[LOGO] STANDISH FUNDS(R)
Financial Report Standish Equity Asset Fund
--------------------------------------------------------------------------------
Six Months Ended
March 31, 2000
(Unaudited)
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investment in Standish Equity Portfolio
("Portfolio"), at value (Note 1A) $50,989,781
Receivable for Fund shares sold 43,434
Deferred organization costs (Note 1E) 2,801
Prepaid expenses 1,972
-----------
Total assets 51,037,988
LIABILITIES
Accrued accounting, custody and transfer agent fees $ 4,233
Accrued trustees' fees and expenses (Note 2) 1,000
Accrued expenses and other liabilities 37,646
--------
Total liabilities 42,879
-----------
NET ASSETS $50,995,109
===========
NET ASSETS CONSIST OF:
Paid-in capital $42,710,062
Accumulated net realized gain 846,434
Undistributed net investment income 35,049
Net unrealized appreciation 7,403,564
-----------
TOTAL NET ASSETS $50,995,109
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 2,698,239
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
(Net Assets/Shares outstanding) $ 18.90
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)
Dividend income allocated from Portfolio $ 292,532
Interest income allocated from Portfolio 66,798
Expenses allocated from Portfolio (168,407)
----------
Net investment income allocated from Portfolio 190,923
EXPENSES
Administration service fee (Note 3) $ 66,256
Accounting, custody, and transfer agent fees 13,194
Registration fees 8,725
Legal and audit services 7,552
Trustees' fees and expenses (Note 2) 2,000
Amortization of organization expenses (Note 1E) 562
Insurance expense 543
Miscellaneous 5,624
---------
Total expenses 104,456
Deduct:
Reimbursement of Fund operating expenses (Note 2) (19,102)
---------
Net expenses 85,354
----------
Net investment income 105,569
----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain allocated from Portfolio on:
Investment security transactions 1,723,166
Financial futures contracts 278,433
---------
Net realized gain 2,001,599
Change in unrealized appreciation (depreciation)
allocated from Portfolio on:
Investment securities 2,867,881
Financial futures contracts 479,308
---------
Net change in unrealized appreciation
(depreciation) 3,347,189
----------
Net realized and unrealized gain 5,348,788
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $5,454,357
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 2000 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1999
---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 105,569 $ 379,152
Net realized gain 2,001,599 8,222,287
Net change in unrealized appreciation (depreciation) 3,347,189 5,483,473
----------- -----------
Net increase in net assets from investment operations 5,454,357 14,084,912
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1F)
From net investment income (94,796) (355,195)
From net realized gains on investments (6,435,217) (1,736,620)
----------- -----------
Total distributions to shareholders (6,530,013) (2,091,815)
----------- -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 5)
Net proceeds from sale of shares 806,585 84,938,827
Value of shares issued to shareholders in payment of
distributions declared 6,530,013 2,091,815
Cost of shares redeemed (12,480,610) (50,607,920)
----------- -----------
Net increase (decrease) in net assets from Fund
share transactions (5,144,012) 36,422,722
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,219,668) 48,415,819
NET ASSETS
At beginning of period 57,214,777 8,798,958
----------- -----------
At end of period (including undistributed net
investment income of $35,049
and $24,276, respectively) $50,995,109 $57,214,777
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 2000 ----------------------
(UNAUDITED)(1) 1999(1) 1998(1)(2)
-------------- ---------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.12 $ 17.51 $20.00
------- ------- ------
FROM INVESTMENT OPERATIONS:
Net investment income* 0.04 0.10 0.05
Net realized and unrealized gain (loss) on
investments 2.04 2.02 (2.42)
------- ------- ------
Total from investment operations 2.08 2.12 (2.37)
------- ------- ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.03) (0.10) (0.12)
From net realized gain on investments (2.27) (0.41) --
------- ------- ------
Total distributions to shareholders (2.30) (0.51) (0.12)
------- ------- ------
NET ASSET VALUE, END OF PERIOD $ 18.90 $ 19.12 $17.51
======= ======= ======
TOTAL RETURN+++ 11.61%++ 12.04% (11.66)%++
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net assets)*(3) 0.96%+ 0.91% 0.83%+
Net Investment Income (to average daily net
assets)* 0.40%+ 0.52% 0.46%+
Net Assets, End of Period (000's omitted) $50,995 $57,215 $8,799
</TABLE>
-----------------
* For the periods indicated, the investment adviser voluntarily agreed not
to impose a portion of its investment advisory fee and/or reimbursed the
Fund for all of its operating expenses. If this voluntary action had not
been taken, the investment income per share and ratios would have been:
<TABLE>
<S> <C> <C> <C>
Net investment income (loss) per share $ 0.03 $ 0.10 $(0.14)
Ratios (to average daily net assets):
Expenses (3) 1.03%+ 0.94% 2.49%+
Net investment income (loss) 0.33%+ 0.49% (1.20)%+
</TABLE>
(1) Calculated based on average shares outstanding.
(2) For the period October 8, 1997 (commencement of operations) to September
30, 1998.
(3) Includes the Fund's share of Standish Equity Portfolio's allocated expenses
for the periods since October 8, 1997.
+ Computed on an annualized basis.
++ Not annualized
+++ Total return would have been lower in absence of expense waivers.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET 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 Equity Asset Fund (the "Fund") is a separate diversified
investment series of the Trust.
The Fund invests all of its investable assets in an interest of the
Standish Equity Portfolio ( 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
30% at March 31, 2000). 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.
Shares of the Fund may be purchased by entities ("Account Administrators")
that provide omnibus accounting services for groups of individuals who
beneficially own Fund shares ("Omnibus Accounts"). Omnibus Accounts
include pension and retirement plans (such as 401(k) plans, 457 plans and
403(b) plans), and programs through which personal and or account
maintenance services are provided to groups of individuals whether or not
such individuals invest on a tax-deferred basis. Individual investors may
only purchase Fund shares through their Omnibus Account Administrators.
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.
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.
E. DEFERRED ORGANIZATIONAL EXPENSES
Costs associated with the Fund's organization and initial registration are
being amortized, on a straight-line basis, through September 2002.
5
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
F. DISTRIBUTIONS TO SHAREHOLDERS:
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, as will dividends from net investment income. 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. Distributions to shareholders are recorded on the
ex-dividend date. Dividends from net investment income and distributions
from capital gains, 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, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, passive foreign investment companies (PFIC),
litigation proceeds, market discount, non-taxable dividends, capital loss
carryforwards, losses deferred due to wash sales and excise tax
regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
(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 (SA&W) for such services. See Note 2 of
the Portfolio's Notes to Financial Statements which are included elsewhere
in this report. SA&W voluntarily agreed to limit the total operating
expenses of the Fund and its pro rata share of the Portfolio expenses
(excluding commissions, taxes, and extraordinary expenses) for the six
months ended March 31, 2000, so that the Fund's annual operating expenses
do not exceed the total operating expenses of the Standish Equity Fund
(net of any expense limitation) for the comparable period plus 0.25% (the
Fund's maximum Administration Service Fee). Pursuant to this agreement,
for the six months ended March 31, 2000, SA&W voluntarily reimbursed the
Fund for $19,102 of its operating expenses. This agreement is voluntary
and temporary and may be discontinued or revised by SA&W at any time. The
Fund 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 SA&W. Certain of the trustees and officers of
the Trust are directors or officers of SA&W.
(3) ADMINISTRATION SERVICE FEE:
Pursuant to a service plan, the Fund pays the service fees at an aggregate
annual rate of up to 0.25% of the Fund's average daily net assets. The
service fee is payable for the benefit of the participants in the Omnibus
Accounts that are shareholders in the Fund and is intended to be
compensation to Account Administrators for providing personal services
and/or account maintenance services to participants in Omnibus Accounts
that are the beneficial owners of Fund shares.
(4) INVESTMENT TRANSACTIONS:
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended March 31, 2000 aggregated $763,151, and $12,606,917
respectively.
6
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH EQUITY ASSET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(5) 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
MARCH 31, 2000 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1999
---------------- ------------------
<S> <C> <C>
Shares sold 43,559 5,004,819
Shares issued to shareholders in payment of
distributions declared 367,888 104,416
Shares redeemed (704,832) (2,620,073)
-------- ----------
Net increase (decrease) (293,385) 2,489,162
======== ==========
</TABLE>
At March 31, 2000, one profit sharing plan on behalf of their plan
participants was a shareholder of the Fund. Prudential Trust for the
benefit of MTA profit sharing plan held of record approximately 99% of the
Fund's outstanding voting shares. Investment activity of this shareholder
could have a material impact on the fund.
7
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS - MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY SHARES (NOTE 1A)
------------------------------------------------------------------------------
<S> <C> <C>
EQUITIES -- 93.7%
BASIC INDUSTRY -- 2.1%
Dow Chemical 10,700 $ 1,219,800
LaFarge Corp. 22,400 532,000
Nucor Corp. 14,000 700,000
Westvaco Corp. 34,100 1,138,087
------------
3,589,887
------------
CAPITAL GOODS -- 8.4%
Advanced Energy Industries* 12,900 657,900
Boeing Co. 42,200 1,600,962
General Dynamics 28,900 1,437,775
Ingersoll Rand Co. 42,900 1,898,325
Navistar International* 18,800 754,350
Tyco International Ltd. 71,900 3,586,012
US Freightways Corp. 46,100 1,725,869
United Technologies Corp. 45,500 2,875,031
------------
14,536,224
------------
CONSUMER STABLE -- 8.9%
Ball Corp. 17,400 601,387
Bestfoods 54,700 2,560,644
CVS Corp. 66,800 2,509,175
McCormick & Co., Inc. 26,600 857,850
Quaker Oats Company 46,600 2,825,125
Safeway, Inc.* 89,600 4,054,400
Supervalu, Inc. 48,100 910,894
Universal Foods Corp. 49,900 1,066,612
------------
15,386,087
------------
EARLY CYCLICAL -- 1.7%
General Motors Corp. 15,000 1,242,187
Kaufman And Broad Home 45,000 964,687
Whirlpool Corp. 12,100 709,362
------------
2,916,236
------------
ENERGY -- 6.2%
BP Amoco PLC ADR 54,790 2,907,294
Chevron Corp. 8,500 785,719
Coastal Corp. 46,700 2,148,200
El Paso Energy Corp. 59,000 2,382,125
Exxon Mobil Corp. 31,802 2,474,593
------------
10,697,931
------------
FINANCIAL -- 10.9%
AMBAC Inc. 28,000 1,410,500
Americredit* 55,500 905,344
Chase Manhattan Corp. 22,100 1,926,844
Conseco, Inc. 60,300 689,681
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS - MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY SHARES (NOTE 1A)
------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (CONTINUED)
Cullen/Frost Bankers, Inc. 29,900 $ 790,481
Federal Home Loan Mortgage Corp. 24,400 1,078,175
Federal National Mortgage Association 23,600 1,331,925
Firstar Corp. 51,500 1,181,281
Fleet Financial Group, Inc. 78,600 2,868,900
Golden West Financial Corp. 50,400 1,571,850
MBNA Corp. 30,700 782,850
PNC Bank Corp. 32,300 1,455,519
Protective Life Corp. 23,300 739,775
Southtrust Corp. 19,900 506,206
The PMI Group, Inc. 30,400 1,442,100
------------
18,681,431
------------
GROWTH CYCLICAL -- 7.3%
Brinker International, Inc.* 67,500 2,003,906
Federated Department Stores* 51,600 2,154,300
Jones Apparel Group, Inc.* 84,300 2,687,062
TJX Cos, Inc. 108,700 2,411,781
Target Corp. 30,300 2,264,925
Williams-Sonoma, Inc.* 33,800 1,047,800
------------
12,569,774
------------
HEALTH CARE -- 9.2%
Abbott Laboratories 37,800 1,330,089
Biomet, Inc. 57,200 2,080,650
Elan Corp., PLC ADR* 32,100 1,524,750
Eli Lilly & Co. 39,200 2,469,600
Genzyme Corp.* 15,600 781,950
Schering-Plough Corp. 63,300 2,326,275
Sybron International Corp.* 69,000 2,001,000
Warner-Lambert Company 16,300 1,589,250
Waters Corp.* 13,100 1,247,775
Watson Pharmaceutical, Inc.* 13,700 543,719
------------
15,895,058
------------
REAL ESTATE -- 0.9%
General Growth Properties, REIT 10,100 307,419
Liberty Property Trust, REIT 24,600 588,863
Prentiss Properties Trust, REIT 31,400 700,613
------------
1,596,895
------------
SERVICES -- 12.0%
AT&T Corp. 37,200 2,092,500
Bell Atlantic Corp. 57,500 3,514,688
Bellsouth Corp. 92,776 4,360,472
Centurytel, Inc. 66,425 2,466,028
Gannett Co., Inc. 13,600 957,100
General Motors Corp., Class H* 9,800 1,220,100
Interim Services, Inc.* 49,900 926,269
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS - MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY SHARES (NOTE 1A)
------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (CONTINUED)
Knight Ridder, Inc. 48,000 $ 2,445,000
Omnicom Group 28,900 2,700,344
------------
20,682,501
------------
TECHNOLOGY -- 24.2%
ADC Telecommunications, Inc.* 14,800 797,350
Adobe Systems, Inc. 22,300 2,482,269
Advanced Micro Devices* 24,500 1,398,031
American Power Conversion Corp.* 112,100 4,806,288
Analog Devices* 31,300 2,521,606
Apple Computer, Inc.* 28,700 3,897,819
BMC Software, Inc.* 14,800 730,750
Computer Associates International, Inc. 39,400 2,331,988
Corning, Inc. 5,200 1,008,800
Cypress Semiconductor Corp.* 58,700 2,894,644
EMC Corp.* 9,100 1,137,500
Intel Corp. 39,300 5,185,144
Rational Software Corp.* 4,300 328,950
Sun Microsystems, Inc.* 28,100 2,633,057
Symbol Technologies, Inc. 49,300 4,058,006
Tellabs, Inc.* 17,500 1,102,227
Texas Instruments 22,300 3,568,000
Unisys Corp.* 32,600 831,300
------------
41,713,729
------------
UTILITIES -- 1.9%
AES Corp.* 16,800 1,323,000
Calpine Corp.* 11,500 1,081,000
Dominion Resources, Inc. 20,200 776,438
------------
3,180,438
------------
TOTAL EQUITIES (COST $137,319,735) 161,446,191
------------
<CAPTION>
PAR
RATE MATURITY VALUE
------- ------------ --------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 5.3%
U.S. GOVERNMENT AGENCY -- 0.4%
FNMA Discount Note+=/= 6.698% 06/08/2000 $700,000 691,271
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS - MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY (NOTE 1A)
------------------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENTS -- 4.9%
Morgan Stanley Repurchase Agreement, dated 03/31/00,
due 04/03/00, with a maturity value of $8,497,607 and
effective yield of 5.30%, collateralized by a U.S.
Government Agency Obligation with a rate of 6.50%,
a maturity date of 07/01/09 and aggregate market value
of $8,663,889
$ 8,493,856
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,186,094) 9,185,127
-------------
TOTAL INVESTMENTS -- 99.0% (COST $146,505,829) $ 170,631,318
OTHER ASSETS, LESS LIABILITIES -- 1.0% 1,736,628
-------------
NET ASSETS -- 100.0% $ 172,367,946
=============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
ADR - American Depositary Receipt
REIT - Real Estate Investment Trust
* Non-income producing security.
+ Denotes all or part of security pledged as collateral to cover margin
requirements on open financial futures contracts (Note 5).
=/= Rate noted is yield to maturity.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Note 1A) (identified cost,
$146,505,829) $170,631,318
Cash 959,032
Receivable for investments sold 2,255,429
Interest and dividends receivable 186,419
Receivable for variation margin on open financial
futures contracts (Note 5) 79,750
Deferred organization costs (Note 1E) 16,257
Prepaid expenses 1,404
------------
Total assets 174,129,609
LIABILITIES
Payable for investments purchased $1,709,536
Accrued accounting and custody fees 24,906
Accrued trustees' fees and expenses (Note 2) 6,559
Accrued expenses and other liabilities 20,662
----------
Total liabilities 1,761,663
------------
NET ASSETS (APPLICABLE TO INVESTORS' BENEFICIAL
INTERESTS) $172,367,946
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
Dividend income $ 948,423
Interest income 216,925
-----------
Total income 1,165,348
EXPENSES
Investment advisory fee (Note 2) $ 427,306
Accounting and custody fees 68,590
Legal and audit services 17,702
Trustees' fees and expenses (Note 2) 9,550
Amortization of organization expenses (Note 1E) 7,468
Insurance expense 4,286
Miscellaneous 7,732
----------
Total expenses 542,634
-----------
Net investment income 622,714
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain
Investment security transactions 5,462,281
Financial futures contracts 895,856
----------
Net realized gain 6,358,137
Change in unrealized appreciation (depreciation)
Investment securities 11,198,434
Financial futures contracts 678,744
----------
Net change in unrealized appreciation
(depreciation) 11,877,178
-----------
Net realized and unrealized gain 18,235,315
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $18,858,029
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 2000 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1999
---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 622,714 $ 2,191,260
Net realized gain 6,358,137 14,598,308
Net change in unrealized appreciation (depreciation) 11,877,178 25,069,765
------------ ------------
Net increase in net assets from investment operations 18,858,029 41,859,333
------------ ------------
CAPITAL TRANSACTIONS
Contributions 10,942,220 130,904,313
Withdrawals (48,289,489) (189,518,283)
------------ ------------
Net decrease in net assets from capital transactions (37,347,269) (58,613,970)
------------ ------------
TOTAL DECREASE IN NET ASSETS (18,489,240) (16,754,637)
NET ASSETS
At beginning of period 190,857,186 207,611,823
------------ ------------
At end of period $172,367,946 $190,857,186
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS YEAR ENDED NINE MONTHS MAY 3, 1996
ENDED SEPTEMBER 30, ENDED (COMMENCEMENT OF
MARCH 31, 2000 ---------------------- SEPTEMBER 30, OPERATIONS) TO
(UNAUDITED) 1999 1998 1997 DECEMBER 31, 1996
-------------- ---------- ---------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
RATIOS:
Expenses (to average daily net assets) 0.64%+ 0.60% 0.65% 0.66%+ 0.69%+
Net Investment Income (to average
daily net assets) 0.73%+ 0.81% 0.75% 0.99%+ 1.58%+
Portfolio Turnover 33% 90% 144% 75% 78%
Net Assets, End of Period
(000's omitted) $172,368 $190,857 $207,612 $170,142 $106,278
</TABLE>
-----------------
+ Computed on an annualized basis.
15
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY 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
Equity Portfolio (the "Portfolio") is a separate diversified investment
series of the Portfolio Trust. As of March 31, 2000 the Standish Equity
Fund, Standish Equity Asset Fund and Standish U.S. Equity Fund Limited
held approximately 65%, 30% and 5% interests in the Standish Equity
Portfolio, respectively.
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 illiquid 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, which
approximates market value. 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 value based upon the value on such
date unless the trustees determine during such sixty-day period that
amortized value 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 and accrued
interest of the repurchase agreement's underlying investments to ensure
the existence of a proper level of collateral.
C. SECURITIES TRANSACTION AND INCOME
Securities transactions are recorded as of the trade date. Interest income
is determined on the basis of interest accrued. Dividend income is
recorded on the ex-dividend date. 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 at least one of
the Portfolio's investors is a regulated investment company that invests
all or substantially all of its 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 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.
16
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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 April 2001.
(2) INVESTMENT ADVISORY FEE:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory and administrative services is paid
monthly at the annual rate of 0.50% 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 purchased
option transactions and short-term obligations, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Securities $ -- $ --
=========== ===========
Investments (non-U.S.Government Securities) $53,425,514 $84,797,377
=========== ===========
</TABLE>
(4) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2000 as computed on a federal
income tax basis, were as follows:
<TABLE>
<S> <C>
Aggregate Cost $ 146,505,829
=============
Gross unrealized appreciation 31,891,523
Gross unrealized depreciation (7,766,034)
-------------
Net unrealized appreciation $ 24,125,489
=============
</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 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
17
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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 contract, or if the counterparty does
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.
The Portfolio entered into no such transactions for the six months ended
March 31, 2000 .
FUTURES CONTRACTS
The Portfolio may enter into financial futures contracts for the delayed
sale or delivery of securities or contracts based on financial indices at
a fixed price on a future date. Pursuant to margin requirements the
Portfolio deposits either cash or securities in an amount equal to a
certain percentage of the contract amount. Subsequent payments are made or
received by the Portfolio 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 Portfolio. 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 Portfolio's exposure to the
underlying instrument, while selling futures tends to decrease the
Portfolio's exposure to the underlying instrument or hedge other
investments. In addition, there is the risk that the Portfolio 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 counterparty does not perform under the contract's terms. The
Portfolio enters into financial futures transactions primarily to seek 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.
The Portfolio had the following open financial futures contracts at
March 31, 2000.
<TABLE>
<CAPTION>
UNDERLYING FACE
CONTRACT POSITION EXPIRATION DATE AMOUNT AT VALUE UNREALIZED GAIN
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
S&P 500 (29 contracts) Long 6/16/2000 $10,985,925 $646,335
</TABLE>
At March 31, 2000, the Portfolio had segregated sufficient cash and/or
securities to cover margin requirements on open financial futures
contracts.
(6) LINE OF CREDIT
The Portfolio, and other subtrusts in the Portfolio Trust and funds in the
Trust are parties to a committed line of credit facility, which enables
each portfolio/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 six
months ended March 31, 2000 the expense related to this commitment fee was
$1,668 for the Portfolio.
During the six months ended March 31, 2000, the Portfolio had no
borrowings under the credit facility.
18
<PAGE>
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