gain (loss)
on investments (0.04) (0.02) (0.04) 0.33 (0.57)
--------- --------- -------- -------- --------
Total from investment operations 1.09 1.13 1.07 1.46 0.44
--------- --------- -------- -------- --------
Less distributions to shareholders:
From net investment income (1.13) (1.15) (1.12) (1.12) (1.01)
In excess of net investment income -- -- -- (0.01) --
--------- --------- -------- -------- --------
Total distributions to shareholders (1.13) (1.15) (1.12) (1.13) (1.01)
--------- --------- -------- -------- --------
Net Asset Value, End of Year $ 19.44 $ 19.48 $ 19.50 $ 19.55 $ 19.22
========= ========= ======== ======== ========
Total Return 5.75% 5.94% 5.62% 7.85% 2.27%
Ratios/Supplemental Data:
Expenses (to average daily net assets) 0.35% 0.36% 0.35% 0.33% 0.33%
Net investment income (to average daily
net assets) 5.81% 5.89% 5.75% 5.95% 5.24%
Portfolio turnover (2) -- 119% 156% 208% 154%
Net assets, end of year (000 omitted) $ 260,004 $ 245,757 $194,074 $243,500 $277,017
</TABLE>
- --------------------------------------------
(1) Calculated based on average shares outstanding.
(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.
8
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
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 Short-Term Asset Reserve Fund (the "Fund") is a separate
diversified investment series of the Trust.
On January 2, 1998, the Fund contributed substantially all of its
investable assets to the Standish Short-Term Asset Reserve Portfolio (the
"Portfolio"). The Fund currently invests all of its investable assets in
an interest of 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 99.6% at December 31,
1998). The performance of the Fund is directly affected by the performance
of the Portfolio. The financial statements of the Portfolio are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of the financial statements. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. Investment security valuations
The Fund records its investment in the Portfolio at value. The method by
which the Portfolio values its securities is discussed in Note 1A of the
Portfolio's Notes to Financial Statements, which are included elsewhere in
this report.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. 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 regulated investment company qualified 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.
At December 31, 1998, the Fund, for federal income tax purposes, had
capital loss carry overs which will reduce the Fund's taxable income
arising from future net realizable gain on investments, if any, to the
extent permitted by the Internal Revenue Code and thus will reduce the
amount of distributions to shareholders which would otherwise be necessary
to relieve the Fund of any liability for federal income tax. Such capital
loss carry overs are as follows:
Capital Loss
Carry Over Expiration
---------------------- ----------------------
$3,071,161 12/31/2000
1,512,610 12/31/2001
5,263,400 12/31/2002
568,968 12/31/2003
277,757 12/31/2004
381,998 12/31/2005
80,787 12/31/2006
9
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Notes to Financial Statements
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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:
Dividends from net investment income will be declared and distributed
quarterly. The Fund's dividends from short-term and long-term capital
gains, if any, after reduction by capital losses will be declared and
distributed at least annually. In determining the amounts of its
dividends, the Fund will take into account its share of the income, gains
or losses, expenses, and any other tax items of the Portfolio. Dividends
from net investment income and capital gains distributions, if any, are
reinvested in additional shares of the Fund unless a shareholder elects to
receive them in cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatment of asset backed securities Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications between paid-in capital, undistributed net investment
income and accumulated net realized gain (loss).
(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 the SA&W.
Certain of the trustees and officers of the Trust are limited partners or
officers of SA&W.
(4) Investment Transactions:
Increases and decreases in the Fund's investment in the Portfolio for the
year ended December 31, 1998, aggregated $291,072,536 and $294,495,239,
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>
Year Ended Year Ended
December 31, 1998 December 31, 1997
--------------------- -----------------
<S> <C> <C>
Shares sold......................................... 15,063,028 11,681,922
Shares issued to shareholders in
payment of distributions declared................ 659,576 500,402
Shares redeemed..................................... (14,962,667) (9,519,545)
----------- ----------
Net increase........................................ 759,937 2,662,779
</TABLE>
At December 31, 1998, three shareholders were record owners of
approximately 17%, 13% and 10% respectively of the total outstanding
shares of the Fund.
10
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Report of Independent Accountants
To the Trustees of Standish, Ayer & Wood Investment Trust and the Shareholders
of Standish Short-Term Asset Reserve Fund:
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Standish, Ayer & Wood Investment Trust: Standish Short-Term Asset Reserve Fund
(the "Fund"), at December 31, 1998, the results of its operations, the changes
in its net assets and the financial highlights for 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
February 18, 1999
11
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Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected
Maturity Par Value
Security Rate (Unaudited) Maturity Value (Note 1A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BONDS AND NOTES -- 86.0%
Asset Backed -- 38.4%
Advanta Mortgage Loan Trust 1993-4 A1 5.500% 03/28/01 03/25/2010 $ 546,589 $ 535,615
Amresco 1997-1 B1A Non-ERISA FRN(a) 6.456% 02/28/99 03/25/2027 5,550,000 5,249,086
Auto Finance Group 1997-A A 6.350% 12/05/99 10/15/2002 2,342,740 2,351,526
BCI Home Equity 1994-1 B(a) 6.220% 02/28/99 03/29/2044 1,442,502 1,433,025
Case Equipment Loan Trust 1997-B C 6.410% 02/26/00 09/15/2004 3,978,465 3,987,790
Charming Shoppes Master Trust 1994-1 A 7.000% 04/13/99 04/15/2003 3,500,000 3,509,844
Charter Financial Corp 1994-1A 7.400% 11/20/98 10/25/2001 304,290 304,290
Chase Manhattan Auto Owner 1997-B 6.750% 03/15/01 01/15/2004 3,825,000 3,923,912
Chase Manhattan Credit Card
Master Trust 1996-3 A 7.040% 02/15/2004 5,000,000 5,193,359
Chemical Master Credit Card Trust 1995-2 A 6.230% 08/24/00 06/15/2003 5,140,000 5,215,455
Delta Funding Home Equity 1996-1 A5 7.400% 10/24/00 07/25/2013 5,000,000 5,094,531
Delta Funding Home Equity 1998-2 A3F 6.240% 10/16/06 05/15/2025 3,000,000 3,004,102
Delta Funding Home Equity Loan 1998-1 2A(a) 5.252% 03/31/99 05/25/2030 3,237,262 3,213,994
Equicredit Home Equity 1993-4 A 5.725% 02/27/01 12/15/2008 1,011,564 1,007,771
Equicredit Home Equity 1998-1 A3F 6.225% 12/12/00 12/15/2012 2,852,000 2,859,130
Green Tree Acc Corp. 1998-6 A3 5.930% 10/05/00 04/01/2009 6,050,000 6,070,752
Greentree Home Equity 1997-3 A2 6.490% 04/04/99 07/15/2028 1,323,317 1,324,971
Gulf States Auto Grantor Trust 1996-B A 6.600% 10/07/99 05/25/2003 2,385,720 2,387,956
IMC Home Equity Ln Trust 97-3 A4 6.840% 11/21/99 10/20/2013 5,000,000 5,004,688
IMC Home Equity Trust 1996-3 A3 7.270% 04/29/99 04/25/2011 2,520,792 2,523,549
Independent National Mortgage
Corp. 1998-2 A2 6.170% 04/30/01 12/25/2011 4,900,000 4,906,125
Premier Auto Trust 1997-2 A2 6.010% 11/06/1999 1,018,888 1,018,888
Standard Credit Card 1994-3 B 7.000% 04/05/99 04/07/2001 2,225,000 2,231,252
Standard Credit Card 1998-1 A6(a) 6.737% 03/31/99 03/23/2003 4,674,000 4,672,539
TMS Home Equity 1996-A5 ERISA 6.850% 10/11/99 06/15/2019 4,000,000 4,023,125
TMS Home Equity 1996-C A3 7.070% 04/19/99 12/15/2016 2,682,684 2,692,745
TMS Home Equity Trust 1996-D A1O(a) 5.851% 03/31/99 04/15/2028 2,904,962 2,885,295
TMS Home Equity Trust 1998-1 AV1(a) 5.710% 03/31/99 06/15/2029 4,102,512 4,070,461
UCFC Home Equity Loan Trust 1994-D A4 8.775% 09/08/99 02/10/2016 3,746,554 3,809,777
UCFC Home Equity Loan Trust 1996 A1 A5 6.500% 10/01/99 03/15/2016 4,000,000 4,005,000
World Omni Auto Lease 1996-A A1 ERISA 6.300% 02/28/99 06/25/2002 1,920,321 1,922,721
----------------
Total Asset Backed (Cost $100,909,568) 100,433,274
----------------
Corporate -- 39.5%
Bank Bonds -- 10.0%
Banponce Corp. 6.270% 03/04/1999 6,400,000 6,402,739
Huntington Bank 6.150% 01/07/1999 1,550,000 1,550,047
Key Corp. 8.400% 04/01/1999 5,300,000 5,339,008
MBNA Corp.(a) 5.756% 05/05/1999 3,000,000 3,001,020
MTN-MBNA American Bank 7.120% 04/12/1999 2,850,000 2,860,517
Nations Bank 5.750% 03/15/2001 2,500,000 2,521,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected
Maturity Par Value
Security Rate (Unaudited) Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bank Bonds (continued)
Sovereign Bancorp 6.750% 07/01/2000 $ 4,555,000 $ 4,565,112
---------------
26,239,693
---------------
Financial -- 20.6%
American Express Centuri Bank(a) 5.644% 07/12/1999 2,500,000 2,502,800
Bear Stearns Co. 7.625% 09/15/1999 1,000,000 1,013,350
Bear Stearns Co.(a) 4.300% 01/14/1999 2,800,000 2,786,000
Beneficial Corp. 8.170% 11/09/1999 3,950,000 4,046,420
Carramerica Realty Corp. 6.625% 10/01/2000 3,050,000 3,042,406
Chrysler Corp. Medium Term Notes 5.250% 10/19/2000 2,750,000 2,732,895
CIT Group Holdings 6.250% 09/30/1999 5,000,000 5,043,600
Conseco 6.400% 06/15/2001 6,500,000 6,261,970
Dean Witter Discover(a) 4.240% 03/10/1999 2,800,000 2,753,940
Finova Financial Corp. 6.750% 03/25/1999 5,000,000 5,009,750
Goldman Sachs, Inc. 144A(a) 5.604% 01/26/1999 3,000,000 3,000,000
Household Financial Corp. 6.000% 05/08/2000 2,000,000 2,010,044
Lehman Brothers 6.330% 08/01/2000 3,000,000 2,994,990
Lehman Brothers Holding Inc. 6.000% 02/26/2001 4,000,000 3,970,459
Wellsford Residential Property REIT(a) 5.570% 03/31/99 11/24/1999 6,750,000 6,753,780
---------------
53,922,404
---------------
Industrial Bonds -- 8.9%
Chrysler Finance Corp. Senior Notes 9.500% 12/15/1999 3,000,000 3,117,660
Coca-Cola Co. 144A 6.000% 03/15/2001 4,175,000 4,217,151
COMDISCO Inc. 6.500% 06/15/2000 5,750,000 5,772,310
Cox Enterprises 144A 6.250% 08/26/1999 6,460,000 6,488,657
USA Waste Services Inc. 6.125% 07/15/2001 3,500,000 3,533,639
---------------
23,129,417
---------------
Total Corporate (Cost $103,374,695) 103,291,514
---------------
Government/Other -- 3.6%
EuroDollar -- 0.9%
St. Georges Euro(a) 6.750% 03/31/99 07/14/2000 2,285,800 2,285,800
---------------
Yankee Bonds -- 2.7%
St. Georges Bank 144A Notes 6.875% 04/01/1999 2,150,000 2,159,030
Tyco International 6.125% 06/15/2001 5,000,000 5,048,150
---------------
7,207,180
---------------
Total Government/Other (Cost $9,450,556) 9,492,980
---------------
U.S. Government Agency -- 4.5%
Pass Thru Securities -- 4.5%
FHLMC(a) 7.855% 02/01/23 02/01/2023 113,356 113,626
FHLMC Gold 5 Yr 7.000% 04/30/99 08/01/1999 1,003,167 1,008,810
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected
Maturity Par Value
Security Rate (Unaudited) Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pass Thru Securities (continued)
FHLMC Gold 5 Yr 8.000% 08/31/99 02/01/2000 -
07/01/2000 $ 980,108 $ 998,790
FNMA 5.920% 07/05/99 07/05/2001 5,000,000 5,013,300
FNMA 8.500% 01/31/02 12/01/2026 4,553,516 4,768,351
---------------
Total U.S. Government Agency (Cost $11,887,485) 11,902,877
---------------
TOTAL BONDS AND NOTES (COST $225,622,304) 225,120,645
---------------
SHORT-TERM INVESTMENTS -- 13.1%
Commercial Paper -- 7.7%
Cummings Engine Corp. 0.000% 02/19/99 7,300,000 7,224,078
Browning Ferris Corp. 6.200% 01/14/99 5,000,000 4,950,917
Ciesco 5.350% 02/04/99 5,000,000 4,972,507
Occidental Petroleum 6.150% 01/04/99 3,000,000 2,984,112
---------------
20,131,614
---------------
U.S. Government Agency -- 4.7%
FHMLC Discount Notes 4.980% 01/08/99 1,650,000 1,649,093
FNMA Discount Notes 4.800% 01/07/99 1,000,000 999,590
FHLB Discount Notes 4.250% 01/07/99 9,800,000 9,789,996
---------------
12,438,679
---------------
Repurchase Agreements -- 0.7%
Prudential-Bache Repurchase Agreement, dated 12/31/98, due 1/4/99, with a
maturity value of $1,713,148 and an effective yield of 3.95%, collateralized by
a U.S. Government Agency Obligation with a rate of 7.685%, a maturity date of
12/1/24 and a market value of $1,746,704. 1,712,397
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $34,299,874) 34,282,690
---------------
TOTAL INVESTMENTS -- 99.1% (COST $259,922,178) $ 259,403,335
Other Assets, Less Liabilities -- 0.9% 2,335,085
===============
NET ASSETS -- 100% $ 261,738,420
===============
Notes to the Schedule of Investments:
144A - Securities exempt from registration under Rule 144A of the Securities Act
of 1933.
These securities may be resold in transactions exempt from registration.
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
REIT - Real Estate Investment Trust
(a) Variable Rate Security; rate indicated is as of 12/31/98.
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Assets and Liabilities
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at value (Note 1A) (identified cost, $259,922,178) $ 259,403,335
Interest and dividends receivable 2,277,529
Reclaim receivable 78,507
Deferred organization costs (Note 1E) 8,097
Prepaid expenses 1,992
-------------
Total assets 261,769,460
-------------
Liabilities
Accrued accounting and custody fees $ 10,017
Accrued trustees' fees and expenses (Note 2) 4,490
Accrued expenses and other liabilities 16,533
-----------
Total liabilities 31,040
-------------
Net Assets (applicable to investors' beneficial interests) $ 261,738,420
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Operations
For the period January 2, 1998
(commencement of operations) to
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income (Note 1C)
Interest income $ 17,434,018
------------
Total income 17,434,018
Expenses
Investment advisory fee (Note 2) $ 709,540
Accounting and custody fees 121,516
Legal and audit services 27,429
Trustees' fees and expenses (Note 2) 17,152
Insurance expense 6,294
Amortization of organization expense (Note 1E) 2,017
Miscellaneous 800
---------
Total expenses 884,748
------------
Net investment income 16,549,270
------------
Realized and Unrealized Gain (Loss)
Net realized gain
Investment securities transactions 67,070
---------
Net realized gain 67,070
Change in unrealized appreciation (depreciation)
Investment securities (632,740)
---------
Change in net unrealized appreciation (depreciation) (632,740)
------------
Net realized and unrealized loss (565,670)
------------
Net Increase in Net Assets from Operations $ 15,983,600
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
January 2, 1998
(commencement of operations)
December 31, 1998
-------------------------------
<S> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 16,549,270
Net realized gain 67,070
Change in net unrealized appreciation (depreciation) (632,740)
-------------
Net increase in Net Assets from Investment
Operations 15,983,600
-------------
Capital Transactions
Assets contributed by Standish Short Term Asset
Reserve Fund at commencement (including
unrealized appreciation of $113,897) 248,286,826
Contributions 305,080,235
Withdrawals (307,612,241)
-------------
Increase in Net Assets resulting from
capital transactions 245,754,820
-------------
Total Increase in Net Assets 261,738,420
Net Assets
At beginning of period --
-------------
At end of period $ 261,738,420
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Supplemental Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
January 2, 1998
(commencement of operations)
to December 31, 1998
-------------------------------
<S> <C>
Ratios:
Expenses (to average daily net assets) 0.31%+
Net investment income (to average daily net assets) 5.83%+
Portfolio Turnover 113%
Net assets, end of period (000s omitted) $261,738
</TABLE>
- -------------------------------------------------
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
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
Short-Term Asset Reserve Portfolio (the "Portfolio") is a separate
diversified investment series of the Portfolio Trust.
On January 2, 1998 the Short-Term Asset Reserve Fund contributed
substantially all of its investable assets to the Portfolio. At December
31, 1998 there were two funds invested in the Portfolio. The value of each
Fund's investment in the Portfolio reflects the Funds' proportionate
interest in the net assets of the Portfolio. The proportionate interest at
December 31, 1998 of the Standish Short-Term Asset Reserve Fund and the
Merrimac Short-Term Asset Reserve Series were approximately 99.6% and
0.4%, respectively.
The following is a summary of significant accounting policies followed by
the Portfolio in the preparation of its 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 price, 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 Fund are valued at amortized cost. 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 trade date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or accretion of discount on long-term debt securities when
required for federal income tax purposes. Realized gains and losses from
securities sold are recorded on the identified cost basis.
19
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 allocates 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.
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
January 2003.
(2) Investment Advisory Fee:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory services is paid monthly at the annual
rate of 0.25% 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 short-term
obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
U.S. Government Securities................................. $128,744,468 $104,806,778
============ ============
Investments (non-U.S. Government Securities)............... $233,419,802 $101,952,506
============ ============
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at December 31, 1998, as computed on a federal
income tax basis, were as follows:
<TABLE>
<S> <C>
Aggregate Cost......................................................... $259,922,178
============
Gross unrealized appreciation.......................................... 438,305
Gross unrealized depreciation.......................................... (957,148)
------------
Net unrealized depreciation............................................ $ (518,843)
============
</TABLE>
20
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
(5) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to enhance
potential gain in circumstances where hedging is not involved. The nature,
risks and objectives of these instruments are set forth more fully in
Parts A & B of the Master Portfolio 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 hedge against risks of
market exposure and changes in security prices, 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, 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 purchased 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. There were no
outstanding written option contracts at December 31, 1998.
21
<PAGE>
Independent Auditors' Report
To the Trustees of Standish, Ayer & Wood Master Portfolio and Investors of
Standish Short-Term Asset Reserve Portfolio:
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 supplemental data present
fairly, in all material respects, the financial position of Standish
Short-Term Asset Reserve Portfolio, at December 31, 1998, the results of
its operations, the changes in its net assets and the supplemental data
for the periods indicated therein, in conformity with generally accepted
accounting principles. These financial statements and supplemental 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 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, which included
confirmation of securities at December 31, 1998, by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 1999
22
<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 year ended December 31, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> Standish Short Term Asset Reserve Portfolio
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 259,922,178
<INVESTMENTS-AT-VALUE> 259,403,335
<RECEIVABLES> 2,356,036
<ASSETS-OTHER> 10,089
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 261,769,460
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,040
<TOTAL-LIABILITIES> 31,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 245,754,820
<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> 15,983,600
<NET-ASSETS> 261,738,420
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17,434,018
<OTHER-INCOME> 0
<EXPENSES-NET> 884,748
<NET-INVESTMENT-INCOME> 16,549,270
<REALIZED-GAINS-CURRENT> 67,070
<APPREC-INCREASE-CURRENT> (632,740)
<NET-CHANGE-FROM-OPS> 15,983,600
<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> 261,738,420
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 709,540
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 884,748
<AVERAGE-NET-ASSETS> 283,884,670
<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
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.31
<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 December 31, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> Standish Short Term Asset Reserve Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 260,723,259
<RECEIVABLES> 2,521,686
<ASSETS-OTHER> 245
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 263,245,190
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,241,114
<TOTAL-LIABILITIES> 3,241,114
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 271,932,991
<SHARES-COMMON-STOCK> 13,376,420
<SHARES-COMMON-PRIOR> 12,616,483
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (251,900)
<ACCUMULATED-NET-GAINS> (11,156,682)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (520,333)
<NET-ASSETS> 260,004,076
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17,303,788
<OTHER-INCOME> (878,874)
<EXPENSES-NET> 98,793
<NET-INVESTMENT-INCOME> 16,326,121
<REALIZED-GAINS-CURRENT> 68,452
<APPREC-INCREASE-CURRENT> (634,230)
<NET-CHANGE-FROM-OPS> 15,760,343
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,326,120
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,063,028
<NUMBER-OF-SHARES-REDEEMED> (14,962,667)
<SHARES-REINVESTED> 659,576
<NET-CHANGE-IN-ASSETS> 14,247,075
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (159,329)
<OVERDIST-NET-GAINS-PRIOR> (11,317,706)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 98,793
<AVERAGE-NET-ASSETS> 281,009,949
<PER-SHARE-NAV-BEGIN> 19.48
<PER-SHARE-NII> 1.13
<PER-SHARE-GAIN-APPREC> (0.04)
<PER-SHARE-DIVIDEND> (1.13)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
