STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
Financial Statements for the
Six Months Ended March 31, 1999
(Unaudited)
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
Financial Statements
Table of Contents
Page
Statements of Assets and Liabilities...........................2
Statements of Operations.......................................3
Statements of Changes in Net Assets............................4
Financial Highlights...........................................5
Schedule of Investments........................................6
Notes to Financial Statements.................................10
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Statement of Assets and Liabilities
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments at value (Note 1A) (identified cost, $36,584,571) $ 38,459,636
Cash 358,832
Receivable for investments sold 2,371,802
Dividends receivable 100,831
Receivable for variation margin on open financial futures contracts (Note 6) 1,004
Unrealized appreciation on forward foreign currency exchange contracts (Note 6) 9,551
Receivable for foreign dividend tax reclaims 65,769
Prepaid expenses 211
-------------
Total assets 41,367,636
Liabilities
Payable for investments purchased $ 1,575,086
Unrealized depreciation on forward foreign currency exchange contracts (Note
6) 2,391
Accrued trustees' fees and expenses (Note 2) 2,611
Accrued accounting, custody and transfer agent fees 25,674
Accrued expenses and other liabilities 17,862
------------
Total liabilities 1,623,624
-------------
Net Assets $ 39,744,012
=============
Net Assets consist of:
Paid-in capital $ 37,309,473
Undistributed net investment income 74,872
Accumulated net realized gain 475,190
Net unrealized appreciation 1,884,477
=============
Total Net Assets $ 39,744,012
=============
Shares of beneficial interest outstanding 1,764,080
=============
Net Asset Value, offering price and redemption price per share
(Net Assets/Shares outstanding) $ 22.53
=============
</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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Dividend income (net of foreign withholding taxes of $14,790) $ 260,628
Interest income 23,902
------------
Total investment income 284,530
Expenses
Investment advisory fee (Note 2) $ 161,558
Accounting, custody and transfer agent fees 82,606
Legal and audit services 20,164
Trustees' fees and expenses (Note 2) 3,874
Registration fees 3,241
Insurance expense 2,817
Miscellaneous 2,076
-----------
Total expenses 276,336
Deduct --
Waiver of investment advisory fee (Note 2) (74,388)
-----------
Net expenses 201,948
------------
Net investment income 82,582
------------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss)
Investment security transactions 367,436
Financial futures contracts 216,254
Foreign currency transactions and forward foreign
currency exchange contracts (18,749)
-----------
Net realized gain 564,941
Change in unrealized appreciation (depreciation)
Investment securities 4,324,611
Financial futures contracts 127,665
Foreign currency and forward foreign currency exchange contracts 16,216
-----------
Net change in unrealized appreciation (depreciation) 4,468,492
------------
Net realized and unrealized gain 5,033,433
------------
Net Increase in Net Assets from Operations $ 5,116,015
============
</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
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
---------------- ------------------
<S> <C> <C>
Increase (decrease) in Net Assets
From Investment Operations
Net investment income $ 82,582 $ 544,277
Net realized gain 564,941 565,185
Change in unrealized appreciation (depreciation) 4,468,492 (3,113,110)
------------ -------------
Net increase (decrease) in Net Assets from Investment Operations 5,116,015 (2,003,648)
------------ -------------
Distributions to Shareholders
From net investment income (200,185) (567,912)
From net realized gains on investments (567,620) (4,215,438)
------------ -------------
Total distributions to shareholders (767,805) (4,783,350)
------------ -------------
Fund Share (principal) Transactions (Note 4)
Net proceeds from sale of shares 1,598,233 6,057,674
Value of shares issued to shareholders in payment of
distributions declared 657,079 4,381,657
Cost of shares redeemed (3,675,513) (16,333,667)
------------ -------------
Net decrease in Net Assets from Fund share transactions (1,420,201) (5,894,336)
------------ -------------
Total Increase (Decrease) in Net Assets 2,928,009 (12,681,334)
Net Assets
At beginning of period 36,816,003 49,497,337
------------ -------------
At end of period (including undistributed net investment income
of $74,872 and $192,475 respectively) $39,744,012 $ 36,816,003
============ =============
</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 Year Ended
March 31, September 30, Year Ended December 31,
1999 --------------------- -----------------------------------------------
(Unaudited) 1998 1997 (1) 1996 1995 1994 1993
---------- --------- ---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.17 $ 23.57 $ 23.25 $ 23.54 $ 23.12 $ 26.74 $ 19.78
---------- --------- ---------- --------- ---------- ----------- ----------
Investment Operations
Net investment income* 0.05 0.32 0.39 0.47 0.04 0.21 0.26
Net realized and unrealized gain (loss)
on investments 2.74 (1.17) 1.44 1.28 0.45 (2.08) 7.29
---------- --------- ---------- --------- ---------- ----------- ----------
Total from investment operations 2.79 (0.85) 1.83 1.75 0.49 (1.87) 7.55
---------- --------- ---------- --------- ---------- ----------- ----------
Less distributions to shareholders
From net investment income (0.11) (0.31) (0.30) (0.51) -- (0.12) (0.23)
In excess of net investment income -- -- -- -- -- -- (0.36)
From net realized gains on investments (0.32) (2.24) (1.21) (1.53) (0.07) (1.63) --
---------- --------- ---------- --------- ---------- ----------- ----------
Total distributions to shareholders (0.43) (2.55) (1.51) (2.04) (0.07) (1.75) (0.59)
---------- --------- ---------- --------- ---------- ----------- ----------
Net Asset Value, End of Period $ 22.53 $ 20.17 $ 23.57 $ 23.25 $ 23.54 $ 23.12 $ 26.74
========== ========= ========== ========= ========== =========== ==========
Total Return 13.80% (2.92)% 7.65% 7.44% 2.14% (6.99)% 38.27%
Ratios/Supplemental Data
Expenses (to average daily net assets)* 1.00%+ 1.00% 0.84%+ 0.50% 1.22% 1.23% 1.34%
Net investment income (to average daily
net assets)* 0.41%+ 1.30% 1.78%+ 1.80% 1.76% 1.52% 1.09%
Portfolio Turnover 90% 206% 155% 163% 108% 51% 63%
Net Assets, End of Period (000's
omitted) $ 39,744 $ 36,816 $ 49,497 $ 47,739 $ 59,473 $ 104,435 $ 92,419
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the periods indicated, 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 share $ 0.01 $ 0.22 $ 0.29 $ 0.27 -- -- --
Ratios (to average daily net assets)
Expenses 1.37%+ 1.42% 1.42%+ 1.29% -- -- --
Net investment income 0.04%+ 0.88% 1.20%+ 1.01% -- -- --
</TABLE>
(1) For the nine months ended September 30, 1997.
+ Computed on an annualized basis.
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
EQUITIES -- 96.5%
Australia -- 5.5%
F.H. Faulding & Company Ltd. 39,500 $ 236,035
National Australia Bank Ltd. 29,000 528,171
Newcrest Mining Ltd.* 211,000 413,129
Pioneer Intl Ltd. 103,000 204,943
PMP Communications Ltd. 121,600 249,683
Qantas Airways Ltd. 96,000 254,300
Stockland Trust Group 123,000 301,036
--------------
2,187,297
--------------
Austria -- 2.1%
Austrian Airlines 5,400 175,429
BBAG Oester Brau Bete AG 6,200 281,050
Erste Bank 2,900 147,109
Oemv AG 2,800 247,505
--------------
851,093
--------------
Denmark -- 2.5%
FLS Industries A/S-B 11,200 219,363
Jyske Bank A/S 2,412 193,514
Tele Danmark B Ordinary Shares 3,300 326,519
Topdanmark (Registered)* 1,360 250,708
--------------
990,104
--------------
France -- 7.8%
AGF Assurances Gen France 5,500 296,808
Banque National De Paris 3,350 291,422
Ciments Francais-A 4,400 237,446
Esso Ste Anonyme Francaise 4,300 345,522
Michelin B French Regular Shares 4,170 187,003
Pechiney SA-A 4,100 148,242
Pinault-Printemps 1,300 206,236
Renault SA 9,300 327,523
Rhone Polenc Frf25 "A" 10,200 461,271
Scor SA 4,300 216,270
Suez Lyonnaise Des Eaux-Dumex 2,000 369,984
--------------
3,087,727
--------------
Germany -- 11.9%
Agiv AG 16,200 305,107
BASF AG 6,800 248,800
BHF Bank 8,900 365,019
Daimler Chrysler AG* 7,425 645,912
DBV Holding AG Registered Shares 1,170 423,032
Escada AG 2,550 357,788
Fielmann Preferred AG 4,800 170,961
GEA Preferred AG 10,400 207,657
Heidelberger Zement AG 3,500 213,432
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Germany (continued)
Lufthansa AG 15,800 $ 345,322
Mannesmann AG Dm50* 4,350 555,413
Phoenix AG 19,000 307,601
RWE AG 7,700 340,735
Thyssen Krupp AG* 11,820 233,459
--------------
4,720,238
--------------
Hong Kong -- 0.0%
Regal Hotel International 800 78
--------------
Ireland -- 2.6%
Bank Of Ireland 7,000 146,569
CRH PLC 14,650 252,830
DCC PLC 47,000 362,699
Fyffes PLC 1 56,600 133,173
Jurys Hotel Group 15,200 132,883
--------------
1,028,154
--------------
Italy -- 5.8%
Credito Italiano Ordinary Shares 41,600 224,629
ENI Spa 96,600 618,264
Impreglio Spa* 180,000 140,091
R.A.S. Spa 29,600 308,291
San Paolo - Imi Spa* 19,500 316,221
Telecom Italia Mobile Ordinary Shares 66,200 443,345
Telecom Italia Spa 25,400 269,783
--------------
2,320,624
--------------
Japan -- 19.5%
CSK Corp. 14,000 440,926
Daito Trust Construction Ordinary Shares 29,000 303,798
DDI Corp. 82 386,695
Denso Corp. 8,000 156,632
Hitachi Ltd. (Hit. Seisakusho) 50,000 369,263
Honda Motor Co. Ltd. 9,000 405,474
House Foods Corp. 11,000 155,621
Inax Corp. 38,000 257,920
Izumiya 43,000 372,968
Kirin Brewery Co. Ltd. 18,000 210,392
Mazda Motors Corp. 71,000 275,032
Mitsui Chemicals Inc. 67,000 321,600
Nippon Kayaku Co. Ltd. 50,000 238,737
Nippon Shinpan Co. Ordinary Shares 125,000 284,211
Nippon Telegraph and Telephone Corp. 15 146,526
Ono Pharmaceutical 14,000 563,537
Orient Corporation 186,000 483,992
Sekisui House Ltd. Jpy 50 20,000 212,211
Shikoku Electric Power 23,000 358,316
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Japan (continued)
Takeda Chem Industries Ltd. 5,000 $ 193,263
The Bank Of Tokyo Mitsubishi 28,000 384,808
Toho Co. Ltd. 1,900 256,800
Tokyo Electric Power Co., Inc. 9,000 193,263
Toshiba Corp. 25,000 170,316
Toyo Suisan Kaisha Ltd. 41,000 341,811
Yakult Honsha 39,000 279,158
--------------
7,763,270
--------------
Netherlands -- 4.3%
ABN Amro Holdings 13,200 274,962
ASR Verzekeringsgroep NV 1,700 125,684
Gamma Holding 6,700 307,331
Hollandsche Beton Groep NV 100 1,052
ING Groep 4,000 220,393
Koninklijke Boskalis Westminster NV 19,100 292,728
Koninklijke KPN NV 6,800 270,451
Koninklijke Van Ommeren NV 6,900 201,074
--------------
1,693,675
--------------
Singapore -- 3.0%
Jurong Shipyards Ltd. 41,000 162,576
Overseas Chinese Banking Corp. 48,000 325,094
Sembcorp Industries 200,553 219,418
Singapore Airlines Ltd. 40,000 289,436
Want Want Holdings 180,200 182,002
--------------
1,178,526
--------------
Spain -- 3.9%
Faes-Fabric Espan De Product 10,400 159,685
Inmobiliaria Urbis SA Accion Series 1* 13,500 214,187
Repsol SA 8,900 458,195
Sevillana De Electricidad Esb500 30,800 417,193
Telefonica Ordinary Shares 7,600 322,283
--------------
1,571,543
--------------
Switzerland -- 6.3%
Ares-Serono Group, Class B 185 274,245
Credit Suisse Group - Registered 2,260 421,260
Helvetia Patria Holding - Registered 410 318,707
Moevenpick Holding-Bearer 400 209,360
Roche Holding AG - Genusschein 550 670,460
Schindler Holding AG-Registered 170 286,452
Swiss Air Group 1,550 331,863
--------------
2,512,347
--------------
United Kingdom -- 21.3%
Abbey National 15,600 324,190
Amec PLC 200,400 726,762
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom (continued)
Associated British Foods PLC 40,000 $ 279,273
Barclays PLC 1P Ordinary Shares 6,800 196,827
BG PLC 76,400 448,765
British Energy PLC 61,000 585,003
British Telecommunications PLC 19,300 315,691
Caradon PLC 89,000 195,810
Courtaulds Textiles PLC 53,000 132,409
Granada Group PLC 19,300 395,690
Hammerson Prop Inv & Dev Ordinary Shares 33,300 224,085
Hyder PLC 16,500 208,768
National Westminster 18,200 423,007
Norwich Union PLC 53,500 370,363
Nycomed Amersham PLC-A 42,000 361,833
Royal Bank of Scotland Group PLC 37,700 821,542
Signet Group PLC* 638,000 491,027
Smith and Nephew Associated PLC 132,500 321,413
Somerfield PLC 40,200 205,722
Tate & Lyle PLC 67,000 449,241
Transport Development Group PLC 69,300 233,448
United Utilities PLC 24,000 290,124
Vodafone Group PLC 24,400 454,957
--------------
8,455,950
--------------
TOTAL EQUITIES (COST $36,485,677) 38,360,626
--------------
<CAPTION>
Par
Security Rate Maturity Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 0.3%
U.S. GOVERNMENT AGENCY -- 0.3%
Federal Home Loan Mortgage Corporation Discount Note+ 0.000% 6/24/1999 100,000 99,010
--------------
TOTAL U.S. GOVERNMENT AGENCY (COST $98,894) 99,010
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $98,894) 99,010
--------------
TOTAL INVESTMENTS -- 96.8% (COST $36,584,571) $ 38,459,636
Other Assets, Less Liabilities -- 3.2% 1,284,376
==============
NET ASSETS -- 100% $ 39,744,012
==============
</TABLE>
Notes to the Schedule of Investments:
* 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.
9
<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.
10
<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 six months ended
March 31, 1999. This agreement is voluntary and temporary and may be
discontinued or revised by SIMCO at any time. For the six months ended
March 31, 1999, SIMCO voluntarily waived a portion of its investment
advisory fee in the amount of $74,388. 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 Year Ended
March 31, 1999 September 30, 1998
---------------------------- ----------------------------
Purchases Sales Purchases Sales
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
U.S. Government Securities............. $ -- -- $ 444,094 --
============= ============= ============= =============
Investments (non-U.S. Government
Securities) ........................... $ 36,227,204 $ 37,979,280 $ 83,013,299 $ 94,513,395
============= ============= ============= =============
</TABLE>
(4) Shares of Beneficial Interest:
The Declaration of Trust permits the Trust to issue an unlimited number
of full and fractional shares of beneficial interest having a par value
of one cent per share. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
--------------------- --------------------
<S> <C> <C>
Shares sold.................................................. 72,596 264,292
Shares issued to shareholders in payment of distributions
declared.................................................. 28,631 231,061
Shares redeemed.............................................. (162,654) (770,220)
--------------------- --------------------
Net decrease................................................. (61,427) (274,867)
===================== ====================
</TABLE>
At March 31, 1999, the Fund had two shareholders of record owning
approximately 13% and 11% of the Fund's outstanding shares.
11
<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, 1999, as computed on a federal
income tax basis, were as follows:
Aggregate Cost................................... $ 36,584,571
===============
Gross unrealized appreciation.................... $ 3,731,663
Gross unrealized depreciation.................... $ (1,856,598)
---------------
Net unrealized appreciation ..................... $ 1,875,065
===============
(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 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, 1999, the Fund did not write any option
transactions, nor were there any open written option contracts at March
31, 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.
12
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 1999, the Fund held the following forward foreign currency
exchange contracts:
<TABLE>
<CAPTION>
U.S.$
U.S. $ U.S.$ Unrealized
Contract Value Market Aggregate Appreciation/
Contracts to Receive Local Principal Amount Date Value Face Amount (Depreciation)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Great British Pound 1,127 4/01/99 $ 1,816 $ 1,818 $ (2)
Japanese Yen 55,021,000 6/10/99 466,916 457,365 9,551
-----------------------------------------------------
$ 468,732 $ 459,183 $ 9,549
=====================================================
<CAPTION>
U.S.$
U.S. $ U.S.$ Unrealized
Contract Value Market Aggregate Appreciation/
Contracts to Deliver Local Principal Amount Date Value Face Amount (Depreciation)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro 1,062 4/01/99 $ 1,146 $ 1,142 $ (4)
Japanese Yen 42,432,000 6/10/99 360,788 358,403 (2,385)
-----------------------------------------------------
$ 361,934 $ 359,545 $ (2,389)
=====================================================
</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, 1999, the
Fund held the following open 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 (1 contract) Long 6/22/99 $ 292,800 $ (4,910)
Topix Futures (1 contract) Long 6/16/99 105,853 9,003
---------------
$ 4,093
===============
</TABLE>
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