STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
Financial Statements for the Period Ended
September 30, 1999
[LOGO]
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
November 25, 1999
Dear Standish Funds Shareholder:
Enclosed you will find the annual statement for your Standish Fund for the
fiscal year ended September 30, 1999.
During the twelve months ended September 30, 1999, returns from most equity
investments have been very strong. For example, large capitalization U.S.
stocks, as reflected in the Standard and Poor's 500 Index, provided a total
return of 27.79%; smaller cap U.S. stocks, as measured by the Russell 2000
Index, a return of 19.08%; and international stocks, as recorded by the Morgan
Stanley Capital International EAFE Index, a total return of 30.94%. Within the
market, growth issues have generally performed better than value stocks, and
larger capitalization issues have generally performed better than smaller
capitalization issues. The past year's results combined with those of prior
years have produced very good returns. Specifically, the Standard and Poor's 500
Index annual total return for the five years ending September 30, 1999 was
25.03%, about two and one-half times the very long-term average return for U.S.
stocks.
The financial crisis that gripped the world's capital market in the fall of 1998
has waned, and economic growth, especially in the U.S., remains strong. Some
acceleration of growth has appeared in Western Europe, as has evidence of a
bottoming of the economy in Japan. Corporate profit growth has generally been
strong. Although inflation has been quiescent, interest rates have increased
reflecting the stronger economic growth. The Federal Reserve has recently
tightened monetary policy, reversing the easing that took place a year ago.
Standish Ayer & Wood is devoted to producing superior long-term returns through
very disciplined investment philosophies designed to uncover value. We remain
confident that we have the capability to do a superior job by adhering to our
disciplines. As of September 30, 1999, Standish, Ayer & Wood, Inc., advisor to
Standish Funds, together with its affiliate, Standish International Management
Company, L.P., had approximately $45 billion of assets under management,
including $6 billion of assets in the Standish Funds. Our principal clients are
corporate pension trusts, governmental pension funds, insurance companies,
endowments and foundations, and high net worth individuals. Standish, Ayer &
Wood remains independent and is owned by investment professionals active in the
business. The professional staff, now 287, has grown over the last year and
includes 111 professionals who hold the Chartered Financial Analyst designation.
We appreciate the opportunity to serve you and hope you will find the attached
information helpful.
Sincerely yours,
/s/ Ted Ladd
Edward H. Ladd
Chairman
Standish, Ayer & Wood, Inc.
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
Management Discussion and Analysis
The Standish International Equity Fund achieved a return of 21.26% for the
twelve-month period ended September 30, 1999. The Fund's fiscal year was
extraordinarily positive for international equity markets, with the MSCI EAFE
Index up 30.94%. This represents a 3% premium over the remarkably steady advance
in U.S. equities as measured by the S&P 500 Index.
A large part of the performance generated by international stocks over the past
twelve months was realized in the fourth quarter of 1998, as global markets
soared after the summer financial panic. The summer's events included defaults
in Russia, devaluation of Asian currencies, and highly publicized problems at
hedge fund Long Term Capital. The U.S. Federal Reserve triggered a recovery in
financial markets by easing monetary policy in October, 1998 - a significant
action considering that the rate cut took place between scheduled FOMC meetings.
Asian markets have since experienced a particularly strong turnaround, producing
some of the year's highest returns. Japan began to emerge from the depths of a
crippling recession to rise more than 77% in U.S. dollar terms, Hong Kong
returned 61%, and Singapore appreciated an astounding 123%, as local shares
soared when foreign ownership restrictions were lifted. Europe appreciated 17%
over the past twelve months with Scandinavian markets leading the region's rise.
Mobil phone maker Nokia fueled a 90% return in Finland, and Sweden posted a
solid 41% gain. The United Kingdom and Germany trailed most markets over the
fiscal year with identical returns of 16.7%
While the Fund achieved an attractive return of 21.26% for the fiscal year, it
trailed the benchmark due mainly to stock selection, as county allocation was
fairly neutral. The research team was successful in uncovering portfolio
candidates that fit our investment criteria: positive business momentum and
attractive valuation. In fact, many of the Fund's holdings reported earnings
ahead of analysts' expectations - over two thirds versus approximately half for
the universe. Unfortunately, investors often overlooked positive earnings growth
in favor of other market developments, such as the flurry of merger activity
engendered by Europe's accelerated consolidation. Consequently, many companies
with strong earnings power, low price multiples, and solid core businesses did
not fare as well as anticipated.
We remain focused on identifying companies that demonstrate this combination of
positive relative business momentum and attractive valuation. Our research team
is aided in their search for such companies by a series of investment models
that have been systematized to evaluate companies on characteristics that
effectively gauge value and growth. Historically, the characteristics of our
international equity portfolios have exhibited higher positive earnings estimate
activity and lower price multiples than the index of international equities.
Looking forward, we believe international equity markets will continue to reward
investors with a premium over the U.S. market. Against the backdrop of
widespread economic growth, we believe that international companies are well
positioned to surpass earnings expectations and post attractive returns.
As always, we appreciate your support of the Standish International Equity Fund
and will work diligently to earn and reward your confidence in the coming year.
Sincerely,
/s/ Remi J. Browne
Remi J. Browne
3
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
Comparison of Change in Value of $100,000 Investment in
Standish International Equity Fund and the EAFE Index
[The following table was represented as a mountain graph in the printed
materials.]
Standish International
Equity Fund EAFE Index
---------------------- ----------
100000 100000
100350 100600
101450 102411
99900 102923
99600 100864
103400 101772
100300 96276
100750 94640
110384 106564
110485 101769
112818 106450
106835 102192
110942 107302
1 Year 119206 111272
118948 107155
117194 99654
119103 89290
116420 88576
123438 98674
126018 97785
132212 99154
117358 89536
102925 77091
110640 89117
109065 83859
2 Year 107963 85201
110801 87927
120173 97380
115139 91537
116639 92434
118352 93358
111658 86543
116950 90792
115384 88976
119217 93995
121269 95320
115654 90840
3 Year 120621 95527
120567 93493
119643 90146
114482 84196
115786 84592
120241 90251
115188 85973
112137 83772
111483 89025
109194 87244
107342 82672
107941 83450
4 Year 108595 83884
108595 83884
111559 86417
116446 93952
119410 102868
120948 105039
120069 103400
123818 107019
132418 112798
130213 110204
139309 113598
135064 103715
5 Year 150169 111204
159323 120611
152359 120274
141352 115090
145789 119970
146856 119286
141268 120968
146131 122141
150766 125036
145273 121097
147104 125130
142012 119111
6 Year 139645 119861
132457 115259
129860 114936
132578 122097
137893 126687
138135 125180
135974 122989
142943 130646
138095 125662
139246 128116
134884 124672
138034 128141
7 Year 142640 133304
145972 133851
145124 134303
146033 137150
153789 141138
152153 138541
153168 139321
147904 135249
146964 135545
151413 139146
148092 137722
155362 143202
8 Year 153255 141360
149696 136412
152398 138643
150619 139143
150355 139881
160968 148987
168472 157196
170851 159743
157693 147810
164972 156087
156573 144084
151463 142614
9 Year 149469 143855
158452 150429
173265 160087
181617 165018
186344 166321
188866 165506
188017 166764
189684 168448
165944 147578
160148 143047
174202 157952
180395 166040
10 Year 186131 172582
185079 172064
180064 167969
182248 174973
192279 182059
182491 172685
YTD 188395 179418
193458 184747
193131 185430
194193 187303
------------------------------------------------------
Average Annual Total Return
(for periods ended 9/30/99)
Since
Inception
1 Year 3 Year 5 Year 10 Year 12/08/1988
------ ------ ------ ------- ----------
21.26% 8.65% 5.98% 5.58% 6.32%
------------------------------------------------------
Past performance is not predictive of future performance.
4
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (Note 1A) (identified cost,
$35,020,185) $37,101,124
Cash 1,434,716
Foreign currency, at value (cost $1,025,533) 1,032,344
Receivable for investments sold 1,280,449
Interest and dividends receivable 112,009
Receivable for variation margin on open financial
futures contracts (Note 6) 17,547
Unrealized appreciation on forward foreign currency
exchange contracts (Note 6) 14,530
Tax reclaim receivable 96,463
Prepaid expenses 2,448
-----------
Total assets 41,091,630
LIABILITIES
Payable for investments purchased $1,964,989
Unrealized depreciation on forward foreign currency
exchange contracts (Note 6) 41,673
Accrued accounting, custody and transfer agent fees 29,764
Accrued trustees' fees and expenses (Note 2) 1,465
Accrued expenses and other liabilities 35,305
----------
Total liabilities 2,073,196
-----------
NET ASSETS $39,018,434
===========
NET ASSETS CONSIST OF:
Paid-in capital $34,407,855
Accumulated net realized gain 2,189,910
Undistributed net investment income 400,152
Net unrealized appreciation 2,020,517
-----------
TOTAL NET ASSETS $39,018,434
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 1,641,724
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
(Net Assets/Shares outstanding) $ 23.77
===========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend income (net of foreign withholding taxes of
$90,474) $ 814,934
Interest income 58,212
----------
Total investment income 873,146
EXPENSES
Investment advisory fee (Note 2) $ 318,110
Accounting, custody and transfer agent fees 183,431
Legal and audit services 37,345
Registration fees 6,501
Insurance expense 5,835
Trustees' fees and expenses (Note 2) 5,584
Miscellaneous 4,860
----------
Total expenses 561,666
Deduct:
Waiver of investment advisory fee (Note 2) (164,027)
----------
Net expenses 397,639
----------
Net investment income 475,507
----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain
Investment security transactions 2,373,004
Financial futures contracts 177,573
Foreign currency transactions and forward foreign
currency exchange contracts 24,892
----------
Net realized gain 2,575,469
Change in unrealized appreciation (depreciation)
Investment securities 4,530,485
Financial futures contracts 82,914
Foreign currency and forward foreign currency
exchange contracts (8,867)
----------
Net change in unrealized appreciation
(depreciation) 4,604,532
----------
Net realized and unrealized gain 7,180,001
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $7,655,508
==========
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 475,507 $ 544,277
Net realized gain 2,575,469 565,185
Change in unrealized appreciation (depreciation) 4,604,532 (3,113,110)
----------- ------------
Net increase (decrease) in net assets from investment
operations 7,655,508 (2,003,648)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1E)
From net investment income (563,638) (567,912)
From net realized gains on investments (567,620) (4,215,438)
----------- ------------
Total distributions to shareholders (1,131,258) (4,783,350)
----------- ------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)
Net proceeds from sale of shares 3,622,377 6,057,674
Value of shares issued to shareholders in payment of
distributions declared 827,848 4,381,657
Cost of shares redeemed (8,772,044) (16,333,667)
----------- ------------
Net decrease in net assets from Fund share
transactions (4,321,819) (5,894,336)
----------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,202,431 (12,681,334)
NET ASSETS
At beginning of year 36,816,003 49,497,337
----------- ------------
At end of year (including undistributed net
investment income of $400,152 and $192,475,
respectively) $39,018,434 $ 36,816,003
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
SEPTEMBER 30, ENDED YEAR ENDED DECEMBER 31,
------------------ SEPTEMBER 30, --------------------------------
1999(1) 1998 1997 1996 1995 1994
-------- -------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 20.17 $ 23.57 $ 23.25 $ 23.54 $ 23.12 $ 26.74
-------- -------- -------- -------- -------- --------
INVESTMENT OPERATIONS:
Net investment income* 0.27 0.32 0.39 0.47 0.04 0.21
Net realized and unrealized gain
(loss) on investments 3.98 (1.17) 1.44 1.28 0.45 (2.08)
-------- -------- -------- -------- -------- --------
Total from investment operations 4.25 (0.85) 1.83 1.75 0.49 (1.87)
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.33) (0.31) (0.30) (0.51) -- (0.12)
From net realized gain on investments (0.32) (2.24) (1.21) (1.53) (0.07) (1.63)
-------- -------- -------- -------- -------- --------
Total distributions to shareholders (0.65) (2.55) (1.51) (2.04) (0.07) (1.75)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 23.77 $ 20.17 $ 23.57 $ 23.25 $ 23.54 $ 23.12
======== ======== ======== ======== ======== ========
TOTAL RETURN 21.26% (2.92)% 7.65% 7.44% 2.14% (6.99)%
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net
assets)* 1.00% 1.00% 0.84%+ 0.50% 1.22% 1.23%
Net Investment Income (to average
daily net assets)* 1.20% 1.30% 1.78%+ 1.80% 1.76% 1.52%
Portfolio Turnover 195% 206% 155% 163% 108% 51%
Net Assets, End of Year (000's
omitted) $ 39,018 $ 36,816 $ 49,497 $ 47,739 $ 59,473 $104,435
</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 $ 0.18 $ 0.22 $ 0.29 $ 0.27 -- --
Ratios (to average daily net assets):
Expenses 1.41% 1.42% 1.42%+ 1.29% -- --
Net investment income 0.79% 0.88% 1.20%+ 1.01% -- --
</TABLE>
+ Computed on an annualized basis.
(1) Calculated based on average shares outstanding.
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 - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
VALUE
SECURITY SHARES (NOTE 1A)
- --------------------------------------------------------------------------------
EQUITIES -- 94.8%
AUSTRALIA -- 2.5%
Boral Ltd. 82,000 $ 125,561
Broken Hill Proprietary 16,200 186,627
Leighton Holdings Ltd. 34,000 130,710
Qantas Airways Ltd. 72,000 225,573
Westfield Trust 74,000 149,440
Westpac Banking Corp. Ordinary Shares 26,900 165,972
------------
983,883
------------
BELGIUM -- 2.8%
Arbed 1,600 157,931
Bekaert SA Ordinary Shares 740 339,551
Fortis B 11,400 372,247
Solvay Et Cie A NPV 3,200 228,445
------------
1,098,174
------------
DENMARK -- 0.8%
Tele Danmark Ordinary Shares 5,400 322,365
------------
FINLAND -- 0.7%
Enso Oy-A Shares* 21,500 285,407
------------
FRANCE -- 7.5%
AGF Assurances Generale France 3,900 213,911
AXA Company Frf60 1,700 215,512
Banque National De Paris 3,350 267,930
Ciments Francais-A 4,400 323,972
Compagnie De Saint Gobain French 850 158,731
Elf-Aquitaine Societe National Elf-Aquitaine 1,500 262,507
Groupe Danone 460 112,163
Michelin B French Regular Shares 4,170 197,215
Peugeot SA FF35 2,100 421,739
Remy Cointreau* 10,000 208,084
Rhone Polenc Frf25 "A" 5,950 307,938
Societe Generale France Ordinary Shares 1,200 247,781
------------
2,937,483
------------
GERMANY -- 7.4%
BASF AG 6,800 290,251
Commerzbank AG 10,600 407,205
DBV-Winterhur Holding 7,200 412,584
Deutsche Bank AG 6,200 415,817
Deutsche Telekom AG 7,800 320,450
Escada AG 2,550 372,791
Karstadt AG Dm50* 550 248,848
M.A.N. AG Dm50 4,500 135,895
Phoenix AG 19,000 268,642
------------
2,872,483
------------
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 - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
VALUE
SECURITY SHARES (NOTE 1A)
- --------------------------------------------------------------------------------
HONG KONG -- 1.9%
Dah Sing Financial Holdings Ordinary Shares 60,000 $ 240,201
Hang Seng Bank Ordinary Shares 15,000 158,814
Hong Kong Electric 62,000 192,341
Regal Hotel International* 800 70
Sun Hung Kai Properties 18,000 137,285
------------
728,711
------------
IRELAND -- 1.5%
CRH PLC Ordinary Shares 4,799 92,077
DCC PLC 16,624 130,739
Irish Permanent PLC Ordinary Shares 22,800 256,680
Kerry Group PLC - A 8,600 109,207
------------
588,703
------------
ITALY -- 2.5%
ENI Spa 76,300 479,155
Fondiaria La Assicurazioni Spa 22,400 132,710
R.A.S. Spa 11,900 118,921
Telecom Italia Mobile Ordinary Shares 39,900 246,906
------------
977,692
------------
JAPAN -- 26.8%
Aoyama Trading 3,000 101,389
Cosmo Oil Company Ltd. 64,000 101,540
DDI Corp. 79 593,316
Daiichi Pharmaceutical 15,000 227,845
Daikyo, Inc.* 77,000 233,487
Dainippon Ink & Chemical Inc. 45,000 179,966
Daito Trust Construction Ordinary Shares 29,000 430,154
Daiwa House Industry 27,000 266,908
Hitachi Chemical 10,000 170,860
Hitachi Ltd. (Hit. Seisakusho) 61,000 675,742
House Foods Corp. 16,000 233,571
Industrial Bank of Japan 44,000 540,706
Kawasaki Kisen 108,000 204,807
Kyocera Corp. 2,800 212,918
Mazda Motors Corp. 56,000 280,736
Mitsubishi Motor Corp.* 71,000 385,261
Nippon Shinpan Co. Ordinary Shares 125,000 416,588
Nomura Securities Co. Ltd. 20,000 309,801
Ntt Mobile Communcations 110 216,861
Ohbayashi-Gumi Corp. Jpy 50 29,000 175,056
Ono Pharmaceutical 6,000 222,493
Orient Corporation 43,000 153,398
Ricoh Corp. Ltd. 24,000 416,823
Rohm Company 1,000 208,881
Sankyo Co. Ltd. Jpy 50 10,000 300,413
Seino Transportation Co. Ltd. 62,000 419,076
Sharp Corp. 18,000 288,284
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
VALUE
SECURITY SHARES (NOTE 1A)
- --------------------------------------------------------------------------------
JAPAN (CONTINUED)
Shikoku Electric Power 13,000 $ 207,961
Shionogi & Co. Ltd. 38,000 311,791
Sumitomo Bank 13,000 195,268
Taisho Pharmaceutical Co. Ltd. 4,000 168,231
Tokyo Broadcasting 8,000 161,097
Toyo Seikan Kaisha 12,000 259,106
Toyo Suisan Kaisha Ltd. 41,000 490,753
Toyota Motor Co. 9,000 286,425
Yokogawa Electric 56,000 399,549
------------
10,447,061
------------
NETHERLANDS -- 5.2%
ABN Amro Holdings 11,100 248,741
Gamma Holding 6,700 268,824
Getronics NV Andeel 4,200 226,556
ING Groep 5,376 293,434
Koninklijke Boskalis Westminster NV 19,100 309,800
Koninklijke KPN NV 3,400 149,842
Koninklijke Philips Electonics Ordinary Shares 2,392 241,977
Royal Dutch Petroleum Co. 4,715 274,713
------------
2,013,887
------------
NEW ZEALAND -- 0.4%
Telecom New Zealand Ordinary Shares 38,900 153,627
------------
PORTUGAL -- 1.9%
Banco Pinto & Sotto Mayor 10,000 198,481
Cimentos De Portugal SA 9,620 159,115
Portugal Telecom SA 9,600 400,342
------------
757,938
------------
SINGAPORE -- 1.8%
Development Bank of Singapore 21,467 239,996
Keppel Corp. Ltd. Ordinary Shares 65,000 189,703
Overseas Union Bank Ordinary Shares 31,000 137,717
Sembcorp Industries Ltd. Ordinary Shares 153 176
Singapore Airlines Ltd. 15,000 146,514
------------
714,106
------------
SPAIN -- 4.0%
Aumar Ordinary Shares 7,700 160,061
Endesa SA 15,128 287,993
Faes-Fabric Espan De Product 10,400 120,966
Inmobiliria Urbis SA* 28,200 179,951
Repsol SA 5,800 113,819
Telefonica SA* 42,500 681,637
------------
1,544,427
------------
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
VALUE
SECURITY SHARES (NOTE 1A)
- --------------------------------------------------------------------------------
SWITZERLAND -- 7.6%
Ares-Serono Group, Class B 185 $ 292,534
Ascom Holding AG Bearer Shares 125 246,030
Cie Financ Richemont-Uts "A" 140 283,774
Credit Suisse Group Registered Shares 1,380 253,203
Grands Magasins Jelmoli SA 160 174,967
Helvetia Patria Holding Registered Shares 410 336,469
Hilti AG-PC 470 355,918
Nestle Registered Shares 260 489,191
Roche Holding AG - Genusschein 210 243,305
Valora Holding AG Registered Shares 1,100 279,624
------------
2,955,015
------------
UNITED KINGDOM -- 19.5%
Alliance & Leicester PLC+ 20,900 287,826
Allied Zurich PLC Ordinary Shares 24,600 286,970
Arcadia Group PLC 42,000 117,387
Astrazeneca PLC 8,400 346,234
BG PLC 38,200 216,678
BPB Industries PLC 30,800 189,664
Barclays PLC Ordinary Shares 14,200 416,036
Barratt Developments PLC Ordinary Shares 56,600 244,163
Bass PLC Ordinary Shares 18,000 217,221
Billiton PLC 32,700 136,971
British Energy PLC 54,646 370,686
British Energy PLC- A Shares* 61,000 58,253
British Petroleum Co. PLC 12,400 219,977
British Telecommunications PLC 29,800 451,159
FKI Babcock 42,600 130,273
Firstgroup 55,700 290,721
Hazlewood Foods PLC 142,000 270,042
London & Scotland Marine Oil (Lasmo PLC) 78,500 178,107
National Westminster 7,400 172,161
Rio Tinto PLC Ordinary Shares 13,000 222,286
Royal Bank of Scotland Group PLC 37,700 807,651
Signet Group PLC* 638,000 522,607
Smith and Nephew Associated PLC 40,700 127,372
Tate & Lyle PLC 32,900 201,219
Tomkins PLC 57,000 238,380
United Utilities PLC 24,000 258,656
Vodafone Group PLC 15,000 354,145
Wimpey (George) PLC 139,000 288,368
------------
7,621,213
------------
TOTAL EQUITIES (COST $34,921,236) 37,002,175
------------
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<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%
U.S. Treasury Bill+ 4.628% 12/23/1999 $ 100,000 $ 98,949
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $98,949) 98,949
------------
TOTAL INVESTMENTS -- 95.1% (COST $35,020,185) $ 37,101,124
OTHER ASSETS, LESS LIABILITIES -- 4.9% 1,917,310
-------------
NET ASSETS -- 100.0% $ 39,018,434
=============
</TABLE>
NOTES TO 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.
13
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(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 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 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.
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.
14
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 treatments for financial
futures contracts and 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 (excluding litigation,
indemnification and other extraordinary expenses) to 1.00% of the Funds
average daily net assets for the fiscal year ended September 30, 1999.
This agreement is voluntary and temporary and may be discontinued or
revised by SIMCO at any time. For the fiscal year ended September 30,
1999, SIMCO voluntarily waived a portion of its investment advisory fee in
the amount of $164,027. 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:
Cost of purchases and proceeds from sales of investments, other than
short-term investments for the year ended September 30, 1999 were as
follows:
PURCHASES SALES
----------- -----------
U.S. Government Securities $ -- $ --
=========== ===========
Investments (non-U.S.Government Securities) $74,264,935 $79,584,773
=========== ===========
(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:
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
Shares sold 158,473 264,292
Shares issued to shareholders in payment of
distributions declared 36,030 231,061
Shares redeemed (378,286) (770,220)
-------- --------
Net decrease (183,783) (274,867)
======== ========
At September 30, 1999, the Fund had three shareholders of record owning
approximately 14%, 12% and 10% of the total outstanding shares of the
Fund.
15
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at September 30, 1999, as computed on a
federal income tax basis, were as follows:
Aggregate Cost $35,104,087
===========
Gross unrealized appreciation 3,445,211
Gross unrealized depreciation (1,448,174)
-----------
Net unrealized appreciation $ 1,997,037
===========
(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
Funds 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 Funds 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 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 year ended September 30, 1999, the Fund did not write any
option transactions, nor were there any open written option contracts at
September 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
16
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 September 30, 1999, the Fund held the following forward foreign
currency exchange contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
LOCAL PRINCIPAL CONTRACT MARKET AGGREGATE UNREALIZED
CONTRACTS TO RECEIVE AMOUNT VALUE DATE VALUE FACE AMOUNT GAIN/(LOSS)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
British Pound Sterling 606,608 10/1/99 $ 998,766 $ 998,785 $ (19)
Euro Dollar 811,879 10/01-10/04/99 866,449 851,982 14,467
Japanese Yen 56,359,000 3/17/00 543,686 551,052 (7,366)
Swiss Franc 4,616 10/4/99 3,081 3,082 (1)
---------------- ---------------- --------------
TOTAL $ 2,411,982 $ 2,404,901 $ 7,081
================ ================ ==============
<CAPTION>
LOCAL PRINCIPAL CONTRACT MARKET AGGREGATE UNREALIZED
CONTRACTS TO DELIVER AMOUNT VALUE DATE VALUE FACE AMOUNT GAIN/(LOSS)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
British Pound Sterling 255,656 10/1/99 $ 420,930 $ 420,941 $ 11
Euro Dollar 1,672,051 10/01-10/04/99 1,784,397 1,750,117 (34,280)
Japanese Yen 742,211 10/4/99 6,972 7,024 52
Singapore Dollar 1,982 10/1/99 1,166 1,159 (7)
---------------- --------------- --------------
TOTAL $ 2,213,465 $ 2,179,241 $ (34,224)
================ =============== ==============
</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 September 30, 1999, the Fund held the following open financial futures
contracts:
<TABLE>
<CAPTION>
UNDERLYING FACE
CONTRACT POSITION EXPIRATION DATE AMOUNT AT VALUE UNREALIZED LOSS
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Eurotop 100 Futures (4 contracts) Long 12/17/99 $ 1,170,000 $(40,580)
Topix Futures (4 contracts) Long 12/15/99 59,880,000 (78)
--------
$(40,658)
========
</TABLE>
17
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(7) LINE OF CREDIT:
The Fund, other funds in the trust and subtrusts in the Portfolio Trust
are parties to a committed line of credit facility, which enables each
portfolio or fund to borrow, in the aggregate, up to $25 million. Interest
is charged to each participating portfolio/fund based on its borrowings at
a rate equal to the Federal Funds effective rate plus 1/2 of 1%. In
addition, a commitment fee, computed at an annual rate of .065 of 1% on
the daily unused portion of the facility, is allocated ratably among the
participating portfolios/funds at the end of each quarter. For the year
ended September 30, 1999 the expense related to this commitment fee was
$697 for the Fund. During the year ended September 30, 1999, the Fund had
no borrowings under the credit facility.
- --------------------------------------------------------------------------------
TAX INFORMATION -- UNAUDITED
The Fund paid foreign taxes of $90,474 and the Fund recognized $905,408 of
foreign source income during the year ended September 30, 1999.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Standish, Ayer & Wood Investment Trust and the Shareholders
of Standish International Equity Fund:
In our opinion, the accompanying statement of asset and liabilities, including
the schedule of investments, and related statements of operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of Standish, Ayer & Wood Investment Trust:
Standish International Equity Fund (the "Fund"), at September 30, 1999, the
results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1999, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 19, 1999
19
<PAGE>
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