Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at value (Note 1A) (identified cost,
$28,645,466) $ 28,645,466
Cash 100
Receivable for Fund shares sold 29,574,478
Interest receivable 712,949
------------
Total assets 58,932,993
Liabilities
Payable for investments purchased $29,358,416
-----------
Total liabilities 29,358,416
------------
Net Assets $ 29,574,577
============
Net Assets consist of:
Paid-in capital $ 29,574,577
------------
Total Net Assets $ 29,574,577
============
Shares of beneficial interest outstanding 1,478,729
============
Net Asset Value, offering price and redemption price
per share (Net Assets/Shares outstanding) $ 20.00
============
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
For the period
June 30, 1999
(commencement
of operations)
to June 30, 1999
(Unaudited)
----------------
Increase (Decrease) in Net Assets
From Investment Operations
-----------
Net increase in net assets from investment operations --
-----------
Fund Share (Principal) Transactions (Note 4)
Net proceeds from sale of shares $29,574,577
-----------
Net increase in net assets from Fund share transactions 29,574,577
-----------
Total Increase in Net Assets 29,574,577
Net Assets
At beginning of period --
-----------
At end of period $29,574,577
===========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Schedule of Investments - June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value* (Note 1A)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS AND NOTES -- 96.9%
Government/Other -- 96.9%
Denmark -- 11.7%
Denmark Bullet 7.000% 11/15/2007 $ 7,900,000 $ 1,259,765
Kingdom of Denmark 8.000% 11/15/2001 6,000,000 910,576
Kingdom of Denmark 8.000% 03/15/2006 7,700,000 1,273,254
------------
3,443,595
------------
EuroDollar -- 1.0%
American Standard Global 7.125% 06/01/2006 275,000 284,487
------------
France -- 1.0%
Remy Cointreau 144A 10.000% 07/30/2005 275,000 306,891
------------
Germany -- 27.4%
Bundesobligation Ser 127 Notes 4.500% 05/19/2003 1,500,000 1,591,630
Colt Telecom Group PLC 144A Notes 7.625% 07/31/2008 500,000 265,457
Depfa Bank 144A Notes 4.750% 07/15/2008 1,200,000 1,235,131
Deutschland Republic 6.500% 10/14/2005 1,300,000 1,513,360
Deutschland Republic 6.500% 07/04/2027 1,350,000 1,613,044
Deutschland Republic 8.375% 05/21/2001 1,200,000 1,355,919
Exide Holding Europe 144A Notes 9.125% 04/15/2004 275,000 148,002
Fresenius Med Global 7.375% 02/01/2008 500,000 272,069
RSL Communications PLC Reg 0.000% 03/15/2008 275,000 90,365
------------
8,084,977
------------
Italy -- 11.1%
Italian Government BTP Notes NCL 4.000% 10/01/2003 1,550,000 1,605,239
Italian Government BTP Notes NCL 5.000% 02/15/2003 1,575,000 1,691,008
------------
3,296,247
------------
Japan -- 15.2%
Austria Republic 4.500% 09/28/2005 100,000,000 974,025
European Investment Bank 4.625% 02/26/2003 125,000,000 1,166,302
Republic of Finland 6.000% 01/29/2002 125,000,000 1,170,425
Spanish Government 4.750% 03/14/2005 120,000,000 1,173,085
------------
4,483,837
------------
Mexico -- 1.0%
Mexico Global Notes 6.542% 04/07/2004 275,000 289,466
------------
Netherlands -- 5.3%
KPN-Qwest B.V. 144A Private Placement 7.125% 06/01/2009 275,000 285,022
Netherlands Government Notes 5.750% 09/15/2002 1,150,000 1,262,900
------------
1,547,922
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Schedule of Investments - June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value* (Note 1A)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Zealand -- 3.9%
New Zealand Government 8.000% 04/15/2004 $ 1,000,000 $ 572,181
New Zealand Government 10.000% 03/15/2002 1,000,000 590,818
------------
1,162,999
------------
Sweden -- 3.4%
Sweden Government Bond #1038 6.500% 10/25/2006 3,900,000 505,634
Sweden Government Bond #1042 5.000% 01/15/2004 600,000 493,351
------------
998,985
------------
United Kingdom -- 15.9%
Abbey National Treasury 7.750% 12/31/2003 150,000 248,965
Alliance and Leicester Building Society 8.750% 12/07/2006 200,000 352,638
Birmingham Midshires Building Society 9.125% 01/05/2006 175,000 312,397
CSW Investments 8.875% 09/27/2006 175,000 304,293
FHLB 6.875% 06/07/2002 400,000 645,983
FNMA Global Bond 6.875% 06/07/2002 700,000 1,130,746
IPC Magazines 144A 0.000% 03/15/2008 175,000 132,535
Inco Ltd. 15.750% 07/15/2006 200,000 465,956
Slough Estates 7.125% 02/17/2010 150,000 121,518
UK Treasury Gilt 8.000% 06/10/2003 600,000 1,031,029
------------
4,746,060
------------
Total Government/Other (Cost $28,645,466) 28,645,466
------------
TOTAL BONDS AND NOTES (COST $28,645,466) 28,645,466
------------
TOTAL INVESTMENTS -- 96.9% (COST $28,645,466) $ 28,645,466
Other Assets, Less Liabilities -- 3.1% 929,111
------------
NET ASSETS -- 100.0% $ 29,574,577
============
</TABLE>
Notes to Schedule of Investments:
FHLB - Federal Home Loan Bank
FNMA - Federal National Mortgage Association
NCL - Non-callable
144A - Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration.
* Denominated in United States currency except for foreign country specific
bonds which are denominated in their respective local currency.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
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 Fixed Income Fund II (the "Fund") is a
separate non-diversified investment series of the Trust. The Fund
commenced operations on June 30, 1999.
The following is a summary of significant accounting policies 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. Repurchase agreements
It is the policy of the Fund 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 Fund 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. 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.
D. 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.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. 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.
F. Distributions to shareholders
Dividends from net investment income and distributions from capital gains,
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 treatments for options, futures
and foreign currency transactions. Permanent book and tax basis
differences relating to shareholder distributions will result in
reclassifications between paid-in-capital, distributions in excess of 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 0.40% of the Fund's average daily net assets. 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.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
investments, for the period ended June 30, 1999 were as follows:
Purchases Sales
----------- -----------
U.S. Government Securities $ 1,776,729 $ 0
=========== ===========
Investments (non-U.S.Government Securities) $26,868,737 $ 0
=========== ===========
Included in these amounts is $28,645,466 of securities received in
exchange for Fund shares.
7
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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:
For the period June 30, 1999
(commencement of
operations)
to June 30, 1999
-----------------------------
Shares sold 1,478,729
---------
Net increase 1,478,729
=========
On June 30, 1999, the Fund was formed with an initial contribution of
securities in kind valued at approximately $28,645,466.
At June 30, 1999, two shareholders were record owners of approximately 76%
and 24% of the total outstanding shares of the Fund, respectively.
(5) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30, 1999, as computed on a federal
income tax basis, were as follows:
Aggregate Cost $28,645,466
===========
Gross unrealized appreciation 0
Gross unrealized depreciation 0
-----------
Net unrealized appreciation $ 0
===========
(6) 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 the
Fund's Prospectus and Statement of Additional Information.
The Fund trades the following 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 Assets
and Liabilities at market value. The underlying face amount at value of
any open purchased options is shown in the Schedule of Investments. This
amount reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the underlying
instruments, if there is an illiquid secondary market for the contracts,
or if the counterparties do not perform under the 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
8
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
The Fund had no written option transactions for the period ended June 30,
1999.
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 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 June 30, 1999, the Fund held no open forward foreign currency or cross
currency exchange contracts.
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 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
contract's 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 June 30, 1999, the Fund held no open futures contracts.
Interest rate swap contracts
Interest rate swaps involve the exchange by the Fund with another party of
their respective commitments to pay or receive interest, e.g., an exchange
of floating rate payments for fixed rate payments with respect to a
notional amount of principal. Credit and market risk exist with respect to
these instruments. If forecasts of interest rates and other market factors
are incorrect, investment performance will diminish compared to what
performance would have been if these investment techniques were not used.
Even if the forecasts are correct, there are risks that the positions may
correlate imperfectly with the asset or liability being hedged, a liquid
secondary market may not always exist, or a counterparty to a transaction
may not perform. The Fund expects to enter into these transactions
primarily for hedging purposes including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio,
9
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Fixed Income Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
protecting against currency fluctuations, as a duration management
technique or protecting against an increase in the price of securities the
Fund anticipates purchasing at a later date. Gains and losses are realized
upon the expiration or closing of the swap contracts.
At June 30, 1999, the Fund held no open interest rate swap contracts.
10
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