STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Note 1A) (identified cost, $868,144,502) $843,654,978
Cash 244,319
Foreign currency, at value (cost $1,183,244) 1,172,358
Receivable for investments sold 24,727,371
Receivable for Fund shares sold 1,034,350
Interest receivable 16,887,084
Unrealized appreciation on forward foreign currency
exchange contracts (Note 7) 2,831,862
Prepaid expenses 17,135
------------
Total assets 890,569,457
LIABILITIES
Payable for investments purchased $15,224,906
Payable for Fund shares redeemed 215,340
Unrealized depreciation on forward foreign currency
exchange contracts (Note 7) 14,696,859
Distributions payable 1,819,243
Options written, at value (premiums received,
$7,360,423) (Note 7) 7,538,545
Accrued accounting, custody and transfer agent fees 83,186
Accrued trustees' fees and expenses (Note 2) 14,983
Accrued expenses and other liabilities 49,685
----------
Total liabilities 39,642,747
------------
NET ASSETS $850,926,710
============
NET ASSETS CONSIST OF:
Paid-in capital $896,781,813
Accumulated net realized loss (17,222,044)
Undistributed net investment income 7,794,189
Net unrealized depreciation (36,427,248)
------------
TOTAL NET ASSETS $850,926,710
============
NET ASSETS ATTRIBUTABLE TO:
Institutional Class $850,826,471
============
Service Class $ 100,239
============
SHARES OF BENEFICIAL INTEREST OUTSTANDING
Institutional Class 39,287,097
============
Service Class 4,660
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(Net Assets/Shares outstanding)
Institutional Class $ 21.66
============
Service Class $ 21.51
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
Interest income (net of foreign withholding taxes of $30,700) $27,281,679
-----------
Total investment income 27,281,679
EXPENSES
Investment advisory fee (Note 2) $ 1,868,381
Accounting and custody fees 438,342
Legal and audit services 56,357
Trustees' fees and expenses (Note 2) 27,576
Registration fees 17,454
Insurance expense 11,350
Transfer agent fees - Institutional Class 11,120
Transfer agent fees - Service Class 1,872
Service fees - Service Class 55
Miscellaneous 20,226
-----------
Total expenses 2,452,733
Deduct:
Reimbursement of operating expenses - Service Class
(Note 2) (1,858)
-----------
Total expense deductions (1,858)
-----------
Net expenses 2,450,875
-----------
Net investment income 24,830,804
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Investment security transactions (39,547,529)
Written options transactions (5,278,087)
Foreign currency transactions and forward foreign
currency exchange contracts 73,912,881
-----------
Net realized gain 29,087,265
Change in unrealized appreciation (depreciation)
Investment securities (892,047)
Written options 11,276,665
Foreign currency and forward foreign currency
exchange contracts (28,824,100)
-----------
Net change in unrealized appreciation
(depreciation) (18,439,482)
-----------
Net realized and unrealized gain 10,647,783
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $35,478,587
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 24,830,804 $ 77,720,041
Net realized gain (loss) 29,087,265 (46,794,068)
Change in unrealized appreciation (depreciation) (18,439,482) (25,439,155)
-------------- --------------
Net increase in net assets from investment operations 35,478,587 5,486,818
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G)
From net investment income
Institutional Class (20,124,895) (107,801,609)
Service Class (1,152) --
From net realized gains on investments Institutional Class -- (633,288)
-------------- --------------
Total distributions to shareholders (20,126,047) (108,434,897)
-------------- --------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 5)
Net proceeds from sale of shares
Institutional Class 48,333,839 289,944,558
Service Class 573,783 --
Value of shares issued to shareholders in payment of distributions declared
Institutional Class 16,407,755 84,762,409
Service Class 1,152 --
Cost of shares redeemed
Institutional Class (280,712,525) (572,699,748)
Service Class (472,400) --
-------------- --------------
Net decrease in net assets from Fund share transactions (215,868,396) (197,992,781)
-------------- --------------
TOTAL DECREASE IN NET ASSETS (200,515,856) (300,940,860)
NET ASSETS
At beginning of period 1,051,442,566 1,352,383,426
-------------- --------------
At end of period (including undistributed net
investment income of $7,794,189 and $3,089,432,
respectively) $ 850,926,710 $1,051,442,566
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
2000 ----------------------------------------------------------------
(UNAUDITED)(1) 1999(1) 1998(1) 1997(1) 1996(1) 1995
-------------- ------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.32 $ 23.22 $ 22.81 $ 23.25 $ 23.21 $ 21.30
-------- ---------- ---------- ---------- -------- --------
FROM INVESTMENT OPERATIONS:
Net investment income 0.57 1.34 1.38 1.54 1.72 1.96
Net realized and unrealized gain
(loss) on investments 0.27 (1.15) 0.58 1.16 1.73 1.84
-------- ---------- ---------- ---------- -------- --------
Total from investment operations 0.84 0.19 1.96 2.70 3.45 3.80
-------- ---------- ---------- ---------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.50) (2.08) (1.21) (2.86) (2.64) (1.89)
From net realized gain on investments -- (0.01) (0.34) (0.28) (0.77) --
-------- ---------- ---------- ---------- -------- --------
Total distributions to shareholders (0.50) (2.09) (1.55) (3.14) (3.41) (1.89)
-------- ---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 21.66 $ 21.32 $ 23.22 $ 22.81 $ 23.25 $ 23.21
======== ========== ========== ========== ======== ========
TOTAL RETURN 3.97%++ 0.79% 8.73% 11.86% 15.28% 18.13%
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net assets) 0.53%+ 0.52% 0.52% 0.53% 0.53% 0.51%
Net Investment Income (to average
daily net assets) 5.32%+ 5.82% 5.92% 6.37% 7.17% 8.09%
Portfolio Turnover 142%++ 162% 156% 173% 226% 165%
Net Assets, End of Period (000's omitted) $850,826 $1,051,443 $1,352,383 $1,172,695 $840,133 $803,537
</TABLE>
-----------------
(1) Calculated based on average shares outstanding.
+ Computed on an annualized basis.
++ Not annualized.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
FINANCIAL HIGHLIGHTS - SERVICE CLASS
--------------------------------------------------------------------------------
PERIOD
ENDED
JUNE 30, 2000
(UNAUDITED)(1)(2)
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD $21.48
------
FROM INVESTMENT OPERATIONS:
Net investment income 0.18
Net realized and unrealized gain on investments 0.35
------
Total from investment operations 0.53
------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.50)
------
Total distributions to shareholders (0.50)
------
NET ASSET VALUE, END OF PERIOD $21.51
======
TOTAL RETURN+++ 3.36%++
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net assets)* 0.78%+
Net Investment Income (to average daily net assets)* 4.64%+
Portfolio Turnover 142%++
Net Assets, End of Period (000's omitted) $ 100
-----------------
* For the period indicated, the investment adviser voluntarily agreed to
reimburse the Class for a portion of its operating expenses. If this
voluntary action had not been taken, the investment loss per share and
ratios would have been:
Net investment loss per share $(0.14)
Ratios (to average daily net assets):
Expenses 9.06%+
Net investment loss (3.64)%+
(1) Calculated based on average shares outstanding.
(2) Service Class commenced operations on April 25, 2000.
+ Computed on an annualized basis.
++ Not annualized.
+++ Total return would have been lower in the absence of expense waivers.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS AND NOTES -- 94.4%
GOVERNMENT/OTHER -- 91.3%
CANADA -- 6.9%
Canada Government 5.500% 06/01/2009 $ 23,850,000 $ 15,709,436
Canada Government 6.000% 06/01/2008 19,085,000 12,950,996
Canada Government 6.000% 09/01/2005 43,815,000 29,700,121
------------
58,360,553
------------
DENMARK -- 0.0%
Denmark Realkredit+ 8.000% 10/01/2026 2,000 260
------------
EURODOLLAR -- 28.4%
Bulgaria FLIRB Series A(a) 2.750% 07/28/2012 4,870,000 3,567,275
Bundes Obligation+ 4.500% 08/19/2002 45,960,000 43,452,558
Bundes Obligation+ 5.000% 08/20/2001 14,610,000 13,963,578
Bundes Obligation Ser 117 Notes+ 5.125% 11/21/2000 23,710,000 22,672,265
Bundes Obligation Ser 118 Notes+ 5.250% 02/21/2001 16,340,000 15,637,315
Clear Channel Communications 6.500% 07/07/2005 5,225,000 4,984,683
Deutschland Republic+ 5.375% 01/04/2010 18,725,000 18,007,356
Deutschland Republic+ 5.625% 01/04/2028 21,010,000 20,172,686
Deutschland Republic+ 6.250% 01/04/2024 17,600,000 18,115,229
Deutschland Republic+ 6.500% 07/04/2027 23,225,000 24,845,128
Enron Corp.+ 4.375% 04/08/2005 520,000 459,646
Federal Republic of Germany+ 4.750% 11/20/2001 13,585,000 12,929,451
Flextronics International 9.750% 07/01/2010 1,000,000 978,670
Ford Motor Credit Co. 3.750% 07/12/2004 4,100,000 3,622,280
Fort James Corp. Notes+ 4.750% 06/29/2004 4,795,000 4,300,782
General Motors Acceptance Corp.+ 5.500% 02/02/2005 5,730,000 5,367,420
Italian Government BTPS Notes NCL 6.500% 11/01/2027 8,790,000 9,009,555
Lehman Brothers Holdings PLC Medium Term Notes(a) 4.739% 08/25/2003 10,250,000 9,707,859
Level 3 Communications Inc.+ 10.750% 03/15/2008 3,325,000 2,984,227
Level 3 Communications Inc.+ 11.250% 03/15/2010 1,300,000 1,166,766
Metromedia Fiber Network+ 10.000% 12/15/2009 5,247,000 4,809,442
Winstar Communications 144A+ 12.750% 04/15/2010 1,180,000 1,070,331
------------
241,824,502
------------
GERMANY -- 2.9%
Colt Telecom Group PLC 144A Notes+ 7.625% 07/31/2008 24,075,000 10,695,202
Exide Holding Corp.+ 9.125% 04/15/2004 10,000,000 4,588,906
Exide Holding Europe 144A Notes+ 9.125% 04/15/2004 2,625,000 1,204,588
Haus Limited(a) 4.900% 05/01/2035 7,546,137 3,643,362
Uruguay Notes NCL+ 8.000% 09/08/2000 10,000,000 4,894,019
------------
25,026,077
------------
IRELAND -- 0.1%
Esat Telecom Group PLC+ 11.875% 11/01/2009 1,075,000 1,283,013
------------
JAPAN -- 20.5%
Deutsche Telekom 1.500% 06/15/2005 607,000,000 5,715,559
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JAPAN (CONTINUED)
Ford Motor Credit Corp.+ 1.200% 02/07/2005 $ 2,430,000,000 $ 22,710,263
General Motors+ 1.250% 12/20/2004 1,445,000,000 13,549,030
IBM Corp. Notes 0.900% 04/14/2003 825,000,000 7,760,416
Italy Euroyen Notes+ 1.800% 02/23/2010 1,960,000,000 18,609,509
Italy Euroyen Notes+ 5.000% 12/15/2004 725,000,000 8,024,716
Italy Euroyen Notes NCL+ 3.750% 06/08/2005 235,000,000 2,500,304
KFW International Finance 1.750% 03/23/2010 717,000,000 6,765,923
McDonald's Corp. 2.000% 03/09/2010 1,155,000,000 10,896,265
Mexican Notes NCL+ 3.100% 04/24/2002 1,125,000,000 10,845,344
Oesterreich KontrollBank 1.800% 03/22/2010 1,021,000,000 9,692,392
Procter & Gamble+ 1.500% 12/07/2005 1,480,000,000 13,952,828
Province of Ontario 1.875% 01/25/2010 1,846,000,000 17,434,936
Spanish Government 4.750% 03/14/2005 700,000,000 7,721,565
Uruguay Notes+ 2.500% 04/24/2002 500,000,000 4,759,742
Westpac Banking+ 0.875% 09/22/2003 1,431,000,000 13,444,522
------------
174,383,314
------------
LUXEMBOURG -- 0.6%
PTC International Finance II SA+ 11.250% 12/01/2009 4,930,000 4,883,683
------------
NETHERLANDS -- 5.4%
Deutsche Telekom 6.125% 07/06/2005 3,770,000 3,613,994
KPN-Qwest B.V. 144A Private Placement+ 7.125% 06/01/2009 8,225,000 7,244,605
Koninklijke Ahold NV 4.000% 05/19/2005 1,250,000 1,300,915
Mannesmann Finance(a) 4.073% 07/15/2002 7,000,000 6,651,051
Netherland Government Notes 5.500% 07/15/2010 26,000,000 24,991,126
Versatel Telecom 4.000% 03/30/2005 1,350,000 1,208,419
Versatel Telecom 4.000% 12/17/2004 620,000 686,692
------------
45,696,802
------------
NEW ZEALAND -- 2.4%
Fletcher Challenge+ 11.250% 12/15/2002 13,000,000 6,379,378
Fletcher Challenge+ 14.500% 09/30/2000 8,030,000 3,815,326
Fletcher Challenge CVT+ 10.000% 04/30/2005 3,900,000 1,882,997
Nufarm Ltd. Notes+ 9.800% 04/15/2002 17,600,000 8,413,508
------------
20,491,209
------------
SINGAPORE -- 2.2%
Singapore Government+ 3.500% 02/01/2004 19,300,000 11,067,640
Singapore Government+ 5.125% 11/15/2004 12,900,000 7,804,164
------------
18,871,804
------------
SLOVAKIA -- 0.4%
Slovak Wireless 11.250% 03/30/2007 3,165,000 3,112,600
------------
SWEDEN -- 6.9%
Sweden Government Bond #1042+ 5.000% 01/15/2004 258,900,000 29,170,371
Sweden Government Bond #1044 NCL+ 3.500% 04/20/2006 285,000,000 29,541,549
------------
58,711,920
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TURKEY -- 0.3%
Turkish Treasury Bill++ 34.164% 08/22/2001 $2,298,000,000,000 $ 2,644,309
------------
UNITED KINGDOM -- 12.7%
Alliance and Leicester Building Society+ 8.750% 12/07/2006 7,300,000 11,845,099
British Sky Broadcasting+ 7.750% 07/09/2009 9,400,000 13,814,846
General Electric Capital Corp.+ 5.125% 01/12/2004 4,000,000 5,782,005
IPC Magazines 144A(b)+ 0.000% 03/15/2008 9,543,000 8,541,271
Inco Ltd.+ 15.750% 07/15/2006 796,000 1,677,853
Lehman Brothers Holdings PLC+ 6.950% 06/22/2004 6,200,000 9,267,679
National Westminister Bank 6.625% 10/29/2049 5,250,000 4,794,898
OTE PLC+ 6.125% 02/07/2007 9,725,000 9,129,728
Royal Bank of Scotland 144A+ 6.770% 03/31/2049 6,600,000 6,364,697
Tate & Lyle International Finance+ 5.750% 10/06/2006 5,950,000 5,456,189
UK Treasury Gilt+ 9.000% 10/13/2008 5,375,000 10,058,620
UK Treasury Gilt Stock+ 5.750% 12/07/2009 8,910,000 14,076,052
UK Treasury Gilt Stock+ 6.000% 12/07/2028 3,650,000 6,847,670
------------
107,656,607
------------
YANKEE BONDS -- 1.6%
Asia Pulp and Paper Global Financial Notes+ 11.750% 10/01/2005 2,900,000 2,030,000
Fuji JGB Inv. L.L.C. Pfd 144A FLIRB 9.870% 12/31/2049 3,200,000 3,074,720
Mexico Global Bond 11.375% 09/15/2016 2,325,000 2,627,250
Republic of Panama 144A Notes+ 7.875% 02/13/2002 6,100,000 5,993,250
------------
13,725,220
------------
Total Government/Other (Cost $799,997,157) 776,671,873
------------
U.S. TREASURY OBLIGATIONS -- 3.1%
TREASURY BONDS -- 3.1%
U.S. Treasury Bond+ 9.250% 02/15/2016 7,225,000 9,375,594
U.S. Treasury Inflation Index Bond 4.045% 01/15/2009 16,900,000 17,372,434
------------
26,748,028
------------
Total U.S. Treasury Obligations (Cost $26,450,690) 26,748,028
------------
TOTAL BONDS AND NOTES (COST $826,447,847) 803,419,901
------------
<CAPTION>
CONTRACT
SIZE
-----------------
<S> <C> <C>
PURCHASED OPTIONS -- 0.6%
DEM 3.75% Call, Strike Price 90.20, 09/13/2000 23,100,000 163,224
DEM 3.75% Call, Strike Price 91.05, 09/29/2000 12,000,000 55,572
DEM 3.75% Call, Strike Price 92.49, 07/17/2000 950,000 0
DEM 4% Call, Strike Price 93.99, 07/04/2009 25,000,000 0
DEM 4% Call, Strike Price 95.43, 07/21/2000 27,100,000 0
DEM 4% Call, Strike Price 99.01, 08/03/2000 13,280,000 133
DEM 4.5% Call, Strike Price 101.20, 08/14/2000 13,515,000 0
DEM 4.5% Call, Strike Price 95.42, 11/02/2000 10,200,000 78,887
DEM 4.5% Call, Strike Price 95.54, 10/13/2000 10,225,000 64,438
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACT VALUE
SECURITY SIZE (NOTE 1A)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
PURCHASED OPTIONS (CONTINUED)
DEM 4.75% Call, Strike Price 85.93, 09/11/2000 11,224,500 $ 386,572
DEM 5.38% Call, Strike Price 99.12, 02/01/2001 10,000,000 227,240
DEM 5.38% Call, Strike Price 99.21, 01/03/2001 25,000,000 542,100
JPY Put, Strike Price 150.00, 02/08/2001 13,450,000 134
JPY Put/AUD Call, Strike Price 68.75, 01/09/2001 15,250,000 114,009
JPY Put/EUR Call, Strike Price 105.00, 11/09/2000 9,260,000 128,205
JPY Put/EUR Call, Strike Price 110.25, 12/06/2001 9,800,000 196,500
JPY Put/EUR Call, Strike Price 125.00, 08/29/2000 22,950,000 0
JPY Put/USD Call, Strike Price 115.00, 09/01/2000 11,850,000 8,295
JPY Put/USD Call, Strike Price 115.80, 08/14/2000 13,500,000 2,700
JPY Put/USD Call, Strike Price 120.00, 11/07/2001 10,850,000 86,800
USD Put/CAD Call, Strike Price 1.42, 10/19/2000 11,150,000 17,840
USD Put/EUR Call, Strike Price 0.97, 11/09/2000 8,400,000 213,360
USD Put/EUR Call, Strike Price 0.97, 11/01/2000 8,550,000 239,400
USD Put/MXP Call, Strike Price 10.00, 4/12/2001 2,625,000 53,757
USD Put/MXP Call, Strike Price 8.25, 04/12/2001 5,250,000 661
UST 6.00% Call, Strike Price 95.59, 02/01/2001 100,000 417,969
UST 6.00% Call, Strike Price 95.98, 01/05/2001 100,000 443,500
UST 6.00% Call, Strike Price 99.88, 10/27/2000 215,000 274,629
UST 6.50% Call, Strike Price 100.88, 02/22/2001 190,000 669,453
UST 6.50% Call, Strike Price 99.53, 02/16/2001 190,000 843,600
------------
TOTAL PURCHASED OPTIONS (COST $6,703,883) 5,228,978
------------
<CAPTION>
PAR
RATE MATURITY VALUE
------- ---------- -------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 4.1%
U.S. GOVERNMENT AGENCY -- 3.5%
FHLMC Discount Note@ 6.179% 08/17/2000 $ 29,900,000 29,659,006
------------
REPURCHASE AGREEMENTS -- 0.6%
Investors Bank & Trust Repurchase Agreement, dated 06/30/00, due
07/03/00, with a maturity value of $5,349,655 and an effective
yield of 5.75%, collateralized by a U.S. Government Agency
Obligation with a rate of 7.50%, maturity date of 11/01/27 and
market value of $5,454,138. 5,347,093
------------
TOTAL SHORT-TERM INVESTMENTS (COST $34,992,772) 35,006,099
------------
TOTAL INVESTMENTS -- 99.1% (COST $868,144,502) $843,654,978
OTHER ASSETS, LESS LIABILITIES -- 0.9% 7,271,732
------------
NET ASSETS -- 100.0% $850,926,710
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
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.
CVT - Convertible
FHLMC - Federal Home Loan Mortgage Corporation
FLIRB - Front Loaded Interest Reduction Bond
NCL - Non-callable
UST - United States Treasury
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Deutsche Mark
EUR - Euro
JPY - Japanese Yen
MXP - Mexican Peso
USD - United States Dollar
* Denominated in United States dollars except for foreign country specific
bonds which are denominated in their respective local currency.
+ Denotes all or part of security pledged as collateral.
(a) Variable Rate Security; rate indicated is as of 6/30/00.
@ Rate noted is yield to maturity.
(b) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date. The rate shown is the rate at
period end. The maturity date shown is the ultimate maturity.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish International Fixed Income Fund (the "Fund") is a
separate non-diversified investment series of the Trust.
The Fund currently offers two classes of shares: Institutional Class and
Service Class. Expenses of the Fund are borne pro-rata by the holders of
each class of shares, except for transfer agent fees and an account
service fee of 0.25% of the average daily net assets of the Service Class
of shares. Each class votes separately as a class only with respect to its
own distribution plan or other matters that relate only to that class.
Shares of each class would receive their pro-rata share of the net assets
of the Fund (after satisfaction of any class-specific expenses) if the
Fund were liquidated. In addition, the Trustees declare separate dividends
on each class of shares.
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 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 Fund are valued at amortized cost, which approximates
market value. 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 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 Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian banks vault, all
securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor on a daily basis, the market value and accrued interest of the
repurchase agreements underlying investments to ensure the existence of a
proper level of collateral.
C. SECURITIES TRANSACTIONS AND INCOME
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or accretion of discount on long-term debt securities when
required for federal income tax purposes. Realized gains and losses from
securities sold are recorded on the identified cost basis. The Fund does
not isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or
loss from investments.
D. FEDERAL TAXES
As a regulated investment company qualified under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
11
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
At December 31, 1999, the Fund, for federal income tax purposes, had a
capital loss carryover which will reduce the Fund's taxable income arising
from net realized 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 carryover is
$42,835,858 which expires on December 31, 2007. The Fund elected to defer
to its fiscal year ending December 31, 2000 $3,104,760 of losses
recognized during the period November 1, 1999 to December 31, 1999.
E. FOREIGN CURRENCY TRANSACTIONS
Investment security valuations, other assets, and liabilities initially
expressed in foreign currencies are converted into U.S. dollars based upon
current exchange rates. Purchases and sales of foreign investment
securities and income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions.
Section 988 of the Internal Revenue Code provides that gains or losses on
certain transactions attributable to fluctuations in foreign currency
exchange rates must be treated as ordinary income or loss. For financial
statement purposes, such amounts are included in net realized gains or
losses.
F. ALLOCATION OF OPERATING ACTIVITY
Investment income, common expenses and realized gains and losses are
allocated among the share classes of the Fund based on the relative net
assets of each class. Service fees, which are directly attributable to the
Service Class Shares, are charged to the Service Class operations.
G. DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on ex-dividend date.
Distributions in excess of net realized gain on investments, written
options, and foreign currency arise because of certain timing differences.
Dividends from net investment income and distributions from capital gains,
if any, are reinvested in additional shares of the Fund unless the
shareholder elects to receive them in cash. Distributions to shareholders
are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences, 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 investment advisory fee paid to Standish International Management
Company, LLC ("SIMCO") for overall investment advisory and administrative
services, and general office facilities, is paid monthly at the annual
rate of 0.40% of the Fund's average daily net assets. SIMCO voluntarily
agreed to limit the Service Class operating expenses (excluding brokerage
commissions, taxes and extraordinary expenses) for the period ended June
30, 2000, so that the Service Class annual operating expenses do not
exceed the total operating expenses of the Institutional Class (net of any
expense limitation) for the comparable period plus 0.25% (the maximum
Administration Service Fee). Pursuant to this agreement, for the period
ended June 30, 2000, SIMCO reimbursed the Service Class $1,858 for class
specific operating expenses. This agreement is voluntary and temporary and
may be discontinued or revised by SIMCO at any time. The
12
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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 Standish Ayer & Wood, Inc. which is
the parent company of SIMCO.
(3) ADMINISTRATION SERVICE FEE:
Pursuant to a service plan, the Service Class pays the service fee at an
aggregate annual rate of up to 0.25% of the class average daily net
assets. The service fee is payable for the benefit of participants in the
omnibus accounts that are shareholders in the Service Class 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 Service Class shares.
(4) PURCHASES AND SALES OF INVESTMENTS:
Purchases and proceeds from sales of investments, other than short-term
investments, for the six months ended June 30, 2000 were as follows:
PURCHASES SALES
-------------- --------------
U.S. Government Securities $ 81,847,717 $ 60,072,401
============== ==============
Investments (non-U.S.Government
Securities) $1,086,262,410 $1,249,084,751
============== ==============
(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
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
Institutional Class:
Shares sold 2,252,311 12,454,256
Shares issued to shareholders in payment of
distributions declared 761,592 3,856,026
Shares redeemed (13,046,140) (25,229,550)
------------ ------------
Net decrease (10,032,237) (8,919,268)
============ ============
<CAPTION>
PERIOD FROM
APRIL 25, 2000
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 2000
(UNAUDITED)
----------------
<S> <C>
Service Class:
Shares sold 26,691
Shares issued to shareholders in payment of distributions
declared 54
Shares redeemed (22,085)
------------
Net increase 4,660
============
</TABLE>
13
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
At June 30, 2000, one shareholder held of record approximately 23% of the
total outstanding shares of the Institutional Class, and one shareholder
held of record approximately 100% of the total outstanding shares of the
Service Class. Investment activity of these shareholders could have a
material impact on the Fund.
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30, 2000, as computed on a federal
income tax basis, were as follows:
Aggregate Cost $868,144,502
============
Gross unrealized appreciation 9,849,751
Gross unrealized depreciation (34,339,275)
-----------
Net unrealized depreciation $(24,489,524)
============
(7) FINANCIAL INSTRUMENTS:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to enhance
potential gain in circumstances where hedging is not involved. The nature,
risks and objectives of these instruments are set forth more fully in the
Fund's Prospectus and Statement of Additional Information.
The Fund trades the following instruments with off-balance sheet risk:
OPTIONS
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before a
certain date. The Fund may use options to seek to hedge against risks of
market exposure and changes in securities prices and foreign currencies,
as well as to seek to enhance returns. Writing puts and buying calls tend
to increase the Fund's exposure to the underlying instrument. Buying puts
and writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments. Options, both held and
written by the Fund, are reflected in the accompanying Statement of Assets
and Liabilities at market value. The underlying face amount at value of
any open purchased options is shown in the Schedule of Investments. This
amount reflects each contracts 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 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.
14
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
A summary of written option transactions for the six months ended June 30,
2000 is as follows:
<TABLE>
<CAPTION>
WRITTEN PUT OPTION TRANSACTIONS
-------------------------------------------------------------------------------------------
NUMBER OF CONTRACTS PREMIUMS
------------------- ------------
<S> <C> <C>
Outstanding, beginning of period 7 $ 1,671,842
Options written 9 1,748,037
Options expired (1) (228,375)
Options closed (7) (1,632,390)
---- -----------
Outstanding, end of period 8 $ 1,559,114
==== ===========
<CAPTION>
WRITTEN CALL OPTION TRANSACTIONS
-------------------------------------------------------------------------------------------
NUMBER OF CONTRACTS PREMIUMS
------------------- ------------
<S> <C> <C>
Outstanding, beginning of period 8 $ 908,164
Options written 7 659,680
Options expired (2) (270,700)
Options closed (6) (431,430)
---- -----------
Outstanding, end of period 7 $ 865,714
==== ===========
<CAPTION>
WRITTEN CROSS CURRENCY OPTION TRANSACTIONS
-------------------------------------------------------------------------------------------
NUMBER OF CONTRACTS PREMIUMS
------------------- ------------
<S> <C> <C>
Outstanding, beginning of period 10 $ 8,904,897
Options written 15 2,173,571
Options expired (2) (476,690)
Options closed (13) (5,666,183)
---- -----------
Outstanding, end of period 10 $ 4,935,595
==== ===========
</TABLE>
FORWARD CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency and cross currency
exchange contracts for the purchase or sale of a specific foreign currency
at a fixed price on a future date. Risks may arise upon entering these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar and other foreign currencies.
The forward foreign currency and cross currency exchange contracts are
marked to market using the forward foreign currency rate of the underlying
currency and any gains or losses are recorded for financial statement
purposes as unrealized until the contract settlement date or upon the
closing of the contract. Forward currency exchange contracts are used by
the Fund primarily to protect the value of the Funds foreign securities
from adverse currency movements. Unrealized appreciation and depreciation
of forward currency exchange contracts is included in the Statement of
Assets and Liabilities.
15
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
At June 30, 2000, the Fund held the following forward foreign currency and
cross 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>
Argentinian Peso 8,925,756 09/07/2000-04/17/2002 $ 8,736,196 $ 8,588,040 $ 148,156
Canadian Dollar 24,870,000 09/27/2000 16,829,754 16,945,226 (115,472)
Danish Krone 27,960,000 09/20/2000 3,586,945 3,535,213 51,732
Euro 60,866,048 07/06-09/20/2000 58,345,103 57,920,381 424,722
Hong Kong Dollar 41,470,000 08/13/2001 5,320,691 5,324,038 (3,347)
Japanese Yen 19,205,965,000 07/31/2000-05/17/2001 186,986,282 192,252,142 (5,265,860)
Polish Zloty 13,768,165 07/24/2000 3,133,401 3,350,000 (216,599)
Slovakia Koruna 94,642,834 09/11/2000 2,107,445 2,179,907 (72,462)
Thai Baht 227,880,000 09/11/2000 5,821,136 6,000,000 (178,864)
------------ ------------ -----------
TOTAL $290,866,953 $296,094,947 $(5,227,994)
============ ============ ===========
<CAPTION>
LOCAL PRINCIPAL CONTRACT MARKET AGGREGATE UNREALIZED
CONTRACTS TO RECEIVE AMOUNT VALUE DATE VALUE FACE AMOUNT GAIN/(LOSS)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentinian Peso 9,240,109 07/10/2000-04/17/2002 $ 8,757,279 $ 8,665,970 $ (91,309)
British Pound Sterling 49,895,000 09/20/2000 75,756,240 75,097,907 (658,333)
Canadian Dollar 86,950,000 09/20/2000 58,828,703 58,966,759 138,056
Danish Krone 27,960,000 09/20/2000 3,586,945 3,565,872 (21,073)
Euro 428,726,823 07/03/2000-08/22/2001 411,272,447 411,118,221 (154,226)
Hong Kong Dollar 171,352,470 08/13/2001 21,984,895 21,581,037 (403,858)
Japanese Yen 31,511,216,150 07/06/2000-08/17/2001 313,481,392 306,453,050 (7,028,342)
New Zealand Dollar 58,705,000 09/20/2000 27,521,800 28,112,630 590,830
Polish Zloty 13,768,165 07/24/2000 3,133,401 3,267,244 133,843
Singapore Dollar 33,760,000 09/27/2000 19,720,933 19,673,086 (47,847)
Swedish Krona 559,380,000 09/20/2000 63,995,503 65,329,051 1,333,548
Thai Baht 486,960,000 09/11/2000 12,439,267 12,000,000 (439,267)
-------------- -------------- -----------
TOTAL $1,020,478,805 $1,013,830,827 $(6,647,978)
============== ============== ===========
</TABLE>
FORWARD FOREIGN CROSS CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
MARKET MARKET CONTRACT UNREALIZED
CONTRACTS TO DELIVER VALUE IN EXCHANGE FOR VALUE VALUE DATE GAIN
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro $3,224,956 Hungarian Forint $3,235,931 08/08/2000 $10,975
---------- ---------- -------
TOTAL $3,224,956 $3,235,931 $10,975
========== ========== =======
</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 cash or securities in 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
16
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH INTERNATIONAL FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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 Funds exposure to the underlying instrument, while selling
futures tends to decrease the Funds 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 June 30, 2000, the Fund held no open futures contracts.
INTEREST RATE SWAP CONTRACTS
Interest rate swaps involve the exchange by the Fund with another party of
their respective commitments to pay or receive interest, e.g., an exchange
of floating rate payments for fixed rate payments with respect to a
notional amount of principal. Credit and market risk exist with respect to
these instruments. If forecasts of interest rates and other market factors
are incorrect, investment performance will diminish compared to what
performance would have been if these investment techniques were not used.
Even if the forecasts are correct, there are risks that the positions may
correlate imperfectly with the asset or liability being hedged, a liquid
secondary market may not always exist, or a counterparty to a transaction
may not perform. The Fund expects to enter into these transactions
primarily for hedging purposes including, but not limited to, preserving a
return or spread on a particular investment or portion of its portfolio,
protecting against currency fluctuations, as a duration management
technique or protecting against an increase in the price of securities the
Fund anticipates purchasing at a later date. Gains and losses are realized
upon the expiration or closing of the swap contracts.
At June 30, 2000, the Fund held no open interest rate swap contracts.
17
