STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (Note 1A) (identified cost,
$36,005,326) $35,433,558
Cash 50
Receivable for investments sold 121,149
Interest receivable 542,899
Prepaid expenses 4,060
-----------
Total assets 36,101,716
LIABILITIES
Payable for investments purchased $688,963
Payable for Fund shares redeemed 8,778
Distributions payable 4,990
Accrued accounting, custody and transfer agent fees 5,802
Accrued trustees' fees and expenses (Note 2) 1,754
Accrued expenses and other liabilities 972
--------
Total liabilities 711,259
-----------
NET ASSETS $35,390,457
===========
NET ASSETS CONSIST OF:
Paid-in capital $36,391,376
Accumulated net realized loss (596,207)
Undistributed net investment income 167,056
Net unrealized depreciation (571,768)
-----------
TOTAL NET ASSETS $35,390,457
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 1,837,927
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
(Net Assets/Shares outstanding) $ 19.26
===========
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $1,332,215
----------
Total investment income 1,332,215
EXPENSES
Investment advisory fee (Note 2) $ 57,031
Accounting, custody, and transfer agent fees 38,452
Registration fees 14,346
Legal and audit services 13,018
Insurance expense 2,934
Trustees' fees and expenses (Note 2) 2,064
Amortization of organization expenses (Note 1E) 1,197
Miscellaneous 2,796
---------
Total expenses 131,838
Deduct:
Waiver of investment advisory fee (Note 2) (57,031)
Reimbursement of Fund operating expenses (Note 2) (17,776)
---------
Total expense deductions (74,807)
---------
Net expenses 57,031
---------
Net investment income 1,275,184
---------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss
Investment security transactions (192,511)
---------
Net realized loss (192,511)
Change in unrealized appreciation (depreciation)
Investment securities (129,898)
---------
Net change in unrealized appreciation
(depreciation) (129,898)
---------
Net realized and unrealized loss (322,409)
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 952,775
=========
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS
Net investment income $ 1,275,184 $ 1,483,044
Net realized loss (192,511) (293,690)
Change in unrealized appreciation (depreciation) (129,898) (327,779)
----------- -----------
Net increase in net assets from investment operations 952,775 861,575
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1F)
From net investment income (1,140,088) (1,449,025)
----------- -----------
Total distributions to shareholders (1,140,088) (1,449,025)
----------- -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)
Net proceeds from sale of shares 992,059 24,780,932
Value of shares issued to shareholders in payment of
distributions declared 1,073,104 1,198,378
Cost of shares redeemed (4,596,846) (13,861,624)
----------- -----------
Net increase (decrease) in net assets from Fund share
transactions (2,531,683) 12,117,686
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,718,996) 11,530,236
NET ASSETS
At beginning of period 38,109,453 26,579,217
----------- -----------
At end of period (Including undistributed net
investment income of $167,056 and
$31,960, respectively) $35,390,457 $38,109,453
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ---------------------------------------------------------
(UNAUDITED)(1) 1999(1) 1998(1) 1997 1996 1995(2)
------------------ ----------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.36 $ 19.87 $ 19.95 $ 19.99 $ 20.24 $20.00
------- ------- ------- ------- ------- ------
FROM INVESTMENT OPERATIONS:
Net investment income* 0.65 1.24 1.25 1.34 1.27 0.57
Net realized and unrealized gain
(loss) on investments (0.15) (0.53) (0.16) (0.04) (0.27) 0.24
------- ------- ------- ------- ------- ------
Total from investment operations 0.50 0.71 1.09 1.30 1.00 0.81
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.60) (1.22) (1.17) (1.34) (1.24) (0.57)
From net realized gain on investments -- -- -- -- (0.01) --
------- ------- ------- ------- ------- ------
Total distributions to shareholders (0.60) (1.22) (1.17) (1.34) (1.25) (0.57)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $ 19.26 $ 19.36 $ 19.87 $ 19.95 $ 19.99 $20.24
======= ======= ======= ======= ======= ======
TOTAL RETURN+++ 2.60%+ 3.67% 5.58% 6.66% 5.13% 4.20%+
RATIOS/SUPPLEMENTAL DATA:
Expenses (to average daily net
assets)* 0.30%++ 0.30% 0.30% 0.37% 0.40% 0.40%++
Net Investment Income (to average
daily net assets)* 6.71%++ 6.27% 6.19% 6.60% 6.60% 6.29%++
Portfolio Turnover 47%+ 147% 145% 94% 107% 127%+
Net Assets, End of Period (000's
omitted) $35,390 $38,109 $26,579 $13,916 $12,525 $8,868
<FN>
-----------------
* For the period indicated, the investment adviser voluntarily agreed not to
impose any of its investment advisory fee and/or reimbursed the Fund for a
portion of its operating expenses. If this voluntary action had not been
taken, the investment income per share and ratios would have been:
</FN>
Net investment income per share $ 0.61 $ 1.12 $ 1.15 $ 1.18 $ 1.11 $ 0.38
Ratios (to average daily net assets):
Expenses 0.69%++ 0.89% 0.81% 1.28% 1.25% 2.51%++
Net investment income 6.32%++ 5.68% 5.68% 5.69% 5.75% 4.18%++
</TABLE>
(1) Calculated based on average shares outstanding.
(2) For the period from July 3, 1995 (start of business) to December 31, 1995.
+ Not annualized.
++ Computed on an annualized basis.
+++ Total return would have been lower in the absense of expense waivers.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS AND NOTES -- 97.9%
ASSET BACKED -- 26.0%
ARG Funding 1999-1A A3 6.020% 05/20/2005 $ 600,000 $ 573,656
Advanta Mortgage Loan Trust 1997-4 A4 6.660% 03/25/2022 350,000 347,539
BankBoston Home Equity Loan 1998-1 A2 6.220% 02/25/2013 450,000 442,687
Chase Manhattan Auto Owner 1997-B 6.750% 01/15/2004 600,000 594,656
Chase Manhattan Credit Card Master Trust 1996-3 A 7.040% 02/15/2004 555,000 554,263
Discover Credit Card 1999-1B 5.550% 08/15/2004 600,000 582,187
Equicredit Funding Trust 1996-A A3 7.350% 11/15/2019 411,262 412,161
Ford Credit Auto Owner Trust 1997-B B 6.400% 05/15/2002 500,000 495,000
Ford Credit Auto Owner Trust 1998-C B 6.060% 02/15/2003 1,005,000 982,990
Green Tree Lease Finance 1997-1 C 6.850% 09/20/2005 122,527 120,177
Gulf States Auto Grantor Trust 1996-B A 6.600% 05/25/2003 46,932 46,682
Independent National Mortgage Corp. 1998-2 A2 6.170% 12/25/2011 344,852 340,326
MMCA Automobile Trust 1998-1 A3 5.860% 08/16/2004 266,916 264,538
MMCA Automobile Trust 1999-2 A2 6.800% 08/15/2003 600,000 597,375
Premier Auto Trust 1997-1B ERISA 6.550% 09/06/2003 700,000 696,010
Residential Asset Securities Corp. 2000-KS1 A1 7.615% 12/25/2014 756,572 753,499
Standard Credit Card 1998-1 A6(a) 7.053% 03/23/2003 500,000 499,375
UCFC Home Equity Loan Trust 1993-B A1 6.075% 07/25/2014 221,002 211,643
UCFC Home Equity Loan Trust 1994-D1 A4 8.775% 02/10/2016 300,388 300,388
UCFC Home Equity Loan Trust 1996-A1 A5 6.500% 03/15/2016 7,593 7,593
World Omni Auto Lease 1997-A B Non-ERISA 144A 7.300% 06/25/2003 395,450 394,976
-----------
Total Asset Backed (Cost $9,271,311) 9,217,721
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.0%
Collateralized Mortgage Obligation Trust 13-A(a) 6.380% 01/20/2003 1,960 1,946
-----------
Total Collateralized Mortgage Obligations (Cost $1,945) 1,946
-----------
CORPORATE -- 49.3%
BANK BONDS -- 16.0%
Aristar Inc. 6.000% 08/01/2001 600,000 587,323
Bankers Trust Corp.(a) 6.313% 09/24/2002 755,000 744,559
Branch Banking & Trust 5.700% 02/01/2001 250,000 247,691
Chase Manhattan Corp. Sub. Notes NCL 9.375% 07/01/2001 600,000 611,746
Crestar Finance Corp. 8.250% 07/15/2002 650,000 660,373
Firstar Corp. Medium Term Notes(a) 6.753% 08/03/2001 600,000 601,276
NationsBank Corp. 5.750% 03/15/2001 350,000 346,336
NationsBank Corp. Sub. Notes NCL 8.125% 06/15/2002 395,000 400,269
US Bancorp Notes NCL 6.350% 09/28/2001 850,000 840,353
Wells Fargo & Co. 8.375% 05/15/2002 600,000 610,036
-----------
5,649,962
-----------
FINANCIAL -- 17.7%
AT& T Capital Corp. 6.250% 05/15/2001 500,000 494,181
Avalon Bay Comm Notes 6.500% 07/15/2003 500,000 481,436
Bear Stearns Co. 6.500% 08/01/2002 725,000 707,537
Carramerica Realty Corp. 6.625% 10/01/2000 160,000 159,411
Conseco Inc. 6.400% 06/15/2001 150,000 114,000
Conseco Inc. 6.400% 02/10/2003 600,000 396,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL (CONTINUED)
FleetBoston Financial Corp. Medium Term Notes 6.551% 01/08/2002 $ 500,000 $ 500,906
Ford Motor Credit 8.200% 02/15/2002 350,000 353,429
General Electric Capital Corp. Medium Term Notes 6.520% 10/08/2002 625,000 616,941
International Lease Finance Corp. 5.625% 05/01/2002 500,000 484,923
Kern River Funding Notes 6.720% 09/30/2001 350,000 346,777
Lehman Brothers Holdings Medium Term Notes 7.000% 05/15/2003 750,000 731,757
Morgan Stanley Dean Wittter Medium Term Notes 7.750% 07/09/2001 750,000 753,507
Spieker Properties REIT 6.650% 12/15/2000 75,000 74,499
Wellsford Residential Property REIT 7.250% 08/15/2000 50,000 49,983
-----------
6,265,287
-----------
INDUSTRIAL BONDS -- 15.6%
COMDISCO Inc. Notes NCL 6.000% 01/30/2002 500,000 479,494
Cox Communications Inc. 7.000% 08/15/2001 250,000 248,370
Daimler Chrysler NA Holding 7.400% 01/20/2005 750,000 746,305
DeepTech International 12.000% 12/15/2000 600,000 609,558
Enron Corp. 6.450% 11/15/2001 600,000 590,747
IBM Credit Corp. 6.450% 11/12/2002 625,000 614,216
Tele-Commun Inc. 8.250% 01/15/2003 450,000 458,773
Tyco International Ltd. 6.500% 11/01/2001 600,000 591,238
WMX Technologies 7.100% 08/01/2026 350,000 331,790
Wheeling-Pittsburgh Corp. 9.375% 11/15/2003 825,000 852,769
-----------
5,523,260
-----------
Total Corporate (Cost $17,890,620) 17,438,509
-----------
GOVERNMENT/OTHER -- 5.8%
EURODOLLAR -- 1.2%
Argentina Notes NCL 0.000% 04/15/2001 450,000 418,500
-----------
YANKEE BONDS -- 4.6%
Banco Latinoamericano 144A Notes 6.500% 04/02/2001 300,000 297,428
Edperbrascan Ltd. Notes 7.375% 10/01/2002 625,000 607,271
Royal Carribean Cruises 7.125% 09/18/2002 750,000 715,485
-----------
1,620,184
-----------
Total Government/Other (Cost $2,090,937) 2,038,684
-----------
NON-AGENCY -- 0.7%
PASS THRU SECURITIES -- 0.7%
MLMI Mortgage Inv. 1995-C2 D Non-ERISA(a) 7.573% 06/15/2021 240,413 236,759
-----------
Total Non-Agency (Cost $247,025) 236,759
-----------
U.S. GOVERNMENT AGENCY -- 7.2%
FHLB 6.000% 11/15/2001 200,000 197,688
FNMA 5.125% 02/13/2004 1,450,000 1,360,956
FNMA 5.250% 01/15/2003 500,000 480,000
FNMA 6.140% 06/12/2002 450,000 443,673
Private Export Funding Corp. 6.860% 04/30/2004 80,000 79,984
-----------
Total U.S. Government Agency (Cost $2,571,074) 2,562,301
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR VALUE
SECURITY RATE MATURITY VALUE* (NOTE 1A)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 8.9%
TREASURY NOTES -- 8.9%
U.S. Treasury Note 5.375% 02/15/2001 $1,100,000 $ 1,092,784
U.S. Treasury Note 5.500% 08/31/2001 350,000 346,119
U.S. Treasury Note 5.750% 08/15/2003 1,750,000 1,720,198
-----------
Total U.S. Treasury Obligations (Cost $3,153,877) 3,159,101
-----------
TOTAL BONDS AND NOTES (COST $35,226,789) 34,655,021
-----------
SHORT-TERM INVESTMENTS -- 2.2%
U.S. GOVERNMENT AGENCY -- 2.0%
FHLMC Discount Note@ 6.499% 07/03/2000 700,000 699,751
-----------
REPURCHASE AGREEMENTS -- 0.2%
Investors Bank & Trust Repurchase Agreement, dated
06/30/00, due 07/03/00, with a maturity value of $78,824
and an effective yield of 5.75%, collateralized by a U.S.
Government Agency Obligation with a rate of 6.00%,
maturity date of 07/01/29 and market value of $80,394. 78,786
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $778,537) 778,537
-----------
TOTAL INVESTMENTS -- 100.1% (COST $36,005,326) $35,433,558
OTHER ASSETS, LESS LIABILITIES -- (0.1%) (43,101)
-----------
NET ASSETS -- 100.0% $35,390,457
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
144A - Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration.
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
MLMI - Merrill Lynch Mortgage Investors, Inc.
MMCA - Mitsubishi Motors Credit of America
NCL - Non-callable
REIT - Real Estate Investment Trust
UCFC - United Companies Financial Corporation
* Denominated in United States dollars except for foreign country specific
bonds which are denominated in their respective local currency.
(a) Variable Rate Security; rate indicated is as of 6/30/00.
@ Rate noted is yield to maturity.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES:
Standish, Ayer & Wood Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment
company. Standish Controlled Maturity Fund (the "Fund") is a separate
diversified investment series of the Trust.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. INVESTMENT SECURITY VALUATIONS
Securities for which quotations are readily available are valued at the
last sale price, or if no sale price, at the closing bid price in the
principal market in which such securities are primarily traded. Securities
(including illiquid securities) for which quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
Short-term instruments with less than sixty-one days remaining to maturity
when acquired by the Fund are valued at amortized cost, which approximates
market value. If the Fund acquires a short-term instrument with more than
sixty days remaining to its maturity, it is valued at current market value
until the sixtieth day prior to maturity and will then be valued at
amortized value based upon the value on such date unless the trustees
determine during such sixty-day period that amortized value does not
represent fair value.
B. REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor on a daily basis, the market value and accrued interest of the
repurchase agreement's underlying investments to ensure the existence of a
proper level of collateral.
C. SECURITIES TRANSACTIONS AND INCOME
Securities transactions are recorded as of the trade date. Realized gains
and losses from securities sold are recorded on the identified cost basis.
Interest income is determined on the basis of interest accrued, adjusted
for accretion of discount or amortization of premium on debt securities
when required for federal income tax purposes.
D. FEDERAL TAXES
As a regulated investment company qualified under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
At December 31, 1999, the Fund, for federal income tax purposes, had a
capital loss carryover which will reduce the Fund's taxable income arising
from net realized gain on investments, if any, to the extent permitted by
the Internal Revenue Code and thus will reduce the amount of distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal income tax. Such capital loss carryovers are
$5,003, $88,743 and $236,142 which will expire on December 31, 2004, 2005
and 2007, respectively. The Fund elected to defer to its fiscal year
ending December 31, 2000, $61,378 of losses recognized during the period
November 1, 1999 to December 31, 1999.
8
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
E. DEFERRED ORGANIZATION EXPENSE
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized on a straight-line basis through June
2000.
F. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders are recorded on the ex-dividend date.
Dividends from net investment income and capital gains distributions, if
any, are reinvested in additional shares of the Fund unless a shareholder
elects to receive them in cash. Income and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences, which may
result in distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, passive foreign investment
companies (PFIC), litigation proceeds, market discount, non-taxable
dividends, capital loss carryforwards, losses deferred due to wash sales
and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
(2) INVESTMENT ADVISORY FEE:
The investment advisory fee paid to Standish, Ayer & Wood, Inc. ("SA&W")
for overall investment advisory, administrative services, and general
office facilities, is paid monthly at the annual rate of 0.30% of the
Fund's average daily net assets. SA&W voluntarily agreed to limit total
Fund operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to 0.30% of the Fund's average daily net assets
for the six months ending June 30, 2000. Pursuant to this agreement, for
the six months ended June 30, 2000, SA&W voluntarily did not impose
$57,031 of its investment advisory fee and reimbursed the Fund for $17,776
of its operating expenses. The Trust pays no compensation directly to its
trustees who are affiliated with SA&W or to its officers, all of whom,
receive remuneration for their services to the Trust from SA&W. Certain of
the trustees and officers of the Trust are directors or officers of SA&W.
(3) PURCHASES AND SALES OF INVESTMENTS:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended June 30, 2000 were as follows:
PURCHASES SALES
---------- -----------
U.S. Government Securities $7,188,161 $12,385,106
========== ===========
Investments (non-U.S.Government Securities) $9,863,359 $ 7,170,650
========== ===========
9
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST:
The Declaration of Trust permits the trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
Shares sold 51,313 1,269,370
Shares issued to shareholders in payment of
distributions declared 55,674 61,360
Shares redeemed (237,735) (700,006)
-------- ----------
Net increase (decrease) (130,748) 630,724
======== ==========
</TABLE>
At June 30, 2000, four shareholders held of record approximately 36%, 26%,
15% and 11% of the total outstanding shares of the Fund. Investment
activity of these shareholders could have a material impact on the Fund.
(5) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES:
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at June 30, 2000 as computed on a federal
income tax basis, were as follows:
Aggregate Cost $36,005,326
===========
Gross unrealized appreciation 18,257
Gross unrealized depreciation (590,025)
-----------
Net unrealized depreciation $ (571,768)
===========
(6) FINANCIAL INSTRUMENTS:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to enhance
potential gain in circumstances where hedging is not involved. The nature,
risks and objectives of these instruments are set forth more fully in the
Fund's Prospectus and Statement of Additional Information.
The Fund trades the following instruments with off-balance sheet risk:
OPTIONS
Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on or before a
certain date. The Fund may use options to seek to hedge against risks of
market exposure and changes in securities prices and foreign currencies,
as well as to seek to enhance returns. Writing puts and buying calls tend
to increase the Fund's exposure to the underlying instrument. Buying puts
and writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments. Options, both held and
written by the Fund, are reflected in the accompanying Statement of Assets
and Liabilities at market value. The underlying face amount at value of
any open purchased options is shown in the Schedule of Investments. This
amount reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the underlying
instruments, if there is an illiquid secondary market for the contract, or
if the counterparty does not perform under the contract's terms.
Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised
or are closed are added to or offset against the proceeds or amount paid
on the transaction to determine the realized gain or loss. Realized gains
and losses on purchased options are included in realized gains and losses
on investment securities, except purchased options on foreign currency
which are included in realized gains and losses on foreign currency
transactions. If a put option written by the Fund is exercised, the
premium reduces the cost
10
<PAGE>
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH CONTROLLED MATURITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
basis of the securities purchased by the Fund. The Fund, as writer of an
option, has no control over whether the underlying securities may be sold
(call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
The Fund entered into no such transactions for the six months ended June
30, 2000.
FUTURES CONTRACTS
The Fund may enter into financial futures contracts for the delayed sale
or delivery of securities or contracts based on financial indices at a
fixed price on a future date. Pursuant to the margin requirements, the
Fund deposits either cash or securities in an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or
received by the Fund each day, dependent on the daily fluctuations in the
value of the underlying security, and are recorded for financial statement
purposes as unrealized gains or losses by the Fund. There are several
risks in connection with the use of futures contracts as a hedging device.
The change in value of futures contracts primarily corresponds with the
value of their underlying instruments or indices, which may not correlate
with changes in the value of hedged investments. Buying futures tends to
increase the Fund's exposure to the underlying instrument, while selling
futures tends to decrease the Fund's exposure to the underlying instrument
or hedge other Fund investments. In addition, there is the risk that the
Fund may not be able to enter into a closing transaction because of an
illiquid secondary market. Losses may arise if there is an illiquid
secondary market or if the counterparties do not perform under the
contract's terms. The Fund enters into financial futures transactions
primarily to manage its exposure to certain markets and to changes in
securities prices and foreign currencies. Gains and losses are realized
upon the expiration or closing of the futures contracts.
At June 30, 2000, the Fund held no open futures contracts.
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