<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Financial Statements
For the Six Months Ended June 30, 1997
(Unaudited)
[LOGO APPEARS HERE]
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investment in Standish Equity Portfolio ("Portfolio"), at value (Note 1A) $ 132,467,762
Receivable for Fund shares sold 203,920
Other assets 3,280
-------------
Total assets 132,674,962
Liabilities
Distribution payable $ 233,245
Accrued trustees' fees (Note 2) 191
Accrued expenses and other liabilities 873
-----------
Total liabilities 234,309
-------------
Net Assets $ 132,440,653
=============
Net Assets consist of:
Paid-in capital $ 95,530,489
Accumulated net realized gain 12,971,135
Distributions in excess of net investment income (388,390)
Net unrealized appreciation 24,327,419
-------------
Total Net Assets $ 132,440,653
=============
Shares of beneficial interest outstanding 3,078,888
=============
Net Asset Value, Offering and Redemption Price Per Share
(Net assets/Shares outstanding) $ 43.02
=============
</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
Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Investment Income (Note 1B)
Dividend income allocated from Portfolio $ 923,309
Interest income allocated from Portfolio 125,268
Expenses allocated from Portfolio (392,876)
------------
Net investment income from Portfolio 655,701
Expenses
Registration costs 25,606
Accounting and transfer agent fees 13,642
Legal and audit services 373
Insurance expense 157
Miscellaneous 3,159
------------
Total expenses 42,937
Deduct:
Reimbursement of operating expense (5,451)
------------
Net expenses 37,486
------------
Net investment income 618,215
------------
Realized and Unrealized Gain (loss)
Net realized gain allocated from Portfolio on:
Investment security transactions 12,435,974
Financial futures contracts 572,492
------------
Net realized gain 13,008,466
Change in unrealized appreciation (depreciation) allocated from Portfolio on:
Investment securities 7,292,479
Financial futures contracts (39,652)
------------
Change in net unrealized appreciation (depreciation) 7,252,827
------------
Net realized and unrealized gain on investments 20,261,293
------------
Net increase in net assets resulting from operations $ 20,879,508
============
</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
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
-------------------- -------------------
<S> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 618,215 $ 1,549,680
Net realized gain 13,008,466 16,774,749
Change in net unrealized appreciation (depreciation) 7,252,827 6,696,912
------------ ------------
Net increase in net assets from operations 20,879,508 25,021,341
------------ ------------
Distributions to Shareholders
From net investment income (707,165) (1,481,454)
In excess of net investment income (388,390) --
From net realized gain (7,692,777) (11,604,448)
------------ ------------
Total distributions to shareholders (8,788,332) (13,085,902)
------------ ------------
Fund share (principal) Transactions (Note 5)
Net proceeds from sale of shares 18,698,127 21,565,418
Net asset value of shares issued to shareholders in payment of
distributions declared 8,497,060 12,463,945
Cost of shares redeemed (12,700,492) (28,642,403)
------------ ------------
Increase in net assets from Fund share transactions 14,494,695 5,386,960
------------ ------------
Net increase in net assets 26,585,871 17,322,399
Net Assets
At beginning of period 105,854,782 88,532,383
------------ ------------
At end of period (including distributions in excess of net
investment income of $393,841 and $88,950, respectively) $132,440,653 $105,854,782
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1997 ---------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992+
--------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 38.79 $ 34.81 $ 28.66 $ 30.89 $ 26.28 $ 25.66
-------- --------- ------- ------- -------- -------
Income from operations:
Net investment income* 0.22 0.60 0.76 0.45 0.50 0.56
Net realized and unrealized gain (loss) on
investments 7.12 8.52 9.94 (1.62) 5.57 1.81
-------- --------- ------- ------- -------- -------
Total from investment operations 7.34 9.12 10.70 (1.17) 6.07 2.37
-------- --------- ------- ------- -------- -------
Less distributions declared to shareholders
From net investment income (0.25) (0.56) (0.78) (0.44) (0.47) (0.54)
In excess of net investment income (0.13) -- -- -- -- --
From net realized gain on investments (2.73) (4.58) (3.77) (0.62) (0.99) (1.19)
From paid-in capital -- -- -- -- -- (0.02)
-------- --------- ------- ------- -------- -------
Total distributions (3.11) (5.14) (4.55) (1.06) (1.46) (1.75)
-------- --------- ------- ------- -------- -------
Net asset value, end of period $ 43.02 $ 38.79 $ 34.81 $ 28.66 $ 30.89 $ 26.28
======== ========= ======= ======= ======== =======
Total return 19.00% 26.84% 37.55% (3.78)% 20.79% 9.52%
Ratios (to average daily net assets)/Supplemental Data:
Net assets, end of period (000 omitted) $132,441 $ 105,855 $88,532 $86,591 $ 72,916 $14,679
Expenses/(1)/ 0.72%++ 0.71% 0.69% 0.70% 0.80% --
Net investment income 1.04%++ 1.53% 2.05% 1.55% 1.29% 2.52%
Portfolio turnover/(2)/ -- 41% 159% 182% 192% 92%
Average broker commission rate/(2)/ -- $ 0.0499 -- -- -- --
</TABLE>
- -------------------
* For the six months ended June 30, 1997, the year ended December 31, 1996, and
the two year period ended December 31, 1993, 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>
Net investment income per share $ 0.22 $ 0.59 -- -- $ 0.47 $ 0.34
Ratios (to average daily net assets):
Expenses/(1)/ 0.73%++ 0.72% -- -- 0.97% 1.00%
Net Investment Income 1.03%++ 1.52% -- -- 1.12% 1.52%
</TABLE>
+ Audited by other auditors.
/(1)/ Includes the Fund's share of Standish Equity Portfolio's allocated
expenses for the six months ended June 30, 1997 and for the period from
May 3, 1996 to December 31, 1996.
++ Computed on an annualized basis.
/(2)/ Portfolio turnover and average broker commission rate represents activity
while the Fund was investing directly in securities. The portfolio
turnover and average broker commission rate for the period since the Fund
transferred substantially all of its investable assets to the Portfolio is
shown in the Portfolio's financial statements which are included elsewhere
in this report.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(1) Significant Accounting Policies:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish Equity Fund (the "Fund") is a separate diversified
investment series of the Trust.
The Fund invests all of its investable assets in an interest of the
Standish Equity Portfolio (the "Portfolio"), a subtrust of Standish,
Ayer & Wood Master Portfolio (the "Portfolio Trust"), which is
organized as a New York trust, and has the same investment objective as
the Fund. The value of the Fund's investment in the Portfolio reflects
the Fund's proportionate interest in the net assets of the Portfolio
(approximately 100% at June 30, 1997). 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 differences are primarily due to
differing treatments for futures transactions. Permanent book and tax
basis differences
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
SA&W has voluntarily agreed to limit the aggregate annual operating
expenses of the Fund and Portfolio (excluding commissions, taxes and
extraordinary expenses) to 0.71% of the Fund's average daily net
assets. SA&W voluntarily agreed to reimburse the Fund for it's
operating expenses of $5,451 for the six months ended June 30, 1997.
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 June 30, 1997 aggregated $18,525,333 and
$13,252,081, respectively.
(5) Shares of Beneficial Interest:
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of beneficial interest having a
par value of one cent per share. Transactions in Fund shares were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31, 1997
------------------------ --------------------------
<S> <C> <C>
Shares sold 455,575 561,325
Shares issued to shareholders in payment of
distributions declared 198,919 325,504
Shares redeemed (304,347) (701,269)
------------------------ --------------------------
Net increase 350,147 185,560
======================== ==========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Schedule of Investments - June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
<S> <C> <C>
EQUITIES -- 95.0%
Basic Industry -- 6.7%
Cleveland-Cliffs, Inc. 13,000 $ 529,750
Crane Co. 34,100 1,425,806
Dexter Corp. 24,300 777,600
Owens Illinois 51,900 1,608,900
Sealed Air Corp. 25,100 1,192,250
Southdown, Inc. 15,000 654,375
Union Carbide Corp. 17,800 837,713
USG Corp. 16,300 594,950
USX-US Steel Group, Inc. 36,400 1,276,275
---------------
8,897,619
---------------
Capital Goods -- 8.5%
Agco Corp. 29,600 1,063,750
Camco International, Inc. 17,600 963,600
Caterpiller Tractor, Inc. 15,600 1,675,050
Deere & Co. 33,200 1,821,850
Ingersoll Rand Co. 22,600 1,395,550
Magnetek Inc. 26,700 443,888
Manitowoc Co., Inc. 6,800 317,900
Timken Co. 30,600 1,088,213
United Technologies Corp. 29,800 2,473,400
---------------
11,243,201
---------------
Consumer Stable -- 6.4%
American Stores Co. 9,000 444,375
Conagra, Inc. 14,800 949,050
Dean Foods Co. 12,900 520,838
Interstate Bakeries Corp. 23,200 1,376,050
Philip Morris Cos., Inc. 44,800 1,988,000
Richfood Holdings, Inc. 24,900 647,400
Safeway, Inc. 29,200 1,346,850
Supervalu Inc. 17,800 614,100
Universal Foods Corp. 15,900 606,188
---------------
8,492,851
---------------
Early Cyclical -- 3.8%
AMR Corp. 6,300 582,750
Ford Motor Co. 36,700 1,385,425
General Motors Corp. 14,500 807,469
Lancaster Colony Corp. 11,600 561,150
U.S. Airways Group, Inc. 17,100 598,500
UAL Corp. 16,100 1,152,156
---------------
5,087,450
---------------
</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 - June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
<S> <C> <C>
Energy -- 10.1%
British Petroleum PLC 32,684 $ 2,447,182
Lyondell Petro Chemical 55,700 1,214,956
Oryx Energy Co. 56,500 1,193,563
Pennzoil 39,600 3,039,300
Phillips Petroleum Co. 45,200 1,977,500
Texaco, Inc. 13,300 1,446,375
Tidewater, Inc. 11,800 519,200
USX-Marathon Group 52,700 1,521,713
---------------
13,359,789
---------------
Financial -- 13.4%
Ace Ltd. 18,400 1,359,300
BankAmerica Corp. 30,800 1,988,525
Bear Stearns Cos., Inc. 45,905 1,569,377
Cigna Corp. 7,300 1,295,750
Equitable Companies, Inc. 36,200 1,203,650
First Union Corp. 16,400 1,517,000
Golden West Financial Corp. 17,000 1,190,000
H. F. Ahmanson & Co. 36,700 1,578,100
Old Republic International Corp. 40,800 1,236,750
Reliastar Financial Corp. 21,400 1,564,875
Republic New York Corp. 17,400 1,870,500
The Money Store, Inc. 49,800 1,428,638
---------------
17,802,465
---------------
Growth Cyclical -- 12.8%
Applebees International, Inc. 19,100 510,925
Costco Cos., Inc. 40,600 1,334,725
Fred Meyer, Inc. 27,500 1,421,406
Lone Star Steakhouse & Saloon 20,700 538,200
Nautica Enterprises Inc. 30,400 803,700
Pier 1 Imports, Inc. 65,600 1,738,400
Regal Cinemas 29,600 976,800
Rexall Sundown, Inc. 28,200 1,099,800
Ross Stores, Inc. 55,100 1,801,081
Ryan's Family Steakhouse 66,700 571,119
Tech Data Corp. 19,300 606,744
Tiffany & Co. 22,300 1,029,981
TJX Cos., Inc. 54,400 1,434,800
Tommy Hilfiger Corp. 34,000 1,366,375
Xerox Corp. 22,300 1,758,913
---------------
16,992,969
---------------
Health Care -- 11.4%
Amgen, Inc. 49,800 2,894,625
Bergen Brunswig Corp. Class A 31,250 871,094
</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 - June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
<S> <C> <C>
Health Care (continued)
Biomet, Inc. 34,800 $ 648,150
Bristol-Myers Squibb Co. 23,500 1,903,500
Coherent, Inc. 27,500 1,223,750
Health Care & Retirement 23,100 770,963
Lincare Holdings, Inc. 14,400 619,200
Schering-Plough Corp. 61,600 2,949,100
Sybron International Corp. 16,800 669,900
United States Surgical Corp. 37,600 1,400,600
Watson Pharmaceutical, Inc. 26,400 1,115,400
---------------
15,066,282
---------------
Real Estate -- 2.2%
Beacon Properties Corp., REIT 16,100 537,338
Cali Realty Corp., REIT 16,700 567,800
Duke Realty Investments, REIT 9,000 364,500
Prentiss Properties Trust 24,800 635,500
Starwood Lodging Trust, REIT 18,800 802,525
---------------
2,907,663
---------------
Services -- 9.1%
Ameritech Corp. 32,800 2,228,350
Bellsouth Corp. 27,500 1,275,313
Ceridian Corp. 20,700 874,575
Ecolab, Inc. 14,200 678,050
Gannett Co., Inc. 12,800 1,264,000
New York Times Co. Class A 32,300 1,598,850
Nynex Corp. 24,200 1,394,525
Omnicom Group 27,800 1,713,175
Washington Post Co. 2,400 955,200
---------------
11,982,038
---------------
Technology -- 9.8%
Adaptec, Inc. 16,500 573,375
Compaq Computer 13,800 1,369,650
Dell Computer Corp. 13,200 1,550,175
Harris Corp., Inc. 24,700 2,074,800
Sci Sys, Inc. 24,500 1,561,875
Storage Technology Corp. 28,600 1,272,700
Stratus Computer, Inc. 25,700 1,285,000
Sun Microsystems Corp. 41,500 1,544,576
Symantec 58,900 1,148,550
Western Digital 18,600 588,225
---------------
12,968,926
---------------
Utilities -- 0.8%
FPL Group, Inc. 21,600 994,950
---------------
</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 - June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL EQUITIES (COST $101,439,655) 125,796,203
----------------
Par Value
Security Rate Maturity Value (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS AND NOTES -- 0.2%
U.S. Government Agency -- 0.2%
Pass Thru Securities -- 0.2%
Federal Farm Credit Bank 0.000% 09/02/1997 - 09/24/1997 $ 275,000 $ 271,726
----------------
271,726
----------------
Total U.S. Government Agency (Cost $271,779) 271,726
----------------
TOTAL BONDS AND NOTES (COST $271,779) 271,726
----------------
SHORT-TERM INVESTMENTS -- 6.5%
Repurchase Agreements -- 6.5%
Prudential-Bache Repurchase Agreement, dated 6/30/97, 5.27% due 7/1/97, to pay
$6,495,540 (Collateralized by FNMA FNARM's with rates ranging from 6.01% to
6.07% and maturity dates ranging from 1/1/34 to 5/1/34 with an aggregate market
value of $6,625,467), 5.270%, 7/1/97 6,495,540 6,495,540
Safety Cash Overnite Investment, 4.850%, 7/1/97 2,135,030 2,135,030
----------------
Total Repurchase Agreements (Cost $8,630,570) 8,630,570
----------------
TOTAL SHORT-TERM INVESTMENTS (COST $8,630,570) 8,630,570
----------------
TOTAL INVESTMENTS-- 101.7% (COST $110,342,004) $ 134,698,499
Other Assets, Less Liabilites-- (1.7)% (2,230,597)
----------------
NET ASSETS-- 100% $ 132,467,902
================
</TABLE>
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
June 30, 19987 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value (Note 1A) (identified cost, $110,342,004) $ 134,698,499
Receivable for investments sold 780,169
Interest and dividends receivable 129,836
Prepaid expenses 19,668
Deferred organization costs (Note 1E) 57,361
-------------
Total assets 135,685,533
Liabilities
Due to Custodian 25,677
Payable for investments purchased 3,149,462
Payable for daily variation margin on open financial futures contracts (Note 5) 29,925
Accrued expenses and other liabilities 12,567
-----------
Total liabilities 3,217,631
-------------
Net Assets (applicable to investors' beneficial interests) $ 132,467,902
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
<TABLE>
<CAPTION>
Statement of Operations
Six Months ended June 30, 1007 (Unaudited)
- -------------------------------------------------------------------------------
<S><C> <C>
Investment Income (Note 1C)
Dividend income $ 923,309
Interest income 125,269
-------------
Total income 1,048,578
Expenses
Investment advisory fee (Note 2) 298,974
Accounting and custody fees 48,009
Legal and audit services 29,201
Amortization of organization cost (Note 1E) 7,242
Miscellaneous 6,073
Trustees fees (Note 2) 1,956
Insurance expense 1,421
------------
Total expenses 392,876
------------
Net investment income 655,702
------------
Realized and Unrealized Gain (loss)
Net realized gain
Investment security transactions 12,435,986
Financial futures contracts 572,492
------------
Net realized gain 13,008,478
Change in unrealized appreciation (depreciation)
Investment securities 7,292,487
Financial futures contracts (39,653)
------------
Change in net unrealized appreciation (depreciation) 7,252,834
------------
Net realized and unrealized gain 20,261,312
------------
Net increase (decrease) in net assets from operations $ 20,917,014
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
Six Months Ended May 3, 1996
June 30, 1997 (commencement of operations)
(Unaudited) to December 31, 1996
---------------------- --------------------------------
<S><C> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 655,702 $ 1,091,670
Net realized gain 13,008,478 13,302,616
Change in net unrealized appreciation
(depreciation) 7,252,834 3,404,699
------------ ------------
Net increase in net assets from operations 20,917,014 17,798,985
------------ ------------
Capital transactions
Assets Contributed by Standish Equity Fund
at commencement
(including unrealized gain of $13,699,897) -- 97,994,616
Contributions 18,525,335 15,564,794
Withdrawals (13,252,081) (25,080,761)
------------ ------------
Increase in net assets resulting from
capital transactions 5,273,254 88,478,649
------------ ------------
Total increase in net assets 26,190,268 106,277,634
Net Assets
At beginning of period 106,277,634 --
------------ ------------
At end of period $132,467,902 $106,277,634
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Supplementary Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
Six Months Ended May 3, 1996
June 30, 1997 (commencement of operations)
(Unaudited) through December 31, 1996
------------------- -------------------------------
<S> <C> <C>
Ratios (to average daily net assets):
Expenses 0.66%+ 0.69%+
Net investment income 1.10%+ 1.58%+
Portfolio Turnover 82% 78%
Average commission rate (per share) $ 0.0474 $ 0.0483
Net assets, end of period (000s omitted) $132,468 $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 transaction and income-
Securities transactions are recorded as of the trade date. Interest
income is determined on the basis of interest accrued. Dividend income
is recorded on the ex-dividend date. Realized gains and losses from
securities sold are recorded on the identified cost basis.
D. Income Taxes-
The Portfolio is treated as a partnership for federal tax purposes. No
provision is made by the Portfolio for federal or state taxes on any
taxable income of the Portfolio because each investor in the Portfolio
is ultimately responsible for the payment of any taxes. Since some of
the Portfolio's investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolio, the
Portfolio normally must satisfy the source of income and
diversification requirements applicable to regulated investment
companies (under the Internal Revenue Code) in order for its investors
to satisfy them. The Portfolio will allocate at least annually among
its investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of
income, gain, loss deduction or credit.
16
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. Deferred Organizational Expenses-
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight-line basis
through April, 2001. These costs were paid for by the investment
adviser and will be reimbursed by the portfolio.
(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>
Purchases Sales
------------------ ----------------
<S> <C> <C>
U.S. Government Securities $ 271,207 $0
================== ================
Investments (non-U.S. government securities) $96,396,620 $94,223,390
================== ================
</TABLE>
(4) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30, 1997, as computed on a federal
income tax basis, were as follows:
<TABLE>
<S> <C>
Aggregate Cost $ 110,342,004
=================
Gross unrealized appreciation $ 25,051,581
Gross unrealized depreciation $ (695,086)
-----------------
Net unrealized appreciation (depreciation) $ 24,356,495
=================
</TABLE>
(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 investments are set forth more
fully in the Portfolio's Parts A and B.
The Portfolio trades the following financial instruments with
off-balance sheet risk:
17
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Equity Portfolio
Notes to Financial Statements (Unauditied)
- --------------------------------------------------------------------------------
Options--
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before
a certain date. The Portfolio may use options to seek to hedge against
risks of market exposure and changes in securities prices and foreign
currencies, as well as to seek to enhance returns. Writing puts and
buying calls tend to increase the Portfolio's exposure to the
underlying instrument. Buying puts and writing calls tend to decrease
the Portfolio's exposure to the underlying instrument, or hedge other
Portfolio investments. Options, both held and written by the Portfolio,
are reflected in the accompanying Statement of Assets and Liabilities
at market value. The underlying face amount at value of any open
purchased option is shown in the Schedule of Investments. This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the
contracts' terms.
Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are
exercised or are closed are added to or offset against the proceeds or
amount paid on the transaction to determine the realized gain or loss.
Realized gains and losses on purchased options are included in realized
gains and losses on investment securities, except purchased options on
foreign currency which are included in realized gains and losses on
foreign currency transactions. If a put option written by the Portfolio
is exercised, the premium reduces the cost basis of the securities
purchased by the Portfolio. The Portfolio, as a writer of an option,
has no control over whether the underlying securities may be sold
(call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option. The Portfolio entered into no such transactions for the period
ended June 30. 1997.
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. The Portfolio is required to
deposit 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 tend 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 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 June 30, 1997, the Portfolio had entered into the following
financial futures contracts:
<TABLE>
<CAPTION>
Underlying
Expiration Date Face/amount at Unrealized
Contract Position value Gain/(Loss)
----------------------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
S&P 500 (9 Contracts) Long 9/15/97 4,036,220 (29,065)
</TABLE>
At June 30, 1997, the Portfolio had segregated sufficient cash and/or
securities to cover margin requirements on open futures contracts.
18
<PAGE>
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Standish, Ayer & Wood Investment Trust
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(800) 221-4795
