STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Standish Intermediate Tax Exempt Bond Fund
Standish Small Cap Tax-Sensitive Equity Fund
Standish Tax-Sensitive Equity Fund
Financial Statements for the Period Ended
September 30, 1996
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Financial Statements
Table of Contents
Page
Chairman's Message ..............................................3
Selected Financial Information ..................................4
Performance Highlights ..........................................5
Management Discussion:
Standish Massachusetts Intermediate Tax Exempt Bond Fund ...6,7
Standish Intermediate Tax Exempt Bond Fund .................6,7
Standish Small Cap Tax-Sensitive Equity Fund ...............8
Standish Tax-Sensitive Equity Fund .........................9
Statements of Assets and Liabilities ............................10
Statements of Operations ........................................11,12
Statements of Changes in Net Assets .............................13,14,15
Financial Highlights
Standish Massachusetts Intermediate Tax Exempt Bond Fund ...16
Standish Intermediate Tax Exempt Bond Fund .................17
Standish Small Cap Tax-Sensitive Equity Fund ...............18
Standish Tax-Sensitive Equity Fund .........................19
Portfolio of Investments
Standish Massachusetts Intermediate Tax Exempt Bond Fund ...20
Standish Intermediate Tax Exempt Bond Fund .................23
Standish Small Cap Tax-Sensitive Equity Fund ...............27
Standish Tax-Sensitive Equity Fund .........................31
Notes to Financial Statements ...................................34
Report of Independent Accountants ...............................39
<PAGE>
Standish, Ayer & Wood Investment Trust
Chairman's Message
October 18, 1996
Dear Standish, Ayer & Wood Investment Trust Shareholder: Enclosed you will find
the annual financial statements for the Standish Intermediate Tax Exempt Bond
Fund, the Standish Massachusetts Intermediate Tax Exempt Bond Fund, the Standish
Tax-Sensitive Equity Fund, and the Standish Small Cap Tax-Sensitive Equity Fund.
We are providing a combined report for these funds to reduce redundant reporting
and to supply the financial reporting related to our tax managed investment
capabilities in one comprehensive document.
These four funds have combined net assets of $77 million. The two tax-sensitive
funds have only been in operation since the beginning of 1996. In all cases, the
investment advisor is Standish, Ayer & Wood.
As of September 1996, Standish, Ayer & Wood managed assets for its clients of
$29 billion, including the Standish mutual fund assets of $4 billion. The
principal clients of the firm are corporate pension trusts, insurance companies,
endowments and foundations, and high net worth individuals. The firm remains
independent and is owned by investment professionals active in the operation of
the business. At mid year 1996, David W. Murray, the Treasurer of both Standish,
Ayer & Wood and the Standish, Ayer & Wood Investment Trust, elected to take
early retirement and James E. Hollis was elected interim Treasurer of the Trust.
We are grateful to Dave for twenty-two years of distinguished service to
Standish. There have been no other material changes in the structure of the firm
or its key personnel.
During the nine months of operation of the tax-sensitive equity funds, U.S.
equity markets have been very strong with the Standard & Poor's 500 Index
registering a total return of 13.50% and the Russell 2000 Index registering a
total return of 10.77%. Tax exempt bond market returns during this period, as
measured by a combination of the Lehman Municipal 3, 5, 7 and 10 year indices,
have been a mundane 2.11%. These municipal results have been relatively better
than those of most other fixed income sectors, as flat tax concerns have
subsided and municipal supply has been constrained.
The tax-sensitive equity funds have the objective of providing favorable after
tax returns through limited turnover and attempts to mitigate the amount of
realized capital gains. At Standish, we have noted for some time the adverse
impact for taxable investors of high portfolio turnover which triggers capital
gains, possibly including short-term gains that may result in an even greater
tax liability for investors. We believe there is a major opportunity to improve
after tax returns by limiting the portfolio turnover and managing the
recognition of capital gains.
During the last year, we at Standish have added resources to both investment
research and shareholder servicing. We appreciate the opportunity to serve you
and hope you will find the attached information helpful. We remain confident
that we have the resources and the organization to do a superior job, and we
will be working hard to fulfill your expectations in the years ahead.
Sincerely yours,
Edward H. Ladd
Chairman
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Selected Financial Information
for the period ended September 30, 1996
<TABLE>
<CAPTION>
Standish
Massachusetts Standish Standish
Intermediate Intermediate Small Cap Standish
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund (a) Bond Fund (a) Equity Fund (b) Equity Fund (b)
----------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net asset value - beginning of period $21.02 $21.40 $20.00 $20.00
Income from investment operations
Net investment income * 0.74 0.79 0.04 0.28
Net realized and unrealized gain (loss) (0.39) (0.28) 3.55 3.50
----------------- -------------- ---------------- ---------------
Total from investment operations 0.35 0.51 3.59 3.78
----------------- -------------- ---------------- ---------------
Less distributions declared to shareholders
From net investment income (0.74) (0.79) (0.02) (0.18)
----------------- -------------- ---------------- ---------------
Net asset value - end of period $20.63 $21.12 $23.57 $23.60
================= ============== ================ ===============
Total return 1.70% 2.43% 17.95% 18.97%
Ratios to average net assets
Expenses *t 0.65% 0.65% 0.00% 0.00%
Net investment income *t 4.78% 4.99% 0.41% 2.27%
Net assets at end of period (000 omitted) $32,136 $34,843 $6,896 $2,843
Portfolio turnover 35% 43% 57% 17%
Average broker commission paid per share - - $0.1058 $0.0419
* The Investment Adviser voluntarily did not impose a portion of its fee and
reimbursed the Funds for their operating expenses. Please refer to the
Financial Highlights on pages 16 to 19 for additional disclosure regarding
these ratios.
t Computed on an annualized basis
(a) For the nine months ended September 30, 1996.
(b) For the period January 2, 1996, commencement of investment operations,
through September 30, 1996.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Performance Highlights
for the period ended September 30, 1996
Total Return
- ------------------------------------------------------------------------- -----------------
Tax Exempt Bond Funds (a)
Standish Mass. Intermediate Tax Exempt Fund 1.70%
Standish Intermediate Tax Exempt Bond Fund 2.43%
Lehman Muni 3-5-7-10 Index 2.11%
Tax-Sensitive Equity Funds (b)
Standish Tax-Sensitive Small Capitalization Equity Fund 17.95%
Russell 2000 Index 10.77%
Standish Tax-Sensitive Equity Fund 18.97%
S&P 500 Index 13.50%
(a) For the nine months ended September 30, 1996.
(b) For the period January 2, 1996 through September 30, 1996.
</TABLE>
The S&P 500 Index is generally considered to be representative of the
performance of unmanaged common stocks publicly traded on the U.S.
markets.
The Russell 2000 Index is generally considered to be representative of
unmanaged small capitalization stocks in the U.S. markets.
Lehman Brothers State General Obligation Bond 3, 5, 7, and 10 Year
Index is actually a subset of a broader index--the Lehman Brothers
Municipal Bond Index. The Municipal Bond Index is unmanaged and
designed to be a composite measure of the total return performance of
the municipal bond market, and includes approximately 1,800 bonds
(rated A or better, including bonds in the following sectors: state
general obligations, prerefunded, electrics, hospital, state housing,
industrial development/pollution control, and transportation).
Past performance is not predictive of future performance.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Standish Intermediate Tax Exempt Bond Fund
Management Discussion & Analysis
The bond markets have suffered through a dismal year thus far in 1996.
Thankfully, municipals have been perhaps the best performing sector in domestic
fixed income. The Standish Intermediate Tax Exempt Bond Fund has produced a
total return of 2.43% (after a fee reduction) for the year-to-date period
through September 30, 1996, well ahead of the benchmark performance index
(Lehman Muni 3-5-7-10) return of 2.11%, while the Standish Massachusetts
Intermediate Tax Exempt Bond Fund has produced a total return of 1.70% (after a
fee reduction) for the year-to-date, trailing the same index.
Most of 1996 witnessed reports showing economic growth to be stronger than the
market anticipated. This, of course, led to fears of inflation and the
expectation that the Federal Reserve would raise short term interest rates.
Consequently, bond prices declined and volatility was high. The year-to-date
taxable bond market performance as represented by the Lehman Aggregate Index and
the Lehman Government/Corporate Bond Index was below the tax exempt market at
1.84% and 1.77% respectively. Municipal bonds, however, proved to be far more
resilient than most taxable fixed income sectors. As fears of a "flat tax" waned
and municipal new issue supply remained modest, interest rates on tax-exempt
securities rose far less than those of Treasuries. Yield spreads between top
quality and lower quality paper also compressed during the year.
Standish Intermediate Tax Exempt Bond Fund
The fund underperformed in the first quarter of 1996, as we extended duration
into what turned out to be a significant market decline. By the second quarter,
however, performance had turned around. Several actions have helped make this a
successful year. Our increased exposure to California and New York credits has
benefited the fund, as stabilizing credit quality resulted in good performance
for these sectors. Our overweighting in "BBB" rated paper contributed
significantly as quality spreads tightened. We added to our housing bond
exposure as well, choosing bonds which have above market yields as well as
defensive characteristics. Finally, we have reduced the cost of trading by using
futures contracts to manage duration more effectively.
Standish Massachusetts Intermediate Tax Exempt Bond Fund
The Massachusetts market has underperformed the national municipal market this
year. Some states have benefited more from the strong national economic recovery
than has Massachusetts. Further, the hospital sector of the market remains
troubled, and the Massachusetts municipal market has a significant number of
health care credits. Nevertheless, when considering the heavy tax burden applied
to unearned income in the state, Massachusetts double tax-exempt bonds have
still proven to be an excellent choice in terms of after-tax returns in the bond
market.
During 1996, we have maintained our philosophy of not making major interest rate
bets, preferring instead to identify securities which appear to be undervalued
through research and trading. In addition, we have taken two steps to improve
the performance of the fund. We have increased our exposure to housing bonds,
choosing securities which we believe have above average yields as well as
defensive characteristics. Also, we have employed the use of futures contracts
to manage the portfolio's duration in a much more cost-effective manner (i.e.
reducing the number of trades and the bid-to-ask spread necessary to adjust
duration).
Raymond J. Kubiak Maria D. Furman
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Standish Intermediate Tax Exempt Bond Fund
Comparison of Change in Value of $100,000 Investment in
Standish Massachusetts Intermediate Tax Exempt Bond Fund,
Standish Intermediate Tax Exempt Bond Fund and the Lehman Muni 3-5-7-10 Index
The following is a description of the graphical chart omitted from electronic
format:
This line chart shows the cumulative performance of the Standish Massachusetts
Intermediate Tax Exempt Bond Fund and the Standish Intermediate Tax Exempt Bond
Fund compared with the Lehman Muni 3-5-7-10 Index for the period November 2,
1992 to September 30, 1996, based upon a $100,000 investment. Also included are
the average annual total returns for one year, three year, and since inception.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Management Discussion & Analysis
Small cap stocks have proven to be an extremely volatile asset class in 1996.
After a slow start, small caps rose very sharply in late spring, peaked in May,
and dropped abruptly through July. Peak to trough declines were some 30%. August
began a recovery which was not sustained in September. For the period from
January 2, 1996 (commencement of investment operations) to September 30, 1996,
the Standish Small Cap Tax-Sensitive Equity Fund gained 17.95%, after expense
reimbursement, compared to a gain of 10.77% for the Russell 2000 Index of Small
Cap Stocks.
Early in 1996 performance benefited from the smaller size of the companies in
the fund, as well as the fund's aggressive growth orientation. Similarly, during
the severe correction and subsequent slow recovery, these characteristics
penalized fund performance. Quarterly performance contribution was strongest in
the technology sector. Offsetting the good technology performance were poor
returns on consumer and health care stocks.
We continue to concentrate investments in rapidly growing, high quality smaller
companies with strong business positions. This leads to an emphasis on the
higher growth sectors, particularly the innovative areas of health care,
technology and business services. We invest in companies with a minimum of 20%
growth, very strong balance sheets, and leadership positions within their
operating niches.
We believe 1996 will prove to be a reasonable year for small cap stocks despite
their volatility. We are happy to report that, as of September 30, the fund had
no reportable realized capital gains to distribute to shareholders and has
recognized capital losses which may be used by the fund to offset future
realized capital gains, if any. We thank you for your support and interest in
the Small Cap Tax-Sensitive Fund.
Nicholas S. Battelle
<PAGE>
Comparison of Chnage in Value of $100,000 Investment in Standish Small
Cap Tax-Sensitive Equity Fund and the S&P 500 Index
The following is a description of the graphical chart omitted from electronic
format:
This line chart shows the cumulative performance of the Standish Small Cap
Tax-Sensitive Equity Fund compared with the S&P 500 Index for the period January
2, 1996 to September 30, 1996, based upon a $100,000 investment. Also included
is the average annual total return since inception.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Tax-Sensitive Equity Fund
Management Discussion & Analysis
The returns from the stocks of large U.S. companies were excellent during the
first nine months of 1996, with the Standard and Poor's 500 Index up 13.50% for
the period. The Tax-Sensitive Equity Fund returned 18.97%, after expense
reimbursement, for this period, beating this benchmark by 5.47%.
Returns for the first nine months of 1996 were driven by an economy which
continued to grow steadily and without a hint of the inflation which is so
devastating to equity markets. Several market sectors did extremely well.
Optimistic consumers, almost fully employed, continued to spend and retail
stocks performed quite well. The technology sector was mixed but generally
strong, while selected banks and insurance companies showed reasonable earnings
growth. Interest sensitive stocks, such as telephone and electric utilities, did
poorly as interest rates rose.
Returns for the Tax-Sensitive Equity Fund were driven by individual stock
selection rather then heavy weightings in favored S&P sectors. The fund's best
returns were achieved by Consolidated Stores, a retail liquidator, which was up
100%, and American Travellers, a major insurer of nursing home stays, which rose
67%. Our worst disappointment came in Teradyne, as investors pounded
semiconductor and capital equipment stocks. But the fund did participate in the
surge experienced by other technology stocks as Adaptec, Compaq, Hewlett, Intel,
IBM and Varian were up an average of 28%.
We are happy to report that, as of September 30, our fund had no reportable
realized capital gains to distribute to shareholders and has recognized capital
losses which may be used by the fund to offset future realized capital gains, if
any. There will be a dividend payment, but returns will not be reduced by
further capital gains taxes.
Laurence A. Manchester
<PAGE>
Comparison of Chnage in Value of $100,000 Investment in Standish
Tax-Sensitive Equity Fund and the S&P 500 Index
The following is a description of the graphical chart omitted from electronic
format:
This line chart shows the cumulative performance of the Standish Tax-Sensitive
Equity Fund compared with the S&P 500 Index for the period January 2, 1996 to
September 30, 1996, based upon a $100,000 investment. Also included is the
average annual total return since inception.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Statements of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Massachusetts
Intermediate Intermediate Small Cap
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund Bond Fund Equity Fund Equity Fund
- --------------------------------------------------- ----------------- ------------- -------------- ---------------
Assets:
<S> <C> <C> <C> <C>
Investments, at value (Note 1A) * $ 31,908,048 $ 35,036,341 $ 6,720,966 $ 2,782,028
Cash - - 143,995 36,592
Receivable for investments sold - - 258,450 -
Receivable for fund shares sold - - 152,665 2,618
Dividends & interest receivable 489,513 545,442 1,966 3,126
Deferred organization expense (Note 1E) 3,092 4,163 16,073 16,082
Receivable from investment advisor (Note 3) - - 23,523 21,425
----------------- ------------- -------------- ---------------
Total assets 32,400,653 35,585,946 7,317,638 2,861,871
----------------- ------------- -------------- ---------------
Liabilities:
Distributions Payable 87,631 90,225 - -
Payable for investments purchased - 97,050 403,754 -
Payable for daily variation margin on open
financial futures contracts (Note 7) 2,938 1,188 - -
Payable for Delayed Delivery Transactions (Note 8) - 507,035 - -
Payable for fund shares redeemed 125,000 2,500 - -
Accrued custodian fee 16,844 17,162 8,881 10,470
Accrued investment advisory fee (Note 3) 24,870 19,444 - -
Accrued trustee fees (Note 3) 620 652 94 49
Other accrued expenses and other liabilities 6,667 7,978 9,042 8,410
----------------- ------------- -------------- ---------------
Total Liabilities 264,570 743,234 421,771 18,929
----------------- ------------- -------------- ---------------
Net assets $ 32,136,083 $ 34,842,712 $ 6,895,867 $ 2,842,942
================= ============= ============== ===============
Net assets consist of:
Paid-in capital $ 32,411,904 $ 34,179,759 $ 6,820,711 $ 2,538,959
Accumulated undistributed net investment income - - 5,180 12,585
Accumulated net realized investment gain (loss) (587,756) 18,747 (289,040) (21,876)
Net unrealized appreciation 311,935 644,206 359,016 313,274
----------------- ------------- -------------- ---------------
Net Assets $ 32,136,083 $ 34,842,712 $ 6,895,867 $ 2,842,942
================= ============= ============== ===============
Shares of beneficial interest outstanding 1,557,795 1,649,638 292,564 120,446
================= ============= ============== ===============
Net asset value, offering price,
and redemption price per share $ 20.63 $ 21.12 $ 23.5 $ 23.60
================= ============= ============== ===============
(Net assets/Shares outstanding)
* Identified cost of investments $ 31,629,887 $ 34,401,415 $ 6,361,949 $ 2,468,754
================= ============= ============== ===============
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Statements of Operations
For the Period Ended September 30, 1996
Massachusetts
Intermediate Intermediate Small Cap
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund (a) Bond Fund (a) Equity Fund (b) Equity Fund (b)
- ------------------------------------------------------ ----------------- --------------- ----------------- --------------
Investment Income
Interest income $ 1,327,319 $ 1,378,131 $ 6,588 $ 2,877
Dividend income - - 2,631 25,160
----------------- ------------- --------------- --------------
Total investment income 1,327,319 1,378,131 9,219 28,037
----------------- ------------- --------------- --------------
Expenses
Investment advisory fee (Note 3) 98,478 98,399 13,510 6,161
Trustee fees (Note 3) 1,114 1,158 123 65
Accounting, custody and transfer agent fees 58,060 60,894 37,783 30,741
Registration costs 466 12,774 2,184 2,366
Audit services 12,104 16,692 18,717 18,717
Legal fees 6,412 5,243 2,433 2,433
Amortization of organization costs 2,161 2,915 2,802 2,802
Miscellaneous 719 2,582 10 320
----------------- ------------- --------------- --------------
Total Expenses 179,514 200,657 77,562 63,605
----------------- ------------- --------------- --------------
Deduct:
Waiver of investment advisory fee 20,375 41,685 13,510 6,161
Reimbursement of Fund operating expenses - - 64,052 57,444
----------------- ------------- --------------- --------------
Total waiver of investment advisory fee and
reimbursement of operating expenses 20,375 41,685 77,562 63,605
----------------- ------------- --------------- --------------
Net expenses 159,139 158,972 0 0
----------------- ------------- --------------- --------------
Net investment income 1,168,180 1,219,159 9,219 28,037
----------------- ------------- --------------- --------------
Realized and unrealized gain (loss):
Net realized gain (loss)
Investment securities 71,451 57,082 (289,040) (21,876)
Financial futures (50,933) (3,947) - -
----------------- ------------- --------------- --------------
Net realized gain (loss) 20,518 53,135 (289,040) (21,876)
Change in net unrealized appreciation (depreciation)
Investment securities (664,889) (468,693) 359,016 313,274
Financial futures 33,774 9,280 - -
----------------- ------------- --------------- --------------
Change in net unrealized appreciation (depreciation) (631,115) (459,413) 359,016 313,274
Net realized and unrealized gain (loss) (610,597) (406,278) 69,976 291,398
----------------- ------------- --------------- --------------
Net increase in net assets from operations $ 557,583 $ 812,881 $ 79,195 $ 319,435
================= ============= =============== ==============
(a) For the nine months ended September 30, 1996.
(b) For the period January 2, 1996, commencement of investment operations, through September 30, 1996.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Statements of Operations
For the Year Ended December 31, 1995
Massachusetts
Intermediate Intermediate
Tax Exempt Tax Exempt
Bond Fund Bond Fund
- ------------------------------------------------------ ----------------- -------------
Investment Income
Interest income $ 1,653,234 $ 1,550,770
Dividend income - -
----------------- -------------
Total investment income 1,653,234 1,550,770
----------------- -------------
Expenses
Investment advisory fee (Note 3) 124,213 115,482
Trustee fees (Note 3) 1,222 1,165
Accounting, custody and transfer agent fees 72,031 72,211
Registration costs 3,208 14,414
Audit services 16,088 15,919
Legal fees 1,240 1,131
Amortization of organization costs 2,850 4,410
Miscellaneous 2,321 985
----------------- -------------
Total Expenses 223,173 225,717
----------------- -------------
Deduct:
Waiver of investment advisory fee 21,818 38,426
Reimbursement of Fund operating expenses - -
----------------- -------------
Total waiver of investment advisory fee and
reimbursement of operating expenses 21,818 38,426
----------------- -------------
Net expenses 201,355 187,291
----------------- -------------
Net investment income 1,451,879 1,363,479
----------------- -------------
Realized and unrealized gain (loss):
Net realized gain (loss)
Investment securities (132,384) 257,404
Financial futures (11,785) (57,508)
----------------- -------------
Net realized gain (loss) (144,169) 199,896
Change in net unrealized appreciation (depreciation)
Investment securities 2,339,720 1,841,975
Financial futures - -
----------------- -------------
Change in net unrealized appreciation (depreciation) 2,339,720 1,841,975
Net realized and unrealized gain (loss) 2,195,551 2,041,871
----------------- -------------
Net increase in net assets from operations $ 3,647,430 $ 3,405,350
================= =============
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Statements of Changes in Net Assets
Nine Months Year Year
Ended Ended Ended
9/30/96 12/31/95 12/31/94
- ---------------------------------------------------------- ----------------- ----------------- --------------
Increase (decrease) in Net Assets
From Operations:
Net investment income $ 1,168,180 $ 1,451,879 $ 1,384,665
Net realized gain (loss) 20,518 (144,169) (464,105)
Change in net unrealized appreciation (depreciation) (631,115) 2,339,720 (2,123,372)
----------------- ----------------- --------------
Net increase in net assets from operations 557,583 3,647,430 (1,202,812)
----------------- ----------------- --------------
Distributions to shareholders:
From net investment income (1,168,180) (1,451,879) (1,384,665)
From realized capital gains - - (10,471)
----------------- ----------------- --------------
Total distributions to shareholders (1,168,180) (1,451,879) (1,395,136)
----------------- ----------------- --------------
Fund share (principal) transactions (Note 5)
Net proceeds from sale of shares 7,839,919 10,781,062 10,055,521
Net asset value of shares issued to shareholders in
payment of distributions declared 354,227 371,483 181,704
Cost of shares redeemed (8,012,503) (8,558,571) (9,490,499)
----------------- ----------------- --------------
Increase in net assets from Fund share transactions 181,643 2,593,974 746,726
----------------- ----------------- --------------
Net increase (decrease) in net assets (428,954) 4,789,525 (1,851,222)
Net assets:
Beginning of period 32,565,037 27,775,512 29,626,734
----------------- ----------------- --------------
End of period $ 32,136,083 $ 32,565,037 $ 27,775,512
================= ================= ==============
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Statements of Changes in Net Assets
Nine Months Year Year
Ended Ended Ended
9/30/96 12/31/95 12/31/94
- ------------------------------------------------------------ -------------- -------------- -------------
Increase (decrease) in Net Assets
From Operations:
Net investment income $ 1,219,159 $ 1,363,479 $ 957,255
Net realized gain (loss) 53,135 199,896 (234,284)
Change in net unrealized appreciation (depreciation) (459,413) 1,841,975 (1,284,419)
-------------- -------------- -------------
Net increase in net assets from operations 812,881 3,405,350 (561,448)
-------------- -------------- -------------
Distributions to shareholders:
From net investment income (1,219,159) (1,363,479) (957,255)
From realized capital gains - - (18,500)
-------------- -------------- -------------
Total distributions to shareholders (1,219,159) (1,363,479) (975,755)
-------------- -------------- -------------
Fund share (principal) transactions (Note 5)
Net proceeds from sale of shares 11,111,750 16,771,357 12,559,281
Net asset value of shares issued to shareholders in
payment of distributions declared 428,110 316,498 225,637
Cost of shares redeemed (9,156,263) (6,778,640) (7,865,733)
-------------- -------------- -------------
Increase in net assets from Fund share transactions 2,383,597 10,309,215 4,919,185
-------------- -------------- -------------
Net increase (decrease) in net assets 1,977,319 12,351,086 3,381,982
Net assets:
Beginning of period 32,865,393 20,514,307 17,132,325
-------------- -------------- -------------
End of period $ 34,842,712 $ 32,865,393 $ 20,514,307
============== ============== =============
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Statements of Changes in Net Assets
For the Period Ended September 30, 1996
Small Cap
Tax-Sensitive Tax-Sensitive
Equity Fund (a) Equity Fund (a)
- -------------------------------------------------------------- ---------------- -----------------
Increase (decrease) in Net Assets
From Operations:
Net investment income $ 9,219 $ 28,037
Net realized gain (loss) (289,040) (21,876)
Change in net unrealized appreciation 359,016 313,274
-------------- -----------------
Net increase in net assets from operations 79,195 319,435
-------------- -----------------
Distributions to shareholders:
From net investment income (4,039) (15,453)
-------------- -----------------
Fund share (principal) transactions (Note 5)
Net proceeds from sale of shares 6,823,260 2,539,035
Net asset value of shares issued to shareholders in
payment of distributions declared 2,858 14,425
Cost of shares redeemed (5,407) (14,500)
-------------- -----------------
Increase in net assets from Fund share transactions 6,820,711 2,538,960
-------------- -----------------
Net increase in net assets 6,895,867 2,842,942
Net assets:
Beginning of period 0 0
-------------- -----------------
End of period (including undistributed net $ 6,895,867 $ 2,842,942
============== =================
investment income of $5,180 and $12,585, respectively)
(a) For the period January 2, 1996, commencement of investment operations, through September 30, 1996.
</TABLE>
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Financial Highlights
<TABLE>
<CAPTION>
Nine Months Ended November 2, 1992
September 30, 1996 Year Ended December 31, (start of business) to
-------------------------------------
(Note 1F) 1995 1994 1993 December 31, 1992*
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $21.02 $19.55 $21.31 $20.32 $20.00
Income from investment operations
Net investment income ** 0.74 0.94 0.94 0.92 0.13
Net realized and unrealized gain (loss) (0.39) 1.47 (1.75) 1.13 0.32
-------- ----------- ----------- ----------- -----------
Total from investment operations 0.35 2.41 (0.81) 2.05 0.45
-------- ----------- ----------- ----------- -----------
Less distributions declared to shareholders
From net investment income (0.74) (0.94) (0.94) (0.92) (0.13)
From realized capital gains - - (0.01) (0.14) -
-------- ----------- ----------- ----------- -----------
Total distributions declared to shareholders (0.74) (0.94) (0.95) (1.06) (0.13)
-------- ----------- ----------- ----------- -----------
Net asset value - end of period $20.63 $21.02 $19.55 $21.31 $20.32
======== =========== =========== =========== ===========
Total return 1.70% 12.64% (3.84%) 10.24% 13.85t
Ratios (to average net assets)/Supplemental Data
Expenses ** 0.65%t 0.65% 0.65% 0.65% 0.65t
Net investment income ** 4.78%t 4.71% 4.67% 4.35% 4.05t
Net assets at end of period (000 omitted) $32,136 $32,565 $27,776 $29,627 $6,537
Portfolio turnover 35%x 77% 84% 94% 31%
** The investment adviser voluntarily did not impose a portion of its
investment advisory fee. If this reduction had not been undertaken, the net
investment income per share and the ratios would have been:
Net investment income per share $0.72 $0.95 $0.91 $0.86 $0.11
Ratios (to average net assets):
Expenses 0.73%t 0.72% 0.78% 0.95% 1.37t
Net investment income 4.70%t 4.64% 4.54% 4.05% 3.33t
* Audited by other auditors
t Computed on an annualized basis
x Commencing in fiscal 1996, securities which are puttable on demand have
been excluded from the portfolio turnover calculation
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Financial Highlights
Nine Months Ended November 2, 1992
September 30, 1996 Year Ended December 31, (start of business) to
------------------------------------
(Note 1F) 1995 1994 1993 December 31, 1992*
------------- ----------- ----------- ----------- ---------------------
Net asset value - beginning of period $21.40 $19.91 $21.44 $20.42 $20.00
Income from investment operations
Net investment income ** 0.79 0.98 0.95 0.93 0.14
Net realized and unrealized gain (loss) (0.28) 1.49 (1.51) 1.24 0.42
----------- ----------- ----------- ----------- --------------
Total from investment operations 0.51 2.47 (0.56) 2.17 0.56
----------- ----------- ----------- ----------- --------------
Less distributions declared to shareholders
From net investment income (0.79) (0.98) (0.95) (0.93) (0.14)
From realized capital gains - - (0.02) (0.22) -
----------- ----------- ----------- ----------- --------------
Total distributions declared to shareholders (0.79) (0.98) (0.97) (1.15) (0.14)
----------- ----------- ----------- ----------- --------------
Net asset value - end of period $21.12 $21.40 $19.91 $21.44 $20.42
=========== =========== =========== =========== ==============
Total return 2.43% 12.65% (2.68%) 10.78% 17.02t
Ratios (to average net assets)/Supplemental Data
Expenses ** 0.65%t 0.65% 0.65% 0.65% 0.65t
Net investment income ** 4.99%t 4.75% 4.62% 4.36% 4.16t
Net assets at end of period (000 omitted) $34,843 $32,865 $20,514 $17,132 $5,577
Portfolio turnover 43%x 140% 157% 126% 62%
** The investment adviser voluntarily did not impose a portion
of its investment advisory fee. If this reduction had not been
undertaken, the net investment income per share
and the ratios would have been:
Net investment income per share $0.76 $0.95 $0.90 $0.85 $0.12
Ratios (to average net assets):
Expenses 0.82%t 0.79% 0.89% 1.15% 1.47t
Net investment income 4.82%t 4.61% 4.38% 3.86% 3.34t
* Audited by other auditors
t Computed on an annualized basis
x Commencing in fiscal 1996, securities which are puttable on demand have
been excluded from the portfolio turnover calculation
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Financial Highlights
For the Period
January 2, 1996
(commencement of
investment operations)
to September 30, 1996
----------------------------
Net asset value - beginning of period $20.00
Income from investment operations
Net investment income * 0.04
Net realized and unrealized gain (loss) 3.55
------------------------
Total from investment operations 3.59
------------------------
Less distributions declared to shareholders
From net investment income (0.02)
------------------------
Total distributions declared to shareholders (0.02)
------------------------
Net asset value - end of period $23.57
========================
Total return 17.95%
Ratios (to average net assets)/Supplemental Data
Expenses * 0.00t
Net investment income * 0.41t
Net assets at end of period (000 omitted) $6,896
Portfolio turnover 57%
Average broker commission paid per share $0.1058
* The investment adviser voluntarily did not impose its investment advisory fee and
reimbursed the Fund for its operating expenses. Had these actions not been
undertaken, the net investment income per share and the ratios would have been:
Net investment loss per share ($0.28)
Ratios (to average net assets):
Expenses 3.45t
Net investment loss (3.04t)
t Computed on an annualized basis
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Tax-Sensitive Equity Fund
Financial Highlights
For the Period
January 2, 1996
(commencement of
investment operations)
to September 30, 1996
------------------------
Net asset value - beginning of period $20.00
Income from investment operations
Net investment income * 0.28
Net realized and unrealized gain (loss) 3.50
------------------------
Total from investment operations 3.78
------------------------
Less distributions declared to shareholders
From net investment income (0.18)
------------------------
Total distributions declared to shareholders (0.18)
------------------------
Net asset value - end of period $23.60
========================
Total return 18.97%
Ratios (to average net assets)/Supplemental Data
Expenses * 0.00%t
Net investment income * 2.27%t
Net assets at end of period (000 omitted) $2,843
Portfolio turnover 17%
Average broker commission paid per share $0.0419
* The investment adviser voluntarily did not impose its investment advisory fee and
reimbursed the Fund for its operating expenses. Had these actions not been
undertaken, the net investment income per share and the ratios would have been:
Net investment loss per share ($0.36)
Ratios (to average net assets):
Expenses 5.15%t
Net investment loss (2.88%t
t Computed on an annualized basis
</TABLE>
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- --------------------------------------------------- --------- --------------- -------------- ----------------
Bonds - 97.5%
- ---------------------------------------------------
General Obligations - 40.7%
- ---------------------------------------------------
<S> <C> <C> <C> <C>
Amesbury MA State Qualified 5.%0 6/01/2003 $ 750,000 $ 750,000
Brockton MA State Qualified 5.55 12/15/2003 270,000 267,975
Brockton MA State Qualified 5.65 12/15/2004 300,000 297,750
Brockton MA State Qualified 5.70 6/15/2002 160,000 164,200
Brockton MA State Qualified 6.13 6/15/2018 250,000 253,438
Commonwealth of Massachusetts 6.25 7/01/2002 750,000 805,313
Commonwealth of Massachusetts 6.50 8/01/2001 480,000 516,600
Commonwealth of Massachusetts 6.90 10/01/2000 200,000 216,750
Commonwealth of Massachusetts 7.50 12/01/2000 400,000 443,000
Commonwealth of Massachusetts 7.50 6/01/2004 700,000 810,250
Lawrence MA State Qualified 5.13 9/15/2003 1,250,000 1,253,125
Lowell MA State Qualified 6.00 8/15/1999 775,000 801,156
Mass Bay Transportation Authority 6.45 3/01/2000 500,000 529,375
Mass Port Authority 5.50 7/01/2003 550,000 569,250
Mass Port Authority 7.13 7/01/2012 415,000 420,075
Mass St College Bldg Authority Project 7.50 5/01/2006 500,000 589,375
Mass St College Bldg Authority Project 7.50 5/01/2007 250,000 295,938
Massachusetts Bay Transportation Authority 6.25 3/01/2004 475,000 515,375
Puerto Rico Highway Authority 6.25 7/01/2004 800,000 869,000
Springfield MA 6.25 8/01/2006 1,000,000 1,075,000
University of Mass Building Authority State Guarantee 6.63 5/01/2007 1,000,000 1,105,000
Worcester, MA 6.00 7/01/2005 500,000 530,000
----------------
13,077,945
----------------
Housing Revenue - 6.4%
- ---------------------------------------------------
Mass HFA Residential Development FNMA 6.50 12/01/2014 695,000 711,506
Mass HFA Residential Development FNMA t 6.88 11/15/2011 500,000 535,625
Mass HFA Residential Development FNMA 7.60 12/01/2014 500,000 535,625
Mass HFA Residential Development FNMA 8.80 8/01/2021 250,000 264,688
----------------
2,047,444
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Rate Maturity Value (Note 1A)
- --------------------------------------------------- --------- --------------- -------------- ----------------
Insured Bonds - 12.6%
- ---------------------------------------------------
Chelsea MA School District AMBAC 6.%0 6/15/2002 $ 225,000 $ 238,781
Chelsea MA School District AMBAC t 6.00 6/15/2004 750,000 799,688
Holyoke MA FSA 6.00 6/15/2007 800,000 840,000
Mass Educational Loan Authority AMBAC t 5.25 7/01/1999 545,000 554,538
Milford MA AMBAC 5.13 12/15/2014 500,000 471,250
New Bedford MA AMBAC 6.00 10/15/2005 575,000 612,375
Rockport MA AMBAC 6.80 12/15/2003 300,000 326,625
Worcester MA MBIA 5.80 8/01/1998 200,000 204,000
----------------
4,047,257
----------------
Lease Revenue - 3.0%
- ---------------------------------------------------
Puerto Rico Housing Bank Appropriation 5.13 12/01/2004 250,000 244,063
Puerto Rico Housing Bank Appropriation 5.13 12/01/2005 750,000 725,625
----------------
969,688
----------------
LOC GIC - 7.2%
- ---------------------------------------------------
Mass IFA Amesbury LOC: State Street 5.35 9/01/2000 455,000 461,825
Mass IFA Human Development LOC: Shawmut 6.25 4/15/2009 805,000 830,156
Mass IFA IBEW LOC: State Street 5.88 1/01/2005 225,000 229,781
Northborough MA IFA LOC: Bank of Boston 5.75 9/01/2002 765,000 782,213
----------------
2,303,975
----------------
Revenue Bonds - 27.6%
- ---------------------------------------------------
Mass HEFA Anna Jaques Hospital 5.75 10/01/1998 440,000 443,850
Mass HEFA Central New England Health Systems 5.75 8/01/2003 500,000 462,500
Mass HEFA Charlton Hospital 7.00 7/01/2000 300,000 318,375
Mass HEFA Charlton Hospital 7.10 7/01/2001 300,000 322,500
Mass HEFA Daughters of Charity Hospital 5.50 7/01/2004 600,000 615,750
Mass HEFA Melrose Wakefield Hospital 6.35 7/01/2006 310,000 322,788
Mass HEFA New England Baptist Hospital 7.30 7/01/2011 715,000 763,263
Mass HEFA Youville Hospital HFA Secured 6.13 2/15/2015 650,000 662,188
Mass IFA Brooks School 5.60 7/01/2005 245,000 251,125
Mass IFA Brooks School 5.90 7/01/2013 410,000 412,050
Mass IFA Clark University 6.45 7/01/2001 300,000 319,125
Mass IFA Loomis Project 6.50 7/01/2002 350,000 356,125
Mass IFA Resource Recovery 6.15 7/01/2002 1,000,000 1,035,000
Mass IFA Springfield College 4.90 9/15/1999 715,000 711,425
Mass Municipal Wholesale Electric Co Power 6.38 7/01/2001 300,000 315,750
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Rate Maturity Value (Note 1A)
- --------------------------------------------------- --------- --------------- -------------- ----------------
Mass Water Resource Authority 5.%5 3/01/2013 $ 500,000 $ 473,750
Mass Water Resource Authority 7.25 4/01/2001 200,000 219,750
New England Loan Marketing MA Student Loan 5.80 3/01/2002 850,000 878,688
----------------
8,884,002
----------------
TOTAL Bonds (Cost $31,052,150) 31,330,311
----------------
Short-Term Investments - 1.8%
- ---------------------------------------------------
Short Term - 1.2%
- ---------------------------------------------------
Mass St Updates 3.85 12/1/1997 * 400,000 400,000
Repurchase Agreement - 0.6%
- ---------------------------------------------------
Prudential-Bache Repurchase Agreement, dated 9/30/96,
5.12% due 10/1/96, to pay $177,763 (Collateralized by
Federal National Mortgage Association, 7.252%, due
4/1/24, market value $181,292) at cost 177,737 177,737
----------------
TOTAL Short-Term Investments (Cost $577,737) 577,737
----------------
TOTAL INVESTMENTS (Cost $31,629,887) - 99.3% 31,908,048
Other Assets/(Liabilities) - 0.7% 228,035
----------------
NET ASSETS - 100.0% $ 32,136,083
================
The following abbreviations are used in this portfolio:
t - Denotes all or part of security pledged as a margin deposit (see Note 7).
* - Date shown reflects actual maturity date. Security puttable on a daily basis.
AMBAC - American Municipal Bond Assurance Corp. IBEW - International Brotherhood of Electrical Workers
FSA - Financial Security Association IFA - Industrial Finance Authority
HEFA - Health & Educational Facilities Authority LOC - Letter of Credit
HFA - Housing Finance Agency MBIA - Municipal Bond Insurance Association
FNMA - Federal National Mortgage Association
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Rate Maturity Value (Note 1A)
- ----------------------------------------------------- --------- --------------- -------------- ---------------
Bonds - 98.0%
- -----------------------------------------------------
General Obligations - 12.2%
- -----------------------------------------------------
Cincinnati Public Schools OH 6.%5 6/15/2002 $ 600,000 $ 626,250
Commonwealth of Massachusetts 7.50 6/01/2004 500,000 578,750
Commonwealth of Massachusetts 3.85 12/01/1997 200,000 200,000
Detroit MI 6.00 4/01/2000 250,000 254,375
District of Columbia 5.80 6/01/2004 500,000 490,000
Honolulu HI 5.40 9/27/2007 500,000 500,625
Lawrence MA 5.38 9/15/2005 500,000 503,125
Lowell MA State Qualified 7.20 2/15/2000 500,000 535,625
Texas State Tpk Authority ** t 12.63 1/01/2020 400,000 562,000
---------------
4,250,750
---------------
Housing Revenue - 10.3%
- -----------------------------------------------------
CA Housing Authority Summit Medical Center 5.50 5/01/2005 615,000 628,838
Colorado HEFA Rocky Mountain Adventist Hospital 6.00 2/01/1998 225,000 226,406
Colorado HFA Multi Family Insured Mortgage 7.90 10/01/2000 225,000 244,688
Florida HFA 0.00 7/15/2016 1,000,000 108,750
Mass HFA 7.60 12/01/2014 400,000 428,500
MI Housing Authority AMBAC 5.50 6/01/2018 490,000 490,000
MI Housing Authority AMBAC 6.40 4/01/2005 250,000 260,625
New Mexico Mortgage Finance Authority 5.75 7/01/2014 500,000 505,625
Penn Housing Finance Agency 5.35 10/01/2008 500,000 500,000
Texas Dept Housing & Community 0.00 3/01/2015 350,000 101,938
Virginia Housing Development Authority 0.00 11/01/2017 575,000 97,031
---------------
3,592,401
---------------
Insured Bonds - 22.6%
- -----------------------------------------------------
Benton County WA School District AMBAC t 6.70 12/01/2006 580,000 651,775
CA Housing Authority MBIA 5.65 8/01/2025 400,000 402,000
Chicago IL O'Hare Airport MBIA 6.75 1/01/2006 500,000 555,000
DC Medlantic Hospital MBIA 7.00 8/15/2005 500,000 550,000
Denver CO Airport MBIA 7.50 11/15/2006 500,000 568,125
District of Columbia FSA 5.30 6/01/2004 500,000 501,250
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Rate Maturity Value (Note 1A)
- ----------------------------------------------------- --------- --------------- -------------- ---------------
Grand Prairie TX Health AMBAC 6.%0 11/01/1999 $ 470,000 $ 479,988
Greater Detroit Resource Recovery AMBAC 6.25 12/13/2007 400,000 432,500
Jefferson County OH Asset Guaranty 6.63 12/01/2005 375,000 391,406
NH HEFA Allegheny Health MBIA 6.25 10/01/2008 300,000 305,250
OK Industrial Authority Health System AMBAC 7.00 8/15/2006 500,000 564,375
Orange County CA Transportation FGIC 4.80 2/15/2006 500,000 482,500
PA HEFA Allegheny Health MBIA 5.50 11/15/2008 405,000 408,544
SD HEFA Mckennan Hosp MBIA 6.00 7/01/2007 500,000 527,500
Tucson AZ COP Asset Guaranty 6.00 7/01/2004 500,000 520,625
Utah Student Loan AMBAC 7.45 11/01/2008 500,000 531,250
---------------
7,872,088
---------------
LOC GIC - 2.2%
- -----------------------------------------------------
Emphoria VA IDB LOC: Bank of Boston 5.80 4/01/2004 200,000 201,612
Emphoria VA IDB LOC: Bank of Boston 5.80 4/01/2004 130,000 131,160
Northborough MA IFA LOC: Bank of Boston 5.75 9/01/2002 440,000 449,900
---------------
782,672
---------------
Revenue Bonds - 50.7%
- -----------------------------------------------------
Alaska Industrial Development and Export Authority 5.25 4/01/1998 215,000 216,881
Alaska Industrial Development and Export Authority 5.50 4/01/2001 500,000 507,500
Alaska Industrial Development and Export Authority 6.20 4/01/2003 150,000 158,250
Allegheny County PA Industrial Development 5.30 12/01/1996 500,000 500,340
Battery Park NY Authority Junior Lien 5.20 11/01/2023 500,000 500,625
Bloomington MN Port Authority FSA 5.30 2/01/2007 1,000,000 1,011,250
Castle Rock CO Import Authority 5.75 12/01/2001 500,000 515,625
Dayton Ohio Special Facilities 6.05 10/01/2009 500,000 501,250
DC Medlantic Hospital 7.00 8/15/2005 500,000 534,375
District of Columbia Redevelopment Agency 5.63 11/01/2010 495,000 482,006
Eddyville Iowa Pollution Control Revenue 5.40 10/01/2006 500,000 509,375
Foothills CA Transportation Agency 0.00 1/01/2007 500,000 310,625
Gateway OH Special Tax 7.50 9/01/2005 500,000 537,500
Hot Springs AK Sales & Use 4.95 12/01/2008 250,000 248,438
Intermountain Power Agency Utah * 5.25 7/01/2003 500,000 511,875
Long Beach CA Aquarium 5.75 7/01/2005 200,000 196,500
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Rate Maturity Value (Note 1A)
- ----------------------------------------------------- --------- --------------- -------------- ---------------
Los Angeles CA Building Authority 5.%0 5/01/2004 $ 500,000 $ 510,000
Mashantucket CT Pequot 6.25 9/01/2003 300,000 306,375
Mass IFA Boston Edison 5.75 2/01/2014 500,000 481,875
Mass IFA Loomis Project 6.50 7/01/2002 250,000 254,375
Mass IFA Resource Recovery 6.15 7/01/2002 150,000 155,250
Met Pier IL 6.25 7/01/2017 300,000 298,875
MT Higher Education 5.95 12/01/2012 440,000 444,950
New York Dormitory Authority t 5.50 7/01/2003 500,000 510,625
New York Dormitory Authority 6.00 7/01/2006 500,000 511,875
New York Med Center Long Island FHA 6.40 8/15/2014 495,000 512,325
New York Med Center Mercy FHA 5.40 8/15/2005 395,000 411,294
New York Med Center Mt. Sinai FHA 5.95 8/15/2009 235,000 239,113
New York Med Center St. Luke's FHA 5.60 8/15/2013 465,000 463,253
New York Med Center St. Vincent FHA 6.13 2/15/2014 515,000 531,738
New York Urban Development Corp. 6.00 1/01/2004 500,000 516,250
New York Urban Development Corp. t 6.25 4/01/2002 500,000 523,750
NH Education Auth. Brewster Acadamy 5.40 6/01/2001 505,000 506,894
NY Metropolitan Tran Authority 5.75 7/01/2015 500,000 482,500
OH Development Commission 5.45 6/01/1999 200,000 202,250
Orange County CA Recovery 5.80 7/01/2016 400,000 399,000
Orange County CA Transportation Sales Tax 6.00 2/15/2007 500,000 525,625
San Bernadino CA Certificates of Participation 5.25 8/01/2004 500,000 495,000
Volusia FL HEFA - Embry Project 5.50 10/15/2004 400,000 403,500
WA Public Power Supply Project 5.30 7/01/2002 500,000 503,125
Weld County Colorado IDA Conagra 6.75 12/15/2001 200,000 212,750
---------------
17,644,982
---------------
TOTAL Bonds (Cost $33,507,967) 34,142,893
---------------
Short-Term Investments - 2.6%
- -----------------------------------------------------
Short Term - 2.0%
- -----------------------------------------------------
Mass St Updates 3.85 12/1/1997 *700,000 700,000
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Intermediate Tax Exempt Bond Fund
Portfolio of Investments
September 30, 1996
Par Value
Security Value (Note 1A)
- ----------------------------------------------------- -------------- ---------------
Repurchase Agreement - 0.6%
- -----------------------------------------------------
Prudential-Bache Repurchase Agreement, dated 9/30/96,
5.12% due 10/1/96, to pay $193,476 (Collateralized by
Federal National Mortgage Association, 7.252, due 4/1/24,
market value $197,317) at cost $ 193,448 $ 193,448
---------------
TOTAL Short-Term Investments (Cost $893,448) 893,448
---------------
TOTAL INVESTMENTS (Cost $34,401,415) - 100.6% 35,036,341
Other Assets/(Liabilities) - (0.6%) (193,629)
---------------
NET ASSETS - 100.0% $ 34,842,712
===============
The following abbreviations are used in this portfolio:
t - Denotes all or part of security pledged as a margin deposit (see Note 7).
* - Delayed delivery contract.
** - Prerefunded security.
*** - Date shown reflects actual maturity date. Security puttable on a daily basis.
AMBAC - American Municipal Bond Assurance Corp. HFA - Housing Finance Agency
COP - Certificate of Participation IDA - Industrial Development Authority
FGIC - Financial Guaranty Insurance Co. IDB - Industrial Development Bond
FHA - Federal Housing Authority IFA - Industrial Finance Authority
FSA - Financial Security Association LOC - Letter of Credit
HEFA - Health & Educational Facilities Authority MBIA - Municipal Bond Insurance Association
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Common Stock - 97.5%
- -----------------------------------------------------
Basic Industry - 3.5%
- -----------------------------------------------------
Hughes Supply Inc. 2,400 $ 88,800
Intertape Polymer Group Inc. 3,700 82,788
OM Group Inc. 1,800 68,400
----------------
239,988
----------------
Capital Goods - 2.7%
- -----------------------------------------------------
BE Aerospace Inc. * 4,900 101,063
Ultrak Inc. * 3,000 82,500
----------------
183,563
----------------
Consumer Cyclical - 4.6%
- -----------------------------------------------------
Cannondale Corp. * 2,000 46,500
Custom Chrome Inc. * 3,700 67,988
Donna Karan International Inc. * 3,000 68,625
Golden Bear Golf Inc. * 2,600 51,350
ITI Technologies Inc. * 2,400 84,600
----------------
319,063
----------------
Consumer Stable - 6.3%
- -----------------------------------------------------
Arbor Drug Inc. 2,600 56,550
Atlantic Coast Airlines Inc. * 4,700 55,225
Garden Ridge Corp. * 3,400 58,225
Midwest Express Holdings * 2,000 59,750
Opta Food Ingredients Inc. * 3,800 34,200
Performance Food Group Co. * 4,750 78,375
Robert Mondavi Corp. * 2,900 94,975
----------------
437,300
----------------
Financial - 4.9%
- -----------------------------------------------------
American Travellers Corp. * 2,900 96,063
Inphynet Medical Management Inc. * 2,300 41,975
Olympic Financial Inc. * 3,300 81,263
S&P 400 Mid-Cap Depository Receipt 1,000 47,953
Texas Regional Bancshares 2,400 69,000
----------------
336,254
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Health Care - 27.8%
- -----------------------------------------------------
Agouron Pharmaceuticals Inc. * 2,300 $ 100,338
Arbor Health Care Company * 3,300 77,138
Arris Pharmaceutical Corp. * 3,500 49,438
Ballard Medical Products 3,800 74,100
Chirex Inc. * 5,200 67,600
Conmed Corp. * 4,000 72,000
Corvel Corp. * 2,700 82,013
Dura Pharmaceuticals Inc. * 1,500 55,313
Emcare Holdings Inc. * 2,600 70,200
FPA Medical Management Inc. * 1,700 44,838
Fuisz Technologies Ltd. * 3,100 40,300
Genesis Health Ventures Inc. * 2,600 73,125
Healthplan Services Corp. * 3,400 74,375
Horizon Mental Health Management * 2,800 69,300
Impath Inc. * 2,900 35,525
Innotech Inc. * 3,500 35,438
Martek Biosciences * 2,500 62,500
Medarex Inc. * 7,000 56,875
Medcath Inc. * 3,400 57,800
Medquist Inc. * 3,000 60,750
Myriad Genetics Inc. * 2,000 51,000
National Surgery Centers * 2,200 61,600
Natures Sunshine Products Inc. 3,500 61,250
Occusystems Inc. * 1,500 45,000
Pharmaceutical Product Development * 1,900 51,300
Possis Medical Inc. * 3,100 55,025
Protocol Systems Inc. * 3,100 51,538
Rochester Medical Corp. * 3,400 56,525
Rural/Metro Corp. * 1,900 69,350
United Dental Care Inc. * 2,000 72,250
Vertex Pharmaceuticals Inc. * 2,800 82,600
----------------
1,916,404
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Services - 26.2%
- -----------------------------------------------------
Air Express International Corp. 2,500 $ 70,625
Alternative Resources Corp. * 1,400 39,375
Analysts International Corp. 1,200 55,200
Applied Graphics Technology * 3,900 58,013
Barrett Business Services Inc. * 3,700 59,200
BET Holdings Inc. * 3,000 86,250
Central Parking Corp. 2,350 76,375
Coach USA Inc. * 3,300 88,275
Computer Task Group Inc. 2,300 71,588
Continental Waste Industries Inc. * 1,600 35,800
Cotelligent Group Inc. * 2,300 36,225
Data Processing Resources Corp. * 3,400 74,800
Emmis Broadcasting Corp. * 1,800 83,250
Evergreen Media Corp. * 1,650 51,563
LCC International Inc. * 1,800 32,850
Logan's Roadhouse Inc. * 2,600 52,325
May & Speh * 3,900 78,000
Natural Microsystems Corp. * 600 28,875
Newpark Resources Inc. * 2,700 98,213
Norrell Corp. 1,600 50,400
Oacis Healthcare Holdings * 3,100 37,975
On Assignment Inc. * 1,800 61,650
Pacific Gateway Exchange Inc. * 2,100 61,950
Personnel Group of America Inc. * 3,200 83,200
Prepaid Legal Services Inc. * 3,200 41,200
Remedy Temp Inc. * 2,000 42,500
Right Management Consultants * 2,800 67,900
Scandinavian Broadcast Systems Corp. * 3,700 83,250
Scientific Games Holdings Corp. * 2,800 58,450
Techforce Corp. * 5,700 42,038
----------------
1,807,315
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Small Cap Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Technology - 21.5%
- -----------------------------------------------------
Advanced Technology Material * 3,900 $ 52,650
Affiliated Computer Services Inc. * 900 52,875
Applix Inc. * 2,700 70,875
Aspen Technologies Inc. * 700 47,425
Black Box Corp. * 2,300 75,900
CCC Information Services Group * 3,200 67,200
Computer Horizons Corp. * 1,900 54,150
Cymer Inc. * 2,000 35,500
Datastream Systems Inc. * 1,200 36,300
Dupont Photomasks Inc. * 1,800 50,400
Etec Systems Inc. * 1,100 37,400
Gensym Corp. * 1,900 41,325
Harbinger Corp. * 1,100 27,500
Indus Group Inc. * 3,500 70,000
Intelligroup Inc. * 4,000 55,500
Lecroy Corp. * 2,600 67,600
MDL Information Systems * 2,000 63,250
Nichols Research Corp. * 2,600 77,350
P-Com Inc. * 1,800 44,550
Perceptron Inc. * 1,700 42,925
Periphonics Corp. * 1,300 50,691
Photronics Inc. * 2,000 62,000
Project Software & Development * 1,500 63,375
Sanmina Corp. * 1,600 64,400
TCSI Corp. * 5,500 72,875
Ultradata Corp. * 4,500 27,563
Videoserver Inc. * 2,000 69,500
----------------
1,481,079
----------------
TOTAL INVESTMENTS (Cost $6,361,949) - 97.5% 6,720,966
Other Assets/(Liabilities) - 2.5% 174,901
----------------
NET ASSETS - 100.0% $ 6,895,867
================
* Non-income producing security.
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Common Stock - 97.9%
- -----------------------------------------------------
Basic Industry - 5.1%
- -----------------------------------------------------
CSX Corp. 400 $ 20,200
Morton International Inc. 1,800 71,550
Norfolk Southern Corp. 300 27,413
Praxair, Inc 600 25,800
----------------
144,963
----------------
Capital Goods - 15.8%
- -----------------------------------------------------
Crane Company 1,600 71,000
Deere & Co. 1,500 63,000
Dover Corp. 1,000 47,750
Harris Corp. Inc. 1,100 71,638
Rockwell International Corp. 1,000 56,375
Textron Inc. 800 68,000
United Technologies Corp. 600 72,075
----------------
449,838
----------------
Consumer Cyclical - 12.2%
- -----------------------------------------------------
Carnival Corp. 2,000 62,000
Clayton Homes 2,600 57,200
Consolidated Stores Corp. * 700 28,000
Jones Apparel Group Inc. * 600 38,250
Leggett & Platt Inc. 2,200 64,625
Pier 1 Imports Inc. 2,600 41,925
Waban Inc. * 2,400 54,900
----------------
346,900
----------------
Consumer Stable - 10.0%
- -----------------------------------------------------
General Nutrition Companies * 2,000 35,125
Kroger Co. * 700 31,325
Media General Inc. 1,500 47,250
Philip Morris Companies Inc. 350 31,413
Richfood Holdings Inc. 1,300 48,425
Wallace Computer Services 2,300 64,975
Wendys International Inc. 1,200 25,800
----------------
284,313
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Energy - 9.2%
- -----------------------------------------------------
Amoco Corp. 800 $ 56,400
British Petroleum PLC 608 76,000
Mobil Corp. 600 69,450
Texaco Inc. 650 59,800
----------------
261,650
----------------
Financial - 17.5%
- -----------------------------------------------------
Advanta Corp. 700 32,195
American Bankers Insurance Group 1,300 65,000
American Travellers Corp. * 1,775 58,797
Bank of Boston Corp. 700 40,513
BankAmerica Corp. 700 57,488
Chase Manhattan Corp. 700 56,088
Federal National Mortgage Association 1,400 48,825
First USA Inc. 400 22,150
Northern Trust 700 46,025
Reliastar Financial Corp. 1,500 71,250
----------------
498,331
----------------
Health Care - 10.5%
- -----------------------------------------------------
Abbott Laboratories 1,100 54,175
Bristol-Myers Squibb Co. 600 57,825
Columbia/HCA Healthcare Corp. 900 51,188
Schering-Plough Corp. 900 55,350
Sofamor/Danek Group, Inc. * 1,000 30,875
Watson Pharmaceutical Inc. * 1,300 48,750
----------------
298,163
----------------
Real Estate Investment Trust - 4.0%
- -----------------------------------------------------
Macerich Company (The) 1,500 33,563
Merry Land & Investment Co. 1,300 27,788
Patriot American Hospitality 400 13,450
Starwood Lodging Trust 900 37,688
----------------
112,489
----------------
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Standish Tax-Sensitive Equity Fund
Portfolio of Investments
September 30, 1996
Value
Security Shares (Note 1A)
- ----------------------------------------------------- --------------- ------------------
Technology - 12.1%
- -----------------------------------------------------
Adaptec Inc. * 1,000 60,000
Compaq Computer * 1,000 64,125
Hewlett-Packard Company 800 39,000
Intel Corp. 700 66,806
International Business Machine 400 49,800
Varian Associates Inc. 1,300 62,400
----------------
342,131
----------------
Utilities - 1.5%
- -----------------------------------------------------
FPL Group Inc. 1,000 43,250
----------------
TOTAL INVESTMENTS (Cost $2,468,754) - 97.9% 2,782,028
Other Assets/(Liabilities) - 2.1% 60,914
----------------
NET ASSETS - 100.0% $ 2,842,942
================
* Non-income producing security.
</TABLE>
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
Notes to Financial Statements
(1).....Significant Accounting Policies:
Standish, Ayer & Wood Investment Trust (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 Massachusetts Intermediate Tax Exempt Bond Fund
(Massachusetts Intermediate Tax Exempt Bond Fund) is a separate
non-diversified investment series of the Trust. Standish Intermediate
Tax Exempt Bond Fund (Intermediate Tax Exempt Bond Fund), Standish
Small Cap Tax-Sensitive Equity Fund (Small Cap Tax-Sensitive Equity
Fund) and Standish Tax-Sensitive Equity Fund (Tax-Sensitive Equity
Fund) are separate diversified investment series of the Trust (together
with the Massachusetts Intermediate Tax Exempt Bond Fund, individually
a "Fund" and collectively, the "Funds"). The following is a summary of
significant accounting policies consistently followed by the Funds in
the preparation of the 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--
Municipal bonds are normally valued on the basis of valuations
furnished by a pricing service. Taxable obligations, if any, for which
price quotations are readily available are normally valued at the last
sales prices on the exchange or market on which they are primarily
traded, or if not listed or no sale, at the last quoted bid prices.
Equity securities for which quotations are readily available are valued
at the last sale prices or if no sale, at the closing bid prices in the
principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are
not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short term instruments with less
than sixty-one days remaining to maturity when acquired by a Fund are
valued on an amortized cost basis. If a Fund acquires a short term
instrument with more than sixty days remaining to its maturity, it is
valued at current market value until the sixtieth day prior to maturity
and will then be valued at amortized cost based upon the value on such
date unless the Trustees determine during such sixty-day period that
amortized cost does not represent fair value.
B...Repurchase agreements--
It is the policy of each 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 each
Fund to monitor on a daily basis, the market value 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 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 qualified regulated investment companies under Subchapter M of the
Internal Revenue Code, the Funds are not subject to income taxes to the
extent that each Fund distributes all of its taxable income for its
fiscal year. Dividends paid by the Massachusetts Intermediate Tax
Exempt Bond Fund and the Intermediate Tax Exempt Bond Fund
(collectively the "Bond Funds") from net interest earned on tax-exempt
municipal bonds are not includable by shareholders as gross income for
Federal income tax purposes because the Bond Funds intend to meet
certain requirements of the Internal Revenue Code applicable to
regulated investment companies which will enable the Bond Funds to pay
exempt-interest dividends.
<PAGE>
At September 30, 1996, the following Funds, for federal income tax
purposes, had capital loss carryovers as follows:
<TABLE>
<CAPTION>
Expiration Date September 30,
-------------------------------------------------------
2002 2003 2004 Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Massachusetts Intermediate Tax Exempt Bond Fund $ 375,094 $ 178,890 $ ----- $ 553,984
Small Cap Tax-Sensitive Equity Fund ----- ----- $ 240,551 $ 240,551
Tax-Sensitive Equity Fund ----- ----- $ 21,876 $ 21,876
</TABLE>
Such carryovers will reduce each Fund's taxable income arising from
future 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 Funds of any liability for federal income tax.
E...Deferred organization expense--
Costs associated with the Funds' organization and initial registration
are being amortized, on a straight-line basis, through October, 1997
for the Massachusetts Intermediate Tax Exempt Bond Fund and the
Intermediate Tax Exempt Bond Fund and through December, 2000 for the
Small Cap Tax-Sensitive Equity Fund and the Tax-Sensitive Equity Fund.
F...Change in fiscal year end--
The Board of Trustees voted on February 9, 1996 to change the fiscal
year end of the Massachusetts Intermediate Tax Exempt Bond Fund and the
Intermediate Tax Exempt Bond Fund from December 31 to September
30.
(2).....Distributions to Shareholders:
Distributions on shares of the Bond Funds are declared daily from net
investment income and distributed monthly. Dividends from net
investment income, if any, will be distributed at least annually for
the Small Cap Tax-Sensitive Equity Fund and the Tax-Sensitive Equity
Fund. Distributions on capital gains, if any, will be distributed
annually for all of the Funds. Distributions from net investment income
and capital gains, if any, are automatically reinvested in additional
shares of the applicable Fund unless the shareholder elects to receive
them in cash.Distributions 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. Permanent book and tax differences relating to
shareholder distributions will result in reclassifications to paid-in
capital.
(3).....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 at the following annual rates of
each Fund's average daily net assets: .40% for the Massachusetts
Intermediate Tax Exempt Bond Fund and the Intermediate Tax Exempt Bond
Fund, .60% for the Small Cap Tax-Sensitive Equity Fund and .50% for the
Tax-Sensitive Equity Fund. SA&W has agreed that the total Fund
operating expenses for any fiscal year will not exceed 0.65% of the
Fund's average daily net assets for the Massachusetts Intermediate Tax
Exempt Bond Fund and the Intermediate Tax Exempt Bond Fund, .90% for
the Small Cap Tax-Sensitive Equity Fund and 1.00% for the Tax-Sensitive
Equity Fund. For the period ended September 30, 1996 and the year ended
December 31, 1995, SA&W voluntarily did not impose $20,375 and $21,818,
respectively, of its advisory fee to the Massachusetts Intermediate Tax
Exempt Bond Fund and $41,685 and $38,426, respectively, to the
Intermediate Tax Exempt Bond Fund, which are reflected as reductions of
expenses in the respective Statements of Operations. For the period
ended September 30, 1996, SA&W voluntarily did not impose its
investment advisory fees of $13,510 and $6,161 and reimbursed operating
expenses of $64,052 and $57,444 for the Small Cap Tax-Sensitive Equity
Fund and Tax-Sensitive Equity Fund, respectively. These agreements are
voluntary and temporary and may be discontinued or revised by SA&W at
any time. The Funds pay no compensation directly to the Trust's
Trustees who are affiliated with SA&W nor to its officers, all of whom
receive remuneration for their services to the Funds from SA&W. Certain
of the trustees and officers of the trust are directors or officers of
SA&W.
<PAGE>
4)......Purchases and Sales of Investments:
Purchases and sales of investments, other than short-term obligations,
were as follows:
<TABLE>
<CAPTION>
Period Ending For the Year Ended
September 30, 1996 December 31, 1995
------------------------------------------------------------------
Purchases Sales Purchases Sales
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Massachusetts Intermediate Tax Exempt Bond Fund $ 11,013,527 $ 11,159,395 $ 26,333,975 $ 23,520,553
============= ============== ============== =============
Intermediate Tax Exempt Bond Fund $ 16,279,361 $ 14,065,880 $ 50,986,883 $ 40,572,529
============= ============== ============== =============
Small Cap Tax-Sensitive Equity Fund $ 8,506,998 $ 1,856,009
============= ==============
Tax-Sensitive Equity Fund $ 2,783,277 $ 293,127
============= ==============
</TABLE>
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 each Funds' shares
were as follows:
<TABLE>
<CAPTION>
Period Ended (a) Year Ended Year Ended
September 30, 1996 December 31, 1995 December 31, 1994
---------------- ---------------- -------------------
Massachusetts Intermediate Tax Exempt Bond Fund
<S> <C> <C> <C>
Shares sold 379,843 534,346 500,726
Shares issued to shareholders in payment of distributions declared 17,163 18,097 9,020
Shares redeemed (388,723) (423,607) (479,585)
---------------- --------------- ---------------
Net increase 8,283 128,836 30,161
================ =============== ===============
Intermediate Tax Exempt Bond Fund
Shares sold 524,041 821,564 612,015
Shares issued to shareholders in payment of distributions declared 20,313 15,149 11,043
Shares redeemed (430,546) (331,012) (392,041)
---------------- --------------- ---------------
Net increase 113,808 505,701 231,017
================ =============== ===============
Small Cap Tax-Sensitive Equity Fund
Shares sold 292,713
Shares issued to shareholders in payment of distributions declared 119
Shares redeemed (268)
----------------
Net increase 292,564
================
Tax-Sensitive Equity Fund
Shares sold 120,464
Shares issued to shareholders in payment of distributions declared 660
Shares redeemed (678)
----------------
Net increase 120,446
================
</TABLE>
(a) For the nine months ended September 30, 1996, for the Bond Funds
and for the period from January 2, 1996, commencement of investment
operations, to September 30, 1996, for the Small Cap Tax-Sensitive
Equity Fund and Tax-Sensitive Equity Fund.
At September 30, 1996, the Massachusetts Intermediate Tax Exempt Bond
Fund and the Small Cap Tax-Sensitive Equity Fund each had a shareholder
of record owning approximately 41% and 20% of the respective Funds'
outstanding voting shares.
<PAGE>
(6).....Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at September 30, 1996, as computed on a
federal income tax basis, were as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Aggregate Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Massachusetts Intermediate Tax Exempt Bond Fund $ 31,629,887 $ 430,367 $ (152,206) $ 278,161
Intermediate Tax Exempt Bond Fund $ 34,401,415 $ 713,234 $ (78,308) $ 634,926
Small Cap Tax-Sensitive Equity Fund $ 6,410,438 $ 588,568 $ (278,040) $ 310,528
Tax-Sensitive Equity Fund $ 2,468,754 $ 324,877 $ (11,603) $ 313,274
</TABLE>
(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 investments are set forth more
fully in the Funds' Prospectuses and Statements of Additional
Information. The Funds may trade the following financial instruments
with off balance sheet risk:
Futures contracts--
The Funds 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. The Funds are required to deposit
either in cash or securities an amount equal to a certain percentage of
the contract amount. Subsequent payments are made or received by the
Funds 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 each 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. In addition,
there is the risk that a Fund may not be able to enter into a closing
transaction because of an illiquid secondary market. The Funds enter
into financial futures transactions primarily to manage their exposure
to certain markets and to changes in security prices and, with respect
to the Small Cap Tax-Sensitive Equity Fund and the Tax-Sensitive Equity
Fund, to changes in foreign currencies.
At September 30, 1996, the Massachusetts Intermediate Tax Exempt Bond
Fund held the following futures contracts:
<TABLE>
<CAPTION>
Contract Position Expiration Date Underlying Face Unrealized
Amount at Value Gain/(Loss)
- --------------------------------------------- ----------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Municipal Bond (5 contracts) Long 12/19/96 $ 569,688 $ 17,763
5 year U.S. Treasury Note (7 contracts) Long 12/31/96 739,156 5,946
10 year U.S. Treasury Note (6 contracts) Long 12/31/96 643,688 10,065
-------------- --------------
$ 1,952,532 $ 33,774
============== ==============
</TABLE>
<PAGE>
At September 30, 1996, the Intermediate Tax Exempt Bond Fund held the
following futures contracts:
<TABLE>
<CAPTION>
Contract Position Expiration Date Underlying Face Unrealized
Amount at Value Gain/(Loss)
- --------------------------------------------- ----------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
5 year U.S. Treasury Note (5 contracts) Long 12/31/96 $ 527,969 $ 4,247
10 year U.S. Treasury Note (3 contracts) Long 12/31/96 321,844 5,033
-------------- --------------
$ 849,813 $ 9,280
============== ==============
</TABLE>
At September 30, 1996, the Bond Funds had segregated sufficient cash
and/or securities to cover margin requirements on open future
contracts.
At September 30, 1996, the Small Cap Tax-Sensitive Equity Fund and the
Tax-Sensitive Equity Fund had no open futures contracts.
Since the Massachusetts Intermediate Tax Exempt Bond Fund may invest a
substantial portion of its assets in issuers located in one state, it
will be more susceptible to factors adversely affecting issuers of that
state than would be a comparable general tax-exempt mutual fund.
(8).....Delayed Delivery Transactions:
The Bond Funds may purchase securities on a when-issued 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
instructs its custodian to segregate securities having a value at least
equal to the amount of the purchase commitment.
At September 30, 1996, the Intermediate Tax Exempt Bond Fund had
entered into the following delayed delivery transactions.
Type Security Settlement Date Amount
- --------------- -------------------------------- ----------------- -----------
Buy Intermountain Power Agency Utah 10/4/96 $507,035
........Federal Income Tax Information (Unaudited)
Of the distributions paid by the Bond Funds from net investment income
for the nine months ended September 30, 1996, amounts that were tax
exempt for Federal income tax purposes are as follows:
Massachusetts Intermediate Tax Exempt Bond Fund $1,074,416
Intermediate Tax Exempt Bond Fund $1,211,455
<PAGE>
Report of Independent Accountants
To the Trustees of Standish, Ayer & Wood Investment Trust and the Shareholders
of Standish Massachusetts Intermediate Tax Exempt Bond Fund, Standish
Intermediate Tax Exempt Bond Fund, Standish Small Cap Tax-Sensitive Equity Fund,
and Standish Tax-Sensitive Equity Fund:
We have audited the accompanying statements of assets and liabilities of the
Standish, Ayer & Wood Investment Trust: Standish Massachusetts Intermediate Tax
Exempt Bond Fund, Standish Intermediate Tax Exempt Bond Fund, Standish Small Cap
Tax-Sensitive Equity Fund, and Standish Tax-Sensitive Equity Fund, including the
schedule of portfolio investments as of September 30, 1996 and the related
statements of operations for the nine months ended September 30, 1996 and the
year ended December 31, 1995 for the Standish Massachusetts Intermediate Tax
Exempt Bond Fund and the Standish Intermediate Tax Exempt Bond Fund, and for the
period from January 2, 1996 (start of business) to September 30, 1996 for the
Standish Small Cap Tax-Sensitive Equity Fund and the Standish Tax-Sensitive
Equity Fund; changes in net assets for the nine months ended September 30, 1996
and the two years in the period ended December 31, 1995 for the Standish
Massachusetts Intermediate Tax Exempt Bond Fund and the Standish Intermediate
Tax Exempt Bond Fund, and for the period from January 2, 1996 (start of
business) to September 30, 1996 for the Standish Small Cap Tax-Sensitive Equity
Fund and the Standish Tax-Sensitive Equity Fund; and the financial highlights
for the nine months ended September 30, 1996 and the three years in the period
ended December 31, 1995 for Standish Massachusetts Intermediate Tax Exempt Bond
Fund and the Standish Intermediate Tax Exempt Bond Fund, and for the period from
January 2, 1996 (start of business) to September 30, 1996 for the Standish Small
Cap Tax-Sensitive Equity Fund and the Standish Tax-Sensitive Equity Fund. These
financial statements are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
period from November 2, 1992 (start of business) to December 31, 1992, presented
herein for the Standish Massachusetts Intermediate Tax Exempt Bond Fund and the
Standish Intermediate Tax Exempt Bond Fund, were audited by other auditors,
whose report, dated February 12, 1993, expressed an unqualified opinion on such
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Standish, Ayer & Wood Investment Trust: Standish Massachusetts Intermediate Tax
Exempt Bond Fund, Standish Intermediate Tax Exempt Bond Fund, Standish Small Cap
Tax-Sensitive Equity Fund and Standish Tax-Sensitive Equity Fund as of September
30, 1996; the results of operations for the nine months ended September 30, 1996
and the year ended December 31, 1995 for the Standish Massachusetts Intermediate
Tax Exempt Bond Fund and the Standish Intermediate Tax Exempt Bond Fund, and for
the period from January 2, 1996 (start of business) to September 30, 1996 for
the Standish Small Cap Tax-Sensitive Equity Fund and the Standish Tax-Sensitive
Equity Fund; and the changes in net assets for the nine months ended September
30, 1996 and the two years in the period ended December 31, 1995 for the
Standish Massachusetts Intermediate Tax Exempt Bond Fund and the Standish
Intermediate Tax Exempt Bond Fund, and for the period from January 2, 1996
(start of business) to September 30, 1996 for the Standish Small Cap
Tax-Sensitive Equity Fund and the Standish Tax-Sensitive Equity Fund; and the
financial highlights for the nine months ended September 30, 1996, and the three
years in the period ended December 31, 1995, for Standish Massachusetts
Intermediate Tax Exempt Bond Fund and the Standish Intermediate Tax Exempt Bond
Fund, and for the period from January 2, 1996 (start of business) to September
30, 1996 for the Standish Small Cap Tax-Sensitive Equity Fund and the Standish
Tax-Sensitive Equity Fund, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 19, 1996
