STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
Financial Statements for the Year Ended
December 31, 1999
[LOGO]
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STANDISH, AYER & WOOD INVESTMENT TRUST
January 27, 2000
Dear Standish, Ayer & Wood Investment Trust Shareholder:
We are writing to provide you with a review of developments at Standish, Ayer &
Wood as they relate to the activities of the Investment Trust.
THE 1999 MARKETS
The past year has been as tumultuous as 1998, although in different ways. World
stock markets have been euphoric. The S&P 500 advanced about 21% but the
technology-driven Nasdaq composite soared 86%. For the second year in a row,
larger capitalization growth stocks have performed brilliantly, and small or
middle capitalization value stocks have been left far behind. In striking
contrast to some of the equity markets, the bond market suffered one of its
worst years in history, with prices of ten-year Treasuries dropping 13%. Yield
spreads, which had widened sharply during the crisis in the fall of 1998,
narrowed during the early months of 1999 but then widened again as the year
progressed, with distressingly poor liquidity in the secondary bond market.
Securities that suffered even a slight short-term tarnishing in their attributes
often dropped dramatically in price - investors displayed very little appetite
for any bond or stock that had evidenced any degree of adversity.
STANDISH INVESTMENT DISCIPLINES
Many of Standish's investment disciplines are directed to applying fundamental
research to uncover relatively cheap securities where the fundamentals are
improving. This methodology has generally been quite successful over long
periods of time in the past. However, the investment environment of the last two
years has produced significant headwinds for some of our disciplines. While
there has been enormous pressure on Standish and other value investors to
capitulate and to become momentum investors, we have not wavered in our focus on
fundamentals and value. Of course, we and other investors make misjudgments
along the way, and we are doing our best to learn the correct lessons from the
inevitable mistakes. We have applied new investment tools and made modest
alterations to the investment process. We have added investment talent and
quantitative resources. We believe that our approach is correct, that our
portfolios are attractively priced relative to the benchmarks, and that it is
our obligation to adhere to the philosophy we have consistently represented to
you.
MAJOR DEVELOPMENTS AT STANDISH DURING 1999
We are pleased that Standish is able to report continued stability of both our
clients and our professional team. Assets under management for our clients are
approximately $45 billion, a slight decline during 1999 but up from $39 billion
at the beginning of 1998. These statistics include $3.3 billion of assets
managed through Standish International Management Company, LLC, or SIMCO. The
Standish Funds returned to 1997's level of $5.8 billion of assets from $6.5
billion in 1998. While we had some client turnover, a substantial portion of the
assets lost related to corporate events or restructuring as opposed to
terminations because of investment performance. We have also added a substantial
number of distinguished new clients.
We continue to build our professional resources both by adding new people and
through our long-term commitment to education and professional training. The
Standish team has grown to 292 members from 232 at the beginning of 1998. Our
109 investment officers average experience of 16 years. Sixty-seven of those
officers have advanced degrees (typically an MBA) and 72 have some advanced
professional accreditation.
1
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At the end of the year, the Standish board of directors elected two new
directors: Lavinia Chase and Cathy Powers. During the last year, we were sorry
to lose the services of Mark Flaherty, Director, who accepted a position of
great responsibility at a very large investment management organization. In
addition, we anticipate the retirement of both Arthur Parker and Barr Clayson
from their positions as stockholders and directors of Standish in June 2000. In
line with other professional service firms, Standish is attempting to maintain
the best balance between retaining the wisdom of senior investment managers and
assuring generational change.
STANDISH'S STRATEGIES FOR THE FUTURE
Standish's top priorities include:
o meeting the needs of our clients and working closely with them to
assure that their investment expectations are realistic;
o developing new investment products that add value in today's
environment; and
o investigating strategic business alliances to augment our research
and penetrate foreign markets as well as expand our domestic
distribution channels.
We believe that all investors and investment management firms are facing very
challenging times. However, the characteristics that have served Standish and
our clients well for sixty-seven years are still intact. We remain dedicated to
fulfilling your needs.
Sincerely,
/s/ Ted Ladd /s/ George Noyes
Edward H. Ladd, Chairman George W. Noyes, President
2
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
MANAGEMENT DISCUSSION AND ANALYSIS
The strength of global economies, particularly in the U.S., positively impacted
corporate earnings (and equity valuations), but had a negative effect on
interest rates. In fact, the yield on the one-year Treasury bill rose over the
course of 1999 to just below 6% from a low of 4.4% in January. Nonetheless, the
economy continued to move forward unabated with the third and fourth quarter
posting particularly strong GDP growth of 5.7% and 5.8%, respectively. In
response to the strong economic fundamentals, the Federal Reserve increased the
target Federal Funds Rate by 75 basis points, which completely reversed the
interest rate cuts instituted during the 1998 capital market crisis.
Despite the environment of rising interest rates, the STAR Fund returned 4.61%
for the year, exactly matching the IBC Money Fund Average, the Fund's benchmark.
The Fund's longer average maturity compared to the benchmark negatively impacted
performance due to the rapid rise in interest rates. However, that impact was
offset by the Fund's substantial income advantage. At year-end, the STAR Fund
enjoyed over 100 basis points of incremental yield.
During the year, the relative performance for non-Treasury sectors was good. A
reduction in corporate bond issuance combined with diminished fears about
year-end factors contributed to narrowing yield spreads between agency debt,
corporate bonds and securitized issues.
The Fund consistently maintained a significant weighting in agency, corporate,
asset-backed securities (ABS) and variable rate bonds. With the rise in interest
rates, variable rate notes positively contributed to performance. Not only did
corporate bonds and ABS securities provide attractive levels of income, the
spread tightening and associated capital appreciation helped offset the rise in
interest rates. To improve liquidity in anticipation of year-end and Y2K
disruptions, we slightly reduced our exposure to commercial paper and corporate
bonds in favor of U.S. agency debt. With respect to duration, the Fund
maintained a shorter position relative to its standard one-year maturity in
anticipation of higher interest rates.
We are pleased that performance was on par with the benchmark in such a hostile
interest rate environment. In the coming year, the Fund should benefit from its
yield advantage over standard money market funds. We remain committed to the
STAR Fund's low volatility, high quality mandate in the effort to consistently
provide you with an attractive and stable source of income.
Sincerely yours,
/s/ Barbara J. McKenna /s/ Jennifer A. Pline
Barbara J. McKenna Jennifer A. Pline
3
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE (STAR) FUND
COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN
STANDISH STAR FUND, AND IBC DONOGHUE AVERAGE
[The following table was originally depicted as a line graph in the printed
material.]
Standish IBC
STAR Donoghue
Fund Index
100000 100000
100560 100710
101009 101365
101575 102135
102728 102901
103757 103704
105161 104461
106391 105223
106278 105970
106956 106723
108206 107470
108913 108179
1 year 109501 108904
109761 109623
110428 110269
110970 110986
111337 111685
112730 112411
113817 113120
114949 113855
115465 114584
116300 115282
116937 116009
118165 116705
2 years 119335 117417
120205 118109
120963 118688
121843 119305
122886 119878
123546 120441
124238 120983
125292 121540
126537 122099
127502 122624
128681 123151
129663 123632
3 years 130561 124114
130395 124548
131005 124922
131657 125322
132425 125698
133396 126075
134408 126428
134468 126782
135199 127111
136016 127416
135322 127722
135239 128016
4 years 136235 128323
137410 128631
138289 128901
138826 129198
139599 129482
139682 129767
140358 130052
140800 130338
141595 130625
142049 130913
142473 131214
142705 131502
5 years 143164 131805
143959 132108
143719 132385
143246 132703
143007 133035
143087 133421
143331 133821
144271 134249
144886 134706
145201 135164
145666 135664
145796 136179
6 years 146406 136738
147427 137340
148606 137916
149431 138564
150381 139202
151757 139856
152604 140485
153369 141145
154139 141781
154970 142390
155970 143017
156893 143632
7 years 157899 144264
158999 144884
159178 145435
159612 146016
160202 146586
160802 147114
161704 147687
162395 148293
163099 148901
164140 149496
165361 150109
166234 150710
8 years 166770 151328
167574 151948
168006 152510
168407 153136
169453 153764
170543 154409
171444 155042
172550 155709
173232 156379
174342 157020
175302 157679
175816 158326
9 years 176669 159007
177944 159690
178442 160313
179369 161002
180140 161663
181009 162342
181870 163030
182746 163731
184151 164435
185162 165109
185796 165769
185895 166449
10 years 186830 167098
187926 167733
YTD 188048 168286
191665 171355
192159 172006
193058 172677
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AVERAGE ANNUAL TOTAL RETURN
(FOR PERIODS ENDED 12/31/1999)
SINCE
INCEPTION
1 YEAR 3 YEAR 5 YEAR 10 YEAR 01/03/1989
-------- -------- -------- --------- ------------
4.61% 5.43% 5.95% 5.97% 6.28%
----------------------------------------------------------
Past performance is not predictive of future performance.
4
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investment in Standish Short-Term Asset Reserve
Portfolio ("Portfolio"), at value (Note 1A) $302,243,305
Receivable for Fund shares sold 20,181
Prepaid expenses 1,326
------------
Total assets 302,264,812
LIABILITIES
Payable for Fund shares redeemed $100,000
Distributions payable 186,096
Accrued accounting, custody and transfer agent fees 3,380
Accrued trustees' fees and expenses (Note 2) 1,000
Accrued expenses and other liabilities 9,732
--------
Total liabilities 300,208
------------
NET ASSETS $301,964,604
============
NET ASSETS CONSIST OF:
Paid-in capital $316,695,448
Accumulated net realized loss (12,061,664)
Distributions in excess of net investment income (285,559)
Net unrealized depreciation (2,383,621)
------------
TOTAL NET ASSETS $301,964,604
============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 15,701,062
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
(Net Assets/Shares outstanding) $ 19.23
============
The accompanying notes are an integral part of the financial statements.
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)
Interest income allocated from Portfolio $ 15,733,214
Expenses allocated from Portfolio (852,865)
------------
Net investment income allocated from Portfolio 14,880,349
EXPENSES
Accounting, custody, and transfer agent fees $ 38,787
Legal and audit services 15,758
Registration fees 8,449
Trustees' fees and expenses (Note 2) 4,602
Insurance expense 1,215
Miscellaneous 10,215
----------
Total expenses 79,026
------------
Net investment income 14,801,323
------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) allocated from Portfolio on:
Investment security transactions (950,085)
Financial futures contracts 13,351
----------
Net realized loss (936,734)
Change in unrealized appreciation (depreciation)
allocated from Portfolio on:
Investment securities (1,863,288)
----------
Change in net unrealized appreciation
(depreciation) (1,863,288)
------------
Net realized and unrealized loss on investments (2,800,022)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 12,001,301
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE FUND
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 14,801,323 $ 16,326,121
Net realized gain (loss) (936,734) 68,452
Change in net unrealized appreciation (depreciation) (1,863,288) (634,230)
------------- -------------
Net increase in net assets from investment operations 12,001,301 15,760,343
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1E)
From net investment income (14,801,323) (16,326,120)
------------- -------------
Total distributions to shareholders (14,801,323) (16,326,120)
------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)
Net proceeds from sale of shares 279,131,356 293,554,353
Value of shares issued to shareholders in payment of
distributions declared 12,315,338 12,854,947
Cost of shares redeemed (246,686,144) (291,596,448)
------------- -------------
Net increase in net assets from Fund share
transactions 44,760,550 14,812,852
------------- -------------
TOTAL INCREASE IN NET ASSETS 41,960,528 14,247,075
NET ASSETS
At beginning of year 260,004,076 245,757,001
------------- -------------
At end of year (including distributions in excess of
net investment income of $285,559 and $251,900,
respectively) $ 301,964,604 $ 260,004,076
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1999(1) 1998(1) 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 19.44 $ 19.48 $ 19.50 $ 19.55 $ 19.22
-------- -------- -------- -------- --------
FROM INVESTMENT OPERATIONS:
Net investment income 1.08 1.13 1.15 1.11 1.13
Net realized and unrealized gain
(loss) on investments (0.21) (0.04) (0.02) (0.04) 0.33
-------- -------- -------- -------- --------
Total from investment operations 0.87 1.09 1.13 1.07 1.46
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1.08) (1.13) (1.15) (1.12) (1.12)
In excess of net investment income -- -- -- -- (0.01)
-------- -------- -------- -------- --------
Total distributions to shareholders (1.08) (1.13) (1.15) (1.12) (1.13)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 19.23 $ 19.44 $ 19.48 $ 19.50 $ 19.55
======== ======== ======== ======== ========
TOTAL RETURN 4.61% 5.75% 5.94% 5.62% 7.85%
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net
assets) (2) 0.35% 0.35% 0.36% 0.35% 0.33%
Net Investment Income (to average
daily net assets) 5.60% 5.81% 5.89% 5.75% 5.95%
Portfolio Turnover (3) -- -- 119% 156% 208%
Net Assets, End of Year (000's
omitted) $301,965 $260,004 $245,757 $194,074 $243,500
</TABLE>
- -----------------
(1) Calculated based on average shares outstanding.
(2) Includes the Fund's share of Standish Short-Term Asset Reserve Portfolio's
allocated expenses for the periods since January 2, 1998.
(3) Portfolio turnover represents the rate of portfolio activity for the period
while the Fund was investing directly in securities. The portfolio turnover
rate for the period, since the Fund transferred substatially all of its
investable assets to the portfolio, is shown in the Portfolio's financial
statements which are included elsewhere in this report.
The accompanying notes are an integral part of the financial statements.
8
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE 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 Short-Term Asset Reserve Fund (the "Fund") is a separate
diversified investment series of the Trust.
On January 2, 1998, the Fund contributed substantially all of its
investable assets to the Standish Short-Term Asset Reserve Portfolio (the
"Portfolio"). The Fund currently invests all of its investable assets in
an interest of the Portfolio, a subtrust of Standish, Ayer & Wood Master
Portfolio (the "Portfolio Trust"), which is organized as a New York trust,
and has the same investment objective as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in
the net assets of the Portfolio (approximately 100% at December 31, 1999).
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. INVESTMENT SECURITY VALUATIONS
The Fund records its investment in the Portfolio at value. The method by
which the Portfolio values its securities is discussed in Note 1A of the
Portfolio's Notes to Financial Statements, which are included elsewhere in
this report.
B. SECURITIES TRANSACTIONS AND INCOME
Securities transactions are recorded as of the trade date. Currently, the
Fund's net investment income consists of the Fund's pro rata share of the
net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted
accounting principles.
C. FEDERAL TAXES
As a regulated investment company qualified under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
At December 31, 1999, the Fund, for the federal income tax purposes, had
capital loss carryovers which will reduce the Fund's taxable income
arising from future net realizeable gain on investments, if any, to the
extent permitted by the Internal Revenue Code and thus will reduce the
amount of distributions to shareholders which would otherwise be necessary
to relieve the fund of any liability for federal income tax. Such capital
loss carryovers are as follows:
CAPITAL LOSS CARRY OVER EXPIRATION DATE
----------------------- ---------------
$3,071,161 12/31/2000
1,512,610 12/31/2001
5,263,400 12/31/2002
568,968 12/31/2003
277,757 12/31/2004
381,998 12/31/2005
80,787 12/31/2006
848,377 12/31/2007
The Fund elected to defer to its fiscal year ending December 31, 2000
losses of $56,606 recognized during the period from November 1, 1999 to
December 31, 1999.
9
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STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH SHORT-TERM ASSET RESERVE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income will be declared and distributed
quarterly. The Fund's dividends from short-term and long-term capital
gains, if any, after reduction of capital losses will be declared and
distributed at least annually. In determining the amounts of its
dividends, the Fund will take into account its share of the income, gains
or losses, expenses, and any other tax items of the Portfolio. Dividends
from net investment income and capital gains distributions, if any, are
reinvested in additional shares of the Fund unless a shareholder elects to
receive them in cash. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences, 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, Inc. ("SA&W") for investment advisory
services. See Note 2 of the Portfolio's Notes to Financial Statements
which are included elsewhere in this report. The Trust pays no
compensation directly to its trustees who are affiliated with SA&W or to
its officers, all of whom receive remuneration for their services to the
Trust from the SA&W. Certain of the trustees and officers of the Trust are
directors or officers of SA&W.
(3) INVESTMENT TRANSACTIONS:
Increases and decreases in the Fund's investment in the Portfolio for the
year ended December 31, 1999, aggregated $281,608,608 and $252,168,889,
respectively.
(4) SHARES OF BENEFICIAL INTEREST:
The Declaration of Trust permits the trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
Shares sold 14,432,526 15,063,028
Shares issued to shareholders in payment of
distributions declared 637,220 659,576
Shares redeemed (12,745,104) (14,962,667)
----------- -----------
Net increase 2,324,642 759,937
=========== ===========
At December 31, 1999, three shareholders were record owners of
approximately 23%, 20% and 10% of the total outstanding shares of the
Fund, respectively.
10
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Standish, Ayer & Wood Investment Trust and the Shareholders
of Standish Short-Term Asset Reserve Fund:
In our opinion, the accompanying statement of assets and liabilities and the
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 Short-Term Asset Reserve Fund
(the "Fund") at December 31, 1999, the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated therein,
in conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United States,
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 December 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
11
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STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPECTED
MATURITY PAR VALUE
SECURITY RATE (UNAUDITED) MATURITY VALUE# (NOTE 1A)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BONDS AND NOTES -- 78.7%
ASSET BACKED -- 30.8%
BCI Home Equity 1994-1 B(a) 7.100% 03/31/2000 03/29/2044 $ 476,672 $ 476,374
BankBoston Home Equity Loan 1998-1 A2 6.220% 11/13/2000 02/25/2013 6,000,000 5,928,750
CIT Group Securitization Corp. 1993-1 A4 6.500% 06/30/2001 06/15/2018 5,750,000 5,681,719
Case Equipment Loan Trust 1997-B C 6.410% 04/23/2000 09/15/2004 2,164,916 2,152,739
Chase Manhattan Auto Owner 1997-B 6.750% 09/29/2001 01/15/2004 5,250,000 5,228,467
Chemical Master Credit Card Trust 1995-2
A 6.230% 09/29/2000 06/15/2003 5,300,000 5,285,054
Citibank Credit Card Master Trust 1998-6
B 6.000% 03/10/2001 04/10/2003 2,500,000 2,467,175
Delta Funding Home Equity Loan 1996-1 A5 7.400% 03/22/2001 07/25/2013 5,000,000 4,979,687
Delta Funding Home Equity Loan 1998-1
A2A(a) 5.800% 02/25/2000 05/25/2030 662,716 657,951
Delta Funding Home Equity Loan 1998-2
A3F(a) 6.240% 12/23/2001 05/15/2025 3,000,000 2,958,750
Discover Card Master Trust 1998-2 A 5.800% 02/14/2001 09/16/2003 2,750,000 2,722,500
Ford Credit Auto Owner Trust 1997-B B 6.400% 03/29/2001 05/15/2002 6,225,000 6,164,680
Green Tree Financial Corp. 1998-6 A3 5.930% 11/03/2000 04/01/2009 6,050,000 6,012,187
Green Tree Lease Finance 1997-1 C 6.850% 05/27/2001 09/20/2005 4,165,189 4,077,981
Gulf States Auto Grantor Trust 1996-B A 6.600% 08/07/2000 05/25/2003 1,149,662 1,148,045
Independent National Mortgage Corp.
1998-2 A2 6.170% 04/25/2001 12/25/2011 4,900,000 4,800,469
Premier Auto Trust 1996-3 6.950% 04/02/2000 11/06/2001 5,055,000 5,061,319
Premier Auto Trust 1997-1B ERISA 6.550% 01/02/2001 09/06/2003 5,000,000 4,961,000
Residential Funding 1999 KS1A 6.000% 01/12/2002 04/25/2020 3,970,000 3,880,675
Standard Credit Card 1998-1 A6(a) 6.488% 03/31/2000 03/23/2003 5,174,000 5,149,749
TMS Home Equity Trust 1996-A A5 ERISA 6.850% 02/12/2000 06/15/2019 1,502,317 1,499,970
TMS Home Equity Trust 1998-A AV(a) 6.638% 02/15/2000 06/15/2029 4,224,700 4,211,497
Team Fleet Financing Corp. 1998-2A A 6.070% 05/01/2001 07/25/2002 3,975,000 3,912,270
UCFC Home Equity Loan Trust 1994-D1 A4 8.775% 06/07/2000 02/10/2016 2,017,936 2,030,548
UCFC Home Equity Loan Trust 1996-A1 A5 6.500% 04/13/2000 03/15/2016 1,840,839 1,834,512
------------
Total Asset Backed (Cost $94,445,682) 93,284,068
------------
CORPORATE -- 37.7%
BANK BONDS -- 7.3%
Bank One 6.400% 08/01/2002 2,975,000 2,924,603
BankAmerica Corp. 9.375% 03/01/2001 2,500,000 2,567,375
Firstar Corp. Medium Term Notes(a) 6.410% 03/31/2000 08/03/2001 6,000,000 6,007,974
National Westminister Bank 9.450% 05/01/2001 4,000,000 4,123,600
US Bancorp Notes NCL 6.350% 09/28/2001 5,650,000 5,577,058
Washington Mutual Inc. 6.125% 12/01/2000 1,000,000 991,010
------------
22,191,620
------------
FINANCIAL -- 16.1%
AT& T Capital Corp. 6.250% 05/15/2001 3,600,000 3,565,548
American Express Travel(a) 6.323% 03/31/2000 10/24/2001 3,350,000 3,339,950
BankBoston Corp. Medium Term Notes(a) 6.230% 03/31/2000 08/24/2001 5,850,000 5,846,566
Bear Stearns Co. 6.450% 08/01/2002 3,650,000 3,574,445
Bear Stearns Co. 9.375% 06/01/2001 2,209,000 2,274,497
Carramerica Realty Corp. 6.625% 10/01/2000 3,550,000 3,516,488
Daimler Chrysler National Holding (a) 6.371% 03/31/2000 08/23/2002 4,000,000 4,013,900
General Electric Corp. Notes NCL 6.330% 09/17/2001 4,700,000 4,673,445
General Motors Acceptance Corp. 5.500% 01/04/2002 1,500,000 1,457,475
Homeside Lending Medium Term Notes 6.875% 05/15/2000 1,500,000 1,502,385
Household Financial Corp. 6.000% 05/08/2000 2,150,000 2,146,882
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPECTED
MATURITY PAR VALUE
SECURITY RATE (UNAUDITED) MATURITY VALUE# (NOTE 1A)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lehman Brothers Holding Inc. Medium Term
Notes 6.000% 02/26/2001 $ 4,240,000 $ 4,195,480
Lehman Brothers Holding Inc. Medium Term
Notes 6.330% 08/01/2000 3,000,000 2,993,490
Morgan Stanley Dean Witter(a) 6.313% 12/19/2001 5,500,000 5,495,231
------------
48,595,782
------------
INDUSTRIAL BONDS -- 14.3%
American Home Products 7.700% 02/15/2000 4,650,000 4,658,928
COMDISCO Inc. Notes NCL 6.000% 01/30/2002 5,000,000 4,846,250
Chrysler Corp. 5.875% 02/07/2001 2,720,000 2,697,424
Coca-Cola Co. 144A 6.000% 03/15/2001 4,175,000 4,126,497
DeepTech International 12.000% 06/15/2000 12/15/2000 3,500,000 3,566,216
GTE Corp.(a) 6.129% 03/31/2000 01/05/2001 4,500,000 4,497,343
Hertz Corp. 6.500% 04/01/2000 1,500,000 1,501,185
IBM Corp. 6.375% 06/15/2000 2,500,000 2,502,050
IMC Global Inc. 6.625% 10/15/2001 4,675,000 4,592,299
TRW Inc. 6.500% 06/01/2002 2,500,000 2,449,925
Tyco International Ltd. 6.500% 11/01/2001 3,000,000 2,952,840
Wal-Mart Stores 6.150% 08/10/2001 5,000,000 4,957,050
------------
43,348,007
------------
Total Corporate (Cost $115,088,416) 114,135,409
------------
GOVERNMENT/OTHER -- 2.1%
EURODOLLAR -- 2.1%
Advance Bank Australia(a) 6.231% 03/31/2000 11/29/2001 4,830,000 4,820,340
St. Georges Euro(a) 6.563% 06/30/2000 07/14/2000 1,428,750 1,433,751
------------
Total Government/Other (Cost $6,254,688) 6,254,091
------------
U.S. GOVERNMENT AGENCY -- 5.6%
PASS THRU SECURITIES -- 5.6%
FHLB 5.875% 08/15/2001 3,000,000 2,972,820
FHLMC(a) 6.855% 02/01/2023 98,211 98,732
FHLMC Gold 5 Yr 8.000% 04/19/2000 05/01/2000 - 07/01/2000 220,867 220,867
FHLMC Gold 5 Yr 8.000% 03/19/2000 04/01/2000 179,724 179,724
FHLMC Gold 5 Yr 8.000% 01/19/2000 02/01/2000 5,021 5,021
FNMA 5.100% 03/16/2000 2,500,000 2,491,800
FNMA 5.920% 07/05/2001 5,000,000 4,949,200
FNMA 6.140% 06/12/2002 3,000,000 2,956,860
TVA 6.000% 11/01/2000 3,000,000 2,990,610
------------
Total U.S. Government Agency (Cost $17,021,025) 16,865,634
------------
U.S. TREASURY OBLIGATIONS -- 2.5%
TREASURY NOTES -- 2.5%
U.S. Treasury Note 5.375% 02/15/2001 7,500,000 7,436,700
------------
Total U.S. Treasury Obligations (Cost $7,459,594) 7,436,700
------------
TOTAL BONDS AND NOTES (COST $240,269,405) 237,975,902
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPECTED
MATURITY PAR VALUE
SECURITY RATE (UNAUDITED) MATURITY VALUE# (NOTE 1A)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 20.3%
COMMERCIAL PAPER -- 11.0%
Aetna Services++ 10.280% 03/16/2000 $ 5,000,000 $ 4,895,500
Air Products & Chemicals++ 6.610% 01/20/2000 5,000,000 4,981,396
Ciesco LP++ 5.666% 01/27/2000 4,800,000 4,779,269
E.I. Dupont DE Nemours++ 8.542% 02/15/2000 3,000,000 2,968,050
Edison Asset Service++ 9.703% 02/01/2000 5,000,000 4,957,825
Norfolk & Southern++ 6.814% 02/11/2000 5,685,000 5,640,771
Safeco Credit++ 9.329% 02/09/2000 5,000,000 4,949,400
------------
33,172,211
------------
U.S. GOVERNMENT AGENCY -- 9.3%
FHLB Discount Note++ 5.026% 05/10/2000 1,000,000 999,340
FHLB Discount Note++ 5.757% 03/10/2000 9,750,000 9,643,822
FHLB Discount Note++ 6.788% 04/07/2000 1,500,000 1,492,680
FHLMC Discount Note++ 5.520% 03/09/2000 10,100,000 9,995,970
FNMA Discount Note++ 5.638% 03/02/2000 6,000,000 5,943,240
------------
28,075,052
------------
REPURCHASE AGREEMENTS -- 0.0%
Prudential-Bache Repurchase Agreement,
dated 12/31/99, due 01/03/00, with a
maturity value of $91,033 and an
effective yield of 2.00%, collateralized
by a U.S. Government Agency Obligation
with a rate of 7.00%, maturity date of
04/01/14 and market value of $92,849. 91,018
------------
TOTAL SHORT-TERM INVESTMENTS (COST $61,426,983) 61,338,281
------------
TOTAL INVESTMENTS -- 99.0% (COST
$301,696,388) $299,314,183
OTHER ASSETS, LESS LIABILITIES -- 1.0% 2,929,546
------------
NET ASSETS -- 100.0% $302,243,729
============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
144A - Securities exempt from registration under Rule
144A of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration.
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
NCL - Non-callable
TMS - The Money Store
TVA - Tennessee Valley Authority
# Denominated in United States dollars except for foreign country specific
bonds which are denominated in their respective local currency.
(a) Variable Rate Security; rate indicated is as of 12/31/99.
=/= Rate noted is yield to maturity.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (Note 1A) (identified cost,
$301,696,388) $299,314,183
Receivable for investments sold 236,431
Interest receivable 2,755,140
Deferred organization costs (Note 1E) 6,075
Prepaid expenses 2,694
------------
Total assets 302,314,523
LIABILITIES
Due from custodian $33,200
Accrued accounting and custody fees 11,239
Accrued trustees' fees and expenses (Note 2) 4,962
Accrued expenses and other liabilities 21,393
-------
Total liabilities 70,794
------------
NET ASSETS (APPLICABLE TO INVESTORS' BENEFICIAL
INTERESTS) $302,243,729
============
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1C)
Interest income $15,757,659
-----------
Total income 15,757,659
EXPENSES
Investment advisory fee (Note 2) $ 662,590
Accounting and custody fees 134,904
Legal and audit services 25,524
Trustees' fees and expenses (Note 2) 18,372
Insurance expense 10,725
Amortization of organization expenses (Note 1E) 2,022
Miscellaneous 62
----------
Total expenses 854,199
-----------
Net investment income 14,903,460
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss)
Investment security transactions (953,010)
Financial futures contracts 13,352
----------
Net realized loss (939,658)
Change in unrealized appreciation (depreciation)
Investment securities (1,863,362)
----------
Change in net unrealized appreciation
(depreciation) (1,863,362)
-----------
Net realized and unrealized loss (2,803,020)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $12,100,440
===========
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1998
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1999 DECEMBER 31, 1998
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 14,903,460 $ 16,549,270
Net realized gain (loss) (939,658) 67,070
Change in net unrealized appreciation (depreciation) (1,863,362) (632,740)
------------- -------------
Net increase in net assets from investment operations 12,100,440 15,983,600
------------- -------------
CAPITAL TRANSACTIONS
Assets contributed by Standish Short Term Asset
Reserve Fund at commencement (including unrealized
appreciation of $113,897) -- 248,286,826
Contributions 281,623,902 305,080,235
Withdrawals (253,219,033) (307,612,241)
------------- -------------
Net increase in net assets from capital transactions 28,404,869 245,754,820
------------- -------------
TOTAL INCREASE IN NET ASSETS 40,505,309 261,738,420
NET ASSETS
At beginning of year 261,738,420 --
------------- -------------
At end of year $ 302,243,729 $ 261,738,420
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT-TERM ASSET RESERVE PORTFOLIO
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1998
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1999 DECEMBER 31, 1998
------------ -----------------
<S> <C> <C>
RATIOS:
Expenses (to average daily net assets) 0.32% 0.31%+
Net Investment Income (to average daily net assets) 5.62% 5.83%+
Portfolio Turnover 86% 113%
Net Assets, End of Year (000's omitted) $302,244 $261,738
</TABLE>
- -----------------
+ Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT TERM ASSET RESERVE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES:
Standish, Ayer & Wood Master Portfolio (the "Portfolio Trust") was
organized as a master trust fund under the laws of the State of New York
on January 18, 1996 and is registered under the Investment Company Act of
1940, as amended, as an open-end, management investment company. Standish
Short-Term Asset Reserve Portfolio (the "Portfolio") is a separate
diversified investment series of the Portfolio Trust.
At December 31, 1999 there was one fund, Standish Short Term Asset Reserve
Fund (the "Fund") invested in the Portfolio. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in
the net assets of the Portfolio. The proportionate interest at December
31, 1999 of the Standish Short Term Asset Reserve Fund was approximately
100%.
The following is a summary of significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. INVESTMENT SECURITY VALUATIONS
Securities for which quotations are readily available are valued at the
last sale price, or if no sale price, at the closing bid price in the
principal market in which such securities are normally traded. Securities
(including 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 cost does not represent fair value.
B. REPURCHASE AGREEMENTS
It is the policy of the Portfolio to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the
Portfolio to monitor on a daily basis, the market value and accrued
interest of the repurchase agreement's underlying investments to ensure
the existence of a proper level of collateral.
C. SECURITIES TRANSACTIONS AND INCOME
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or accretion of discount on long-term debt securities when
required for federal income tax purposes. Realized gains and losses from
securities sold are recorded on the identified cost basis.
D. INCOME TAXES
The Portfolio is treated as a partnership for federal tax purposes. No
provision is made by the Portfolio for federal or state taxes on any
taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since 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
19
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT TERM ASSET RESERVE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
to satisfy them. The Portfolio allocates at least annually among its
investor's each investors distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of
income, gain, loss deduction or credit.
E. DEFERRED ORGANIZATIONAL EXPENSES
Costs incurred by the Portfolio in connection with its organization and
initial registration are being amortized on a straight-line basis through
January 2003.
(2) INVESTMENT ADVISORY FEE:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory services is paid monthly at the annual
rate of 0.25% of the Portfolio's average daily net assets. The Portfolio
Trust pays no compensation directly to its trustees who are affiliated
with SA&W or to its officers, all of whom receive remuneration for their
services to the Portfolio Trust from SA&W. Certain of the trustees and
officers of the Portfolio Trust are directors or officers of SA&W.
(3) PURCHASES AND SALES OF INVESTMENTS:
Purchases and proceeds from sales of investments, other than short-term
obligations, were as follows:
PURCHASES SALES
------------ ------------
U.S. Government Securities $ 22,551,237 $ 12,254,694
============ ============
Investments (non-U.S.Government Securities) $158,272,045 $165,483,687
============ ============
(4) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at December 31, 1999 as computed on a federal
income tax basis, were as follows:
Aggregate Cost $301,696,388
============
Gross unrealized appreciation 39,561
Gross unrealized depreciation (2,421,766)
------------
Net unrealized depreciation $ (2,382,205)
============
(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
20
<PAGE>
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH SHORT TERM ASSET RESERVE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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
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 Portfolio is exercised, the premium reduces the cost basis of the
securities purchased by the Portfolio. The Portfolio, as a writer of an
option, has no control over whether the underlying securities may be sold
(call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
There were no written option contracts for the year ended December 31,
1999.
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.
At December 31, 1999 the Portfolio held no open futures contracts.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Standish, Ayer & Wood Master Portfolio and the Investors of
Standish Short-Term Asset Reserve Portfolio:
In our opinion, the accompanying statement of asset and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the supplemental data present fairly, in all material
respects, the financial position of Standish, Ayer & Wood Master Portfolio:
Standish Short-Term Asset Reserve Portfolio (the "Portfolio") at December 31,
1999, the results of its operations, the changes in its net assets and the
supplemental data for the periods indicated therein, in conformity with
accounting principles generally accepted in the United States. These financial
statements and supplemental data (hereafter referred to as "financial
statements") are the responsibility of the Portfolio'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 auditing standards generally accepted in the United States, 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 December 31, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
22
<PAGE>
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