Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in Standish Short-Term Asset Reserve
Portfolio ("Portfolio"), at value (Note 1A) $ 253,195,036
Receivable for Fund shares sold 192,816
Prepaid expenses 679
-------------
Total assets 253,388,531
Liabilities
Distributions payable $207,770
Accrued accounting, custody and transfer agent fees 3,734
Accrued trustees' fees and expenses (Note 2) 984
Accrued expenses and other liabilities 9,626
--------
Total liabilities 222,114
-------------
Net Assets $ 253,166,417
-------------
Net Assets consist of:
Paid-in capital $ 266,293,390
Accumulated net realized loss (11,903,096)
Distributions in excess of net investment income (251,900)
Net unrealized depreciation (971,977)
-------------
Total Net Assets $ 253,166,417
=============
Shares of beneficial interest outstanding 13,090,104
=============
Net Asset Value, offering price and redemption price
per share (Net Assets/Shares outstanding) $ 19.34
=============
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Interest income allocated from Portfolio $ 7,141,433
Expenses allocated from Portfolio (391,917)
-----------
Net investment income allocated from Portfolio 6,749,516
Expenses
Accounting, custody and transfer agent fees $ 18,572
Legal and audit services 8,767
Registration fees 4,562
Trustees' fees and expenses (Note 2) 2,585
Insurance expense 689
Miscellaneous 5,619
---------
Total expenses 40,794
Deduct:
Reimbursement of Fund operating expenses (Note 2) (1,708)
---------
Net expenses 39,086
-----------
Net investment income 6,710,430
-----------
Realized And Unrealized Gain (Loss)
Net realized loss allocated from Portfolio on:
Investment security transactions (746,414)
---------
Net realized loss (746,414)
Change in unrealized appreciation (depreciation)
allocated from Portfolio on:
Investment securities (451,644)
---------
Change in net unrealized depreciation (451,644)
-----------
Net realized and unrealized loss on investments (1,198,058)
-----------
Net Increase in Net Assets from Operations $ 5,512,372
===========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
From Investment Operations
Net investment income $ 6,710,430 $ 16,326,121
Net realized gain (loss) (746,414) 68,452
Change in net unrealized depreciation (451,644) (634,230)
------------- -------------
Net increase in net assets from investment operations 5,512,372 15,760,343
------------- -------------
Distributions to Shareholders (Note 1E)
From net investment income (6,710,430) (16,326,120)
------------- -------------
Total distributions to shareholders (6,710,430) (16,326,120)
------------- -------------
Fund Share (Principal) Transactions (Note 4)
Net proceeds from sale of shares 129,401,340 293,554,353
Value of shares issued to shareholders in payment of
distributions declared 5,490,387 12,854,947
Cost of shares redeemed (140,531,328) (291,596,448)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions (5,639,601) 14,812,852
------------- -------------
Total Increase (Decrease) in Net Assets (6,837,659) 14,247,075
Net Assets
At beginning of period 260,004,076 245,757,001
------------- -------------
At end of period (including distributions in excess
of net investment income of $251,900 and $251,900,
respectively) $ 253,166,417 $ 260,004,076
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1999 -------------------------------------------------------------------
(Unaudited) 1998(1) 1997 1996 1995 1994
-------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.44 $ 19.48 $ 19.50 $ 19.55 $ 19.22 $ 19.79
-------------- ----------- ----------- ----------- ----------- -----------
Investment Operations:
Net investment income 0.54 1.13 1.15 1.11 1.13 1.01
Net realized and unrealized gain
(loss) on investments (0.10) (0.04) (0.02) (0.04) 0.33 (0.57)
-------------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 0.44 1.09 1.13 1.07 1.46 0.44
-------------- ----------- ----------- ----------- ----------- -----------
Less Distributions to Shareholders:
From net investment income (0.54) (1.13) (1.15) (1.12) (1.12) (1.01)
In excess of net investment income -- -- -- -- (0.01) --
-------------- ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders (0.54) (1.13) (1.15) (1.12) (1.13) (1.01)
-------------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 19.34 $ 19.44 $ 19.48 $ 19.50 $ 19.55 $ 19.22
============== =========== =========== =========== =========== ===========
Total Return 2.29% 5.75% 5.94% 5.62% 7.85% 2.27%
Ratios/Supplemental Data:
Expenses (to average daily net assets) 0.36%+ 0.35% 0.36% 0.35% 0.33% 0.33%
Net Investment Income (to average
daily net assets) 5.60%+ 5.81% 5.89% 5.75% 5.95% 5.24%
Portfolio Turnover(2) -- -- 119% 156% 208% 154%
Net Assets, End of Period (000's
omitted) $253,166 $ 260,004 $ 245,757 $ 194,074 $ 243,500 $ 277,017
</TABLE>
- -----------------
* For the periods indicated, 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 investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net investment income per share $ 0.54 -- -- -- -- --
Ratios (to average daily net assets):
Expenses 0.36%+ -- -- -- -- --
Net investment income 5.60%+ -- -- -- -- --
</TABLE>
(1) Calculated based on average shares outstanding.
(2) Portfolio turnover represents the rate of portfolio activity for the
period while the Fund was investing directly in securities. The portfolio
turnover rates for the period since the Fund transferred substatially all
of its investable assets to the portfolio, are shown in the Portfolio's
financial statements which are included elsewhere in this report.
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve 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 Short-Term Asset Reserve Fund (the "Fund") is a separate
diversified investment series of the Trust.
On January 2, 1998, the Fund contributed substantially all of its
investable assets to the Standish Short-Term Asset Reserve Portfolio (the
"Portfolio"). The Fund currently invests all of its investable assets in
an interest of the Portfolio, a subtrust of Standish, Ayer & Wood Master
Portfolio (the "Portfolio Trust"), which is organized as a New York trust,
and has the same investment objective as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in
the net assets of the Portfolio (approximately 100% at June 30, 1999). 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 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
The Fund records its investment in the Portfolio at value. The method by
which the Portfolio values its securities is discussed in Note 1A of the
Portfolio's Notes to Financial Statements, which are included elsewhere in
this report.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. Currently, the
Fund's net investment income consists of the Fund's pro rata share of the
net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted
accounting principles.
C. Federal taxes
As a regulated investment company qualified under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
At December 31, 1998, the Fund, for the federal income tax purposes, had
capital loss carryovers which will reduce the Fund's taxable income
arising from future net realizeable gain on investments, if any, to the
extent permitted by the Internal Revenue Code and thus will reduce the
amount of distributions to shareholders which would otherwise be necessary
to relieve the fund of any liability for federal income tax. Such capital
loss carryovers are as follows:
Capital Loss Carry Over Expiration Date
----------------------- ---------------
$3,071,161 12/31/2000
1,512,610 12/31/2001
5,263,400 12/31/2002
568,968 12/31/2003
277,757 12/31/2004
381,998 12/31/2005
80,787 12/31/2006
D. Other
All net investment income and realized and unrealized gains and losses of
the Portfolio are allocated pro rata among the investors in the Portfolio.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Short-Term Asset Reserve Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
E. Distributions to Shareholders:
Dividends from net investment income will be declared and distributed
quarterly. The Fund's dividends from short-term and long-term capital
gains, if any, after reduction of capital losses will be declared and
distributed at least annually. In determining the amounts of its
dividends, the Fund will take into account its share of the income, gains
or losses, expenses, and any other tax items of the Portfolio. Dividends
from net investment income and capital gains distributions, if any, are
reinvested in additional shares of the Fund unless a shareholder elects to
receive them in cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatment of asset backed securities. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications between paid-in capital, undistributed net investment
income and accumulated net realized gain (loss).
(2) Investment Advisory Fee:
The Fund does not directly pay any investment advisory fees, but
indirectly bears its pro rata share of the compensation paid by the
Portfolio to Standish, Ayer & Wood, Inc. ("SA&W") for such services. See
Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. For the six months ended June 30, 1999, SA&W
voluntarily agreed to limit the operating expenses of the Fund and its pro
rata share of expenses allocated from the Portfolio (excluding brokerage
commissions, taxes and extraordinary expenses) to 0.36% of the Fund's
average daily net assets. Pursuant to this agreement, SA&W voluntarily
reimbursed the Fund for $1,708 of operating expenses for the six months
ended June 30, 1999. The Trust pays no compensation directly to its
trustees who are affiliated with SA&W or to its officers, all of whom
receive remuneration for their services to the Trust from the SA&W.
Certain of the trustees and officers of the Trust are directors or
officers of SA&W.
(3) Investment Transactions:
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended June 30, 1999, aggregated $131,705,958 and $144,785,639,
respectively.
(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 Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
---------------- ---------------
<S> <C> <C>
Shares sold 6,670,931 15,063,028
Shares issued to shareholders in payment of
distributions declared 282,916 659,576
Shares redeemed (7,240,163) (14,962,667)
---------- -----------
Net increase (decrease) (286,316) 759,937
========== ===========
</TABLE>
At June 30, 1999, four shareholders were record owners of approximately
19%, 13%, 12% and 11% of the total outstanding shares of the Fund,
respectively.
7
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected Par Value
Security Rate Maturity Maturity Value* (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BONDS AND NOTES -- 79.3%
Asset Backed -- 33.0%
BCI Home Equity 1994-1 B(a) 5.788% 08/05/99 03/29/2044 $ 1,363,572 $ 1,361,867
BankBoston Home Equity Loan 1998-1 A2 6.220% 10/12/00 02/25/2013 6,000,000 5,979,375
CIT Group Securitization Corp. 93-1 A4 6.500% 07/12/01 06/15/2018 5,150,000 5,162,875
Case Equipment Loan Trust 1997-B C 6.410% 05/15/00 09/15/2004 3,013,609 3,020,672
Chase Manhattan Auto Owner 1997-B 6.750% 04/09/01 01/15/2004 4,175,000 4,221,479
Chemical Master Credit Card Trust 1995-2 A 6.230% 09/12/00 06/15/2003 4,500,000 4,521,060
Citibank CC Master Trust 98-6 B 6.000% 02/17/01 04/10/2003 2,500,000 2,485,150
Delta Funding Home Equity 1996-1 A5 7.400% 11/22/00 07/25/2013 5,000,000 5,068,750
Delta Funding Home Equity 1998-2 A3F(a) 6.240% 10/20/02 05/15/2025 3,000,000 2,963,906
Delta Funding Home Equity Loan 1998-1 2A(a) 5.133% 08/05/99 05/25/2030 1,646,050 1,642,449
Equicredit Home Equity 1998-1 A3F 6.225% 07/20/00 12/15/2012 3,252,000 3,316,024
Green Tree Acc Corp. 1998-6 A3 5.930% 10/28/00 04/01/2009 6,050,000 6,042,437
Gulf States Auto Grantor Trust 1996-B A 6.600% 02/26/00 05/25/2003 1,726,993 1,728,072
Independent National Mortgage Corp. 1998-2 A2 6.170% 11/01/00 12/25/2011 4,900,000 4,881,625
Residential Funding 1999 KS1A 6.000% 02/14/01 04/25/2020 3,970,000 3,935,262
Standard Credit Card 1998-1 A6(a) 6.737% 06/30/99 03/23/2003 4,674,000 4,615,575
TMS Home Equity 1996-A5 ERISA 6.850% 10/28/99 06/15/2019 5,836,209 5,848,975
TMS Home Equity 1996-C A3 7.070% 08/21/99 12/15/2016 892,185 891,623
TMS Home Equity Trust 1996-D A1O(a) 5.198% 08/05/99 04/15/2028 2,279,947 2,276,687
TMS Home Equity Trust 1998-1 AV1(a) 5.163% 08/05/99 06/15/2029 3,230,399 3,226,361
Team Fleet Financing Corp. 1998-2A A 6.070% 04/08/01 07/25/2002 3,975,000 3,935,250
UCFC Home Equity Loan Trust 1994-D A4 8.775% 03/04/00 02/10/2016 2,594,593 2,629,458
UCFC Home Equity Loan Trust 1996 A1 A5 6.500% 12/14/99 03/15/2016 3,575,769 3,573,534
-----------
Total Asset Backed (Cost $83,758,090) 83,328,466
-----------
Corporate -- 36.9%
Bank Bonds -- 5.6%
First USA Bank N.A 6.125% 06/25/2001 3,000,000 2,997,090
National Westminister Bank 9.450% 05/01/2001 4,000,000 4,225,280
Nations Bank 5.750% 03/15/2001 2,500,000 2,484,925
Sovereign Bancorp 6.750% 07/01/2000 4,555,000 4,575,315
-----------
14,282,610
-----------
Financial -- 17.2%
AT& T Capital Corp. 6.250% 05/15/2001 3,600,000 3,559,140
American Express Travel(a) 5.098% 10/24/99 10/24/2001 3,350,000 3,322,896
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expected Par Value
Security Rate Maturity Maturity Value* (Note 1A)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Financial (continued)
Bear Stearns Co. 9.375% 06/01/2001 $ 2,209,000 $ 2,323,559
Beneficial Corp. 8.170% 11/09/1999 3,950,000 3,983,812
Carramerica Realty Corp. 6.625% 10/01/2000 3,550,000 3,524,724
Chrysler Corp. Medium Term Notes 5.250% 10/19/2000 2,750,000 2,720,575
General Motors Acceptance Corp. 5.500% 01/04/2002 1,500,000 1,468,620
Heller Financial 144A 6.350% 08/15/1999 1,250,000 1,248,438
Household Financial Corp. 6.000% 05/08/2000 2,150,000 2,149,334
Lehman Brothers 6.330% 08/01/2000 3,000,000 3,001,890
Lehman Brothers Holding Inc. 6.000% 02/26/2001 4,240,000 4,200,738
Morgan Stanley Dean Witter(a) 5.315% 09/19/99 12/19/2001 5,500,000 5,398,055
Wellsford Residential Property
REIT(a) 5.369% 08/25/99 11/24/1999 6,750,000 6,750,000
-----------
43,651,781
-----------
Industrial Bonds -- 14.1%
American Home Products 7.700% 02/15/2000 4,650,000 4,709,427
COMDISCO Inc. Notes NCL 6.000% 01/21/02 01/30/2002 5,000,000 4,929,650
Chrysler Finance Corp. Senior Notes 9.500% 12/15/1999 3,000,000 3,049,800
Coca-Cola Co. 144A 6.000% 03/15/2001 4,175,000 4,156,054
Cox Enterprises 144A 6.250% 08/26/1999 6,460,000 6,467,946
DeepTech International 12.000% 06/15/00 12/15/2000 3,500,000 3,690,519
Hertz Corp. 6.500% 04/01/2000 1,500,000 1,504,305
IMC Global Inc. 6.625% 10/15/2001 4,675,000 4,668,782
TRW Inc. 144A 6.500% 06/01/2002 2,500,000 2,465,625
-----------
35,642,108
-----------
Total Corporate (Cost $94,035,782) 93,576,499
-----------
Government/Other -- 4.7%
EuroDollar -- 2.7%
Advance Bank Australia(a) 5.168% 08/29/99 11/29/2001 4,630,000 4,632,895
St. Georges Euro(a) 6.063% 07/14/99 07/14/2000 2,143,000 2,155,500
-----------
6,788,395
-----------
Yankee Bonds -- 2.0%
Tyco International 6.125% 06/15/2001 5,000,000 4,973,550
-----------
Total Government/Other (Cost $11,775,250) 11,761,945
-----------
U.S. Government Agency -- 4.7%
Pass Thru Securities -- 4.7%
FHLMC(a) 6.855% 10/08/99 02/01/2023 98,982 99,591
FHLMC Gold 5 Yr 7.000% 06/30/99 08/01/1999 310,968 313,009
FHLMC Gold 5 Yr 8.000% 01/30/00 02/01/2000 - 07/01/2000 539,419 550,039
FNMA 5.750% 06/07/2001 3,030,000 3,018,153
FNMA 5.920% 07/05/01 07/05/2001 5,000,000 4,975,800
TVA 6.000% 11/01/2000 3,000,000 3,009,360
-----------
Total U.S. Government Agency (Cost $12,034,300) 11,965,952
-----------
TOTAL BONDS AND NOTES (COST $201,603,422) 200,632,862
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Schedule of Investments - June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value* (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 20.2%
Commercial Paper -- 12.3%
Anheuser Busch 5.180% 07/01/1999 $ 2,300,000 $ 2,300,000
BP America 5.700% 07/01/1999 4,000,000 4,000,000
International Lease Finance Corp. 4.900% 07/01/1999 5,000,000 5,000,000
Kimberly Clark 5.000% 07/22/1999 5,000,000 4,985,417
Mobil Oil Corp 5.060% 07/02/1999 5,000,000 4,999,297
Motorola Credit 5.000% 08/03/1999 5,000,000 4,977,083
Warner Lambert 4.920% 07/02/1999 5,000,000 4,999,317
-------------
31,261,114
-------------
U.S. Government Agency -- 7.9%
FHLB Discount Note 4.750% 07/06/1999 19,900,000 19,886,990
-------------
Repurchase Agreements -- 0.0%
Prudential-Bache Repurchase Agreement,
dated 6/30/99, due 7/1/99, with a
maturity value of $45,853 and an
effective yield of 4.10%, collateralized
by a U.S. Government Agency Obligation
with a rate of 7.173%, maturity date of
5/1/07 and market value of $47,646. 45,848
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $51,193,952) 51,193,952
-------------
TOTAL INVESTMENTS -- 99.5% (COST $252,797,374) $ 251,826,814
Other Assets, Less Liabilities -- 0.5% 1,368,222
-------------
NET ASSETS -- 100.0% $ 253,195,036
=============
</TABLE>
Notes to Schedule of Investments:
144A - Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration.
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
NCL - Non-callable
REIT - Real Estate Investment Trust
TVA - Tennessee Valley Authority
* Denominated in United States currency except for foreign country specific
bonds which are denominated in their respective local currency.
(a) Variable Rate Security; rate indicated is as of 6/30/99.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at value (Note 1A) (identified cost,
$252,797,374) $ 251,826,814
Receivable for investments sold 162,403
Interest receivable 2,047,095
Tax reclaim receivable 78,507
Deferred organization costs (Note 1E) 7,095
Prepaid expenses 7,085
-------------
Total assets 254,128,999
Liabilities
Payable for investments purchased $903,132
Accrued accounting and custody fees 11,701
Accrued trustees' fees and expenses (Note 2) 3,999
Accrued expenses and other liabilities 15,131
--------
Total liabilities 933,963
-------------
Net Assets (applicable to investors' beneficial
interests) $ 253,195,036
=============
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1C)
Interest income $ 7,165,871
-----------
Total income 7,165,871
Expenses
Investment advisory fee (Note 2) $ 301,254
Accounting and custody fees 62,573
Legal and audit services 13,675
Trustees' fees and expenses (Note 2) 9,456
Insurance expense 5,058
Amortization of organization expenses (Note 1E) 1,002
Miscellaneous 232
----------
Total expenses 393,250
-----------
Net investment income 6,772,621
-----------
Realized and Unrealized Gain (Loss)
Net realized loss
Investment security transactions (749,339)
----------
Net realized loss (749,339)
Change in unrealized appreciation (depreciation)
Investment securities (451,717)
----------
Change in net unrealized depreciation (451,717)
-----------
Net realized and unrealized loss (1,201,056)
-----------
Net Increase in Net Assets from Operations $ 5,571,565
===========
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Period
January 2, 1998
Six Months Ended (Commencement of
June 30, 1999 Operations) to
(Unaudited) December 31, 1998
----------------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
From Investment Operations
Net investment income $ 6,772,621 $ 16,549,270
Net realized gain (loss) (749,339) 67,070
Change in net unrealized depreciation (451,717) (632,740)
------------- -------------
Net increase in net assets from investment
operations 5,571,565 15,983,600
------------- -------------
Capital Transactions
Assets contributed by Standish Short Term Asset
Reserve Fund at commencement (including unrealized
appreciation of $113,897) -- 248,286,826
Contributions 131,721,252 305,080,235
Withdrawals (145,836,201) (307,612,241)
------------- -------------
Net increase (decrease) in net assets from capital
transactions (14,114,949) 245,754,820
------------- -------------
Total Increase (Decrease) in Net Assets (8,543,384) 261,738,420
Net Assets
At beginning of period 261,738,420 --
------------- -------------
At end of period $ 253,195,036 $ 261,738,420
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Period
Six Months January 2, 1998
Ended (Commencement
June 30, 1999 of Operations)
(Unaudited) to December 31, 1998
------------- --------------------
<S> <C> <C>
Ratios:
Expenses (to average daily net assets) 0.33%+ 0.31%+
Net Investment Income (to average daily net assets) 5.62%+ 5.83%+
Portfolio Turnover 45% 113%
Net Assets, End of Period (000's omitted) $253,195 $261,738
</TABLE>
- -----------------
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
14
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Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve 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
Short-Term Asset Reserve Portfolio (the "Portfolio") is a separate
diversified investment series of the Portfolio Trust.
At June 30, 1999 there is one fund invested in the Portfolio. The value of
the Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio. The proportionate interest at
June 30, 1999 of the Standish Short Term Asset Reserve Fund is
approximately 100%.
The following is a summary of significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. Investment security valuations
Securities for which quotations are readily available are valued at the
last sale price, or if no sale price, at the closing bid price in the
principal market in which such securities are normally traded. Securities
(including restricted securities) for which quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
Short-term instruments with less than sixty-one days remaining to maturity
when acquired by the Portfolio are valued at amortized cost. If the
Portfolio acquires a short-term instrument with more than sixty days
remaining to its maturity, it is valued at current market value until the
sixtieth day prior to maturity and will then be valued at amortized cost
based up on the value on such date unless the trustees determine during
such sixty-day period that amortized cost does not represent fair value.
B. Repurchase agreements
It is the policy of the Portfolio to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the
Portfolio to monitor on a daily basis, the market value of the repurchase
agreement's underlying investments to ensure the existence of a proper
level of collateral.
C. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or accretion of discount on long-term debt securities when
required for federal income tax purposes. Realized gains and losses from
securities sold are recorded on the identified cost basis.
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
15
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Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
for its investors to satisfy them. The Portfolio allocates at least
annually among its investors each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss deduction or credit.
E. Deferred Organizational Expenses
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight-line basis through
January 2003.
(2) Investment Advisory Fee:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory services is paid monthly at the annual
rate of 0.25% of the Portfolio's average daily net assets. The Portfolio
Trust pays no compensation directly to its trustees who are affiliated
with SA&W or to its officers, all of whom receive remuneration for their
services to the Portfolio Trust from SA&W. Certain of the trustees and
officers of the Portfolio Trust are directors or officers of SA&W.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- ------------
<S> <C> <C>
U.S. Government Securities $ 6,056,757 $ 8,892,350
=========== ============
Investments (non-U.S.Government Securities) $85,490,212 $105,300,684
=========== ============
</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, 1999, as computed on a federal
income tax basis, were as follows:
<TABLE>
<S> <C>
Aggregate Cost $252,797,374
============
Gross unrealized appreciation 137,534
Gross unrealized depreciation (1,108,094)
------------
Net unrealized depreciation $ (970,560)
============
</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 seek to
enhance potential gain in circumstances where hedging is not involved. The
nature, risks and objectives of these instruments are set forth more fully
in Parts A and B of the Portfolio Trust's registration statement.
The Portfolio trades the following financial instruments with off-balance
sheet risk:
Options
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before a
certain date. The Portfolio may use options to seek to hedge against risks
of market exposure and changes in security 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
16
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Standish, Ayer & Wood Master Portfolio
Standish Short-Term Asset Reserve Portfolio
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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
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 contract's 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.
There were no written option contracts for the six months ended June 30,
1999.
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