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 Year Ended
September 30, 1997
[STANDISH LOGO]
<PAGE>
Standish, Ayer & Wood Investment Trust
Financial Statements
Table of Contents
Page
Chairman's Message..................................................1
Selected Financial Information......................................2
Performance Highlights..............................................3
Management Discussion Analysis:
Standish Massachusetts Intermediate Tax Exempt Bond Fund.........4
Standish Intermediate Tax Exempt Bond Fund.......................4
Standish Small Cap Tax-Sensitive Equity Fund.....................6
Standish Tax-Sensitive Equity Fund...............................8
Statements of Assets and Liabilities................................9
Statements of Operations...........................................10
Statements of Changes in Net Assets................................11
Financial Highlights:
Standish Massachusetts Intermediate Tax Exempt Bond Fund........15
Standish Intermediate Tax Exempt Bond Fund......................16
Standish Small Cap Tax-Sensitive Equity Fund....................17
Standish Tax-Sensitive Equity Fund..............................18
Portfolio of Investments:
Standish Massachusetts Intermediate Tax Exempt Bond Fund........19
Standish Intermediate Tax Exempt Bond Fund......................22
Standish Small Cap Tax-Sensitive Equity Fund....................26
Standish Tax-Sensitive Equity Fund..............................30
Notes of Financial Statements......................................33
Report of Independent Accountants..................................40
<PAGE>
Standish, Ayer & Wood Investment Trust
Chairman's Message
October 31, 1997
Dear Standish, Ayer & Wood Investment Trust Shareholder:
Enclosed you will find the annual 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-sensitive funds in one comprehensive document. As of September 30, 1997,
these funds had combined net assets of $136.7 million.
As of September 1997, Standish, Ayer & Wood managed assets for its clients of
approximately $36.7 billion, including the Standish mutual fund assets of $5.3
billion. The principal clients of the firm are corporate pension trusts, state
and local governmental units, 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.
During the last twelve months, the financial markets have generally registered
very positive rates of return. The tax exempt bond market as measured by a
combination of the Lehman Municipal 3, 5, 7 and 10 year indices, has recorded a
total rate of return of 7.48%. The U.S. equity markets as measured by the
Standard & Poor's 500 Index or the Russell 2000 Growth Index have recorded total
rates of return of 40.45% and 23.34%, respectively.
During the last year, we at Standish have continued to add resources to both
investment research and shareholder servicing. We have added expertise in
research and trading both for equities and for municipal bonds. Good flow of new
business at Standish has allowed us to expand our investment skills. We remain
confident that we have the resources and the organization to do a superior
investment management job, and we will be working hard to fulfill your
expectations in the years ahead. We appreciate the opportunity to serve you and
hope you will find the attached information helpful.
Sincerely yours,
/s/ Edward H. Ladd
Edward H. Ladd
Chairman
<PAGE>
Standish, Ayer & Wood Investment Trust
Selected Financial Information
For the Year Ended September 30, 1997
<TABLE>
<CAPTION>
Standish
Massachusetts Standish Standish
Intermediate Intermediate Small Cap Standish
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund Bond Fund Equity Fund Equity Fund
- ------------------------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value - beginning of period $ 20.63 $ 21.12 $ 23.57 $ 23.60
Income from investment operations
Net investment income * 0.97 1.01 0.02 0.39
Net realized and unrealized gain
(loss) 0.55 0.74 9.05 11.58
------- ------- ------- -------
Total from investment operations 1.52 1.75 9.07 11.97
------- ------- ------- -------
Less distributions declared to
shareholders
From net investment income (0.97) (1.01) (0.03) (0.33)
From net realized gains -- (0.08) -- --
------- ------- ------- -------
Net asset value - end of period $ 21.18 $ 21.78 $ 32.61 $ 35.24
======= ======= ======= =======
Total return 7.55% 8.27% 38.50% 51.19%
Ratios to average net assets
Expenses * 0.65% 0.65% 0.21% 0.20%
Net investment income * 4.67% 4.74% 0.08% 1.31%
Net assets, end of period
(000's omitted) $38,401 $52,729 $32,761 $12,819
Portfolio turnover 25% 23% 102% 25%
Average broker commission paid per
share -- -- $0.0429 $0.0497
</TABLE>
* The investment adviser voluntarily did not impose a portion of its fee and/or
reimbursed the Funds for their operating expenses. Please refer to the
Financial Highlights for additional disclosure regarding these ratios.
2
<PAGE>
Standish, Ayer & Wood Investment Trust
Performance Highlights
for the One-Year Period Ended September 30, 1997
Total Return
- --------------------------------------------------------- --------------
Tax Exempt Funds
Standish Mass. Intermediate Tax Exempt Fund 7.55%
Standish Intermediate Tax Exempt Bond Fund 8.27%
Lehman Muni 3-5-7-10 Index 7.48%
Tax-Sensitive Funds
Standish Tax-Sensitive Small Capitalization Equity Fund 38.50%
Russell 2000 Index 33.20%
Standish Tax-Sensitive Equity Fund 51.19%
S&P 500 Index 40.45%
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.
The 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.
3
<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 enjoyed an excellent environment during the twelve-month period
ending September 30, 1997. The performance of municipal bonds was no exception
to the general trend: investors earned a very satisfactory return over the
period and enjoyed the tax-exempt benefit of municipal bond income as well. The
Standish Intermediate Tax Exempt Bond Fund produced a total return of 8.27% for
the period, well ahead of the benchmark performance index (Lehman Muni 3, 5, 7,
and 10 Year Index) return of 7.48%. In addition, the return easily exceeded that
of the Lipper Intermediate Muni Bond Fund Index of 7.08%. The Standish
Massachusetts Intermediate Tax Exempt Fund returned 7.55%, which also compares
favorably to the indices (note that the Massachusetts Fund only invests in
double tax exempt Massachusetts bonds, whereas the benchmark indices are
"national" in scope).
The twelve-month period was characterized by very favorable circumstances for
financial assets: moderate economic growth with--importantly for bonds--a benign
inflation environment. A fourth quarter 1996 rally was stalled by Fed Chairman
Greenspan's remarks concerning the "irrational exuberance" of the equity
markets, followed by a preemptive tightening by the Federal Reserve in the first
quarter of 1997. However, the second and third quarters of 1997 saw a resumption
of the positive trend for bonds. Overall, bond investors were well rewarded. On
a price return basis, municipals underperformed taxable bonds by a very modest
amount. This is typical in bond market rallies and also reflects the fact that
municipals had become relatively expensive versus taxables in the relatively
weak market of calendar 1996.
Standish Intermediate Tax Exempt Bond Fund
The Fund's success for the period is attributable to its California and New York
exposures, an overweight in "BBB" rated paper, a duration posture modestly
longer than that of the index, and good overall security selection in a market
still characterized by occasional pricing inefficiencies. Credit quality of
states, municipalities, and public authorities definitely improved over the past
year, benefiting the Fund. We are proud to have produced such favorable returns
in a market currently characterized by tight sector and quality spreads, and a
relative lack of value opportunities when compared to years past.
Standish Massachusetts Intermediate Tax Exempt Bond Fund
The Massachusetts market for tax-exempt securities continues to lag the national
market and, although new issue supply has increased, continues to be plagued by
a lack of good value opportunities. Widespread use of bond insurance, tight
quality spreads, and a low level of issuance in the "yield" segment of the
market (i.e. hospitals and other credit sensitive issuers) have inhibited the
ability to add value through security selection. Nevertheless, the Fund
continues to perform well. We have maintained a low turnover posture, preserving
the higher yielding positions in the Fund and have actively used future
contracts to manage the Fund's duration (exposure to the movement of interest
rates). The Massachusetts market may become more interesting in the near term,
as a superb local economy and generally improving credit conditions are offset
by the financial consequences of the "Big Dig" and potential tax cut referendums
on the 1998 ballot.
Thank you for your continuing interest in the Tax Exempt Bond Funds.
Sincerely,
/s/ Raymond J. Kubiak /s/ Maria D. Furman
Raymond J. Kubiak Maria D. Furman
4
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Comparison of Change in Value of $100,000 Investment in
Standish Massachusetts Intermediate Tax Exempt Bond Fund,
the Lehman Muni 3,5,7, and 10 Index, and the Lipper Intermediate Muni Debt Index
[GRAPHIC OMITTED]
[The following table was represented as a line graph in the printed materials.]
Standish
Massachusetts Lehman Lipper
Intermediate Tax Muni Intermediate
Exempt 3-5-7-10 Muni
------ -------- ----
Inception 11/2/92 100000 100000 100000
11/30/92 101305 101290 101680
12/31/92 102271 102141 102575
1/31/93 103357 103448 103754
2/28/93 106612 106241 106867
3/31/93 105229 105147 105649
4/30/93 106229 105873 106504
5/31/93 106517 106201 106856
6/30/93 108089 107762 108309
7/31/93 108333 107870 108266
8/31/93 110126 109552 110193
9/30/93 111047 110517 111449
10/31/93 111453 110760 111628
11/30/93 110850 110106 110947
12/31/93 112755 111901 112766
1/31/94 114008 113020 113928
2/28/94 111819 110906 111512
3/31/94 108020 108189 108390
4/30/94 108815 109011 108845
5/31/94 109620 109633 109705
6/30/94 109114 109457 109387
7/30/94 110452 110848 110754
8/30/94 110814 111335 111175
9/30/94 109664 110433 110030
10/31/94 108348 109506 108820
11/30/94 106924 108290 107198
12/31/94 108420 109611 108796
1/31/95 110702 111398 110906
2/28/95 112714 113593 113213
3/31/95 113693 114819 114209
4/30/95 113792 115141 114461
5/31/95 116267 117870 117150
6/30/95 115984 117781 116787
7/31/95 117232 119260 117850
8/31/95 118537 120521 119005
9/30/95 119107 120988 119600
10/31/95 120378 121928 120736
11/30/95 121656 123148 122016
12/31/95 122127 123788 122797
1/31/96 122871 124952 123755
2/29/96 122408 124636 123371
3/31/96 121361 123655 122125
4/30/96 121021 123525 121905
5/31/96 121211 123407 121881
6/30/96 122293 124305 122624
7/31/96 123029 125259 123691
8/31/96 123036 125350 123703
9/30/96 124205 126403 124755
10/31/96 125492 127639 125915
11/30/96 127445 129528 127741
12/31/96 127093 129239 127345
1/31/97 127352 129734 127651
2/28/97 128291 130704 128582
3/31/97 126833 129318 127232
4/30/97 127649 130004 127868
5/31/97 129137 131538 129352
6/30/97 130328 132656 130516
7/31/97 133077 135335 133322
8/31/97 132137 134523 132242
9/30/97 133584 135855 133591
Standish Intermediate Tax Exempt Bond Fund
[GRAPHIC OMITTED]
[The following table was represented as a line graph in the printed materials.]
Comparison of Change in Value of $100,000 Investment in
Standish Intermediate Intermediate Tax Exempt Bond Fund,
the Lehman Muni 3,5,7, and 10 Index, and the Lipper Intermediate Muni Debt Index
Standish Lehman Lipper
Intermediate Tax Muni Intermediate
Exempt Fund 3-5-7-10 Muni
----------- -------- ----
Inception 11/2/92 100000 100000 100000
11/30/92 101801 101290 101680
12/31/92 102793 102141 102575
1/31/93 104194 103448 103754
2/28/93 107837 106241 106867
3/31/93 106346 105147 105649
4/30/93 107351 105873 106504
5/31/93 107657 106201 106856
6/30/93 109142 107762 108309
7/31/93 109502 107870 108266
8/31/93 111260 109552 110193
9/30/93 112344 110517 111449
10/31/93 112618 110760 111628
11/30/93 112004 110106 110947
12/31/93 113872 111901 112766
1/31/94 114967 113020 113928
2/28/94 112863 110906 111512
3/31/94 109373 108189 108390
4/30/94 110287 109011 108845
5/31/94 111348 109633 109705
6/30/94 111196 109457 109387
7/31/94 112496 110848 110754
8/30/94 112980 111335 111175
9/30/94 112274 110433 110030
10/31/94 111216 109506 108820
11/30/94 109615 108290 107198
12/31/94 110830 109611 108796
1/31/95 112944 111398 110906
2/28/95 114912 113593 113213
3/31/95 115946 114819 114209
4/30/95 116141 115141 114461
5/31/95 118555 117870 117150
6/30/95 118214 117781 116787
7/31/95 119290 119260 117850
8/31/95 120782 120521 119005
9/30/95 121480 120988 119600
10/31/95 122643 121928 120736
11/30/95 124158 123148 122016
12/31/95 124848 123788 122797
1/31/96 125763 124952 123755
2/29/96 125219 124636 123371
3/31/96 124321 123655 122125
4/30/96 124238 123525 121905
5/31/96 124341 123407 121881
6/30/96 125453 124305 122624
7/31/96 126454 125259 123691
8/31/96 126558 125350 123703
9/30/96 127879 126403 124755
10/31/96 129190 127639 125915
11/30/96 131226 129528 127741
12/31/96 130795 129239 127345
1/31/97 131197 129734 127651
2/28/97 132209 130704 128582
3/31/97 130777 129318 127232
4/30/97 131799 130004 127868
5/31/97 133387 131538 129352
6/30/97 134662 132656 130516
7/31/97 137839 135335 133322
8/31/97 136979 134523 132242
9/30/97 138456 135855 133591
5
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Management Discussion & Analysis
The strong performance in small cap stocks which began with a bang in May has
continued to date and we are pleased to report that 1997 is turning out to be an
excellent year for small cap stocks after all. For the year ended September 30,
1997, the Standish Small Cap Tax-Sensitive Fund gained 38.50%, compared to a
gain of 23.34% for the Russell 2000 Growth Index, and a gain of 33.20% for the
Russell 2000 Index. Since September 30, there has been considerably more
turbulence in the markets world wide and this may well not be over; we are,
however, optimistic that the year will produce reasonable returns.
Small caps had been performing poorly for the past four years, with some notable
sharp rallies as exceptions. Currently, there is some evidence that the tone of
the market is more favorable for these stocks. The key to this shift apparently
is in earnings and valuation: small caps have been improving in terms of
earnings growth and propensity to surprise positively analysts' estimates, and
their price/earnings multiples on average compare well to those of large cap
stocks. Large cap stock earnings are more in question now because of the age of
this business cycle and the challenge of repatriating foreign earnings that must
be translated into a very strong U.S. currency. Large cap valuations appear
extended, and it may be that investors are taking some profits and marginally
gravitating to small cap stocks. It would take very little increased attention
from institutional managers to have a noticeable impact on small cap stocks. In
a marketplace which has been very generous to shareholders, we believe that the
best of this cycle has been experienced but that prospects for small caps are
still good for the longer term.
The year ended September 30, 1997 has been again a volatile period for small cap
stocks. After a strong January the stocks languished badly through April, with a
very strong rally beginning in May and continuing to date. Our investments are
oriented toward rapidly growing high quality companies at the smaller end of the
small cap spectrum, and this has presented a performance challenge for the last
two years. In recent months smallness seems to have ceased as a negative. Also
this has been a better year for value investors compared to growth, and we are
decidedly in the higher growth camp; this past trend again has moderated in
recent months. Our most important value-addition this year has been from stock
selection, with our sector emphasis a neutral influence. While we were helped by
growth sector emphasis in particular in technology, it was offset by the strong
performance in financial stocks and more recently in the traditionally cyclical
industries, areas in which we typically have very few investments. As a
reminder, our high growth orientation leads us to heavier commitments in the
technology, medical, and business services sectors, with comparatively fewer
investments in the slower growth areas of the economy. We generally seek to
invest in the highest quality companies, and we select stocks based on earnings
and margin dynamics, business position analysis, and an evaluation of
management. We are committed to producing competitive after tax returns and
despite the bull market of the past two years, I believe we are effectively
balancing investment tactics and strategy with tax considerations.
6
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Management Discussion & Analysis
We are very pleased to announce the addition of Jonathan Stone to the Standish
Small Cap Team. Jonathan joins Drew Beja, Melissa Dane and me after several
years as an effective and distinguished analyst with a regional research and
brokerage firm where he covered technology stocks. He is an experienced,
seasoned analyst who has already had considerable impact in stock selection as
well as portfolio management; he is clearly an important addition to our
capabilities.
In closing, it is important to remind you of the volatility of small cap
investments and that we do not expect a diminution of this volatility in the
future. We remain, however, optimistic about the outlook for small cap stocks
and view the category as having important potential over the long term. We are
very appreciative of your support and thank you for your interest in the
Standish Small Capitalization Tax-Sensitive Equity Fund.
Sincerely,
/s/ Nicholas S. Battelle
Nicholas S. Battelle
Comparison of Change in Value of $100,000 Investment in
Standish Small Capitalization Tax-Sensitive Equity Fund, the S&P 500 Index,
the Russell 2000 Index, and the Russell 2000 Growth Index
[GRAPHIC OMITTED]
[The following table was represented as a line graph in the printed materials.]
Standish Small Russell
Capitalization Russell 2000
Tax Sensitive 2000 S&P 500 Growth
Equity Fund Index Index Index
----------- ----- ----- -----
100000 100000 100000 100000
1/31/96 99750 99892 103404 99172
2/29/96 102750 103006 104363 103694
3/31/96 107550 105135 105368 105744
4/30/96 120900 110756 106921 113862
5/31/96 128800 115121 109678 119701
6/30/96 120750 110394 110096 111923
7/31/96 104386 100753 105232 98259
8/31/96 113194 106602 107451 105534
9/30/96 117948 110768 113499 110969
10/31/96 111292 109061 116629 106181
11/30/96 112994 113555 125445 109134
12/31/96 121231 116531 122960 111262
1/31/97 126141 118859 130642 114042
2/28/97 117174 115977 131667 107155
3/31/97 108557 110504 126237 99593
4/30/97 108407 110812 133781 98438
5/31/97 125990 123146 141929 113233
6/30/97 135058 128429 148287 118090
7/31/97 142221 134400 160091 124137
8/31/97 146880 137478 151126 126757
9/30/97 163362 147542 159407 136873
7
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Management Discussion & Analysis
The returns from the stocks of U.S. companies were excellent over the last 12
months. The Tax-Sensitive Equity Fund returned 51.19%, beating the Standard &
Poor's 500 Index, which was up 40.45%.
These excellent returns arise from the supportive economic environment which the
U.S. is now experiencing. The economy is growing at a steady pace and corporate
profits continue to rise. Consumer confidence, buoyed by high rates of
employment and an enormous boost from the wealth effect growing out of strong
financial markets, is near an all-time high. Most important, inflation appears
largely under control with few signs of rising prices.
Returns for the Tax-Sensitive Equity Fund were driven by individual stock
selection, as we continued to rely on both our computer screens and further
fundamental analysis to find undervalued stocks with good long-term growth
prospects. Many of our best returns came from our technology sector, as
investors remain fascinated by the productivity gains which manufacturing and
service companies are realizing from their large investment in computers over
the past seven years. The best single stock return for the Fund came from Compaq
Computer, up 192% over the past 12 months. Intel and IBM also contributed to our
good results, appreciating 97% and 70%, respectively.
More recently, our group of smaller niche insurance companies--ACE Ltd., Allied
Group, American Bankers, Conseco and Reliastar--have benefited from both the
positive interest rate outlook and a growing investor appetite for smaller
companies.
We are happy to report that, as of September 30, our Fund had no capital gains
to distribute to our shareholders. There will be a dividend payment, but returns
will not be reduced by further capital gains taxes.
Sincerely,
/s/ Laurence A. Manchester
Laurence A. Manchester
Comparison of Change in Value of$100,000 Investment in
Standish Tax-Sensitive Equity Fund and the S&P 500 Index
[GRAPHIC OMITTED]
[The following table was represented as a line graph in the printed materials.]
Standish Tax
Sensitive S&P 500
Equity Fund Index
----------- -----
100000 100000
1/31/96 103400 103404
2/29/96 105950 104363
3/31/96 106600 105368
4/30/96 109050 106921
5/31/96 110950 109678
6/30/96 110250 110096
7/31/96 105763 105232
8/31/96 111813 107451
9/30/96 118971 113499
10/31/96 120836 116629
11/30/96 129608 125445
12/31/96 130612 122960
1/31/97 137675 130642
2/28/97 138227 131667
3/31/97 134369 126257
4/30/97 140511 133781
5/31/97 151425 141929
6/30/97 157671 148287
7/31/97 173188 160091
8/31/97 169870 151126
9/30/97 179875 159407
8
<PAGE>
Standish, Ayer & Wood Investment Trust
Statements of Assets and Liabilities
September 30, 1997
<TABLE>
<CAPTION>
Standish
Massachusetts Standish Standish
Intermediate Intermediate Small Cap Standish
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund Bond Fund Equity Fund Equity Fund
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Assets
Investments at value (Note 1A)* $ 39,524,101 $ 56,214,689 $ 32,277,528 $ 12,225,812
Cash -- -- 353,935 583,783
Receivable for investments sold -- -- 127,770 --
Receivable for Fund shares sold 180,000 -- 84,960 --
Interest and dividends receivable 538,647 787,064 5,555 11,633
Miscellaneous receivable 38,495 -- -- --
Prepaid expenses 2,251 2,648 1,501 939
Deferred organization costs (Note 1E) 234 309 12,299 12,308
------------ ------------ ------------- ------------
Total assets 40,283,728 57,004,710 32,863,548 12,834,475
Liabilities
Payable for investments purchased 933,941 -- 78,662 --
Payable for when-issued securities (Note 750,706 4,122,936 -- --
8)
Payable for Fund shares redeemed 80,500 -- -- --
Distribution payable 85,366 119,524 -- --
Payable for daily variation margin on open
financial futures contracts (Note 7) 1,875 -- -- --
Accrued accounting, custody and
transfer agent fees 19,248 21,790 12,263 9,275
Accrued expenses and other liabilities 11,464 17,168 12,106 6,260
------------ ------------ ------------- ------------
Total liabilities 1,883,100 4,281,418 103,031 15,535
------------ ------------ ------------- ------------
Net Assets $ 38,400,628 $ 52,723,292 $ 32,760,517 $ 12,818,940
============ ============ ============= ============
Net Assets consist of
Paid-in capital $ 37,779,238 $ 50,625,414 $ 24,102,658 $ 9,735,808
Undistributed net investment income -- 8,268 7,577 24,409
Accumulated net realized gain (loss) (414,831 142,748 165,588 (121,011)
Net unrealized appreciation 1,036,221 1,946,862 8,484,694 3,179,734
============ ============ ============= ============
Total Net Assets $ 38,400,628 $ 52,723,292 $ 32,760,517 $ 12,818,940
============ ============ ============= ============
Shares of beneficial interest outstanding 1,812,636 2,420,468 1,004,501 363,730
============ ============ ============= ============
Net asset value, offering price and
redemption price per share
(Net assets/Shares outstanding) $ 21.18 $ 21.78 $ 32.61 $ 35.24
============ ============ ============= ============
* Identified cost of investments $ 38,496,820 $ 54,267,827 $ 23,792,834 $ 9,046,078
============ ============ ============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Standish, Ayer & Wood Investment Trust
Statements of Operations
For the Year Ended September 30, 1997
<TABLE>
<CAPTION>
Standish
Massachusetts Standish Standish
Intermediate Intermediate Small Cap Standish
Tax Exempt Tax Exempt Tax-Sensitive Tax-Sensitive
Bond Fund Bond Fund Equity Fund Equity Fund
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Investment Income
Dividend income $ -- $ -- $ 18,755 $ 85,447
Interest income 1,805,757 2,337,745 30,560 13,204
Miscellaneous income 38,495 -- -- --
----------- ----------- ----------- -----------
Total investment income 1,844,252 2,337,745 49,315 98,651
Expenses
Investment advisory fee (Note 3) 138,703 173,394 100,630 32,635
Accounting, custody and transfer 83,191 90,021 62,119 40,489
agent fees
Audit services 20,865 23,865 13,814 13,014
Legal fees 3,291 5,716 7,515 7,408
Insurance expense 3,257 3,759 1,804 1,122
Amortization of organization 2,858 3,854 3,774 3,774
expenses (Note 1E)
Registration fees 2,722 15,859 16,855 13,463
Administration fees 2,202 2,654 804 345
Trustees fees (Note 3) 739 976 414 154
Miscellaneous 1,652 2,441 1,052 633
----------- ----------- ----------- -----------
Total expenses 259,480 322,539 208,781 113,037
Deduct--
Waiver of investment advisory (33,848) (40,552) (100,63) (32,635)
fee (Note 3)
Reimbursement of Fund operating -- -- (72,897) (67,114)
expenses (Note 3)
----------- ----------- ----------- -----------
Total waiver of investment
advisory fee and reimbursement
of operating expenses (33,848) (40,552) (173,52) (99,749)
----------- ----------- ----------- -----------
Net expenses 225,632 281,987 35,254 13,288
----------- ----------- ----------- -----------
Net investment income 1,618,620 2,055,758 14,061 85,363
----------- ----------- ----------- -----------
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss)
Investment security 97,474 186,163 454,628 (99,250)
transactions
Financial futures contracts 75,451 8,767 -- --
----------- ----------- ----------- -----------
Net realized gain (loss) 172,925 194,930 454,628 (99,250)
Change in unrealized appreciation
(depreciation)
Investment securities 749,120 1,311,936 8,125,678 2,866,460
Financial futures contracts (24,834) (9,280) -- --
----------- ----------- ----------- -----------
Net change in unrealized
appreciation (depreciation) 724,286 1,302,656 8,125,678 2,866,460
----------- ----------- ----------- -----------
-----------
Net realized and unrealized gain 897,211 1,497,586 8,580,306 2,767,210
----------- ----------- ----------- -----------
Net increase in net assets from
operations $ 2,515,831 $ 3,553,344 $ 8,594,367 $ 2,852,573
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended Year Ended
September 30, 1997 September 30, 1996 December 31, 1995
-------------------- ------------------- --------------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 1,618,620 $ 1,168,180 $ 1,451,879
Net realized gain (loss) 172,925 20,518 (144,169)
Change in net unrealized appreciation
(depreciation) 724,286 (631,115) 2,339,720
------------ ------------ ------------
Net increase in net assets from operations 2,515,831 557,583 3,647,430
------------ ------------ ------------
Distributions to Shareholders
From net investment income (1,618,620) (1,168,180) (1,451,879)
------------ ------------ ------------
Fund share (principal) Transactions (Note 5)
Net proceeds from sale of shares 13,888,372 7,839,919 10,781,062
Net asset value of shares issued to shareholders in
payment of distributions declared 636,463 354,227 371,483
Cost of shares redeemed (9,157,501) (8,012,503) (8,558,571)
------------ ------------ ------------
Increase in net assets from Fund share transactions 5,367,334 181,643 2,593,974
------------ ------------ ------------
Net increase (decrease) in net assets 6,264,545 (428,954) 4,789,525
Net Assets
At beginning of period 32,136,083 32,565,037 27,775,512
------------ ------------ ------------
At end of period $ 38,400,628 $ 32,136,083 $ 32,565,037
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended Year Ended
September 30, 1997 September 30, 1996 December 31, 1995
------------------ ------------------- -----------------
<S> <C> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 2,055,758 $ 1,219,159 $ 1,363,479
Net realized gain 194,930 53,135 199,896
Change in net unrealized appreciation
(depreciation) 1,302,656 (459,413) 1,841,975
------------ ------------ ------------
Net increase in net assets from operations 3,553,344 812,881 3,405,350
------------ ------------ ------------
Distributions to Shareholders
From net investment income (2,055,758) (1,219,159) (1,363,479)
From net realized gain (61,613) -- --
------------ ------------ ------------
Total distributions to shareholders (2,117,371) (1,219,159) (1,363,479)
------------ ------------ ------------
Fund share (principal) Transactions (Note 5)
Net proceeds from sale of shares 23,342,391 11,111,750 16,771,357
Net asset value of shares issued to shareholders in
payment of distributions declared 828,068 428,110 316,498
Cost of shares redeemed (7,725,852) (9,156,263) (6,778,640)
------------ ------------ ------------
Increase in net assets from Fund share transactions 16,444,607 2,383,597 10,309,215
------------ ------------ ------------
Net increase in net assets 17,880,580 1,977,319 12,351,086
Net Assets
At beginning of period 34,842,712 32,865,393 20,514,307
------------ ------------ ------------
At end of period (including undistributed net
investment income of $8,268, $0 and $0,
respectively) $ 52,723,292 $ 34,842,712 $ 32,865,393
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Period Ended
September 30, 1997 September 30, 1996*
------------------ -------------------
<S> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 14,061 $ 9,219
Net realized gain (loss) 454,628 (289,040)
Change in unrealized appreciation (depreciation) 8,125,678 359,016
------------ -----------
Net increase in net assets from operations 8,594,367 79,195
------------ -----------
Distributions to Shareholders
From net investment income (11,664) (4,039)
------------ -----------
Fund Share (principal) Transactions+(Note 5)
Net proceeds from sale of shares 18,625,615 6,823,260
Net asset value of shares issued to shareholders in
payment of distributions declared 9,364 2,858
Cost of shares redeemed (1,353,032) (5,407)
------------ -----------
Net increase in net assets from Fund share transactions 17,281,947 6,820,711
------------ -----------
Net increase in net assets 25,864,650 6,895,867
Net Assets
At beginning of period 6,895,867 --
------------ -----------
At end of period (including undistributed net investment
income of $7,577 and $5,180, respectively) $ 32,760,517 $ 6,895,867
============ ===========
</TABLE>
* For the period January 2, 1996, commencement of operations, through September
30, 1996.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Period Ended
September 30, 1997 September 30, 1996*
------------------- -------------------
<S> <C> <C>
Increase (decrease) in Net Assets
From operations
Net investment income $ 85,363 $ 28,037
Net realized loss (99,250) (21,876)
Change in unrealized appreciation (depreciation) 2,866,460 313,274
------------ -----------
Net increase in net assets from operations 2,852,573 319,435
------------ -----------
Distributions to Shareholders
From net investment income (73,042) (15,453)
------------ -----------
Fund Share (principal) Transactions+(Note 5)
Net proceeds from sale of shares 7,241,231 2,539,035
Net asset value of shares issued to shareholders in payment
of distributions declared 61,187 14,425
Cost of shares redeemed (105,951) (14,500)
------------ -----------
Net increase in net assets from Fund share transactions 7,196,467 2,538,960
------------ -----------
Net increase in net assets 9,975,998 2,842,942
Net Assets
At beginning of period 2,842,942 --
------------ -----------
At end of period (including undistributed net investment income of $24,409 and
$12,585, respectively) $ 12,818,940 $ 2,842,942
============ ===========
</TABLE>
* For the period January 2, 1996, commencement of operations, through September
30, 1996.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended Year ended December 31,
September 30, September 30, --------------------------------------------
1997 1996 1995 1994 1993 1992(a)(b)
------------- ------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 20.63 $ 21.02 $ 19.55 $ 21.31 $ 20.32 $20.00
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income * 0.97 0.74 0.94 0.94 0.92 0.13
Net realized and unrealized gain
(loss) on investments 0.55 (0.39) 1.47 (1.75) 1.13 0.32
------- ------- ------- ------- ------- ------
Total from investment operations 1.52 0.35 2.41 (0.81) 2.05 0.45
------- ------- ------- ------- ------- ------
Less distributions to shareholders
From net investment income (0.97) (0.74) (0.94) (0.94) (0.92) (0.13)
From net realized gains on
investments -- -- -- (0.01) (0.14) --
------- ------- ------- ------- ------- ------
Total distributions to
shareholders (0.97) (0.74) (0.94) (0.95) (1.06) (0.13)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 21.18 $ 20.63 $ 21.02 $ 19.55 $ 21.31 $20.32
======= ======= ======= ======= ======= ======
Total return 7.55% 1.70% 12.64% (3.84)% 10.24% 13.85%+
Ratios (to average daily net assets)/
Supplemental Data
Expenses * 0.65% 0.65%+ 0.65% 0.65% 0.65% 0.65%+
Net investment income * 4.67% 4.78%+ 4.71% 4.67% 4.35% 4.05%+
Portfolio Turnover 25%(1) 35%(1) 77% 84% 94% 31%
Net assets, end of period (000's
omitted) $38,401 $32,136 $32,565 $27,776 $29,627 $6,537
</TABLE>
* The investment adviser voluntarily agreed not to impose a portion of its
investment advisory fee and reimbursed the Fund for a portion of its
operating expenses. In the absence of this agreement, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net investment income per share $ 0.95 $ 0.72 $ 0.95 $ 0.91 $ 0.86 $ 0.11
Ratios (to average net assets):
Expenses 0.75% 0.73%+ 0.72% 0.78% 0.95% 1.37%+
Net investment income 4.57% 4.70%+ 4.64% 4.54% 4.05% 3.33%+
</TABLE>
- ----------
(a)Audited by other auditors.
(b)For the period November 2, 1992 (commencement of operations) to December
31, 1992.
+ Computed on an annualized basis.
(1)Commencing in fiscal 1996, securities which are puttable daily have been
excluded from the portfolio turnover calculation.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended Year ended December 31,
September 30, September 30, --------------------------------------------
1997 1996 1995 1994 1993 1992(a)(b)
------------- ------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $ 21.12 $ 21.40 $ 19.91 $ 21.44 $ 20.42 $20.00
------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income * 1.01 0.79 0.98 0.95 0.93 0.14
Net realized and unrealized gain
(loss) on investments 0.74 (0.28) 1.49 (1.51) 1.24 0.42
------- ------- ------- ------- ------- ------
Total from investment operations 1.75 0.51 2.47 (0.56) 2.17 0.56
------- ------- ------- ------- ------- ------
Less distributions to shareholders
From net investment income (1.01) (0.79) (0.98) (0.95) (0.93) (0.14)
From net realized gains on
investments (0.08) -- -- (0.02) (0.22) --
------- ------- ------- ------- ------- ------
Total distributions to
shareholders (1.09) (0.79) (0.98) (0.97) (1.15) (0.14)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 21.78 $ 21.12 $ 21.40 $ 19.91 $ 21.44 $20.42
======= ======= ======= ======= ======= ======
Total return 8.27% 2.43% 12.65% (2.68)% 10.78% 17.02% +
Ratios (to average daily net assets)/
Supplemental Data
Expenses * 0.65% 0.65%+ 0.65% 0.65% 0.65% 0.65%+
Net investment income * 4.74% 4.99%+ 4.75% 4.62% 4.36% 4.16%+
Portfolio Turnover 23%(1) 43%(1) 140% 157% 126% 62%
Net assets, end of period (000's
omitted) $52,723 $34,843 $32,865 $20,514 $17,132 $5,577
</TABLE>
* The investment adviser voluntarily agreed not to impose a portion of its
investment advisory fee and reimbursed the Fund for a portion of its
operating expenses. In the absence of this agreement, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net investment income per share $ 0.99 $ 0.76 $ 0.95 $ 0.90 $ 0.85 $ 0.12
Ratios (to average net assets):
Expenses 0.74% 0.82%+ 0.79% 0.89% 1.15% 1.47%+
Net investment income 4.65% 4.82%+ 4.61% 4.38% 3.86% 3.34%+
</TABLE>
- ----------
(a)Audited by other auditors.
(b)For the period November 2, 1992 (commencement of operations) to December
31, 1992.
+ Computed on an annualized basis.
(1)Commencing in fiscal 1996, securities which are puttable daily have been
excluded from the portfolio turnover calculation.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Financial Highlights
<TABLE>
<CAPTION>
For the Period
January 2, 1996
(commencement of
Year Ended operations) to
September 30, 1997 September 30, 1996
---------------------- -----------------------
<S> <C> <C>
Net asset value, beginning of period $ 23.57 $ 20.00
------- -------
Income from investment operations
Net investment income * 0.02 0.04
Net realized and unrealized gain on investments 9.05 3.55
------- -------
Total from investment operations 9.07 3.59
------- -------
Less distributions to shareholders
From net investment income (0.03) (0.02)
Net asset value, end of period $ 32.61 $ 23.57
======= =======
Total return 38.50% 17.95%
Ratios (to average daily net assets)/Supplemental Data
Expenses * 0.21% 0.00%+
Net investment income * 0.08% 0.41%+
Portfolio Turnover 102% 57%
Average broker commission per share (1) $0.0429 $0.1058
Net assets, end of period (000's omitted) $32,761 $ 6,896
</TABLE>
* The investment adviser voluntarily agreed not to impose a portion of its
investment advisory fee and reimbursed the Fund for a portion of its
operating expenses. In the absence of this agreement, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C>
Net investment loss per share $ (0.16) $ (0.28)
Ratios (to average daily net assets):
Expenses 1.24% 3.45%+
Net investment loss (0.95)% (3.04)%+
</TABLE>
- ----------
+ Computed on an annualized basis.
(1)Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Financial Highlights
<TABLE>
<CAPTION>
For the Period
January 2, 1996
(commencement
Year Ended of operations) to
September 30, 1997 (2) September 30, 1996
----------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period $ 23.60 $ 20.00
------- -------
Income from investment operations
Net investment income * 0.39 0.28
Net realized and unrealized gain on investments 11.58 3.50
------- -------
Total from investment operations 11.97 3.78
------- -------
Less distributions to shareholders
From net investment income (0.33) (0.18)
------- -------
Net asset value, end of period $ 35.24 $ 23.60
======= =======
Total return 51.19% 18.97%
Ratios (to average daily net assets)/Supplemental Data
Expenses * 0.20% 0.00%+
Net investment income * 1.31% 2.27%+
Portfolio Turnover 25% 17%
Average broker commission per share (1) $0.0497 $0.0419
Net assets, end of period (000's omitted) $12,819 $ 2,843
</TABLE>
* The investment adviser voluntarily agreed not to impose a portion of its
investment advisory fee and reimbursed the Fund for a portion of its
operating expenses. In the absence of this agreement, the net investment
income per share and the ratios would have been:
<TABLE>
<S> <C> <C>
Net investment income (loss) per share $ 0.04 $ (0.36)
Ratios (to average daily net assets):
Expenses 1.73% 5.15%+
Net investment loss (0.22)% (2.88)%+
</TABLE>
- ----------
+ Computed on an annualized basis.
(1)Amount represents the average commission per share paid to brokers on the
purchase and sale of equity securities.
(2)Calculated based on average shares outstanding.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BOND -- 98.5%
General Obligations -- 32.2%
Amesbury MA State Qualified 5.30% 06/01/2003 $ 750,000 $ 766,875
Brockton MA State Qualified 5.55% 12/15/2003 270,000 274,725
Brockton MA State Qualified 5.65% 12/15/2004 300,000 306,000
Brockton MA State Qualified 5.70% 06/15/2002 160,000 166,800
Brockton MA State Qualified 6.13% 06/15/2018 250,000 258,750
Commonwealth of Massachusetts 7.50% 12/01/2000 400,000 438,500
Commonwealth of Massachusetts 7.50% 06/01/2004 700,000 808,500
Commonwealth of Massachusetts 5.40% 11/01/2006 600,000 632,250
Commonwealth of Massachusetts 5.00% 11/01/2009 1,000,000 1,007,499
Lawrence MA 5.00% 09/15/2002 250,000 255,000
Lawrence MA State Qualified+ 5.13% 09/15/2003 1,250,000 1,281,249
Lowell MA State Qualified 6.00% 08/15/1999 775,000 798,250
Mass St College Bldg Authority Project 7.50% 05/01/2006 500,000 601,250
Mass St College Bldg Authority Project 7.50% 05/01/2007 350,000 424,375
Massachusetts Bay Transportation Authority 6.25% 03/01/2004 475,000 518,938
Massachusetts Bay Transportation Authority 6.00% 03/01/2005 550,000 594,688
Massachusetts St Govt Ld Bk 5.25% 02/01/2007 1,000,000 1,039,999
Massachusetts St Obligation Rev 5.50% 06/01/2006 500,000 530,625
Peabody MA 5.00% 08/01/2008 500,000 514,375
University of Mass Building Authority State Guarantee 6.63% 05/01/2007 1,000,000 1,146,249
--------------
Total General Obligations (Cost $12,010,368) 12,364,897
--------------
Housing Revenue -- 8.8%
Mass HFA Residential Development FNMA 8.80% 08/01/2021 250,000 258,243
Mass HFA Residential Development FNMA 6.88% 11/15/2011 450,000 488,250
Mass HFA Residential Development FNMA+ 6.88% 11/15/2011 500,000 542,500
Mass HFA Residential Development FNMA 7.60% 12/01/2014 490,000 523,688
Mass HFA Residential Development FNMA 6.50% 12/01/2014 565,000 592,544
Massachusetts St Housing Finance Agency 6.30% 10/01/2013 500,000 526,250
Massachusetts St Housing Finance Authority 5.75% 12/01/2017 425,000 425,000
--------------
Total Housing Revenue (Cost $3,304,901) 3,356,475
--------------
Insured Bond -- 23.5%
Chelsea MA School District AMBAC 6.00% 06/15/2002 225,000 240,469
Chelsea MA School District AMBAC+ 6.00% 06/15/2004 750,000 813,750
Commonwealth of Massachusetts MBIA 6.90% 10/01/2000 200,000 214,000
Holyoke MA FSA 6.00% 06/15/2006 600,000 658,500
Holyoke MA FSA 6.00% 06/15/2007 800,000 882,000
Lynn MA MBIA 5.00% 06/01/2006 485,000 498,944
Massachusetts Bay Transportation Authority FSA 5.25% 03/01/2012 500,000 505,625
Massachusetts St Health & Educational FSA 5.50% 07/01/2007 635,000 669,131
Massachusetts St Industrial Finance Agency AMBAC 5.50% 07/01/2008 500,000 528,125
Massachusetts State Port Authority MBIA 5.75% 07/01/2007 500,000 533,750
Nantucket MA MBIA 6.00% 07/15/2007 400,000 441,000
New Bedford MA AMBAC 6.00% 10/15/2005 575,000 628,906
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Bond (continued)
Springfield MA AMBAC 6.25% 08/01/2006 $1,000,000 $ 1,117,499
Springfield MA AMBAC# 5.65% 09/01/2007 700,000 749,168
Worcester MA MBIA 6.00% 07/01/2005 500,000 545,625
--------------
Total Insured Bond (Cost $8,759,490) 9,026,492
--------------
Lease Revenue -- 2.6%
Puerto Rico Housing Bank Appropriation 5.13% 12/01/2004 250,000 253,438
Puerto Rico Housing Bank Appropriation 5.13% 12/01/2005 750,000 756,563
--------------
Total Lease Revenue (Cost $983,776) 1,010,001
--------------
LOC GIC -- 6.0%
Mass IFA Amesbury LOC: State Street 5.35% 09/01/2000+++ 410,000 420,763
Mass IFA Human Development Loc: Shawmut 6.25% 04/15/2009 765,000 800,381
Mass IFA Orchard Cove Project Loc: Fleet National Bank 5.00% 05/01/2002+++ 415,000 420,188
Northborough MA IFA LOC: Bank of Boston 5.75% 09/01/1999+++ 660,000 671,550
--------------
Total LOC GIC (Cost $2,250,000) 2,312,882
--------------
Revenue Bonds -- 25.4%
Mass Educational Loan Authority AMBAC+ 5.26% 07/01/1999 445,000 452,788
Mass HEFA Central New England Health Systems 5.75% 08/01/2003 500,000 497,500
Mass HEFA Charlton Hospital 7.10% 08/01/2003 300,000 325,875
Mass HEFA Charlton Hospital 7.00% 07/01/2000 300,000 317,625
Mass HEFA Melrose Wakefield Hospital 6.35% 07/01/2006 310,000 329,763
Mass HEFA New England Baptist Hospital 7.30% 07/01/2011 715,000 769,519
Mass HEFA Youville Hospital HFA Secured 6.13% 02/15/2015 800,000 848,000
Mass IFA Berkshire Retirement Development 5.13% 07/01/2018 530,000 535,300
Mass IFA Brooks School 5.60% 07/01/2005 245,000 260,313
Mass IFA Brooks School 5.90% 07/01/2013 410,000 424,350
Mass IFA Clark University 6.45% 07/01/2001 300,000 321,375
Mass IFA Loomis Project 6.50% 07/01/2002 350,000 365,750
Mass IFA Resource Recovery 6.15% 07/01/2002 1,000,000 1,053,749
Mass IFA Springfield College 4.90% 09/15/1999 715,000 717,681
Mass Water Resource Authority 7.25% 04/01/2001 200,000 218,250
Mass Water Resource Authority 5.25% 03/01/2013 500,000 501,250
Massachusetts St Industrial Agency Rev 4.75% 07/01/2007 400,000 404,500
Massachusetts Water Pollution 5.25% 02/01/2008 500,000 520,000
New England Loan Marketing MA Student Loan 5.80% 03/01/2002 850,000 891,438
--------------
Total Revenue Bonds (Cost $9,489,957) 9,755,026
--------------
Total Bond (Cost $36,798,492) 37,825,773
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Massachusetts Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -------------------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS -- 4.4%
SHORT TERM BONDS -- 4.2%
Mass St Updates 4.05% 12/01/1997(dag)(dag) 1,600,000 1,600,000
------------
Total Short Term Bonds (Cost $1,600,000) 1,600,000
------------
REPURCHASE AGREEMENTS -- 0.2%
Prudential-Bache Repurchase Agreement, dated 9/30/97,
due 10/1/97, with a maturity value of $98,343 and an
effective yield of 5.47%, collateralized by a U.S.
Government Agency Obligation with a rate of 9.00%,
with a maturity date of 4/1/10 and with an aggregate
market value of $100,294. 98,328 98,328
------------
Total Repurchase Agreements (Cost $98,328) 98,328
------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,698,328) 1,698,328
------------
TOTAL INVESTMENTS -- 102.9% (COST $38,496,820) $39,524,101
Other Assets, Less Liabilities -- (2.9)% (1,123,473)
============
NET ASSETS -- 100% $38,400,628
============
</TABLE>
Notes to the Schedule of Investments:
AMBAC - American Municipal Bond Assurance Corp.
FSA - Financial Security Association
HEFA - Health & Educational Facilities Authority
HFA - Housing Finance Authority
FNMA - Federal National Mortgage Association
IBEW - International Brotherhood of Electrical Workers
IFA - Industrial Finance Authority
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
+ Denotes all or part of security pledged as collateral to cover margin
requirements on open financial futures contracts (Note 7).
# Delayed delivery contract (Note 8).
(dag) Date shown reflects next mandatory put date.
(dag)(dag) Date shown reflects actual maturity date. Security puttable on a
daily basis.
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BOND -- 96.8%
General Obligations -- 11.0%
California State 6.60% 02/01/2009 $1,000,000 $ 1,162,499
California State 5.25% 06/01/2012 500,000 508,125
Commonwealth of Massachusetts 7.50% 06/01/2004 500,000 577,500
Commonwealth of Massachussetts MBIA 6.00% 11/01/2008 500,000 555,625
Detroit MI 6.00% 04/01/2000 250,000 258,438
District of Columbia 5.80% 06/01/2004 500,000 523,125
Honolulu HI 5.40% 09/27/2007 500,000 526,875
Lawrence MA 5.38% 09/15/2005 500,000 516,875
Lowell MA State Qualified 7.20% 02/15/2000 500,000 531,250
Tuloso-Midway Texas Independent School District 5.75% 08/15/2006 580,000 627,125
--------------
Total General Obligations (Cost $5,579,256) 5,787,437
--------------
Housing Revenue -- 11.6%
California Housing Authority# 5.05% 02/01/2017 500,000 500,000
California Housing Authority MBIA 5.65% 08/01/2025 380,000 389,025
Colorado HFA 7.45% 11/01/2027 400,000 453,500
Colorado HFA Multi Family Insured Mortgage 7.90% 10/01/2000 225,000 243,563
Florida HFA 0.00% 07/15/2016 975,000 118,219
Houston TX Housing Finance Corp. 8.00% 06/01/2014 500,000 551,250
Mass HFA Residential Development FNMA 7.60% 12/01/2014 395,000 422,156
Michigan Housing Authority AMBAC 6.40% 04/01/2005 250,000 270,313
Michigan State Housing Development Authority 0.00% 04/01/2015 350,000 47,250
New Hampshire HFA 6.60% 01/01/2000 400,000 416,000
New Mexico Mortgage Finance Authority 5.75% 07/01/2014 455,000 468,081
North Carolina Hsg Fin Agy 7.60% 03/01/2021 960,000 1,033,200
Penn Housing Finance Agency 5.35% 10/01/2008 500,000 515,225
Rhode Island Housing & Mortgage 4.95% 10/01/2016 500,000 503,750
Texas Dept Housing & Community 0.00% 03/01/2015 290,000 90,625
Virginia Housing Development Authority 0.00% 11/01/2017 575,000 105,656
--------------
Total Housing Revenue (Cost $6,038,608) 6,127,813
--------------
Insured Bond -- 33.6%
Alabama St Docks MBIA# 5.50% 10/01/2004 1,000,000 1,037,500
Austin TX Utilities Systems FSA# 5.75% 11/15/2004 1,000,000 1,056,249
Bakersfield CA Convention Center MBIA 5.40% 04/01/2008 1,000,000 1,056,249
Benton County WA School District AMBAC 6.70% 12/01/2006 580,000 667,000
Bloomington MN Port Authority FSA 5.30% 02/01/2007 610,000 621,438
California Housing Authority Summit Medical Center FSA 5.50% 05/01/2005 615,000 653,438
Chicago IL Board of Education AMBAC 6.75% 12/01/2009 465,000 546,956
Chicago IL O'Hare Airport MBIA 6.75% 01/01/2006 500,000 569,375
Contra Costa CA Merrithew Hospital MBIA 6.00% 11/01/2006 750,000 828,750
Denver CO Airport MBIA 7.50% 11/15/2006 500,000 587,500
District of Columbia FSA 5.30% 06/01/2004 500,000 517,500
District of Columbia Medlantic Hospital MBIA 7.00% 08/15/2005 500,000 561,250
Grand Prairie TX Health AMBAC 6.00% 11/01/1999 360,000 368,550
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insured Bond (continued)
Greater Detroit Resource Recovery AMBAC 6.25% 12/13/2007 $ 400,000 $ 452,000
Hot Springs AK Sales & Use FSA 4.95% 12/01/2008 235,000 237,056
Jefferson County OH Asset Guaranty 6.63% 12/01/2005 345,000 370,444
Jefferson Parish LA FGIC 6.15% 09/01/2005 525,000 577,500
Kansas St Tpk Authority AMBAC# 5.50% 09/01/2006 500,000 525,625
Lubbock TX Health Facilities Development AMBAC 5.40% 12/01/2005 1,000,000 1,049,999
OK Industrial Authority Health System AMBAC 7.00% 08/15/2006 500,000 581,250
Orange County CA Recovery MBIA 5.80% 07/01/2016 400,000 417,000
Palm Beach County Solid Waste AMBAC 6.00% 10/01/2009 500,000 550,625
Pensacola FL Airport MBIA# 6.25% 10/01/2008 380,000 401,850
Rancho Mirage CA MBIA 5.25% 07/01/2010 750,000 768,750
San Bernardino Cnty CA MBIA 5.00% 08/01/2003 1,000,000 1,028,750
SD HEFA Mckennan Hosp MBIA 6.00% 07/01/2007 500,000 550,000
Tucson AZ COP Asset Guaranty 6.00% 07/01/2004 500,000 534,375
Walnut Valley CA School District MBIA 6.75% 08/01/2006 500,000 580,625
--------------
Total Insured Bond (Cost $16,964,983) 17,697,604
--------------
Lease Revenue -- 7.9%
Battery Park NY Authority Junior Lien 5.20% 11/01/2023 500,000 508,125
Los Angeles CA Building Authority 5.60% 05/01/2004 500,000 531,250
New York Dormitory Authority 6.00% 07/01/2006 500,000 532,500
New York Urban Development Corp. 6.25% 04/01/2002 500,000 532,500
New York Urban Development Corp. 6.00% 01/01/2004 500,000 532,500
New York Dormitory Authority 5.50% 07/01/2003 500,000 520,625
NY Metropolitan Tran Authority Ser P 5.75% 07/01/2015 500,000 505,625
San Bernadino CA Certificates of Participation 5.25% 08/01/2004 500,000 510,625
--------------
Total Lease Revenue (Cost $4,054,460) 4,173,750
--------------
LOC GIC -- 2.1%
Emphoria VA IDB LOC: Bank of Boston 5.80% 04/01/1999+ 60,000 60,214
Emphoria VA IDB LOC: Bank of Boston 5.80% 04/01/1999+ 200,000 200,712
Michigan Housing Authority AMBAC 5.50% 06/01/2000+ 485,000 488,031
Northborough MA IFA LOC: Bank of Boston 5.75% 09/01/1999+ 380,000 386,650
--------------
Total LOC GIC (Cost $1,122,287) 1,135,607
--------------
Prerefunded/Escrowed to Maturity -- 2.3%
Cincinnati Public Schools OH 6.15% 06/15/2002 600,000 642,750
Texas State Tpk Authority Creek 12.63% 01/01/2020 400,000 545,500
--------------
Total Prerefunded/Escrowed to Maturity (Cost $1,111,857) 1,188,250
--------------
Revenue Bonds -- 28.3%
Alaska Industrial Development and Export Authority 6.20% 04/01/2003 150,000 161,063
Alaska Industrial Development and Export Authority 5.25% 04/01/1998 215,000 216,195
Alaska Industrial Development and Export Authority 5.50% 04/01/2001 500,000 516,250
Camden County NJ Health Care Redevelopment 5.60% 02/15/2007 600,000 618,750
Castle Rock, CO Import Authority 5.75% 12/01/2001 500,000 519,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds (continued)
Colorado HEFA Rocky Mountain Adventist Hospital 6.00% 02/01/1998 $ 120,000 $ 120,578
Dayton Ohio Special Facilities 6.05% 10/01/2009 500,000 533,125
Denison Texas Hospital Authority 5.90% 08/15/2007 500,000 523,125
District of Columbia Medlantic Hospital 7.00% 08/15/2005 500,000 542,500
District of Columbia Redevelopment Agency 5.63% 11/01/2010 470,000 475,875
Eddyville Iowa Pollution Control Revenue 5.40% 10/01/2006 500,000 528,125
Foothills CA Transportation Agency 0.00% 01/01/2007 500,000 346,875
Gateway OH Special Tax 7.50% 09/01/2005 500,000 543,750
Hendersonville Tennessee Industrial Development 5.95% 12/15/2008 365,000 379,144
Long Beach CA Aquarium 5.75% 07/01/2005 200,000 209,500
Mashantucket CT W Pequot 6.25% 09/01/2003 300,000 321,750
Mass IFA Berkshire Retirement Development 5.13% 07/01/2018 500,000 505,000
Mass IFA Loomis Project 6.50% 07/01/2002 250,000 261,250
Mass IFA Resource Recovery 6.15% 07/01/2002 150,000 158,063
Met Govt Nashville & Davidson Revenue# 6.00% 05/01/2008 610,000 660,325
Met Peioria IL 6.25% 07/01/2017 300,000 315,750
MT Higher Education 5.95% 12/01/2012 410,000 424,863
New York Med Center Long Island FHA 6.40% 08/15/2014 480,000 522,600
New York Med Center Mercy FHA 5.40% 08/15/2005 275,000 286,344
New York Med Center Mt. Sinai FHA 5.95% 08/15/2009 190,000 199,263
New York Med Center St. Luke's FHA 5.60% 08/15/2013 460,000 471,500
New York Med Center St. Vincent FHA 6.13% 02/15/2014 470,000 498,788
NH Education Authority Brewster Acadamy 5.40% 06/01/2001 405,000 413,606
NH HEFA Allegheny Health MBIA 6.25% 10/01/2008 300,000 316,500
OH Development Commission 5.45% 06/01/1999 135,000 137,025
Orange County CA Transportation Sales Tax 6.00% 02/15/2007 500,000 551,875
Scranton PA 7.13% 07/15/2005 500,000 545,625
Stanislaus CA 7.63% 01/01/2010 400,000 429,000
Utah Student Loan AMBAC 7.45% 11/01/2008 500,000 530,625
Volusia FL HEFA - Embry Project 5.50% 10/15/2004 400,000 409,900
WA Public Power Supply Project 5.30% 07/01/2002 500,000 517,500
Weld County Colorado IDA Conagra 6.75% 12/15/2001 200,000 214,750
--------------
Total Revenue Bonds (Cost $14,219,002) 14,926,132
--------------
Total Bond (Cost $49,090,453) 51,036,593
--------------
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.8%
SHORT TERM BONDS -- 9.7%
Illinois St Sales Tax 4.90% 06/15/1998++ 1,400,000 1,410,738
Lone Star Airport Improvement Authority TX 4.00% 12/01/2014++ 100,000 100,000
Lone Star Airport Improvement Authority TX 4.00% 12/01/2014++ 100,000 100,000
Los Angeles County CA 4.50% 06/30/1998++ 1,000,000 1,005,090
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Intermediate Tax Exempt Bond Fund
Schedule of Investments - September 30, 1997
<TABLE>
<CAPTION>
Par Value
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short Term Bonds (continued)
Mass St Updates 4.05% 12/01/1997++ 1,800,000 1,800,000
New York State Dormitory Authority 4.00% 07/01/2023++ 500,000 500,000
Orange County CA Water Dist 3.05% 08/15/2015++ 200,000 200,000
--------------
Total Short Term Bonds (Cost $5,115,106) 5,115,828
--------------
REPURCHASE AGREEMENTS -- 0.1%
Prudential-Bache Repurchase Agreement, dated 9/30/97, due 10/1/97, with a
maturity value of $62,278 and an effective yield of 5.47%, collateralized by a
U.S. Government Agency Obligation with a rate of 9.00%, with
a maturity date of 4/1/10 and with an aggregate market
value of $63,514. 62,268 62,268
--------------
Total Repurchase Agreements (Cost $62,268) 62,268
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $5,177,374) 5,178,096
--------------
TOTAL INVESTMENTS -- 106.6% (COST $54,267,827) $ 56,214,689
Other Assets, Less Liabilities -- (6.6)% (3,491,397)
==============
NET ASSETS -- 100% $ 52,723,292
==============
</TABLE>
Notes to the Schedule of Investments:
AMBAC - American Municipal Bond Assurance Corp.
COP - Certification of Participation
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority
FSA - Financial Security Association
HEFA - Health & Educational Facilities Authority
FNMA - Federal National Mortgage Association
HFA - Housing Finance Authority
IDA - Industrial Development Authority
IDB - Industrial Development Bond
IFA - Industrial Finance Authority
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
GIC - Guaranteed Investment Contact
# Delayed delivery contract (Note 8).
+ Date shown reflects next mandatory put date.
++ Date shown reflects actual maturity date. Security puttable on a daily basis.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
EQUITIES -- 98.5%
Basic Industry -- 1.1%
Chirex, Inc.* 14,200 $ 362,100
----------
Capital Goods -- 7.3%
Ballantyne Of Omaha, Inc.* 13,100 252,175
Comfort Systems USA, Inc.* 12,600 240,975
Hagler Bailly* 8,600 218,225
Kellstrom Industries, Inc.* 15,000 309,375
SBS Technologies, Inc.* 14,300 341,413
Service Experts, Inc.* 8,600 232,738
Tetra Technologies, Inc.* 11,300 261,313
Trailer Bridge, Inc.* 14,500 192,125
Triumph Group, Inc.* 10,500 351,094
----------
2,399,433
----------
Consumer Stable -- 6.6%
800-Jr Cigar, Inc.* 11,100 388,499
Aviation Sales Co.* 10,300 311,575
Barnett Inc.* 9,300 197,625
General Cigar Holdings, Inc.* 8,800 254,100
Hughes Supply, Inc. 8,550 258,103
Robert Mondavi Corp., Class A* 6,600 361,350
Suiza Foods Corp.* 7,500 386,249
----------
2,157,501
----------
Early Cyclical -- 3.0%
Aftermarket Technology, Inc.* 13,900 330,125
Atlantic Coast Airlines, Inc.* 7,300 156,950
Excelsior-Henderson Motorcycle* 25,200 162,225
Hospitality Worldwide Services* 14,700 192,938
Midwest Express Holdings* 4,650 149,091
----------
991,329
----------
Energy -- 6.6%
Cal Dive International, Inc.* 16,200 603,449
Friede Goldman Intl, Inc.* 5,600 336,000
Halter Marine Group, Inc.* 9,200 445,049
Hvide Marine, Inc.* 13,200 422,399
Newpark Resources, Inc.* 4,200 165,113
Veritas DGC, Inc.* 4,400 187,275
----------
2,159,285
----------
Financial -- 3.0%
American Capital Strategies* 1,200 24,000
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
Financial (continued)
E Trade Group, Inc.* 9,900 $ 465,299
Greater Bay Bancorp 6,100 261,538
Rental Service Corp.* 10,000 224,375
----------
975,212
----------
Growth Cyclical -- 11.2%
Apple South, Inc. 22,800 438,899
Ashworth, Inc.* 17,300 177,325
Atria Communities, Inc.* 10,600 190,800
Central Garden & Pet Co.* 10,900 335,175
Coach USA, Inc.* 9,400 282,588
Coldwater Creek, Inc.* 4,900 142,100
Gadzooks, Inc.* 13,300 279,300
Logan's Roadhouse Inc.* 9,700 252,200
North Face, Inc.* 5,400 145,125
Sonic Corp.* 10,700 299,600
Steiner Leisure Ltd.* 8,500 312,375
Suburban Lodges of America* 10,400 274,300
Sunrise Assisted Living, Inc.* 4,500 162,563
Travel Services, Inc.* 7,600 157,700
Vans, Inc.* 14,500 232,000
----------
3,682,050
----------
Health Care -- 15.2%
Affymetrix, Inc.* 7,100 326,600
Arbor Health Care Company* 6,500 286,000
Arris Pharmaceutical Corp.* 19,700 256,100
CN Bioscience, Inc.* 14,500 340,750
Cohr, Inc.* 12,700 206,375
Daou Systems, Inc.* 5,900 184,375
Guilford Pharmaceuticals, Inc.* 11,300 333,350
Horizon Health Corp.* 7,750 193,750
Imnet Systems, Inc.* 9,000 241,875
Impath, Inc.* 9,000 263,250
Inhale Therapeutic Systems* 7,700 241,588
Medimmune, Inc.* 6,400 235,200
Medquist, Inc.* 11,250 262,969
National Surgery Centers, Inc.* 8,550 185,963
Neurogen Corp.* 8,400 226,800
Pharmaceutical Product Development* 10,000 203,750
Sepracor, Inc.* 10,300 338,613
Specialty Care Network, Inc.* 17,600 217,800
Urologix, Inc.* 10,600 251,750
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
Health Care (continued)
Vertex Pharmaceuticals, Inc.* 4,800 $ 181,200
----------
4,978,058
----------
Services -- 21.3%
Abacus Direct Corp.* 6,600 212,025
Analysts International Corp. 5,000 193,750
Barrett Business Services, Inc.* 9,700 162,475
BET Holdings, Inc.* 6,800 359,550
Central Parking Corp. 6,850 321,950
Computer Task Group, Inc. 8,000 335,500
Data Processing Resources Corp.* 4,000 100,000
Devry, Inc.* 9,000 268,875
Emmis Broadcasting Corp., Class A* 6,200 296,050
F.Y.I., Inc. 11,700 304,200
Gray Communications Systems, Class B 13,600 340,000
Harbinger Corp.* 6,000 218,250
Healthplan Services Corp. 9,500 200,688
Heftel Broadcasting Corp.* 5,500 416,624
Inspire Insurance Solutions* 12,500 226,563
Learning Tree International* 6,500 186,063
Metzler Group, Inc.* 5,300 212,663
On Assignment, Inc.* 7,000 318,500
Personnel Group of America, Inc.* 9,400 321,950
Physician Support Systems* 13,600 229,500
Remedy Temp, Inc.* 12,400 291,400
Rural Metro Corp.* 7,000 213,500
Scandinavian Broadcast Systems Corp.* 16,400 393,599
Scholastic Corp.* 8,400 331,800
Wackenhut Corrections Corp.* 7,700 238,700
Walsh International, Inc.* 22,800 285,000
----------
6,979,175
----------
Technology -- 23.2%
Advanced Technology Material* 10,000 367,500
Advantage Learning Systems Inc.* 5,000 126,250
Aehr Test Systems* 21,800 385,588
Asyst Technologies, Inc.* 2,500 111,016
Benchmark Electronics, Inc.* 7,800 219,863
Brooks Automation, Inc.* 6,000 230,250
C. P. Clare Corp.* 13,300 262,675
CFM Technologies, Inc.* 3,900 152,831
Dallas Semiconductor Corp. 6,000 268,500
Exar Corp.* 5,900 156,350
FSI International, Inc.* 7,300 152,388
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Small Cap Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
Technology (continued)
Galileo Technology* 3,200 $ 105,600
Hadco Corp.* 4,400 238,287
Helix Technology Corp. 3,800 235,244
Hyperion Software Corp.* 9,300 290,044
Intelligroup, Inc.* 12,900 277,350
Kulicke & Soffa Industries* 8,900 412,180
Lecroy Corp.* 6,000 265,500
Level One Communications, Inc.* 7,650 307,913
P-Com, Inc.* 13,600 325,550
PCD, Inc.* 11,300 279,675
Photronics, Inc.* 3,900 236,194
PRI Automation, Inc.* 6,700 391,949
Radiant Systems, Inc.* 14,800 310,800
Sanmina Corp.* 2,800 242,375
Semtech Corp.* 4,800 331,800
Star Telecommunications, Inc.* 14,100 324,300
Ultrak, Inc.* 25,400 311,150
Unitrode Corp.* 3,700 274,263
-----------
7,593,385
-----------
TOTAL EQUITIES (COST $23,792,834) 32,277,528
-----------
TOTAL INVESTMENTS -- 98.5% (COST $23,792,834) $32,277,528
Other Assets, Less Liabilities -- 1.5% 482,989
-----------
NET ASSETS -- 100% $32,760,517
===========
Notes to the Schedule of Investments:
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
EQUITIES -- 95.4%
Basic Industry -- 5.8%
Crane Company 8,125 $ 334,140
Hanna (M. A.) Co. 10,000 265,625
Morton International Inc. 2,200 78,100
Praxair, Inc. 1,400 71,663
----------
749,528
----------
Capital Goods -- 7.1%
Deere & Co. 4,100 220,375
Dover Corp. 2,500 169,688
Textron Inc. 2,800 182,000
United Technologies Corp. 4,200 340,199
----------
912,262
----------
Consumer Stable -- 5.0%
General Nutrition Companies* 4,700 136,888
Kroger Co.* 4,000 120,750
Philip Morris Companies Inc. 2,950 122,609
Richfood Holdings Inc. 10,100 261,969
----------
642,216
----------
Early Cyclical -- 3.4%
Lancaster Colony Corp. 4,500 239,063
Leggett & Platt Inc. 4,500 200,531
----------
439,594
----------
Energy -- 8.9%
Amoco Corp. 2,200 212,025
British Petroleum Co. PLC 3,568 324,019
Mobil Corp. 3,800 281,200
Texaco Inc. 5,200 319,475
----------
1,136,719
----------
Financial -- 18.2%
Ace Limited 2,800 263,200
Allied Group 3,500 177,844
AMBAC Inc. 6,900 280,744
American Bankers Insurance Group 5,200 189,800
BankAmerica Corp. 2,000 146,625
BankBoston Corporation 1,200 106,125
Chase Manhattan Corp. 2,500 295,000
Conseco, Inc. 5,770 281,648
Morgan Stanley Dean Witter 3,800 205,438
Northern Trust 1,400 82,775
Reliastar Financial Corp. 7,500 298,594
----------
2,327,793
----------
Growth Cyclical -- 9.9%
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
Growth Cyclical (continued)
BJ's Wholesale Club Inc* 4,400 $ 128,425
Claire's Stores Inc. 9,000 201,375
Costco Companies Inc.* 4,000 150,500
Jones Apparel Group Inc.* 1,600 86,400
Pier 1 Imports Inc. 10,425 186,998
Ross Stores Inc. 4,500 153,563
Tommy Hilfiger Corp.* 5,000 249,688
Wallace Computer Services 3,000 110,625
----------
1,267,574
----------
Health Care -- 8.0%
Abbott Laboratories 1,100 70,331
Bristol-Myers Squibb Co. 2,300 190,325
Schering-Plough Corp. 3,800 195,700
Sofamor Danek Group, Inc.* 3,000 171,375
Steris Corp.* 3,000 123,375
Watson Pharmaceutical Inc.* 4,500 268,875
----------
1,019,981
----------
Real Estate -- 3.3%
Beacon Properties Corp., REIT 2,400 109,950
Macerich Company (The), REIT 1,900 54,863
Patriot Amer Hospitality Inc., REIT 2,399 76,468
Prentiss Properties Trust, REIT 2,200 63,525
Starwood Lodging Trust, REIT 2,100 120,619
----------
425,425
----------
Services -- 5.5%
Carnival Corp. 5,500 254,375
Ceridian Corp.* 5,300 196,100
Oakwood Homes Corp. 8,800 249,700
----------
700,175
----------
Technology -- 20.3%
Adaptec Inc.* 6,400 299,200
Belden Inc. 5,650 212,934
Compaq Computer* 5,250 392,437
Computer Associates International, Inc. 2,500 179,531
Harris Corp., Inc. 7,500 343,124
Intel Corp. 3,000 276,938
International Business Machine 1,000 105,938
Raychem Corp. 3,900 329,549
Shared Medical 4,100 216,788
Sun Microsystems Inc.* 5,300 248,106
----------
2,604,545
----------
TOTAL EQUITIES (COST $9,046,078) 12,225,812
----------
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
Standish, Ayer & Wood Investment Trust
Standish Tax-Sensitive Equity Fund
Schedule of Investments - September 30, 1997
Security Shares Value
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 95.4% (COST $9,046,078) $ 12,225,812
Other Assets, Less Liabilities -- 4.6% 593,128
-------------
NET ASSETS -- 100% $ 12,818,940
=============
Notes to the Schedule of Investments:
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
(1) Significant Accounting Policies:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish 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 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--
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
price 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 the Fund are valued at amortized cost. 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 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 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.
33
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
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. At September 30,
1997, 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 $227,004 $178,890 -- $405,894
Tax-Sensitive Equity Fund -- -- $ 19,612 $ 19,612
</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. Fiscal year end--
The Board of Trustees voted on February 9, 1996 to change the fiscal year
end of the Bond Funds from December 31 to September 30, effective
September 30, 1996.
(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 by 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.
34
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
(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: 0.40% for the Massachusetts Intermediate Tax
Exempt Bond Fund and the Intermediate Tax Exempt Bond Fund, 0.60% for the
Small Cap Tax-Sensitive Equity Fund and 0.50% for the Tax-Sensitive Equity
Fund. For the year ended September 30, 1997, SA&W voluntarily agreed to
limit the total fund operating expenses (excluding litigation,
indemnification and other extraordinary expenses) to the following
percentages of average daily net assets: 0.65% for the Massachusetts
Intermediate Tax Exempt Bond Fund and the Intermediate Tax Exempt Bond
Fund. For the Small Cap Tax-Sensitive Equity Fund and the Tax-Sensitive
Equity Fund, total operating expenses (excluding litigation and
extraordinary expenses) were voluntarily limited by SA&W to 0.00% of
average daily net assets through June 30, 1997; Commencing July 1, 1997
total operating expenses (excluding litigation and extraordinary expenses)
were limited to 0.50% of average daily net assets. For the year ended
September 30, 1997, SA&W voluntarily waived $33,848, $40,552, $100,630 and
$32,635 of its advisory fee to the Massachusetts Tax Exempt Bond Fund,
Intermediate Tax Exempt Bond Fund, Small Cap Tax-Sensitive Equity Fund and
Tax-Sensitive Equity Fund, respectively, and reimbursed operating expenses
of $72,897 and $67,114 for the Small Cap Tax-Sensitive Equity Fund and
Tax-Sensitive Equity Fund, respectively, which are reflected as reductions
of expenses in the respective Statements of Operations. 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 or 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.
(4) Purchases and Sales of Investments:
Purchases and sales of investments, other than short-term obligations,
were as follows:
<TABLE>
<CAPTION>
Year Ended For the Period Ended(a)
September 30, 1997 September 30, 1996
------------------------ ------------------------
Purchases Sales Purchases Sales
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Massachusetts Intermediate Tax Exempt Bond Fund $14,344,251 $8,536,805 $11,013,527 $11,159,395
=========== =========== =========== ===========
Intermediate Tax Exempt Bond Fund $44,667,863 $24,936,103 $16,279,361 $14,065,880
=========== =========== =========== ===========
Small Cap Tax-Sensitive Equity Fund $33,633,673 $16,657,415 $8,506,998 $1,856,009
=========== =========== =========== ===========
Tax-Sensitive Equity Fund $8,248,008 $1,571,491 $2,783,277 $293,127
=========== =========== =========== ===========
</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.
35
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
(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 Fund's shares were as follows:
<TABLE>
<CAPTION>
Massachusetts Intermediate Tax Exempt Year Ended Period Ended (a) Year Ended
Bond Fund September 30, 1997 September 30, 1996 December 31, 1995
------------------ ------------------ -----------------
<S> <C> <C> <C>
Shares sold 664,860 379,843 534,346
Shares issued to shareholders in
payment of distributions declared 30,459 17,163 18,097
Shares redeemed (440,478) (388,723) (423,607)
================== ================== =================
Net increase 254,841 8,283 128,836
================== ================== =================
Intermediate Tax Exempt Bond Fund
Shares sold 1,093,993 524,041 821,564
Shares issued to shareholders in
payment of distributions declared 38,642 20,313 15,149
Shares redeemed (361,805) (430,546) (331,012)
================== ================== =================
Net increase 770,830 113,808 505,701
================== ================== =================
<CAPTION>
Year Ended Period Ended(a)
Small Cap Tax-Sensitive Equity Fund September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Shares Sold 763,163 292,713
Shares issued to shareholders in
payment of distributions declared 387 119
Shares redeemed (51,613) (268)
================== ==================
Net increase 711,937 292,564
================== ==================
Tax-Sensitive Equity Fund
Shares Sold 244,525 120,464
Shares issued to shareholders in
payment of distributions declared 2,135 660
Shares redeemed (3,376) (678)
================== ==================
Net increase 243,284 120,446
================== ==================
</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, 1997, the Massachusetts Intermediate Tax Exempt Bond Fund
had two shareholders of record owning approximately 31% and 11% of the
Fund's outstanding voting shares. The Intermediate Tax Exempt Bond Fund,
the Small Cap Tax-Sensitive Equity Fund and the Tax-Sensitive Equity Fund
each had a shareholder of record owning approximately 14%, 17% and 21% of
the respective Fund's outstanding voting shares.
36
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
(6) Federal Income Tax Basis of Investment Securities:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at September 30, 1997, as computed on a
federal income tax basis, were as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Aggregate Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
--------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Massachusetts Intermediate
Tax Exempt Bond Fund $38,496,820 $1,037,865 $10,584 $1,027,281
Intermediate Tax Exempt Bond
Fund $54,267 ,827 $1,950,867 $4,005 $1,946,862
Small Cap Tax-Sensitive
Equity Fund $23,846,486 $8,600,276 $169,254 $8,431,022
Tax-Sensitive Equity Fund $9,049,975 $3,175,837 $0 $3,175,837
</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 seek 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 Fund's Prospectus and Statement 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 in 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 or index, 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. Buying futures tends to
increase a 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 a
Fund may not be able to enter into a closing transaction because of an
illiquid secondary market. Losses may arise if there is an illiquid
secondary market or if the counterparties do not perform under the
contracts terms. The Funds enter into financial futures transactions
primarily to manage their exposure to certain markets and to changes in
securities prices and, with respect to the Small Cap Tax-Sensitive Equity
Fund and the Tax-Sensitive Equity Fund, to changes in foreign currencies.
Gains and losses are realized upon the expiration or closing of the
futures contracts.
37
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
At September 30, 1997 the Massachusetts Intermediate Tax Exempt Bond Fund
held the following futures contracts:
<TABLE>
<CAPTION>
Underlying
Contract Position Expiration Date Face/amount Unrealized
at value Gain/(Loss)
--------------------------------------- ---------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Municipal Bond (6 contracts) Long 12/19/97 $721,125 $ 8,940
-------------
$ 8,940
=============
</TABLE>
At September 30, 1997, the Massachusetts Intermediate Tax Exempt Bond Fund
had segregated sufficient cash and/or securities to cover margin
requirements on open future contracts.
At September 30, 1997, the Intermediate Tax Exempt Bond Fund, 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, 1997, the Massachusetts Intermediate Tax Exempt Bond Fund
had entered into the following delayed delivery transactions:
<TABLE>
<CAPTION>
Type Security Settlement Date Trade Amount
------------ ----------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Buy Springfield MA 10/15/97 $750,706
===========
</TABLE>
At September 30, 1997, the Intermediate Tax Exempt Bond Fund had entered
into the following delayed delivery transactions:
<TABLE>
<CAPTION>
Type Security Settlement Date Trade Amount
------------ ----------------------------------------- ---------------- ---------------
<S> <C> <C> <C>
Buy Alabama St. Docks 07/08/98 $1,026,400
Buy Austin TX Utilities Systems 08/17/98 1,043,706
Buy CA Housing Authority 05/06/98 500,000
Buy Kansas St. Tpk Authority 06/04/98 520,440
Buy Pensacola FL Airport 07/07/98 391,494
Buy Met Govt. Nashville & Davidson Revenue 02/03/98 640,896
-----------
$4,122,936
===========
</TABLE>
At September 30, 1997, the Small Cap Tax Sensitive Equity Fund and the Tax
Sensitive Equity Fund were not party to any delayed delivery transactions.
38
<PAGE>
Standish, Ayer & Wood Investment Trust
Notes to Financial Statements
(9) Tax Information - Unaudited
Pursuant to section 852 of the Internal Revenue Code, the Standish Small
Cap Tax-Sensitive Equity Fund designates $110,691 as capital gain
dividends for the year ended September 30, 1997. All of this amount
represents a 28% tax rate gain distribution.
Of the distributions paid by the Bond funds from net investment income for
the year ended September 30, 1997, amounts that were tax exempt for
federal income tax purposes are as follows:
Massachusetts Intermediate Tax Exempt Bond $ 2,023,273
Fund
Intermediate Tax Exempt Bond Fund $ 1,568,947
39
<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, 1997 and the related
statements of operations, changes in net assets and the financial highlights for
each of the periods indicated therein. 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
(commencement of operations) to December 31, 1992, presented therein 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, 1997 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, 1997; the results of operations, the changes in its net assets and
the financial highlights for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 11, 1997
40
<PAGE>
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41
<PAGE>
[STANDISH LOGO]
STANDISH, AYER & WOOD, INC.
One Financial Center
Boston, Massachusetts 02111-2662
(617) 350-6100
