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Previous: STANDISH AYER & WOOD INVESTMENT TRUST, N-30D, 1998-06-01 |
Next: STANDISH AYER & WOOD INVESTMENT TRUST, N-30D, 1998-06-01 |
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Statement of Assets and Liabilities
March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments at value (Note 1A) (identified cost, $36,236,708) $ 39,300,131
Cash 355,988
Receivable for investments sold 3,451,707
Interest and dividends receivable 216,012
Receivable from investment adviser (Note 2) 2,493
Receivable for variation margin on open financial futures contracts (Note 6) 6,456
Unrealized appreciation on forward foreign currency exchange contracts (Note 6) 19,587
Receivable for foreign dividend tax reclaims 58,085
------------
Total assets 43,410,459
Liabilities
Payable for investments purchased $ 2,572,098
Unrealized depreciation on forward foreign currency exchange contracts
(Note 6) 16,365
Accrued accounting, custody and transfer agent fees 19,149
Accrued expenses and other liabilities 12,986
-----------
Total liabilities 2,620,598
------------
Net Assets $ 40,789,861
============
Net Assets consist of:
Paid-in capital $ 37,379,879
Undistributed net investment income 112,892
Accumulated net realized gain 225,009
Net unrealized appreciation 3,072,081
============
Total Net Assets $ 40,789,861
============
Shares of beneficial interest outstanding 1,771,071
============
Net asset value, offering price and redemption price per share
(Net assets/Shares outstanding) $ 23.03
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Statement of Operations
For the Six Months Ended March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Dividend income (net of foreign withholding taxes of $52,461) $ 333,920
Interest income 34,328
-----------
Total investment income 368,248
Expenses
Investment advisory fee (Note 2) $ 169,976
Accounting, custody and transfer agent fees 89,988
Audit services 15,845
Registration fees 6,635
Legal fees 4,986
Trustees fees (Note 2) 2,943
Insurance expense 2,852
Miscellaneous 6,373
----------
Total expenses 299,598
Deduct --
Waiver of investment advisory fee (Note 2) (87,128)
----------
Net expenses 212,470
-----------
Net investment income 155,778
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss)
Investment security transactions (24,280)
Financial futures contracts 321,679
Foreign currency transactions and forward foreign
currency exchange contracts 2,063
----------
Net realized gain (loss) 299,462
Change in unrealized appreciation (depreciation)
Investment securities 2,526,002
Financial futures contracts 21,557
Foreign currency and forward foreign currency exchange contracts (4,573)
----------
Net change in unrealized appreciation (depreciation) 2,542,986
-----------
Net realized and unrealized gain 2,842,448
-----------
Net increase in net assets from operations $ 2,998,226
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Nine Months
March 31, 1998 Ended Year Ended
(Unaudited) September 30, 1997 December 31, 1996
---------------- -------------------- -------------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations
Net investment income $ 155,778 $ 668,107 $ 919,841
Net realized gain 299,462 4,288,094 4,520,530
Change in unrealized appreciation
(depreciation) 2,542,986 (806,597) (1,512,964)
------------ ----------- ------------
Net increase in net assets from operations 2,998,226 4,149,604 3,927,407
------------ ----------- ------------
Distributions to Shareholders
From net investment income (246,135) (601,863) (993,584)
From net realized gains on investments (4,215,438) (2,427,615) (2,991,390)
------------ ----------- ------------
Total distributions to shareholders (4,461,573) (3,029,478) (3,984,974)
------------ ----------- ------------
Fund Share (principal) Transactions (Note 4)
Net proceeds from sale of shares 2,070,079 5,984,646 3,568,994
Net asset value of shares issued to shareholders
in payment of distributions declared 4,211,830 2,684,361 3,425,523
Cost of shares redeemed (13,526,038) (8,030,311) (18,671,701)
------------ ----------- ------------
Net increase (decrease) in net assets from Fund
share transactions (7,244,129) 638,696 (11,677,184)
------------ ----------- ------------
Net increase (decrease) in net assets (8,707,476) 1,758,822 (11,734,751)
Net Assets
At beginning of period 49,497,337 47,738,515 59,473,266
------------ ----------- ------------
At end of period (including undistributed net
investment income of $112,892, $203,249 and
$8,961, respectively) $ 40,789,861 $49,497,337 $ 47,738,515
============ =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Nine Months
March 31, Ended Year Ended December 31,
1998 Sept. 30, -----------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993 1992+
-------------- ----------- ------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 23.57 $ 23.25 $ 23.54 $ 23.12 $ 26.74 $ 19.78 $ 22.20
------- ------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income * 0.10 0.39 0.47 0.04 0.21 0.26 0.26
Net realized and unrealized
gain (loss) on
investments 1.73 1.44 1.28 0.45 (2.08) 7.29 (2.47)
------- ------- ------- ------- ------- ------- -------
Total from investment
operations 1.83 1.83 1.75 0.49 (1.87) 7.55 (2.21)
------- ------- ------- ------- ------- ------- -------
Less distributions to shareholders
From net investment income (0.13) (0.30) (0.51) -- (0.12) (0.23) (0.21)
In excess of net investment
income -- -- -- -- -- (0.36) --
From net realized gains on
investments (2.24) (1.21) (1.53) (0.07) (1.63) -- --
------- ------- ------- ------- ------- ------- -------
Total distributions to
shareholders (2.37) (1.51) (2.04) (0.07) (1.75) (0.59) (0.21)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 23.03 $ 23.57 $ 23.25 $ 23.54 $ 23.12 $ 26.74 $ 19.78
======= ======= ======= ======= ======= ======= =======
Total return 10.09% 7.65% 7.44% 2.14% (6.99)% 38.27% (9.95)%
Ratios (to average daily net assets)/Supplemental Data
Expenses 1.00%++ 0.84%++ 0.50% 1.22% 1.23% 1.34% 1.53%
Net investment income 0.73%++ 1.78%++ 1.80% 1.76% 1.52% 1.09% 1.18%
Portfolio Turnover 93% 155% 163% 108% 75% 98% 98%
Average broker commission
per share (1) $0.0340 $0.0137 $0.0092 -- -- -- --
Net assets, end of period
(000's omitted) $40,790 $49,497 $47,739 $59,473 $104,435 $92,419 $56,539
</TABLE>
- -------------------
* For the six months ended March 31, 1998, the nine months ended September 30,
1997 and the year ended December 31, 1996, the investment adviser voluntarily
agreed not to impose a portion of its investment advisory fee. In the absence
of this agreement, 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 $ 0.05 $ 0.29 $ 0.27 -- -- -- --
share
Ratios (to average daily net
assets):
Expenses 1.41%++ 1.42%++ 1.29% -- -- -- --
Net investment income 0.32%++ 1.20%++ 1.01% -- -- -- --
</TABLE>
+ Audited by other auditors.
++ Computed on an annualized basis.
(1)Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITIES -- 96.0%
Australia -- 1.9%
Metal Manufacturers Ltd. 85,000 $ 119,855
National Australia Bank Ltd. 12,500 177,995
National Foods Ltd. Ordinary Shares 75,000 134,552
News Corporation Ltd. 35,000 231,005
Resolute Samantha Limited* 135,000 117,075
-------------
780,482
-------------
Austria -- 3.2%
Bank Austria AG 8,000 541,945
EVN-Energie Versorgung Niedr 1,950 287,290
Mayr-Melnhof 4,900 339,100
Strabag Oesterreich AG 2,450 142,422
-------------
1,310,757
-------------
Belgium -- 4.0%
Royale Belge 1,300 456,125
Sofina 450 385,723
Solvay Et Cie A NPV 5,100 386,647
Tractebel Ordinary Shares 3,900 410,257
-------------
1,638,752
-------------
Finland -- 4.0%
Finnair Oy 57,000 548,614
Kemira Oy Ordinary Shares 20,000 208,538
Merita Ltd. 63,400 381,948
Nokia AB 4,400 473,291
-------------
1,612,391
-------------
France -- 10.9%
Cie Financiere de Paribas SA 4,100 415,165
Cie Generale Des Eaux 1,100 178,714
Ciments Francais-A 2,300 118,863
Clarins 5,200 487,920
Esso Ste Anonyme Francaise 4,300 416,667
France Telecom SA 7,500 395,833
Labinal 600 202,616
Lafarge Coppee French 4,600 391,505
Lafarge Rights 4,600 6,017
Pinault Printemps 400 309,432
Renault SA 12,700 566,085
Scor SA 9,500 544,654
Vallourec 5,400 427,326
-------------
4,460,797
-------------
Germany -- 10.0%
Agiv AG 8,500 182,954
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Germany (continued)
Bankgesellschaft 23,300 $ 577,113
Berliner Kraft & Licht 7,500 324,482
DBV Holding AG Registered Shares 1,500 608,404
DLW AG* 3,250 411,633
Draegerwerk AG 8,500 177,897
Escada AG 2,300 330,864
Lufthansa AG* 14,400 303,326
Mannesmann AG Dm50 350 256,287
Phoenix AG 19,000 385,323
Schmalbach Lubeca AG 550 118,679
Volkswagen AG 525 416,930
-------------
4,093,892
-------------
Hong Kong -- 2.7%
Guoco Group Ltd. Ordinary Shares 91,000 223,120
Hang Lung Development Co. 103,000 149,532
Hong Kong Electric 43,000 147,602
Hong Kong Telecom 79,000 163,114
Hopewell Holdings 920,000 204,202
Regal Hotel International 800 125
Tai Cheung Holdings 650,000 220,184
-------------
1,107,879
-------------
Ireland -- 2.8%
Allied Irish Banks PLC 23,500 285,256
Fyffes PLC 1 220,000 547,013
Irish Life PLC Ordinary Shares 32,000 298,909
-------------
1,131,178
-------------
Italy -- 3.2%
Autostrade SPA-PFD 62,000 287,768
Banca Popolare Di Bergamo Azione Nom 13,000 297,627
ENI SPA 30,700 208,019
Istit Fin Priv Itl 1000 12,900 321,675
Telecom Italia Mobile Ordinary Shares 35,800 193,173
-------------
1,308,262
-------------
Japan -- 18.8%
Aiwa Co. Ltd. 5,000 140,296
Amada Co. Ltd. 31,000 138,382
Brother Industries Ltd. 76,000 249,171
Casio Computer Co. Ltd. 46,000 396,879
Fuji Electric Co. 53,000 181,717
Higo Bank 39,000 203,939
Honda Motor Co. Ltd. 6,000 216,070
Joyo Bank 40,000 159,352
Kandenko 18,000 114,112
Kawasaki Kisen 200,000 307,600
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Japan (continued)
Kokusai Electric 5,000 $ 198,064
Konica Corporation 30,000 136,394
Lion Corporation 110,000 379,623
Long Term Credit Bank of Japan 142,000 247,160
Makino Milling 22,000 149,539
Mitsubishi Corp. 35,000 286,218
Mitsui Chemicals Inc. 68,000 156,621
Mos Food Services 18,000 233,626
Nichicon Corp. 37,000 413,609
Nippon Kayaku Co. 87,000 382,489
Nippon Oil Co. 80,000 280,291
Nippon Shinpan Co. Ordinary Shares 125,000 211,944
Nissho Iwai Corp. 80,000 219,071
Orient Corporation 216,000 471,573
Sony Corp. 3,000 254,333
Sumitomo Chemical Co. 54,000 155,571
Sumitomo Rubber 58,000 301,553
TDK Corp. 5,000 386,376
Tohoku Electric Power 21,000 315,102
Tokuyama Soda Co. Ltd. 74,000 215,965
Toshiba Tungaloy 59,000 168,205
-------------
7,670,845
-------------
Malaysia -- 1.8%
Golden Hope Plantations Bhd 152,000 191,211
Malaysian Intern Shipping Corp. 72,000 137,829
Multi-Purpose Holdings 236,000 103,908
Petronas Gas Berhad 31,000 82,233
Technology Resources Industries 188,000 213,876
-------------
729,057
-------------
Netherlands -- 4.9%
ASR Verzekeringsgroep NV 3,800 272,757
Gamma Holding 7,200 434,239
ING Groep 2,900 164,605
Koninklijke Boskalis Westminster NV 345 5,777
Pakhoed Holding NV 8,750 313,629
Royal Dutch Petroleum Co. 5,800 328,375
Van Ommeren 11,800 498,791
-------------
2,018,173
-------------
Norway -- 2.0%
Den Norske Bank ASA 60,000 326,643
Orkla As A-aksjer 1,300 133,018
Saga Petroleum ASA, A Shares 6,500 115,965
SAS Norge SA - B Shares 15,380 241,101
-------------
816,727
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Switzerland -- 6.5%
Baloise Holdings 150 $ 306,434
Fischer (Georg) 150 284,300
Julius Baer Holdings 180 436,779
Nestle Registered Shares 155 296,114
Novartis AG 580 1,026,259
UBS (Schw. Bank Gesellschaft) 175 285,775
-------------
2,635,661
-------------
United Kingdom -- 19.3%
Alliance Unichem PLC 72,000 529,563
Amec PLC 224,000 589,740
Bg PLC 94,864 490,392
British Telecommunications PLC 50,000 543,270
Courtaulds Textiles PLC 52,000 306,404
English China Clays PLC 110,700 450,587
Hambros PLC* 57,600 261,893
Hazlewood Foods PLC 178,600 603,066
Johnson Matthey Public Limited* 41,600 430,096
Lex Service PLC 88,000 778,496
Railtrack Group PLC 35,000 573,359
Royal Bank of Scotland Group PLC 47,200 732,188
Sedgwick Group PLC 110,000 293,282
Signet Group PLC 638,000 434,591
Transport Development Group PLC 128,000 430,069
Willis Corroon Group 157,000 414,657
-------------
7,861,653
-------------
TOTAL EQUITIES (COST $36,113,061) 39,176,506
-------------
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 0.3%
U.S. GOVERNMENT AGENCY -- 0.3%
FHLMC Discount+ 5.410% 6/12/98 125,000 123,625
-------------
Total U.S. Government Agency (Cost $123,647) 123,625
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $123,647) 123,625
-------------
TOTAL INVESTMENTS -- 96.3% (COST $36,236,708) $ 39,300,131
Other Assets, Less Liabilities -- 3.7% 1,489,730
=============
NET ASSETS-- 100% $ 40,789,861
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Schedule of Investments - March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Notes to the Schedule of Investments:
FHLMC - Federal Home Loan Mortgage Corporation
* Non-income producing security.
+ Denotes all or part of security pledged as collateral to cover margin
requirements on open financial futures contracts (Note 6).
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International 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 International Equity Fund (the "Fund") is a separate,
diversified investment series of the Trust.
The following is a summary of significant accounting policies
consistently followed by the Fund 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 primarily 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
Fund 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. 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 discount on debt securities when required
for federal income tax purposes. Dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities sold are
recorded on the identified cost basis. The Fund does not isolate that
portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from
changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from
investments.
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. Foreign currency transactions
Investment security valuations, other assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars based
upon current exchange rates. Purchases and sales of foreign investment
securities and income and expenses are converted into U.S. dollars
based upon currency exchange rates prevailing on the respective dates
of such transactions.
Section 988 of the Internal Revenue Code provides that gains or losses
on certain transactions attributable to fluctuations in foreign
currency exchange rates must be treated as ordinary income or loss. For
financial statement purposes, such amounts are included in net realized
gains or losses.
11
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. Distributions to shareholders
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. Distributions to
shareholders are recorded on the ex-dividend date. 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 foreign currency 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 gain (loss).
(2) Investment Advisory Fee:
The investment advisory fee paid to Standish International Management
Company, L.P. ("SIMCO") for overall investment advisory and
administrative services, and general office facilities, is paid monthly
at the annual rate of 0.80% of the Fund's average daily net assets.
SIMCO voluntarily agreed to limit total Fund operating expenses to
1.00% of the Fund's average daily net assets for the period ended March
31, 1998. This agreement is voluntary and temporary and may be
discontinued or revised by SIMCO at any time. For the six months ended
March 31, 1998, SIMCO voluntarily waived a portion of its investment
advisory fee in the amount of $87,128. The Trust pays no compensation
directly to its trustees who are affiliated with SIMCO or to its
officers, all of whom receive remuneration for their services to the
Trust from SIMCO. Certain of the trustees and officers of the Trust are
directors or officers of SIMCO or its affiliates.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
investments, were as follows:
<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
March 31, 1998 September 30, 1997
--------------------------- ----------------------------
Purchases Sales Purchases Sales
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Government Securities.................. $ 246,706 -- $ 392,507 --
============ ============ ============ ============
Investments (non-U.S. Government Securities) $ 39,348,898 $ 51,657,678 $ 75,499,625 $ 76,910,303
============ ============ ============ ============
</TABLE>
(4) Shares of Beneficial Interest:
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of beneficial interest having a
par value of one cent per share. Transactions in Fund shares were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended Year Ended December
March 31, 1998 September 30, 1997 31, 1996
------------------- -------------------- --------------------
<S> <C> <C> <C>
Shares sold................................. 93,602 258,881 147,664
Shares issued to shareholders in payment of
distributions declared................... 223,795 109,893 144,612
Shares redeemed ............................ (646,700) (322,069) (764,772)
----------------- ------------------ -----------------
Net increase/(decrease) .................... (329,303) 46,705 (472,496)
================= ================== =================
</TABLE>
At March 31, 1998, the Fund had three shareholders of record owning
approximately 13%, 11% and 11% of the Fund's outstanding voting shares.
12
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(5) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 1998, as computed on a federal
income tax basis, were as follows:
Aggregate Cost........................................ $ 36,236,708
=============
Gross unrealized appreciation......................... $ 4,511,158
Gross unrealized depreciation......................... (1,447,735)
-------------
Net unrealized appreciation (depreciation)............ $ 3,063,423
=============
(6) 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 the Fund's Prospectus and Statement of Additional
Information.
The Fund 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 Fund 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 Fund's exposure to the underlying
instrument. Buying puts and writing calls tend to decrease the Fund's
exposure to the underlying instrument, or hedge other Fund investments.
Options, both held and written by the Fund, are reflected in the
accompanying Statement of Net 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 Fund is
exercised, the premium reduces the cost basis of the securities
purchased by the Fund. The Fund, as 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. During the six
months ended March 31, 1998, the Fund had no written option
transactions, nor were there any open written option contracts at March
31, 1998.
Forward currency exchange contracts
The Fund may enter into forward foreign currency and cross currency
exchange contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date. Risks may arise upon
entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements
in the value of a foreign currency relative to the U.S. dollar and
other foreign currencies. The forward foreign currency and cross
currency exchange contracts are marked to market using the forward
foreign currency rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized
until the contract settlement date or upon the closing of the contract.
Forward currency exchange contracts are used by the Fund primarily to
protect the value of the Fund's
13
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
foreign securities from adverse currency movements. Unrealized
appreciation and depreciation of forward currency exchange contracts
is included in the Statement of Assets and Liabilities.
At March 31, 1998, the Fund held the following forward foreign currency
exchange contracts:
<TABLE>
<CAPTION>
U.S.$
U.S. $ U.S.$ Unrealized
Local Principal Contract Market Aggregate Appreciation/
Contracts to Receive Amount Value Date Value Face Amount (Depreciation)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Australian Dollar 1,208,899 4/03/98 $800,276 $802,985 $(2,709)
French Franc 3,667,099 4/30/98 593,324 594,686 (1,362)
Japanese Yen 50,800,000 6/15/98 385,202 397,496 (12,294)
---------------------------------------------
$1,778,802 $1,795,167 $(16,365)
=============================================
<CAPTION>
U.S.$
U.S. $ U.S.$ Unrealized
Local Principal Contract Market Aggregate Appreciation/
Contracts to Deliver Amount Value Date Value Face Amount (Depreciation)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Finnish Mark 25,480 4/02/98 $ 4,542 $ 4,543 $ 1
Japanese Yen 104,055,685 4/01/98 780,792 788,122 7,330
Japanese Yen 25,300,000 6/15/98 191,843 198,598 6,755
Netherland Guilder 820,877 4/01/98 393,883 394,937 1,054
Norwegian Krona 2,997,052 4/01/98 393,179 395,729 2,550
Swiss Franc 600,006 4/01/98 393,546 395,443 1,897
---------------------------------------------
$2,157,785 $2,177,372 $19,587
=============================================
</TABLE>
Futures contracts
The Fund 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 Fund 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 Fund 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 Fund. There are
several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily
corresponds with the value of their underlying instruments or indices,
which may not correlate with changes in the value of hedged
investments. Buying futures tends to increase the Fund's exposure to
the underlying instrument, while selling futures tends to decrease the
Fund's exposure to the underlying instrument or hedge other Fund
investments. In addition, there is the risk that the Fund 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 Fund 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 March 31, 1998, the
Fund entered into the following financial futures contracts:
<TABLE>
<CAPTION>
Underlying
Face/amount at Unrealized
Contract Position Expiration Date value Gain/(Loss)
------------------------------ --------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Eurotop 100 Futures
(4 contracts) Long 6/19/98 $ 1,134,000 $ 27,280
Topix Futures (2 contracts) Long 6/19/98 187,261 (127)
==============
$ 27,153
==============
</TABLE>
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