STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (Note 1A) (identified cost,
$56,241,942) $56,657,267
Cash 6,532,427
Interest receivable 574,260
-----------
Total assets 63,763,954
LIABILITIES
Payable for investments purchased $ 575,508
Payable for Fund shares redeemed 1,033
Payable for delayed delivery transactions (Note 7) 7,921,707
Options written, at value (Note 6) (premiums
received, $60,059) 46,092
Accrued accounting, custody and transfer agent fees 8,438
Accrued trustees' fees and expenses (Note 2) 524
Accrued expenses and other liabilities 1,541
---------
Total liabilities 8,554,843
-----------
NET ASSETS $55,209,111
===========
NET ASSETS CONSIST OF:
Paid-in capital $54,479,022
Accumulated net realized gain 10,299
Undistributed net investment income 290,498
Net unrealized appreciation 429,292
-----------
TOTAL NET ASSETS $55,209,111
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 2,720,813
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
(Net Assets/Shares outstanding) $ 20.29
===========
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD JUNE 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $290,498
--------
Total investment income 290,498
EXPENSES
Investment advisory fee (Note 2) $14,945
Accounting, custody, and transfer agent fees 8,438
Legal and audit services 4,194
Registration fees 735
Trustees' fees and expenses (Note 2) 524
Miscellaneous 450
-------
Total expenses 29,286
Deduct:
Waiver of investment advisory fee (Note 2) (14,945)
Reimbursement of Fund operating expenses (Note 2) (14,341)
-------
Total expense deductions (29,286)
-------
Net expenses 0
--------
Net investment income 290,498
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain
Investment security transactions 6,846
Written options transactions 3,453
-------
Net realized gain 10,299
Change in unrealized appreciation (depreciation)
Investment securities 415,325
Written options 13,967
-------
Net change in unrealized appreciation
(depreciation) 429,292
--------
Net realized and unrealized gain 439,591
--------
NET INCREASE IN NET ASSETS FROM OPERATIONS $730,089
========
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE PERIOD
JUNE 1, 2000
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 2000
(UNAUDITED)
----------------
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 290,498
Net realized gain 10,299
Change in unrealized appreciation (depreciation) 429,292
-----------
Net increase in net assets from investment operations 730,089
-----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)
Net proceeds from sale of shares 54,489,470
Cost of shares redeemed (10,448)
-----------
Net increase in net assets from Fund share transactions 54,479,022
-----------
TOTAL INCREASE IN NET ASSETS 55,209,111
NET ASSETS
At beginning of period --
-----------
At end of period (including undistributed net investment
income of $290,498) $55,209,111
===========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR THE PERIOD
JUNE 1, 2000
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 2000
(UNAUDITED)(1)
----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.00
-------
FROM INVESTMENT OPERATIONS:
Net investment income 0.12
Net realized and unrealized gain on investments 0.17
-------
Total from investment operations 0.29
-------
NET ASSET VALUE, END OF PERIOD $ 20.29
=======
TOTAL RETURN++ 1.45%+++
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net assets) 0.00%+
Net Investment Income (to average daily net assets) 7.47%+
Portfolio Turnover 4%+++
Net Assets, End of Period (000's omitted) $55,209
-----------------
* For the period indicated, the investment adviser voluntarily agreed not to
impose any of its investment advisory fee and reimbursed the Fund for all
of its operating expenses. If this voluntary action had not been taken, the
investment income per share and ratios would have been:
Net investment income per share $ 0.11
Ratios (to average daily net assets):
Expenses 0.75%+
Net investment income 6.72%+
+ Computed on an annualized basis.
++ Total return would have been lower in the absence of expense waivers.
+++ Not annualized.
(1) Calculated based on average shares outstanding.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND 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 -- 98.1%
ASSET BACKED -- 8.6%
ANRC Auto Owner Trust 1999-A A4 6.940% 04/17/2006 $ 300,000 $ 297,258
ARG Funding 1999-1A A3 6.020% 05/20/2005 420,000 401,559
Advanta Home Equity Trust 1997-2 M1 7.550% 06/25/2027 400,000 395,250
American Express Co. 1999-1 A 5.600% 11/15/2006 450,000 426,164
Americredit Auto Receivable Trust 2000-A A4 7.290% 12/05/2006 375,000 373,535
Chase Credit Card Master Trust 1999-3 B 6.950% 01/15/2007 475,000 466,187
Chase Manhattan Auto Owner 1997-B 6.750% 01/15/2004 350,000 346,883
Citibank Credit Card Master Trust 1996-1 A 0.000% 02/07/2003 600,000 575,625
Daimler Chrysler Auto Trust 2000-A A4 7.230% 01/06/2005 300,000 300,328
Ford Credit Auto Owner Trust 1997-B 2 7.370% 07/15/2004 175,000 174,562
Ford Credit Auto Owner Trust 1997-B B 6.400% 05/15/2002 350,000 346,500
Ford Credit Auto Owner Trust 1999-B C 6.650% 10/15/2003 400,000 391,359
Residential Funding 1997-HS5 M1 7.010% 05/25/2027 325,000 315,910
-----------
Total Asset Backed (Cost $4,786,064) 4,811,120
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.4%
Housing Securities Inc. 1994-2 A1 6.500% 07/25/2009 211,320 205,311
-----------
Total Collateralized Mortgage Obligations (Cost $204,188) 205,311
-----------
CORPORATE -- 22.6%
BANK BONDS -- 4.4%
Branch Bank & Trust Notes(a) 6.375% 06/30/2005 360,000 330,115
First Security Bank Sub. Notes+ 5.875% 11/01/2003 600,000 567,212
First Union Bank Sub. Notes NCL+ 5.800% 12/01/2008 550,000 474,008
Firstar Bank+ 7.125% 12/01/2009 450,000 424,076
U.S. Bancorp Notes NCL 6.000% 05/15/2004 550,000 517,160
Union Planters Corp. Sub. Notes NCL 6.250% 11/01/2003 140,000 132,417
-----------
2,444,988
-----------
FINANCIAL -- 6.3%
American Annuity Group Senior Notes 6.875% 06/01/2008 180,000 154,394
Duke Realty Investments REIT 7.375% 09/22/2005 360,000 346,893
Equity Office Properties Trust 6.625% 02/15/2005 150,000 141,122
Florida Windstorm 144A Notes 7.125% 02/25/2019 330,000 297,860
Florida Windstorm 144A Notes NCL 6.700% 08/25/2004 100,000 94,951
Ford Motor Credit Corp. 6.700% 07/16/2004 975,000 945,056
General Electric Capital Corp. Medium Term
Notes 6.520% 10/08/2002 190,000 187,550
General Electric Credit Corp. Notes 6.267% 07/23/2003 220,000 214,479
Goldman Sachs Notes NCL 7.500% 01/28/2005 500,000 497,716
Morgan Stanley Corp. 7.125% 01/15/2003 440,000 436,866
Simon Debartolo Notes NCL 6.750% 06/15/2005 150,000 139,133
-----------
3,456,020
-----------
INDUSTRIAL BONDS -- 11.9%
CSX Notes 6.250% 10/15/2008 390,000 349,421
CVS Corp. 5.500% 02/15/2004 275,000 257,539
Coastal Corp. Notes NCL 6.200% 05/15/2004 300,000 286,347
Cox Enterprises 144A Notes 6.625% 06/14/2002 440,000 432,828
Daimler Chrysler NA Holding+ 6.900% 09/01/2004 440,000 430,997
Daimler Chrysler NA Holding+ 7.400% 01/20/2005 525,000 522,413
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL BONDS (CONTINUED)
Emerson Electric Co. 7.875% 06/01/2005 $ 85,000 $ 87,361
Enron Corp. 6.450% 11/15/2001 350,000 344,602
Fort James Corp. Senior Notes 6.875% 09/15/2007 250,000 233,897
Great Lakes Chemical Corp. Notes 7.000% 07/15/2009 470,000 441,411
ICI Wilmington 6.750% 09/15/2002 350,000 340,347
International Paper Co. Notes 8.000% 07/08/2003 150,000 150,802
Safeway Store Notes 7.250% 09/15/2004 300,000 295,691
Sprint Capital Corp. 5.700% 11/15/2003 200,000 188,704
TRW Inc. 6.625% 06/01/2004 360,000 341,783
Time Warner Inc. 7.570% 02/01/2024 325,000 298,077
Time Warner Inc. 7.750% 06/15/2005 100,000 100,769
Times Mirror Co. 7.450% 10/15/2009 120,000 117,035
Tyco International Ltd. 144A 6.875% 09/05/2002 190,000 186,750
Viacom Inc. Senior Notes 7.750% 06/01/2005 190,000 191,290
Walt Disney Co.+ 7.300% 02/08/2005 520,000 523,383
Wisconsin Central Transportation Notes 6.625% 04/15/2008 480,000 423,984
-----------
6,545,431
-----------
Total Corporate (Cost $12,393,299) 12,446,439
-----------
GOVERNMENT/OTHER -- 5.9%
YANKEE BONDS -- 5.9%
Abbey National PLC(a) 6.700% 06/29/2049 375,000 335,396
Amvescap Senior Notes 6.600% 05/15/2005 375,000 351,602
Edperbrascan Ltd. Notes 7.375% 10/01/2002 670,000 650,994
Merita Bank FLIRB 144A Notes 7.150% 12/29/2049 325,000 315,283
National Australia Bank 8.600% 05/19/2010 425,000 445,061
National Westminster Bank Perpetual 10 Yr. FLIRB(a) 7.750% 04/29/2049 180,000 177,161
Province of Quebec 8.800% 04/15/2003 275,000 283,963
Royal Caribbean Cruise 7.000% 10/15/2007 150,000 129,387
Royal Caribbean Cruise Senior Notes 7.500% 10/15/2027 160,000 121,695
Vodafone Airtouch PLC 144A Notes 7.750% 02/15/2010 270,000 268,040
Vodafone Airtouch PLC 144A Notes NCL 7.625% 02/15/2005 200,000 200,788
-----------
3,279,370
-----------
Total Government/Other (Cost $3,234,312) 3,279,370
-----------
NON-AGENCY -- 3.9%
PASS THRU SECURITIES -- 3.9%
Chase Commercial Mortgage 1996-1E Non-ERISA 7.600% 06/18/2006 325,000 308,940
Chase Commercial Mortgage Sec 6.6 1997-2D
Non-ERISA 6.600% 12/25/2007 675,000 609,188
Merrill Lynch Mortgage Investments 1996-C2 E
Non-ERISA 6.960% 11/21/2028 250,000 212,900
Merrill Lynch Mortgage Investments 1997-C1 D
Non-ERISA 7.120% 06/18/2029 250,000 230,250
Morgan Stanley Capital I 1997-WF1 E 7.490% 05/15/2009 775,000 717,359
Resolution Trust Corp. 1995-2 CA1 7.450% 05/25/2029 65,074 63,407
-----------
Total Non-Agency (Cost $2,119,842) 2,142,044
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY -- 47.0%
PASS THRU SECURITIES -- 47.0%
FHLMC 5.750% 06/15/2001 $1,680,000 $ 1,663,200
FHLMC 6.000% 04/01/2029 1,444,890 1,324,025
FHLMC 7.500% 02/01/2030 1,376,742 1,358,528
FHLMC 5.750% 03/15/2009 450,000 409,851
FNMA 6.000% 06/01/2029 347,311 317,932
FNMA 6.500% 08/01/2029 - 08/01/2029 4,925,767 4,649,186
FNMA 7.000% 12/01/2029 - 06/01/2030 1,045,047 1,009,013
FNMA 7.125% 02/15/2005 865,000 868,512
FNMA 7.500% 02/01/2030 - 05/01/2030 1,171,253 1,154,773
FNMA 9.000% 11/01/2025 452,895 466,292
FNMA (TBA) 6.500% 07/01/2030 1,200,000 1,131,492
FNMA (TBA) 7.500% 07/01/2030 3,150,000 3,105,680
FNMA (TBA) 8.500% 08/01/2030 3,650,000 3,719,168
GNMA 7.000% 11/15/2027 - 06/15/2028 1,914,987 1,862,727
GNMA 8.000% 04/15/2023 - 05/15/2026 1,371,902 1,388,401
GNMA 9.000% 12/15/2017 1,427,879 1,492,133
-----------
Total U.S. Government Agency (Cost $25,716,696) 25,920,913
-----------
U.S. TREASURY OBLIGATIONS -- 9.7%
TREASURY BONDS -- 7.3%
U.S. Treasury Bond+ 6.250% 05/15/2030 670,000 702,977
U.S. Treasury Bond+ 8.125% 05/15/2021 970,000 1,183,555
U.S. Treasury Bond+ 9.250% 02/15/2016 1,650,000 2,141,139
-----------
4,027,671
-----------
TREASURY NOTES -- 2.4%
U.S. Treasury Inflation Index Note 3.625% 07/15/2002 1,250,000 1,326,363
-----------
Total U.S. Treasury Obligations (Cost $5,311,814) 5,354,034
-----------
TOTAL BONDS AND NOTES (COST $53,766,215) 54,159,231
-----------
<CAPTION>
SHARES
---------
<S> <C> <C>
PREFERRED STOCKS -- 0.5%
Equity Office Properties Trust 144A CVT 7,000 290,500
-----------
TOTAL PREFERRED STOCKS (COST $281,741) 290,500
-----------
<CAPTION>
CONTRACT
SIZE
---------
<S> <C> <C>
PURCHASED OPTIONS -- 0.2%
FNMA 7.25% Put, Strike Price 95.39,
09/19/2000 9,750 863
UST 5.50% Put, Strike Price 95.73, 03/09/2001 3,250 102
UST 5.88% Call, Strike Price 96.21,
08/28/2000 14,000 6,945
UST 6.50% Call, Strike Price 100.83,
08/29/2000 17,000 47,940
UST 6.50% Call, Strike Price 102.88,
09/07/2000 11,070 16,086
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACT VALUE
SECURITY RATE MATURITY SIZE (NOTE 1A)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASED OPTIONS (CONTINUED)
UST 6.50% Call, Strike Price 104.75, 09/29/2000 20,750 $ 15,915
UST 6.50% Call, Strike Price 108.50, 09/19/2000 9,750 838
-------------
TOTAL PURCHASED OPTIONS (COST $75,139) 88,689
-------------
<CAPTION>
PAR
VALUE
---------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 3.8%
COMMERCIAL PAPER -- 2.8%
BMW US Capital@ 6.156% 07/17/2000 $ 500,000 498,546
Coca Cola Co.@ 6.147% 07/17/2000 500,000 498,549
Merrill Lynch@ 6.165% 07/17/2000 575,000 573,326
-------------
1,570,421
-------------
U.S. GOVERNMENT AGENCY -- 1.0%
FNMA Discount Note@ 6.067% 07/17/2000 550,000 548,426
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,118,847) 2,118,847
-------------
TOTAL INVESTMENTS -- 102.6% (COST $56,241,942) $ 56,657,267
OTHER ASSETS, LESS LIABILITIES -- (2.6%) (1,448,156)
-------------
NET ASSETS -- 100.0% $ 55,209,111
=============
</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.
CVT - Convertible
FHLMC - Federal Home Loan Mortgage Corporation
FLIRB - Front Loaded Interest Reduction Bond
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
NCL - Non-callable
REIT - Real Estate Investment Trust
* 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 6/30/00.
+ Denotes all or part of security pledged as collateral.
@ Rate noted is yield to maturity.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND 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 High Grade Bond Fund (the "Fund") is a separate
diversified investment series of the Trust. The Fund commenced operations
on June 1, 2000.
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 bank's 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 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 the 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. 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.
E. DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date.
Dividends from net investment income and capital gains distributions, if
any, are reinvested in additional shares of the Fund unless the
shareholder elects to receive them in cash. 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
9
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
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, Ayer & Wood, Inc. ("SA&W")
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. SA&W voluntarily agreed to limit total
Fund operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to 0.00% of the Fund's average daily net assets
for the period ended June 30, 2000. Pursuant to this agreement, for the
period ended June 30, 2000, SA&W voluntarily did not impose $14,945 of its
investment advisory fee and reimbursed the Fund for $14,341 of its
operating expenses. This agreement is voluntary and temporary and may be
discontinued or revised by SA&W at any time. 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 SA&W. Certain trustees and officers of the 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, for the period ended June 30, 2000 were as follows:
PURCHASES SALES
----------- ----------
U.S. Government Securities $32,836,782 $1,814,276
=========== ==========
Investments (non-U.S. Government Securities) $23,482,056 $ 475,830
=========== ==========
(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:
FOR THE PERIOD JUNE 1, 2000
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 2000
---------------------------
Shares sold 2,721,330
Shares redeemed (517)
---------
Net increase 2,720,813
=========
At June 30, 2000, one shareholder, Exeter Health Resources, held of record
approximately 83% of the total outstanding shares of the Fund. Investment
activity of this shareholder could have a material impact on the Fund.
In connection with the commencement of operations, the Fund acquired its
investments from the Standish Securitized Fund and the Standish Fixed
Income Fund II. The securities were acquired at market value on June 1,
June 9, and June 23, 2000. The total value of securities upon acquisition
from the Standish Securitized Fund and the Standish Fixed Income Fund II
was $1,598,823 and $43,488,477, respectively.
10
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(5) 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 $56,241,942
===========
Gross unrealized appreciation 440,679
Gross unrealized depreciation (25,354)
-----------
Net unrealized appreciation $ 415,325
===========
(6) FINANCIAL INSTRUMENTS:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to enhance
potential gain in circumstances where hedging is not involved. The nature,
risks and objectives of these instruments are set forth more fully in the
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 contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the underlying
instruments, if there is an illiquid secondary market for the contract, or
if the counterparty does not perform under the contract's terms.
Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised
or are closed are added to or offset against the proceeds or amount paid
on the transaction to determine the realized gain or loss. Realized gains
and losses on purchased options are included in realized gains and losses
on investment securities, except purchased options on foreign currency
which are included in realized gains and losses on foreign currency
transactions. If a put option written by the 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.
A summary of such transactions for the period ended June 30, 2000 is as
follows:
WRITTEN PUT OPTION TRANSACTIONS
--------------------------------------------------------------------------
NUMBER OF CONTRACTS PREMIUMS
------------------- --------
Outstanding, beginning of period 0 $ --
Options written 2 54,742
Options closed (1) (6,109)
--- -------
Outstanding, end of period 1 $48,633
=== =======
11
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH HIGH GRADE BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
WRITTEN CALL OPTION TRANSACTIONS
--------------------------------------------------------------------------
NUMBER OF CONTRACTS PREMIUMS
------------------- --------
Outstanding, beginning of period 0 $ --
Options written 1 11,426
--- -------
Outstanding, end of period 1 $11,426
========== =======
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
value of their underlying instruments or indices, which may not correlate
with changes in the value of hedged investments. Buying futures tends to
increase the Fund's exposure to the underlying instrument, while selling
futures tends to decrease the Fund's exposure to the underlying instrument
or hedge other Fund investments. In addition, there is the risk that the
Fund may not be able to enter into a closing transaction because of an
illiquid secondary market. Losses may arise if there is an illiquid
secondary market or if the counterparties do not perform under the
contract's 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.
(7) DELAYED DELIVERY TRANSACTIONS:
The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis. Payment and delivery may take place a month or
more after the date of the transactions. The price of the underlying
securities and the date when the securities will be delivered and paid for
are fixed at the time the transaction is negotiated. The Fund segregates
securities having a value at least equal to the amount of the purchase
commitment.
At June 30, 2000, the Fund had the following delayed delivery transactions
outstanding:
TYPE SECURITY SETTLEMENT DATE PAYABLE AMOUNT
--------------------------------------------------------------------------
Buy FNMA 07/17/2000 $ 983,281
Buy FNMA 07/17/2000 1,031,215
Buy FNMA 07/17/2000 1,081,437
Buy FNMA 07/17/2000 1,123,875
Buy FNMA 08/16/2000 2,256,637
Buy FNMA 08/16/2000 1,445,262
----------
$7,921,707
==========
12
