BOSTON ADVISORS TRUST, 497, 2000-05-04

BOSTON ADVISORS TRUST
497, 2000-05-04

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Boston Advisors Trust

P r o s p e c t u s

April 4, 2000

Boston Advisors Cash Reserves Fund

Boston Advisors U.S. Government Money Market Fund

Boston Advisors Tax Free Money Market Fund

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.

Boston Advisors, Inc.

Advest

[LOGO]
Advest
- ------------------------
Advest, Inc.
Member: NASD, NYSE, SIPC

Boston Advisors, Inc.
100 Federal Street
29th Floor
Boston, MA 02110
1-800-523-5903

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Table of Contents
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RISK/RETURN SUMMARY ............................... 3
Boston Advisors Cash Reserves Fund ................ 4
Boston Advisors U.S. Government
Money Market Fund ............................... 6
Boston Advisors Tax Free
Money Market Fund ............................... 8
INVESTMENT ADVISER ................................ 10
INVESTMENT AND ACCOUNT
POLICIES ........................................ 11
Buying Shares ..................................... 12
Redeeming Shares .................................. 13
Other Share Transaction Procedures ................ 14
Dividends, Distributions and Taxes ................ 15
FOR MORE INFORMATION .............................. 16

2
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Risk/Return Summary
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Boston Advisors money market funds

These funds seek the maximum current income that is consistent with maintaining
liquidity and preserving capital. Each fund invests in money market securities
and is designed to maintain a stable $1 share price.

Who may want to invest
These funds may be appropriate if you:
. Are looking for current income
. Need relative stability of principal
. Are investing for a short period of time
. Want to allocate a portion of your investment assets to money
market securities

Boston Advisors Tax Free Money Market Fund may also be appropriate if you are a
taxpayer in a high tax bracket seeking income exempt from federal income tax.

Risks of the funds

An investment in money market funds is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although each fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
funds.

Investment adviser

Each fund is managed by Boston Advisors, Inc. Founded in 1974, Boston Advisors
is a registered investment adviser. Boston Advisors is a wholly-owned subsidiary
of The Advest Group, Inc., a diversified, publicly traded financial services
firm.

3
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Boston Advisors Cash Reserves Fund
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Investment goals
Seeks to preserve capital and maintain liquidity, consistent with seeking
maximum current income. The fund's board may change these goals without
obtaining the approval of the fund's shareholders. The fund intends to maintain
a stable $1 share price.

Principal investments
The fund invests in U.S. dollar denominated money market securities. These may
include obligations issued by:
. the U.S. government and its agencies and instrumentalities
. corporations, banks and other companies
. multinational organizations such as the World Bank
. non-U.S. governments
. U.S. states and municipalities

The fund may invest in all types of money market securities of U.S. and non-U.S.
issuers, including commercial paper, certificates of deposit, bankers'
acceptances, mortgage-backed and asset-backed securities, repurchase agreements
and other short-term debt securities. These securities may pay interest at
fixed, floating or variable rates.

Minimum credit quality
All investments acquired by the fund will be rated in one of the two highest
short-term rating categories of a nationally recognized statistical rating
organization or, if unrated, will be of equivalent quality.

Maximum maturity
The fund will maintain an average dollar weighted portfolio maturity of 90 days
or less. The fund's individual securities must have a remaining maturity of 397
days or less.

How the adviser selects the fund's investments
The adviser selects for the fund's portfolio those securities that appear to
offer the best relative value based on an analysis of their credit quality,
interest rate sensitivity, yields and prices. Depending on its outlook for
short-term interest rates, the adviser may shorten or lengthen the fund's
average portfolio maturity. To take advantage of changing yield differentials,
the fund may overweight particular sectors of the short-term debt market while
maintaining overall issuer and sector diversification.

4
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Principal risks
The fund might not be able to maintain a $1 share price and investors could lose
money if any of these events occurs:
. The issuer or guarantor of a security owned by the fund defaults
on its payment obligations, becomes insolvent or has its credit
rating downgraded by a rating agency.
. There is a sudden or sharp increase in interest rates.
. The value of the fund's non-U.S. securities goes down because of
unfavorable non-U.S. government actions, political instability or
the more limited availability of accurate information about
non-U.S. issuers.
. The adviser's judgment about the relative value or credit quality
of securities selected for the fund's portfolio proves to be
incorrect.

Performance information
The fund is newly operational and therefore does not have performance
information.

Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
Class 1 shares of the fund.

- -----------------------------------------------------------------------
Shareholder fees
(paid directly from your investment) None
Annual fund operating expenses
(deducted from fund assets)
Management fees 0.55%
Distribution (12b-1) and/or service fees 0.25%
Other expenses/1/ 0.20%
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Total annual fund operating expenses 1.00%
Fee waiver and expense reimbursement/2/ 0.10%
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Net expenses 0.90%
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/1/Based on estimated expenses for year ended 4/30/2001.
/2/The adviser has contractually agreed to waive its advisory fees and reimburse
the fund for its expenses through April 30, 2001 to the extent necessary to
maintain the expense ratio of Class 1 at not more than 0.90% of its average net
assets. This cap may be changed or terminated at any time after April 30, 2001
and does not apply to brokerage commissions, taxes, interest and litigation,
indemnification and other extraordinary expenses.

This example is intended to help you compare the cost of investing in Class 1
shares of the fund with the cost of investing in other mutual funds.
- --------------------------------------------------------------------------------
The example assumes that:
. You invest $10,000 in the fund for the time periods indicated.
. Your investment has a 5% return each year.
. The fund's operating expenses remain the same.
. You redeem your investment at the end of each period.

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

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1 year $ 92
3 years $308
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5
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Boston Advisors U.S. Government Money Market Fund
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Principal investments
The fund invests exclusively in short-term U.S. government securities and
repurchase agreements based on U.S. government securities. U.S. government
securities include all securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities.

Maximum maturity
The fund will maintain an average dollar weighted portfolio maturity of 90 days
or less. The fund's individual securities must have a remaining maturity of 397
days or less.

Principal risks
The fund might not be able to maintain a $1 share price and investors could lose
money if either of these events occurs:

. There is a sudden or sharp increase in interest rates.
. The adviser's judgment about the relative value of securities
selected for the fund's portfolio proves to be incorrect.

Although U.S. government securities and repurchase agreements based on these
securities present a low risk of default, the U.S. government does not guarantee
the value of the fund's investments or shares.

Performance information
The fund is newly operational and therefore does not have performance
information.

6
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Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
Class 1 shares of the fund.

- ------------------------------------------------------------------------
Shareholder fees
(paid directly from your investment) None
Annual fund operating expenses
(deducted from fund assets)
Management fees 0.55%
Distribution (12b-1) and/or service fees 0.25%
Other expenses/1/ 0.20%
- ------------------------------------------------------------------------
Total annual fund operating expenses 1.00%
Fee waiver and expense reimbursement/2/ 0.10%
- ------------------------------------------------------------------------
Net expenses 0.90%
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Although your actual costs may be higher or lower, under these assumptions your
costs would be:

- ---------------------------------------------------------------------
1 year $ 92
3 years $308
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7
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Boston Advisors Tax Free Money Market Fund
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Investment goals
Seeks to preserve capital and maintain liquidity, consistent with seeking
maximum current income that is exempt from regular federal income tax. The
fund's board may change these goals without obtaining the approval of the fund's
shareholders. The fund intends to maintain a stable $1 share price.

Principal investments
The fund invests at least 80% of its assets in short-term municipal securities.
These include obligations issued by:
. Any of the 50 states and their political subdivisions, agencies
and public authorities
. Other governmental issuers such as Puerto Rico, the U.S. Virgin
Islands and Guam.

The municipal securities in which the fund invests include general obligation
bonds, revenue bonds and notes and municipal leases.

Municipal securities may pay interest at fixed, variable or floating rates. The
interest on these securities is exempt from regular federal income tax and
normally is lower than it would be if the interest were subject to taxation.

The fund can invest up to 20% of its assets in securities whose interest is
federally taxable.

Maximum maturity
The fund will maintain an average dollar weighted portfolio maturity of 90 days
or less. The fund's individual securities must have a remaining maturity of 397
days or less.

How the adviser selects the fund's investments
The adviser selects for the fund's portfolio those securities that appear to
offer the best relative value based on an analysis of their credit quality,
interest rate sensitivity, after-tax yields and prices. Depending on its outlook
for short-term interest rates, the adviser may shorten or lengthen the fund's
average portfolio maturity. To take advantage of changing yield differentials,
the fund may overweight particular sectors of the short term municipal market
while maintaining overall issuer, sector and geographical diversification to
reduce credit risk.

Principal risks
Taxable distributions
Normally, substantially all of the fund's income will not be subject to federal
taxation. However, some of the fund's income distributions may be, and
distributions of the fund's gains will be, subject to federal taxation. The fund
may realize taxable gains on the sale of its securities. Some of the fund's
income distributions may be subject to the federal alternative minimum tax. In
addition, distributions of the fund's income and gains generally will be subject
to state income taxation.

8
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Investment risks
The fund might not be able to maintain a $1 share price and investors could lose
money if any of these events occurs:
. The issuer or guarantor of a security owned by the fund defaults
on its payment obligations, becomes insolvent or has its credit
rating downgraded by a rating agency.
. New federal or state laws adversely affect the tax-exempt status
of securities held by the fund or the ability of issuers to pay
principal and interest on these securities.
. There is a sudden or sharp increase in interest rates.
. The adviser's judgment about the relative value or credit quality
of securities selected for the fund's portfolio proves to be
incorrect.

Performance information
The fund is newly operational and therefore does not have performance
information.

Fees and expenses

This table describes the fees and expenses that you may pay if you buy and hold
Class 1 shares of the fund.

- --------------------------------------------------------------------
Shareholder fees
(paid directly from your investment) None
Annual fund operating expenses
(deducted from fund assets)
Management fees 0.55%
Distribution (12b-1) and/or service fees 0.25%
Other expenses/1/ 0.20%
- --------------------------------------------------------------------
Total annual fund operating expenses 1.00%
Fee waiver and expense reimbursement/2/ 0.10%
- --------------------------------------------------------------------
Net expenses 0.90%

- --------------------------------------------------------------------

Although your actual costs may be higher or lower, under these assumptions your
costs would be:

- ----------------------------------------------------------------------
1 year $ 92
3 years $308
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9
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Investment Advisor
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Boston Advisors
The funds' investment adviser is Boston Advisors, Inc., located at 100 Federal
Street, Boston, Massachusetts 02110. Boston Advisors is a registered investment
adviser established in 1974. It manages fixed income, balanced and equity
portfolios.

Advest Group
The adviser is a wholly-owned subsidiary of The Advest Group, Inc., a
diversified, publicly traded financial services firm with headquarters in
Hartford Connecticut. Through its subsidiaries, The Advest Group, Inc. offers a
comprehensive range of investment products and services to individuals,
business owners and companies. Together with its predecessor companies, The
Advest Group, Inc. has been serving investors since 1898.

Advisory fees
Each fund has agreed to pay the adviser a monthly advisory fee at an annual rate
equal to 0.55% of the fund's average daily net assets.

The adviser has contractually agreed to waive its advisory fee and reimburse
each fund for its expenses through April 30, 2001 to the extent necessary to
maintain the expense ratio of Class 1 shares of each fund at not more than 0.90%
of its respective average net assets. This cap may be changed or terminated at
any time after April 30, 2001 and does not apply to brokerage commissions,
taxes, interest and litigation, indemnification and other extraordinary
expenses.

Distributor
Advest, Inc., a wholly-owned broker-dealer subsidiary of The Advest Group, Inc.,
is the principal distributor of each fund's shares.

Distribution plan
The funds have adopted a rule 12b-1 distribution plan authorizing each fund's
Class 1 shares to pay service fees equal to 0.25% annually of the class' average
daily net assets. These fees are an ongoing expense and, over time, may cost you
more than paying an initial sales charge.

10
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Investment and Account Policies
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Share price
You may buy, exchange or redeem fund shares at their net asset value next
determined after receipt of your request in good order. Each fund's net asset
value is the value of its assets minus its liabilities for each class of shares.
Each fund calculates its net asset value at the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m. Eastern time), on each day the
Exchange is open. However, a fund's net asset value may be calculated earlier if
trading on the Exchange is restricted or as permitted by the SEC. The Exchange
is closed on certain holidays listed in the SAI.

Each fund uses the amortized cost method to value its portfolio securities.
Using this method, a fund amortizes over the remaining life of a security the
difference between the principal amount due at maturity and the cost of the
security to the fund.

The funds have purchased insurance to cover certain losses caused by a default
or bankruptcy of issuers of securities owned by the funds. This policy is
designed to guard against fluctuations in a fund's net asset value due to
adverse credit events. Under the limits of this policy, each fund will only be
protected to a maximum loss negotiated with the insurance provider after
subtracting a specific deductible per adverse credit event. While the funds will
pay premiums for this coverage, a fund may incur losses to the extent that the
insurance does not cover them.

Transaction requests
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information.
. Name of the fund
. Account number
. Class of shares being bought, exchanged or redeemed
. Dollar amount or number of shares being bought, exchanged or
redeemed

Minimum investments
Minimum initial investment requirements vary depending on the nature of your
investment account. There are no minimum requirements for additional investments
in your account.

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Minimum
Initial Investment
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Type of Account Class 1
- -------------------------------------------------------------------------
Regular $1000
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Centennial $5000
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Employee $ 100
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11
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Opening an account
You should contact your Financial Advisor at Advest, the fund's distributor, to
open a brokerage account and make arrangements to buy shares. You should pay
for your fund shares through your brokerage account at the time you place your
order.

Adding to your account
By check. Mail or deliver your check or negotiable draft, payable to Advest,
Inc., to your Advest Financial Advisor, who will forward it to the funds. Please
indicate your account number on the check or draft.

By investing cash in your brokerage account. Contact your Advest Financial
Advisor to arrange for cash that has come into your brokerage account to be
invested in a fund.

Through an automatic sweep. If your Advest brokerage account has an automatic
"sweep" feature, cash balances from the account will be automatically invested
in shares of the fund you have selected.

Effective time of purchases
- --------------------------------------------------------------------------------
Purchase is Effective Dividends
Form of Purchase Payment (Eastern time) Begin
- --------------------------------------------------------------------------------
. Payment in federal funds If received At close of On that day
. Having a sufficient cash before 4 p.m.* Exchange
balance in your Advest on that day
account
-------------------------------------------------
If received At close of On the next
after 4 p.m. Exchange on the business day
next business day
- --------------------------------------------------------------------------------
. Other forms of payment At close of Exchange on the On the next
received by Advest, which next business day business day
must be converted into
federal funds
- --------------------------------------------------------------------------------
*Please consult your broker, as it may impose an earlier deadline.

12
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Redeeming Shares
- --------------------------------------------------------------------------------

Through Advest
By contacting your Advest Financial Advisor. Contact your Advest Financial
Advisor to request a redemption of fund shares. You can use the redemption
proceeds to pay for the purchase of securities in your brokerage account, or you
can have Advest, Inc. send a check or wire transfer to you or another person you
designate.

Through an automatic sweep. If your Advest brokerage account has an automatic
"sweep" feature, fund shares will be redeemed automatically to pay for
securities purchased through your account.

Effective time of redemptions

- --------------------------------------------------------------------------------
Redemption Received Redemption is Effective Proceeds Dividends
(Eastern time) (Eastern time) Received Continue
- --------------------------------------------------------------------------------
Before close of At close of Exchange On that day* Through the
Exchange on that day previous
business day
- --------------------------------------------------------------------------------
After close of At close of On the next Through that
Exchange Exchange on the business day* business day
next business day
- --------------------------------------------------------------------------------
*Generally, but not later than the seventh day after redemption is effective.

13
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Other Share Transaction Procedures
- --------------------------------------------------------------------------------

Other transaction policies
Each fund has the right to:

. Waive or change minimum investment amounts
. Reject any purchase order
. Suspend or postpone redemptions of shares to the extent permitted
by the Securities and Exchange Commission
. Pay redemption proceeds by giving you securities. You may pay
transaction costs to dispose of the securities
. Redeem shares held in an Advest brokerage account if you close the
account.

Involuntary redemptions
Each fund may close your account if, for reasons other than investment losses,
the value of fund shares in your account falls below the minimum investment
requirement. After a fund notifies you of the fund's intention to close your
account, you will have 60 days to bring the account back to the minimum level.

14
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Dividends, Distributions and Taxes
- --------------------------------------------------------------------------------

Dividends and distributions
Each fund declares a dividend of substantially all of its net investment income
and short-term capital gain daily and pays the dividends monthly. In addition,
each fund distributes any long-term capital gain annually. Distributions are
expected to be primarily from income. The funds do not expect ordinarily to
distribute any long-term capital gain.

Dividends and capital gain distributions are reinvested in additional shares of
the same fund you hold, unless you tell your Advest Financial Advisor to pay
them in cash.

Taxes
The following table shows the tax status of dividends, distributions and
transactions in fund shares.

Dividends attributable to interest on U.S. Treasury and certain U.S. government
obligations are exempt from state and local income taxes in most states, subject
to state-specific requirements.

- --------------------------------------------------------------------------------
Name of Fund Type of Transaction Tax Status
- --------------------------------------------------------------------------------
Cash Reserves Fund Interest from net Taxable as ordinary
investment income. income.
- --------------------------------------------------------------------------------
U.S. Government Money Interest from net Income exempt from state
Market Fund investment income. tax but subject to
federal tax.
- --------------------------------------------------------------------------------
Tax Free Money Interest designated as Exempt from federal
Market Fund tax-exempt interest. income tax, but may be
subject to alternative
minimum tax and state
and local taxes.
---------------------------------------------------
Interest that is not Taxable as ordinary
designated as income.
tax-exempt interest.
- --------------------------------------------------------------------------------
All funds Distributions of Taxable as ordinary
short-term capital gain. income.
---------------------------------------------------
Distributions of Taxable as long-term
long-term capital gain. capital gain.
---------------------------------------------------
Redemptions or exchanges No gain or loss as long
of fund shares. as the fund maintains a
constant $1 share price.
- --------------------------------------------------------------------------------

After the end of each year, each fund will provide you with information about
the dividends and distributions you received during the previous year.

Taxable dividends and distributions are taxable whether they are received in
cash or additional shares.

If you do not provide the fund with your correct taxpayer identification number
and any required certifications, you may be subject to back-up withholding of
31% of your distributions and taxable dividends.

Because each shareholder's circumstances are different and special tax rules may
apply, you should consult your tax adviser about your investment in the funds.

15
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For More Information
- --------------------------------------------------------------------------------

Boston Advisors Money Market Funds
For investors who want more information about the Boston Advisors money market
funds, the following documents are available free upon request:

Annual/Semi-annual Reports Additional information about each fund's investments
will be available in the funds' annual and semi-annual reports to shareholders.
The funds' annual report will contain a discussion of the market conditions and
investment strategies that significantly affected each fund's performance during
its last fiscal year.

Statement of Additional Information (SAI) The SAI provides more detailed
information about the funds and is incorporated into this prospectus by
reference.

Investors can get free copies of reports and SAIs and request other information
about the funds by contacting the funds at:

Boston Advisors Money Market Funds
100 Federal Street, 29th Floor
Boston, MA 02110
Telephone: 1-800-523-5903
E-mail: [email protected]
Internet: http://www.bostonadvisors.com

Investors can review the funds' semi-annual and annual reports and SAI at the
Public Reference Room of the Securities and Exchange Commission. Investors can
get text-only copies:

. For a fee, by writing to the Public Reference Room of the
Commission, Washington, D.C. 20549-0102

. Free from the Commission's Internet web site at
http://www.sec.gov.

. By electronic request at the following E-mail address:
[email protected].

Investors can get information about the operation of the Public Reference Room
by calling 1-202-942-8090.

If someone makes a statement about the funds that is not in this prospectus, you
should not rely upon that information. Neither the funds nor the distributor is
offering to sell shares of the funds to any person to whom the funds may not
lawfully sell their shares.

Investment Company Act file no. 811-9675

16
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BOSTON ADVISORS TRUST
100 Federal Street
Boston, Massachusetts 02110

STATEMENT OF ADDITIONAL INFORMATION

Boston Advisors Cash Reserves Fund
Boston Advisors U.S. Government Money Market Fund
Boston Advisors Tax Free Money Market Fund

Class 1 and Class 2 shares

April 4, 2000

This statement of additional information is not a prospectus. It should be read
in conjunction with Boston Advisors Trust's prospectus dated April 4, 2000, as
supplemented or revised from time to time. A copy of the prospectus can be
obtained free of charge by calling 1-800-523-5903 or by written request to
Boston Advisors Trust (the "Trust") at 100 Federal Street, Boston, Massachusetts
02110. You can also obtain a copy of the Trust's prospectus from our website at
www.bostonadvisors.com.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Trust History............................................................ 2
2. Description of the Trust and its Investments and Risks................... 2
3. Management of the Trust.................................................. 11
4. Investment Adviser....................................................... 13
5. Principal Underwriter and Distribution Plan.............................. 14
6. Shareholder Servicing/Transfer Agent..................................... 16
7. Custodian and Administrator.............................................. 16
8. Independent Public Accountants........................................... 16
9. Portfolio Transactions................................................... 16
10. Description of Shares.................................................... 17
11. Pricing of Shares........................................................ 19
12. Tax Status............................................................... 20
13. Investment Results....................................................... 23
14. Financial Statements..................................................... 25
15. Appendix - Description of Short-term Debt Ratings...................... 28
</TABLE>
<PAGE>

1. TRUST HISTORY

The Trust was organized as a Massachusetts business trust on September 30, 1999.

2. DESCRIPTION OF THE TRUST AND ITS INVESTMENTS AND RISKS

The Trust is a diversified open-end management investment company consisting of
three funds: Boston Advisors Cash Reserves Fund ("Cash Reserves Fund"), Boston
Advisors U.S. Government Money Market Fund ("U.S. Government Fund") and Boston
Advisors Tax Free Money Market Fund ("Tax Free Fund") (each a "Fund,"
collectively the "Funds").

The prospectus presents the investment objective and the principal investment
strategies and risks of the Funds. This Statement of Additional Information
supplements the disclosure in the Trust's prospectus and provides additional
information about each Fund's investment policies or restrictions.

Restrictions or policies stated as a maximum percentage of a Fund's assets are
only applied immediately after a portfolio investment to which the policy or
restriction applies. Accordingly, any later increase or decrease resulting from
a change in values, total assets, net assets or other circumstances will not be
considered in determining whether the investment complies with a Fund's
restrictions and policies.

Compliance With Money Market Fund Rule 2a-7. Each Fund intends to comply with
the requirements of Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which includes restrictions on, among other things,
the maturity and credit ratings of the Fund's portfolio securities.

Under normal circumstances, each Fund will invest in high quality money market
securities with a maximum remaining maturity of 397 days from the date of
settlement of the purchase. Each Fund will maintain a dollar-weighted average
maturity of 90 days or less.

Money Market Instruments. The Cash Reserves Fund may invest in short-term money
market instruments including commercial bank obligations and U.S. dollar
denominated commercial paper. Commercial bank obligations include certificates
of deposit, time deposits and bankers' acceptances. Obligations of branches of
U.S. and non-U.S. banks may be general obligations of the parent bank in
addition to the issuing branch, or may be limited to an obligation of that
branch by the terms of a specific obligation and by government regulation. As
with investments in non-U.S. securities generally, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the Cash Reserves Fund to investment risks that are different from those of
investments in obligations of domestic issuers.

Commercial paper consists of short-term unsecured promissory notes issued by
corporations in order to finance their current operations. The Cash Reserves
Fund also may invest in variable amount master demand notes (which is a type of
commercial paper). Each of these notes is a direct borrowing arrangement
involving periodically fluctuating rates of interest under a letter agreement.
Transfer of these notes is usually restricted by the issuer, and there is no
secondary trading market for these notes.

2
<PAGE>

Certificates of Deposit. The Cash Reserves Fund may invest in certificates of
deposit of banks and savings and loan associations.

Investing in certificates of deposit issued by non-U.S. banks and non-U.S.
branches of U.S. banks involves some risks that are different from those
associated with investing in certificates of deposit issued by U.S. banks. These
risks include the possible imposition of withholding taxes on interest income,
the possible adoption of governmental restrictions which might adversely affect
the payment of principal and interest on such certificates of deposit, or other
adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against non-U.S. banks and non-U.S.
branches of U.S. banks.

U.S. Government Securities. U.S. Government Fund may only invest in U.S.
government securities that are direct obligations of the U.S. Treasury. U.S.
government securities in which the Cash Reserves and Tax Free Funds may invest
include debt obligations issued by the U.S. Treasury or issued or guaranteed by
an agency or instrumentality of the U.S. government, including the Central Bank
for Cooperatives, District of Columbia Armory Board, Export-Import Bank of the
U.S., Farmers Home Administration, Federal Farm Credit Banks, Federal Financing
Bank, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA"), General Services Administration,
Government National Mortgage Association ("GNMA"), Maritime Administration,
Resolution Trust Corporation, Small Business Administration, Student Loan
Marketing Association, Tennessee Valley Authority and various institutions that
previously were or currently are part of the Farm Credit System (which has been
undergoing reorganization since 1987).

Some U.S. government securities, such as U.S. Treasury bills, Treasury notes and
Treasury bonds, which differ only in their interest rates, maturities and times
of issuance, are supported by the full faith and credit of the United States.
Others are supported by: (i) the right of the issuer to borrow from the U.S.
Treasury, such as securities of the Federal Home Loan Banks; (ii) the
discretionary authority of the U.S. government to purchase the agency's
obligations, such as securities of the FNMA; or (iii) only the credit of the
issuer, such as securities of the Student Loan Marketing Association.

No assurance can be given that the U.S. government will provide financial
support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States. Securities guaranteed as to principal and interest by the U.S.
government, its agencies, authorities or instrumentalities include: (i)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or any of its
agencies, authorities or instrumentalities; and (ii) participations in loans
made to foreign governments or other entities that are so guaranteed. The
secondary market for certain of these participations is limited and, therefore,
may be regarded as illiquid.

U.S. government securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. government securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. government securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but also require a higher rate of

3
<PAGE>

return to attract investors who are willing to defer receipt of cash. These
investments may experience greater volatility in market value than U.S.
government securities that provide for regular payments of interest. The Funds
accrue income on these investments for tax and accounting purposes, which is
distributable to shareholders. Because no cash is received at the time of
accrual, a Fund may have to liquidate other portfolio securities to satisfy the
Fund's distribution obligations. In this case the Fund will forego the purchase
of additional income producing assets with these proceeds. Zero coupon U.S.
government securities include STRIPS and CUBES, which are issued by the U.S.
Treasury as component parts of U.S. Treasury bonds and represent scheduled
interest and principal payments on the bonds.

Mortgage-Backed Securities. The Cash Reserves Fund may invest in mortgage pass-
through certificates and multiple-class pass-through securities, such as real
estate mortgage investment conduits ("REMIC") pass-through certificates,
collateralized mortgage obligations and stripped mortgage-backed securities
("SMBS"), and other types of "mortgage-backed securities" that may be available
in the future. A mortgage-backed security is an obligation of the issuer backed
by a mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations ("CMOs"), provide for payments of both principal and interest at a
variety of intervals; others provide for semiannual interest payments at a
predetermined rate and the repayment of principal at maturity (like a typical
bond). Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties.

Mortgage-backed securities often have stated maturities of up to thirty years
when they are issued, depending upon the length of the mortgages underlying the
securities. In practice, however, unscheduled or early payments of principal and
interest on the underlying mortgages may make the securities' effective maturity
shorter than this, and the prevailing interest rates may be higher or lower than
the current yield of a Fund's portfolio at the time a Fund receives the payments
for reinvestment. Mortgage-backed securities may have less potential for capital
appreciation than comparable fixed income securities, due to the likelihood of
increased prepayments of mortgages as interest rates decline. If a Fund buys
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of a Fund's principal investment to the extent of the
premium paid.

Since faster than expected prepayments must usually be invested in lower
yielding securities, mortgage-backed securities are less effective than
conventional bonds at "locking in" a specified interest rate. Conversely, in a
rising interest rate environment, a declining prepayment rate will extend the
average life of many mortgage-backed securities. This possibility is often
referred to as extension risk. Extending the average life of a mortgage-backed
security increases the risk of depreciation due to future increases in market
interest rates.

The value of mortgage-backed securities may also change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities markets as a whole. Non-governmental
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
governmental issues.

Investing in mortgage-backed securities involves certain risks, including the
failure of a counterparty to meet its commitments, adverse interest rate changes
and the effects of

4
<PAGE>

prepayment rates on mortgage cash flows. Prepayment rates are influenced by
changes in current interest rates and a variety of economic, geographic, social
and other factors and cannot be predicted with certainty. Both adjustable rate
mortgage loans and fixed rate mortgage loans may be subject to a greater rate of
principal prepayments in a declining interest rate environment and to a lesser
rate of principal prepayments in an increasing interest rate environment. Under
certain interest rate and prepayment rate scenarios, the Cash Reserves Fund may
fail to recoup fully its investment in mortgage-backed securities
notwithstanding any direct or indirect governmental, agency or other
guarantee.

Asset-Backed Securities. The Cash Reserves Fund may invest in asset-backed
securities, which are securities that represent a participation in, or are
secured by and payable from, a stream of payments generated by particular
assets, most often a pool or pools of similar assets (e.g., trade receivables).
The credit quality of these securities depends primarily upon the quality of the
underlying assets and the level of credit support and/or enhancement provided.
The underlying assets (e.g., loans) are subject to prepayments which shorten the
securities' weighted average maturity and may lower their return. If the credit
support or enhancement is exhausted, losses or delays in payment may result if
the required payments of principal and interest are not made. The value of these
securities also may change because of changes in the market's perception of the
creditworthiness of the servicing agent for the pool, the originator of the
pool, or the financial institution or trust providing the credit support or
enhancement.

Forward Commitments and When-Issued Securities. Each Fund may purchase
securities on a when-issued basis or purchase or sell securities on a forward
commitment basis. These transactions involve a commitment by the Fund to
purchase or sell securities at a future date. The price of the underlying
securities (usually expressed in terms of yield) and the date when the
securities will be delivered and paid for (the settlement date) are fixed at the
time the transaction is negotiated. When-issued purchases and forward
commitment transactions are negotiated directly with the other party, and such
commitments are not traded on exchanges, but may be traded over-the-counter.

A Fund will purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing
the transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, a Fund may dispose of or
renegotiate a commitment after entering into it. A Fund also may sell securities
it has committed to purchase before those securities are delivered to the Fund
on the settlement date. The Fund may realize a capital gain or loss in
connection with these transactions. For purposes of determining the Fund's
average dollar weighted maturity, the maturity of when-issued or forward
commitment securities will be calculated from the commitment date.

When a Fund purchases securities on a when-issued or forward commitment basis,
the Fund will maintain in a segregated account cash or liquid securities having
a value (determined daily) at least equal to the amount of the Fund's purchase
commitments. In the case of a forward commitment to sell portfolio securities
subject to such commitment, the Fund will hold the portfolio securities while
the commitment is outstanding. These procedures are designed to ensure that the
Fund will maintain sufficient assets at all times to cover its obligations under
when-issued purchases and forward commitments.

5
<PAGE>

Variable Rate and Floating Rate Demand Instruments. The Cash Reserves and Tax
Free Funds may purchase variable and floating rate demand instruments that are
tax exempt municipal obligations or other debt securities that possess a
floating or variable interest rate adjustment formula. These instruments permit
a Fund to demand payment of the principal balance plus unpaid accrued interest
upon a specified number of days' notice to the issuer or its agent. The demand
feature may be backed by a bank letter of credit or guarantee issued with
respect to such instrument.

The terms of the variable or floating rate demand instruments that a Fund may
purchase provide that interest rates are adjustable at intervals ranging from
daily up to six months, and the adjustments are based upon current market
levels, the prime rate of a bank or other appropriate interest rate adjustment
index has provided in the respective instruments. Some of these instruments are
payable on demand on a daily basis or on not more than seven days' notice.
Others, such as instruments with quarterly or semiannual interest rate
adjustments, may be put back to the issuer on designated days on not more than
thirty days' notice. Still others are automatically called by the issuer unless
a Fund instructs otherwise. The Trust, on behalf of a Fund, intends to exercise
the demand feature only (1) upon a default under the terms of the debt security,
(2) as needed to provide liquidity to a Fund, (3) to maintain the respective
quality standards of a Fund's investment portfolio, or (4) to attain a more
optimal portfolio structure.

A Fund will determine the variable or floating rate demand instruments that it
will purchase in accordance with procedures approved by the Trustees to minimize
credit risks. Accordingly, both the long-term and short-term ratings for any
variable or floating rate demand instruments must satisfy a Fund's credit
criteria, except that if credit support is provided, a Fund may rely solely upon
the short-term rating of the variable or floating rate demand instrument. To be
eligible for purchase of a Fund, a variable or floating rate demand instrument
which is unrated must have quality characteristics similar to those of other
obligations in which the Fund may invest. Boston Advisors may determine that an
unrated variable or floating rate demand instrument meets a Fund's quality
criteria by reason of being backed by a letter of credit or guarantee issued by
a bank that meets the quality criteria for a Fund. Thus, the credit of either
the issuer of the obligation or the guarantor bank or both will meet the quality
standards of the Fund.

Cash Reserves and Tax Free Funds may invest in participation interests in
variable or floating rate tax-exempt obligations held by financial institutions
(usually commercial banks). These participation interests provide a Fund with a
specific undivided interest (up to 100%) in the underlying obligation and the
right to demand payment of its proportional interest in the unpaid principal
balance plus accrued interest from the financial institution upon a specific
number of days' notice. In addition, the participation interest generally is
backed by an irrevocable letter of credit or guarantee from the institution. The
financial institution usually is entitled to a fee for servicing the obligation
and providing the letter of credit.

Municipal Obligations. Tax Free Fund invests in municipal obligations. Municipal
obligations are issued by or on behalf of states, territories and possessions of
the United States and their political subdivisions, agencies, authorities and
instrumentalities and the District of Columbia to obtain funds for various
public purposes. The interest on most of these obligations is general exempt
from regular federal income tax. The two principal classifications of municipal
obligations are "notes" and "bonds."

6
<PAGE>

Notes. Municipal notes are generally used to provide for short-term capital
needs and generally have maturities of one year or less. Municipal notes include
tax anticipation notes, revenue anticipation notes, bond anticipation notes, tax
and revenue anticipation notes, construction loan notes, tax-exempt commercial
paper and certain receipts for municipal obligations.

Tax anticipation notes are sold to finance working capital needs to
municipalities. They are generally payable from specific tax revenues expected
to be received at a future date. They are usually general obligations of the
issuer, secured by the taxing power for payment of principal and interest.
Revenue anticipation notes are issued in expectation of receipt of other types
of revenue such as federal revenues available under the Federal Revenue Sharing
Program. Tax anticipation notes and revenue anticipation notes are generally
issued in anticipation of various seasonable revenues such as income, sales, use
and business taxes. Bond anticipation notes are sold to provide interim
financing in anticipation of long-term financing in the market. In most cases,
these monies provided for the repayment of the notes. Construction loan notes
are sold to provide construction financing. These notes are secured by mortgage
notes insured by the Federal Housing Authority; however, the proceeds from the
issuance may be less than the economic equivalent of the payment of principal
and interest on the mortgage note if there had been a default. Tax-exempt
commercial paper consists of short-term unsecured promissory notes issued by a
state or local government or an authority or agency thereof.

The Funds which invest in municipal obligations may also acquire securities in
the form of custodial receipts. These receipts evidence ownership of future
interest payments, principal payments or both on certain state and local
governmental and authority obligations if, in the opinion of bond counsel,
interest payments on these custodial receipts are excluded from gross income for
federal income tax purposes. These obligations are held in custody by a bank on
behalf of the holders of the receipts. These custodial receipts are known by
various names, including "Municipal Receipts" ("Mrs") and "Municipal
Certificates of Accrual on Tax-Exempt Securities" ("M-CATS"). There are a number
of other types of notes issued for different purposes and secured differently
from those described above.

Bonds. Municipal bonds, which generally meet longer term detail needs and have
maturities or more than one year when issued, have two principal
classifications, "general obligation" bonds and "revenue" bonds.

General obligation bonds are issued by entities such as states, counties,
cities, towns and regional districts and are used to fund a wide range of public
projects including the construction or improvement of schools, highways and
roads, water and sewer systems and a variety of other public purposes. The basic
security of general obligation bonds is the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. The taxes that can
be levied for the payment of debt service may be limited or unlimited as to rate
or amount or special assessments.

Revenue bonds have been issued to fund a wide variety of capital projects
including: electric, gas, water and sewer systems; highways, bridges and
tunnels; port and airport facilities; colleges and universities; and hospitals.
The principal security for a revenue bond is generally the net revenues derived
from a particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. Although the
principal security behind these bonds varies widely, many provide additional
security in the form of a debt service reserve fund whose monies may also be
used to make principal and interest payments on the

7
<PAGE>

issuer's obligations. Housing finance authorities have a wide range of security
including partially or fully insured, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other public projects. In
addition to a debt service reserve fund, some authorities provide further
security in the form of a state's ability (without obligation) to make up
deficiencies in the debt service reserve fund. Lease rental revenue bonds issued
by a state or local authority for capital projects are secured by annual lease
rental payments from the state or locality to the authority sufficient to cover
debt service on the authority's obligations.

Private activity bonds (a term that includes certain types of bonds, the
proceeds of which are used to a specified extent for the benefit of persons
other than governmental units), although nominally issued by municipal
authorities, are generally not secured by the taxing power of the municipality
but are secured by the revenues of the authority derived from payments by the
industrial user.

Municipal bonds with a series of maturity dates are called serial bonds. The
serial bonds which a Fund may purchase are limited to short-term serial bonds --
those with original or remaining maturities of thirteen months or less. A Fund
may purchase long-term bonds only if they have a remaining maturity of thirteen
months or less. These include bonds called for redemption if the redemption
payment date will occur within thirteen months. A Fund may also purchase long-
term bonds (sometimes referred to as "Put Bonds") that are subject to a mutual
commitment by the Fund and the issuer to redeem the bond at par at a designated
time within thirteen months.

A tender option bond is a municipal obligation (generally held under a custodial
arrangement) having a relatively long maturity and bearing interest at a fixed
rate substantially higher than prevailing short-term tax-exempt rates. The bond
is typically issued in conjunction with the grant by a third party, such as a
bank, broker-dealer or other financial institution, to the security holder the
option, at periodic intervals, to tender its securities to the institution and
receive the security's face value. As consideration for providing the option,
the financial institution receives periodic fees equal to the difference between
the bond's fixed coupon rate and the rate, as determined by a remarketing agent,
that would cause the bond, coupled with the tender option, to trade at par on
the date of this determination. Thus, after payment of this fee, the security
holder effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. However, an institution will not be
obligated to accept tendered bonds in the event of certain defaults by, or a
significant downgrade in the credit rating assigned to, the issuer of the
bond.

The tender option will reduce the maturity of tender option bonds and the
average portfolio maturity of each Fund. The liquidity of a tender option bond
depends on the credit quality of both the bond issuer and the financial
institution providing liquidity. Consequently, tender option bonds are deemed to
be liquid unless, in the opinion of Boston Advisors, the credit quality of the
bond issuer and the financial institution is deemed, in light of the relevant
Fund's credit quality requirements, to be inadequate.

In addition to general obligation bonds, revenue bonds and series bonds, there
is a variety of hybrid and special type of municipal obligations as well as
numerous differences in the security of municipal obligations both within and
between the two principal classifications above.

Yields on municipal obligations depend on a variety of factors; including money
market conditions, municipal bond market conditions, the size of a particular
offering, the maturity of

8
<PAGE>

the obligation and the quality of the issue. High quality municipal obligations
tend to have a lower yield than lower rated obligations. Municipal obligations
are subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors, such as the Federal Bankruptcy Code, and
laws, if any, which may be enacted by Congress or state legislatures extending
the time of payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or municipalities to levy
taxes. There is also the possibility that as a result of litigation or other
conditions the power or ability of any one or more issuers to pay when due
principal of and interest on its or their municipal obligations may be
materially affected.

Standby Commitments. In order to enhance the liquidity, stability or quality of
municipal obligations, Cash Reserves and Tax Free Funds may each acquire the
right to sell a security to another party at a guaranteed price and date. Such a
right to resell may be referred to as a put, demand feature or "standby
commitment," depending on its characteristics. The aggregate price which a Fund
pays for securities with standby commitments may be higher than the price which
otherwise would be paid for the securities. Standby commitments may not be
available or may not be available on satisfactory terms.

Standby commitments may involve letters of credit issued by U.S. or non-U.S.
banks supporting the other party's ability to purchase the security from the
Fund. The right to sell may be exercisable on demand or at specific intervals,
and may form part of a security or be acquired separately by a Fund. In
considering whether a security meets a Fund's quality standards, Boston Advisors
will look to the creditworthiness of the party providing the Fund with the right
to sell as well as the quality of the security itself.

Illiquid Securities. None of the Funds will invest more than 10% of its net
assets in illiquid and other securities that are not readily marketable.
Repurchase agreements maturing in more than seven days and lacking a demand
feature will be included for purposes of the foregoing limit. Securities subject
to restrictions on resale under the Securities Act of 1933, as amended (the
"1933 Act"), are considered illiquid unless they are eligible for resale
pursuant to Rule 144A, are commercial paper offered in reliance on Section 4(2)
of the 1933 Act or are eligible for another exemption from the registration
requirements of the 1933 Act and are determined to be liquid by Boston Advisors.
Boston Advisors determines the liquidity of Rule 144A and other restricted
securities according to procedures adopted by the Board of Trustees. These
procedures require Boston Advisors to consider, among other things, (1) the
frequency of trades and quotes for the security, (2) the number of dealers
willing to buy the security, (3) the number of potential purchasers, (4) dealer
undertakings to make a market in the security, (5) the nature of the security
and (6) the time needed to dispose of the security. The Board of Trustees
monitors Boston Advisors' application of these procedures. The inability of a
Fund to dispose of illiquid investments readily or at reasonable prices could
impair a Fund's ability to raise cash for redemptions or other purposes.

Repurchase Agreements. The Cash Reserves Fund and U.S. Government Fund may enter
into repurchase agreements with broker-dealers, member banks of the Federal
Reserve System and other financial institutions. Repurchase agreements are
arrangements under which a Fund purchases securities and the seller agrees to
repurchase the securities within a specific time and at a specific price. The
repurchase price is generally higher than the Fund's purchase price, with the
difference being income to the Fund. Boston Advisors reviews and monitors the
creditworthiness of any institution that enters into a repurchase agreement with
a Fund. The

9
<PAGE>

counterparty's obligations under the repurchase agreement are collateralized
with U.S. Treasury and/or agency obligations with a market value of not less
than 100% of the obligations, valued daily.

Repurchase agreements afford a Fund an opportunity to earn income on temporarily
available cash at low risk. In the event of commencement of bankruptcy or
insolvency proceedings with respect to the seller under an outstanding
repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Such a delay may involve loss of interest or a
decline in price of the security. If the court characterizes the transaction as
a loan and the Fund has not perfected a security interest in the security, the
Fund may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, the
Fund would risk losing some or all of the principal and interest involved in the
transaction.

Asset Segregation. The 1940 Act requires that each Fund segregate assets in
connection with certain types of transactions that may have the effect of
leveraging such Fund's portfolio. If a Fund enters into a transaction requiring
segregation, such as a forward commitment, the custodian or Boston Advisors will
segregate liquid assets in an amount required to comply with the 1940 Act. These
segregated assets will be valued at market daily. If the aggregate value of
these segregated assets declines below the aggregate value required to satisfy
the 1940 Act, additional liquid assets will be segregated.

Investment Restrictions. Each Fund will not purchase securities when outstanding
borrowings exceed 5% of the Fund's total assets.

FUNDAMENTAL INVESTMENT RESTRICTIONS. Each Fund has adopted certain investment
restrictions which, along with that Fund's investment objective, may not be
changed without the affirmative vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of that Fund. For
this purpose, a majority of the outstanding shares of a Fund means the vote of
the lesser of:

1. 67% or more of the shares represented at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or

2. more than 50% of the outstanding shares of the Fund.

Each Fund may not:

(1) purchase securities, excluding U.S. government securities and repurchase
agreements, refunded bonds and other securities backed by U.S. government
securities, if this purchase would cause 25% or more of the Fund's total assets
to be invested in securities of issuers conducting their principal business in
the same industry. The Fund may, but is not required to, concentrate in
securities issued by U.S. banks or U.S. branches of foreign banks. Foreign
countries, U.S. territories, states, municipalities and their respective
agencies and instrumentalities are not considered to be industries.

(2) borrow money, except that the Fund may (a) borrow from banks or through
reverse repurchase agreements in an amount up to 33 1/3% of the Fund's total
assets (including the amount borrowed); (b) to the extent permitted by
applicable law, borrow up to an additional 5%

10
<PAGE>

of the Fund's assets for temporary purposes; (c) obtain such short-term credits
as are necessary for the clearance of portfolio transactions; (d) purchase
securities on margin to the extent permitted by applicable law; and (e) engage
in transactions in mortgage dollar rolls that are accounted for as
financings.

(3) invest in real estate, except that the Fund may invest in securities of
issuers that invest in real estate or interests therein, securities that are
secured by real estate or interests therein, securities of real estate
investment trusts and mortgage-backed securities.

(4) invest in commodities or commodity futures contracts, excluding transactions
in financial derivative contracts, such as forward currency contracts; financial
futures contracts and options on financial futures contracts; options on
securities, currencies and financial indices; and swaps, caps, floors, collars
and swaptions, to the extent permitted by the fund's prospectus and this
statement of additional information.

(5) make loans to any institution, individual or other person, except by (a)
purchasing a debt obligation in which the Fund is permitted to invest (b)
entering into repurchase agreements and (c) lending portfolio securities;

(6) act as an underwriter, except as it may be deemed to be an underwriter in a
sale of restricted securities;

(7) issue senior securities, except to the extent permitted by the 1940 Act;

(8) purchase a security if that purchase would cause the Fund to be non-
diversified under the 1940 Act.

3. MANAGEMENT OF THE TRUST

The Trust's Board of Trustees provides broad supervision over the affairs of the
Trust. The officers of the Trust are responsible for the Trust's operations. The
Trustees and executive officers of the Trust are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Trust within the meaning of the
1940 Act.

11
<PAGE>

<TABLE>
<CAPTION>
Name, Address and Age Position(s) Held with Principal Occupation(s) During
Trust Past 5 Years
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Allen G. Botwinick* Chairman of the Board Executive Vice President of
90 State House Square and Trustee Administration and Operations, The
Hartford, CT 06103 Advest Group, Inc. and Advest, Inc.
Age: 57

- ------------------------------------------------------------------------------------------
Michael J. Vogelzang* President, Chief Boston Advisors, Inc., President
100 Federal Street Executive Officer and Chief Investment Officer, 4/99
Boston, MA 02110 and Trustee - present; Senior Vice President
Age: 39 and Chief Investment Officer, 8/97
- 4/99. Freedom Capital Management
Corp., Senior Vice President and
Portfolio Manager, 9/91 - 8/97.

- ------------------------------------------------------------------------------------------
Mone Anathan III Trustee Harvard Divinity School, Student,
99 Garden Street 9/97 - present; President, Filene's
Cambridge, MA 02136 Basement (off-price retailer), 1995
Age: 61 - 8/97.
- ------------------------------------------------------------------------------------------

Hugh A. Dunlap, Jr. Trustee Retired, 5/95 - present; John
29 Lowell Road Hancock Advisors, Inc., Vice
Brookline, MA 02445 Chairman, 11/94 - 5/95.
Age: 69
- ------------------------------------------------------------------------------------------

Ezekiel Russell Peach, Jr. Trustee Robert, Finnegan & Lynah, PC
137 South Street (public accounting),
Boston, MA 02111 partner/principal since 1968.
Age: 66
- ------------------------------------------------------------------------------------------

Todd A. Finkelstein Vice President Boston Advisors, Inc., Senior Vice
100 Federal Street President and Director of Fixed
Boston, MA 02110 Income, 8/98 - present; BankBoston,
Age: 40 Vice President and Senior
Investment Officer, 12/94 - 8/98.

- ------------------------------------------------------------------------------------------
Donna C. McAdam Treasurer and Chief Boston Advisors, Inc., Vice
100 Federal Street Financial Officer President and Chief Operating
Boston, MA 02110 Officer, 4/87 - present.
Age: 53
- ------------------------------------------------------------------------------------------

Susan C. Mosher Secretary Director and Senior Counsel, Mutual
200 Clarendon Street Fund Administration - Investors
Boston, MA 02116 Bank & Trust Company, 1995 -
Age: 45 present.
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

Compensation of Officers and Trustees. The Trust pays no salaries or
compensation to any of its officers. The Trust compensates each Trustee who is
not affiliated with Boston Advisors or Advest with a base fee of $10,000. The
table below illustrates the compensation that each unaffiliated Trustee expects
to receive for his services for the fiscal year ending April 30, 2001.

<TABLE>
<CAPTION>
Pension or
Retirement Estimated
Benefits Annual Total Compensation
Aggregate Accrued As Benefits Upon From Trust and
Name of Person, Compensation Part of Fund Retirement Trust Complex Paid
Position From Trust Expenses to Trustees
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mone Anathan III $10,000 -0- -0- $10,000
- ------------------------------------------------------------------------------------------------------------
Hugh A. Dunlap, Jr. $10,000 -0- -0- $10,000
- ------------------------------------------------------------------------------------------------------------
Ezekiel Russell Peach, Jr. $10,000 -0- -0- $10,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>

4. INVESTMENT ADVISER

The Trust has contracted with Boston Advisors to act as its investment adviser.
Boston Advisors is a wholly owned subsidiary of Advest, Inc. ("Advest"), which
is a subsidiary of The Advest Group, Inc. ("Advest Group"). Advest Group is
engaged in the financial services business in the U.S. and other countries.
Certain Trustees or officers of the Trust are also Trustees and/or officers of
Advest and its subsidiaries (see management biographies above).

As the Trust's investment adviser, Boston Advisors provides the Trust with
investment research, advice and supervision and furnishes an investment program
for the Trust consistent with each Fund's investment objective and policies,
subject to the supervision of the Trust's Trustees. Boston Advisors determines
what portfolio securities will be purchased or sold, arranges for the placing of
orders for the purchase or sale of portfolio securities, selects brokers or
dealers to place those orders, maintains books and records with respect to each
Fund's securities transactions, and reports to the Trustees on each Fund's
investments and performance.

Under the terms of its contract with the Trust, Boston Advisors pays all the
operating expenses, including executive salaries and the rental of office space,
relating to its services for the Trust. Except for the services provided by
Boston Advisors, the Trust pays all of its own ordinary and extraordinary
expenses, including, but not limited to: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of Boston Advisors or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (b) the charges and expenses of auditors; (c) the charges and expenses
of any custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Trust with respect to the Funds; (d) issue and
transfer taxes, chargeable to the Trust in connection with securities
transactions to which each Fund is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (f) fees and expenses involved in registering and maintaining
registrations of the Trust and/or its shares with the SEC, state blue sky
securities agencies and the securities regulators of foreign countries,
including the preparation of prospectuses and statements of additional
information for filing with the SEC; (g) all expenses of shareholders'
<PAGE>

and Trustees' meetings and of preparing, printing and distributing prospectuses,
notices, proxy statements and all reports to shareholders and to governmental
agencies; (h) charges and expenses of legal counsel to the Trust and the
Trustees; (i) any distribution or service fees paid by the Trust in accordance
with Rule 12b-1 under the 1940 Act; (j) compensation of those Trustees of the
Trust who are not affiliated with or interested persons of Boston Advisors or
the Funds (other than as Trustees); (k) the cost of preparing and printing share
certificates; and (l) interest on borrowed money, if any.

In addition to the expenses described above, the Funds will pay brokers' and
underwriting commissions chargeable to the Funds in connection with their
securities transactions. The Trustees' approval of and the terms, continuance
and termination of the management contract are governed by the 1940 Act and the
Investment Advisers Act of 1940, as applicable.

Pursuant to the management contract, Boston Advisors will not be liable for any
error of judgment or mistake of law or for any loss sustained because of the
adoption of any investment policy or the purchase, sale or retention of any
securities on the recommendation of Boston Advisors. Boston Advisors, however,
is not protected against liability by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under the management
contract.

Advisory Fee. As compensation for its management services to the Trust, each
Fund pays Boston Advisors a fee at the annual rate of 0.55% of the Fund's
average daily net assets. This fee is normally computed and accrued daily and
paid monthly. From time to time, Boston Advisors may reduce its fee or make
other arrangements to limit a Fund's expenses to a specified percentage of
average daily net assets. To the extent that a Fund's total expense ratio falls
below its expense limit, Boston Advisors reserves the right to be reimbursed for
management fees waived and fund expenses paid by it during the prior two fiscal
years. Boston Advisors has contractually agreed to limit the Funds' advisory
fees and to reimburse their other fund expenses to reduce each Fund's total
annual operating expenses to 0.90% for Class 1 shares and 0.65% for Class 2
shares of the Fund's average net assets until April 30, 2001.

5. PRINCIPAL UNDERWRITER AND DISTRIBUTION PLAN

Principal Underwriter. Advest, 90 State House Square, Hartford, Connecticut
06103, is the principal underwriter for the Trust in connection with the
continuous offering of its shares. Boston Advisors is an indirect, wholly owned
subsidiary of Advest, which is a subsidiary of Advest Group.

The Trust has entered into an underwriting agreement with Advest, which provides
that Advest will bear expenses for the distribution of the Trust's shares, other
than expenses incurred by Advest for which it is reimbursed or compensated by
the Trust under the distribution plan (discussed below). Advest bears all
expenses it incurs in providing services under the underwriting agreement. These
expenses include compensation to its employees and representatives and to
securities dealers for distribution-related services performed for the Trust.
Advest also pays certain expenses in connection with the distribution of the
Trust's shares, including the cost of preparing, printing and distributing
advertising or promotional materials, and the cost of printing and distributing
prospectuses and supplements to prospective shareholders. The Trust bears the
cost of registering its shares under federal and state securities
<PAGE>

law and the laws of certain foreign countries. Under the underwriting agreement,
Advest will use its best efforts in rendering services to the Trust.

The Trust will not generally issue Fund shares for consideration other than
cash. At the Trust's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with a bona fide reorganization,
statutory merger or other acquisition of portfolio securities.

The redemption price of shares of beneficial interest of the Trust may, at
Boston Advisors' discretion, be paid in cash or portfolio securities. If
redemption proceeds are paid in securities, these securities are valued at the
value employed in determining a Fund's net asset value. A shareholder whose
shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of these securities will be made in
such manner as the Board of Trustees deems fair and reasonable.

Distribution Plan. The Trust has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act covering each Fund's Class 1 shares.
Under the Plan, a distribution and service fee of 0.25% of each Fund's average
daily net assets attributable to Class 1 shares is paid to Advest. Because of
the Plan, long-term shareholders may pay more than the economic equivalent of
the maximum sales charge permitted by the National Association of Securities
Dealers, Inc. (the "NASD").

Advest may pay up to the entire fee under the Plan to its own representatives or
to other dealers for providing services in connection with the sale of each
Fund's shares. To the extent this fee is not paid to others, Advest may retain
this fee as compensation for its services and expenses incurred in accordance
with the Plan. The Plan is a compensation plan, which provides for payment of a
specified fee without regard to the actual expense incurred by Advest. If its
fee exceeds its expense, Advest will realize a profit. If the Plan was
terminated by Trustees of the Trust and a successor plan was adopted, the Funds
would cease to make payments under the Plan and Advest would be unable to
recover any unreimbursed expenses.
In accordance with the terms of the Plan, Advest provides to the Trustees
for their review a quarterly written report of the amounts expended under the
Plan and the purposes for which these expenditures were made. In the Trustees'
quarterly review of the Plan, they will consider the continued appropriateness
and the level of reimbursement or compensation the Plan provides.

No interested person or Trustee of the Trust has any direct or indirect
financial interest in the operation of the Plan except to the extent that Advest
and certain of its employees are receiving a portion of the payments made by the
Trust under the Plan.

The Plan's adoption, terms, continuance and termination are governed by
Rule 12b-1 under the 1940 Act. The Board of Trustees believes that there is a
reasonable likelihood that the Plan will benefit the Trust and its current and
future shareholders. The Plan may not be amended to increase materially the
annual percentage rate spent on distribution activities without approval by the
shareholders of the affected Fund. Other material amendments to the Plan must be
approved by the Trustees.
<PAGE>

6. SHAREHOLDER SERVICING/TRANSFER AGENT

The Trust has contracted with Advest Transfer Services, Inc. ("ATS"), a
subsidiary of Advest Group, to act as shareholder servicing and transfer agent
for the Trust. The Trust pays ATS an annual maintenance fee of $20.00 for each
shareholder account.

Under the terms of its contract with the Trust, ATS services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of each Fund; (ii) distributing dividends and capital gains
associated with the each Fund's portfolio; and (iii) maintaining account records
and responding to shareholder inquiries.

7. CUSTODIAN AND ADMINISTRATOR

Investors Bank & Trust Company, 200 Clarendon Street, Boston, Massachusetts
02116, is the custodian of the Trust's assets and serves as administrator of the
Trust. The custodian's responsibilities include safekeeping and controlling the
Trust's cash and securities, handling the receipt and delivery of securities,
and collecting interest and dividends (if any) on the Trust's investments. As
administrator, Investors Bank provides certain administrative services to the
Trust, such as corporate secretarial services, preparation of Board of Trustees'
meeting materials, preparation and filing of regulatory filings with the SEC,
calculating each Fund's standardized performance information, preparing annual
and semi-annual reports to shareholders and the SEC, preparing each Fund's tax
returns, monitoring compliance and performing other administrative duties.

8. INDEPENDENT PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
is the Trust's independent public accountant, providing audit services, tax
return review, and assistance and consultation with respect to the preparation
of filings with the SEC.

9. PORTFOLIO TRANSACTIONS

Boston Advisors places the portfolio transactions of the Funds and of all other
accounts managed by Boston Advisors for execution with many firms. Boston
Advisors uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to each Fund and at reasonably competitive spreads
or (when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking effective execution, Boston Advisors will use its
best judgment in evaluating the terms of a transaction, and will give
consideration to various relevant factors, including without limitation the size
and type of the transaction, the nature and character of the market for the
security, the confidentiality, speed and certainty of effective execution
required for the transaction, the general execution and operational capabilities
of the broker-dealer firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the spread or
commission, if any. Securities purchased and sold by the Funds are generally
traded in the over-the-counter market on a net basis (i.e., without commission)
through dealers and banks acting for their own account rather than as brokers,
or involve transactions directly with the issuer of such securities.
<PAGE>

Boston Advisors and its affiliates are active as investors, dealers and/or
underwriters in many types of municipal and money market instruments. These
activities could affect the markets for those instruments which the Funds buy,
hold or sell. In certain instances there may be securities which are suitable
for a Fund's portfolio as well as for one or more of the other clients of Boston
Advisors. Investment decisions for each Fund and for Boston Advisor's other
clients are made with a view of achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security in a particular Fund transaction.
Each Fund believes that over time its ability to participate in volume
transactions will produce better executions for the Funds.

Under certain directed brokerage arrangements with third-party broker-dealers,
these broker-dealers may pay certain of the Trust's custody expenses.

10. DESCRIPTION OF SHARES

As an open-end management investment company, the Trust continuously offers its
shares to the public. Under normal conditions, the Trust must redeem its shares
upon the demand of any shareholder at the next determined net asset value per
share. When issued and paid for in accordance with the terms of the prospectus
and statement of additional information, shares of the Trust are fully paid and
non-assessable by the Trust. Shares will remain on deposit with the Trust's
transfer agent and certificates will not normally be issued.

The Trust's Declaration of Trust, dated September 28, 1999 and filed with the
Secretary of State of the Commonwealth of Massachusetts on September 30, 1999
(the "Declaration"), permits the Board of Trustees to authorize the issuance of
an unlimited number of full and fractional shares of beneficial interest which
may be divided into such separate series as the Trustees may establish.
Currently, the Trust consists of three series: Boston Advisors Cash Reserves
Fund, Boston Advisors U.S. Government Money Market Fund and Boston Advisors Tax
Free Money Market Fund. The Trustees may, however, establish additional series
of shares and may divide or combine the shares into a greater or lesser number
of shares without thereby changing the proportionate beneficial interests in the
Trust.

The Declaration further authorizes the Trustees to classify or reclassify any
series of the shares into one or more classes. Pursuant thereto, the Trustees
have authorized the issuance of two classes of shares of the Trust, designated
as Class 1 shares and Class 2 shares. Class 2 shares are only available to
certain managed IRA and qualified benefit plan accounts. Each share of a class
of the Trust represents an equal proportionate interest in the assets of the
Trust allocable to that class. Upon liquidation of a Fund, shareholders of each
class of that Fund are entitled to share pro rata in that Fund's net assets
allocable to such class available for distribution to shareholders. The Trust
reserves the right to create and issue additional series or classes of shares.
In this case the shares of each class of a series would participate equally in
the earnings, dividends and assets allocable to that class of the particular
series.
<PAGE>

The shares of each class represent an interest in the same investment portfolio
and Fund. Each class has equal rights as to voting, redemption, dividends and
liquidation, except that each class bears different distribution and transfer
agent fees and may bear other expenses properly attributable to the particular
class. Class 1 shareholders have exclusive rights to vote on the adoption or
amendment of any Class 1 Rule 12b-1 plan.

Shareholders are entitled to one vote for each share held and may vote on the
election of Trustees and other matters submitted to a meeting of shareholders.
Although Trustees are not elected annually by the shareholders, shareholders
have, under certain circumstances, the right to remove one or more Trustees. The
Trust is not required, and does not intend, to hold annual shareholder meetings,
although special meetings may be called for the purpose of electing or removing
Trustees, changing fundamental investment restrictions, approving a management
contract or Rule 12b-1 plan and acting on other proposals.

The shares of each series of the Trust are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series of the Trust vote together as a
class on matters that affect all series in substantially the same manner. As to
matters affecting a single series or class, shares of such series or class will
vote separately. No amendment adversely affecting the rights of shareholders
may be made to the Declaration without the affirmative vote of a majority of the
Trust's shares. Shares have no preemptive or conversion rights.

The Declaration governs the Trust's operations. A copy of the Declaration is on
file with the office of the Secretary of State of Massachusetts and included as
an Exhibit to the Trust's registration statement on Form N-1A. The Trust is an
entity of the type commonly known as a "Massachusetts business trust," which is
the form in which many mutual funds are organized. Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. The Declaration
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust. Notice of this disclaimer will normally be given in each
agreement, obligation or instrument entered into or executed by the Trust or the
Trustees. The Declaration provides for indemnification to a shareholder by the
relevant series of the Trust (including each Fund) for any loss suffered by the
shareholder as a result of an obligation of that series. The Declaration also
provides that the Trust will, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which a Fund is
unable to meet its obligations. The Trustees believe that, in view of the above,
the risk of personal liability of shareholders is not material.

The Declaration provides that the Trustees of the Trust will not be liable for
any action taken by them in good faith. The Trustees will be fully protected in
relying in good faith upon the records of the Trust and upon reports made to the
Trust by persons selected in good faith by the Trustees as qualified to make
these reports. The Declaration further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. The Declaration
provides that the Trust will indemnify the Trustees and officers of the Trust
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their positions with the
Trust, unless it is determined in the manner provided in the Declaration that
they may
<PAGE>

have not acted in good faith in the reasonable belief that, in the case of
conduct in their official capacity with the Trust, their conduct was in the best
interests of the Trust, and in all other cases, that the conduct was at least
not opposed to the best interest of the Trust (and in the case of any criminal
proceeding, they had no reasonable cause to believe that the conduct was
unlawful). However, nothing in the Declaration or the By-laws protects or
indemnifies a Trustee or officer against any liability to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.

11. PRICING OF SHARES

The net asset value per share of each class of the Funds is determined as of the
close of regular trading on the Exchange (normally 4:00 p.m. Eastern time) on
each day the Exchange is open for trading. As of the date of this Statement of
Additional Information, the Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

The net asset value per share of each class of a Fund is computed by taking the
value of all of a Fund's assets attributable to a class, less the Fund's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of that class. For purposes of determining net asset value,
expenses of the classes of the Fund are accrued daily.

Except as set forth in the following paragraph, each Fund's portfolio
investments are valued on each business day using the amortized cost method.
This method involves valuing an instrument at its cost and, thereafter, assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price a Fund would receive if it sold the investment. During periods of
declining interest rates, the yield on shares of a Fund computed as described
below may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio investments. Thus, if
the use of amortized cost by a Fund resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in that Fund would be able to
obtain a somewhat higher yield than would result from investment in a fund
utilizing solely market values. The converse would apply in a period of rising
interest rates.

Standby commitments will be valued at zero in determining net asset value.
"When-issued" securities will be valued at the value of the security at the time
the commitment to purchase is entered into.

The valuation of a Fund's portfolio investments based upon their amortized cost
is permitted by Rule 2a-7 under the 1940 Act. Rule 2a-7 requires the Funds to
adhere to certain conditions. The Trustees have established procedures designed
to stabilize, to the extent reasonably possible, the price per share of each
class of the Funds for the purpose of maintaining sales and redemptions at $1.00
per share. There is no guarantee that a Fund will be able to maintain a stable
share price. These procedures will include the review of the Funds' portfolio
holdings by the Trustees, at such intervals as they may deem appropriate, to
determine whether a Fund's net asset value per
<PAGE>

class calculated by using available market quotations deviates from $1.00 per
share and, if so, whether this deviation may result in material dilution or is
otherwise unfair to existing shareholders. If the Trustees determine that such a
deviation exists, they have agreed to take such corrective action as they regard
as necessary and appropriate, including: (1) selling portfolio instruments
before maturity to realize capital gains or losses or to shorten average
portfolio maturity; (2) offsetting each shareholder's pro rata portion of the
deviation between the net asset value and $1 from the shareholder's account and
unpaid dividends; (3) reducing or increasing the number of outstanding shares on
a pro rata basis; or (4) establishing a net asset value per share by using
available market quotations.

12. TAX STATUS

It is each Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") for qualification as a
separate regulated investment company. These requirements relate to the sources
of a Fund's income, the diversification of its assets and the distribution of
its income to shareholders. If a Fund meets all such requirements and
distributes to its shareholders, in accordance with the Code's timing and other
requirements, all investment company taxable income, net tax-exempt interest,
and net capital gain, if any, which it earns, the Fund will be relieved of the
necessity of paying federal income tax.

If a Fund did not qualify as a regulated investment company, it would be treated
as a U.S. corporation subject to federal income tax. Under the Code, each Fund
will be subject to a nondeductible 4% excise tax on a portion of its
undistributed ordinary income (not including tax-exempt interest) and capital
gains if it fails to meet certain distribution requirements with respect to each
calendar year. Each Fund intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax.

In order to qualify as a regulated investment company under Subchapter M, each
Fund must, among other things, derive at least 90% of its annual gross income
from interest, gains from the sale or other disposition of securities and
certain other income (the "90% income test"), and satisfy certain annual
distribution and quarterly diversification requirements.

Dividends from any Fund's investment company taxable income, which includes
taxable net investment income and net short-term capital gain in excess of net
long-term capital loss, are taxable as ordinary income, whether received in cash
or reinvested in additional shares. Dividends from any Fund's net long-term
capital gain in excess of net short-term capital loss ("net capital gain"), if
any, whether received in cash or reinvested in additional shares, are taxable to
shareholders as long-term capital gains for federal income tax purposes without
regard to the length of time Fund shares have been held. Each Fund does not
anticipate that it will earn or distribute any net capital gain. The federal
income tax status of all distributions (including exempt-interest dividends, as
described below) will be reported to shareholders annually.

Each Fund's dividends and distributions will not qualify for any dividends-
received deduction that might otherwise be available for certain dividends
received by shareholders that are corporations.

Any dividend declared by a Fund in October, November or December as of a record
date in such a month and paid during the following January will be treated for
federal income tax purposes as received by shareholders on December 31 of the
calendar year in which it is declared.
<PAGE>

Subchapter M of the Code permits the character of tax-exempt interest
distributed by a regulated investment company to flow through as "exempt-
interest dividends" that are treated as tax-exempt interest by its shareholders,
provided that at least 50% of the value of the company's assets at the end of
each quarter of its taxable year is invested in state, municipal and other
obligations the interest on which is excluded from gross income under Section
103(a) of the Code. The Tax Free Fund intends to satisfy this 50% requirement in
order to permit its distributions of tax-exempt interest to be treated as
exempt-interest dividends under the Code. The Tax Free Fund's distributions that
it properly designates as exempt-interest dividends for any taxable year of the
Fund are therefore not subject to regular federal income tax, although they may
be subject to the individual and corporate alternative minimum taxes described
below.

A portion of the income that the Tax Free Fund receives and distributes to
shareholders may require shareholders to pay regular federal, alternative
minimum, state and local income taxes. Taxable income or gains that result in
taxable distributions include, for example, income from repurchase agreements,
interest from U.S. government obligations and gains from the sale of
investments, including when-issued or forward-commitment transactions.
Distributions of accrued market discount that is required to be included in
income with respect to securities acquired at a market discount and a portion of
the discount from certain stripped tax-exempt obligations or their coupons are
also taxable.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Tax Free Fund will not be deductible for federal income tax purposes to the
extent it is deemed related to exempt-interest dividends paid by such Fund.
Under rules used by the Internal Revenue Service to determine when borrowed
funds are used for the purpose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the purchase of shares.

Section 147(a) of the Code prohibits exemption from taxation of interest on
certain governmental obligations to persons who are "substantial users" (or
persons related thereto) of facilities financed by such obligations. The Tax
Free Fund will not undertake any investigation as to the users of the facilities
financed by any tax-exempt obligations in its portfolio, and the Fund may not be
an appropriate investment for substantial users (or related persons) of these
facilities.

Exempt-interest dividends are taken into account in computing the portion, if
any, of Social Security and Railroad Retirement benefits subject to federal and,
in some cases, state taxes. Shareholders are required to report their receipt of
tax-exempt interest, including exempt-interest dividends, on their federal
income tax returns.

Any portion of any exempt-interest dividend paid by the Tax Free Fund that is
attributable to interest on private activity bonds held by that Fund issued on
or after August 8, 1986 (or, in certain cases, September 1, 1986), other than
qualified Section 501(c)(3) bonds or refundings of bonds originally issued
before such dates, is an item of tax preference that is subject to the federal
individual alternative minimum tax and the alternative minimum tax on
corporations.

Exempt-interest dividends from interest the Tax Free Fund earns on any tax-
exempt bonds, regardless of when issued, may increase a corporate shareholder's
liability for the federal corporate alternative minimum tax because 75% of the
excess of adjusted current earnings over alternative minimum taxable income is
an adjustment that, except to the extent already taken into

21
<PAGE>

account as private activity bond interest, increases the alternative minimum
taxable income subject to the corporate alternative minimum tax.

For federal income tax purposes, each Fund is permitted to carry forward a net
capital loss for any year to offset its capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent capital gains are
offset by these losses, they would not result in federal income tax liability to
the Fund and therefore are not expected to be distributed as such to
shareholders.

Redemptions and exchanges of shares are taxable events for shareholders that are
subject to tax but generally will not result in any taxable gain or any loss if
the applicable Fund successfully maintains a constant net asset value per share.
Any loss realized by a shareholder upon the redemption, exchange or other
disposition of shares with a tax holding period of six months or less will be
disallowed, in the case of the Tax Free Fund, to the extent of any exempt-
interest dividends paid on the shares disposed of. For each Fund, any such loss
that is not disallowed will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gain with respect
to such shares.

Losses on redemptions or other dispositions of shares of a Fund may be
disallowed under "wash sale" rules in the event of other investments in that
Fund (including those made pursuant to reinvestment of dividends and/or capital
gain distributions) within a period of 61 days beginning 30 days before and
ending 30 days after a redemption or other disposition of shares of that Fund.
In such a case, the disallowed portion of any loss would be included in the
federal tax basis of the shares acquired in the other investments. Shareholders
should consult their own tax advisers about their individual circumstances to
determine whether any particular transaction in Fund shares is properly treated
as a sale for tax purposes, as this discussion assumes, and the tax treatment of
any gains or loses recognized in these transactions.

A Fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gain, with respect
to its investments (if any) in those countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate these taxes in some cases. None
of the Funds will satisfy the requirements for passing through to its
shareholders its pro rata shares of qualified foreign taxes paid by the Fund.
Accordingly, shareholders will not include these taxes in their gross incomes
and will not be entitled to a tax deduction or credit for these taxes on their
own tax returns.

Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions, and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.

A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent a Fund's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) (i) obligations issued by that state or
certain of its political subdivisions or (ii) certain U.S. government
obligations (not including repurchase agreements), provided in some states that
certain thresholds for holdings of such obligations and/or reporting
requirements are satisfied. The Funds will not seek to satisfy any threshold or
reporting requirements that may apply in particular taxing jurisdictions,
although the Trust may in its sole discretion provide relevant information to
shareholders.

22
<PAGE>

Federal law requires that each Fund withhold (as "backup withholding") 31% of
reportable payments, including dividends (other than exempt-interest dividends)
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, shareholders must certify on their Account
Applications, or on separate IRS Forms W-9, that the Social Security Number or
other Taxpayer Identification Number they provide is their correct number and
that they are not currently subject to backup withholding, or that they are
exempt from backup withholding. A Fund may nevertheless be required to withhold
if it receives notice from the IRS or a broker that the number provided is
incorrect or backup withholding is applicable as a result of previous
underreporting of interest or dividend income.

If, as anticipated, the Funds qualify as regulated investment companies under
the Code, they will not be required to pay any Massachusetts income, corporate
excise or franchise taxes.

The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e. U.S.
citizens or residents or U.S. corporations, partnerships, trusts or estates, and
who are subject to U.S. federal income tax. This description does not address
the special tax rules that may be applicable to particular types of investors,
such as financial institutions, insurance companies, securities dealers, or tax-
exempt or tax-deferred plans, accounts or entities. Investors other than U.S.
persons may be subject to different U.S. tax treatment, including a possible 30%
non-resident alien U.S. withholding tax (or non-resident alien withholding tax
at a lower treaty rate) on amounts treated as ordinary dividends from a Fund.
Shareholders should consult their own tax advisers on these matters and on
state, local and other applicable tax laws.

13. INVESTMENT RESULTS

Quotations, Comparisons and General Information. From time to time, in
advertisements, in sales literature or in reports to shareholders, the past
performance of the Funds may be illustrated and/or compared with that of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, total return of a Fund's classes may be compared to
rankings prepared by Lipper Inc., a widely recognized independent service which
monitors mutual fund performance; the S&P 500, an index of unmanaged groups of
common stock; or the Dow Jones Industrial Average, a recognized unmanaged index
of common stocks of 30 industrial companies listed on the Exchange.

In addition, the performance of the classes of a Fund may be compared to
alternative investment or savings vehicles and/or to indices or indicators of
economic activity, e.g., inflation or interest rates. The Funds may also include
securities industry or comparative performance information in advertising or
materials marketing a Fund's shares. Performance rankings and listings reported
in newspapers or national business and financial publications, such as Barron's,
Business Week, Consumers Digest, Consumer Reports, Financial World, Forbes,
Fortune, Investors Business Daily, Kiplinger's Personal Finance Magazine, Money
Magazine, New York Times, Smart Money, USA Today, U.S. News and World Report,
The Wall Street Journal and Worth may also be cited (if the Funds are listed in
any such publication) or used for comparison. A Fund may also use performance
listings and rankings from various other sources including Bloomberg Financial
Markets, CDA/Wiesenberger, Donoghue's Mutual Fund Almanac, Ibbotson Associates,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and

23
<PAGE>

Co., Lipper Inc., Micropal, Inc., Morningstar, Inc., Schabacker Investment
Management and Towers Data Systems, Inc.

In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature or in reports to shareholders of a Fund.

The Funds may also present, from time to time, historical information depicting
the value of a hypothetical account in one of more classes of a Fund since
inception.

In presenting investment results, the Funds may include references to certain
financial planning concepts, including (a) an investor's need to evaluate his or
her financial assets and obligations to determine how much to invest; (b) an
investor's need to analyze the objectives of various investments to determine
where to invest; and (c) an investor's need to analyze his time frame for future
capital needs to determine how long to invest. The investor controls these three
factors, all of which affect the use of investments in building assets.

Standardized Yield Quotations. From time to time, the Trust may provide yield
quotations for each Fund's shares. These quotations are calculated by standard
methods prescribed by the SEC and may from time to time be used in the Trust's
Prospectus, Statement of Additional Information, advertisements, shareholder
reports or other communications to shareholders. However, these yield quotations
do not necessarily represent the future performance of any Fund. Unlike some
bank deposits or other investments which pay a fixed yield for a stated period
of time, the yields of a Fund will vary based on the type, quality and
maturities of the securities held in its portfolio, fluctuations in short-term
interest rates and changes in its expenses.

A Fund's yield quotations are computed using the appropriate figures for a
particular class as follows: the net change, exclusive of capital changes (i.e.,
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation), in the value of a hypothetical pre-existing
Class 1 or Class 2 account having a balance of one share at the beginning of the
seven-day base period is determined by subtracting a hypothetical charge
reflecting expense deductions from the hypothetical account, and dividing the
net change in value by the value of the share at the beginning of the base
period. This base period return is then multiplied by 365/7 with the resulting
yield figure carried to the nearest 100th of 1%. The determination of net change
in account value reflects the value of additional shares purchased with
dividends from the original share, dividends declared on both the original share
and any such additional shares, and all fees that are charged to a Fund, in
proportion to the length of the base period and the Fund's average account size
(for any fees that vary with the size of an account).

The Trust may also advertise quotations of each Fund's effective yield.
Effective yield is computed by compounding the unannualized base period return
determined as in the preceding paragraph by adding 1 to the base period return,
raising the sum to a power equal to 365 divided by 7, and subtracting one from
the result, according to the following formula:

Effective Yield = (base period return + 1) 365/7 - 1

The Tax Free Fund may advertise its tax equivalent current and effective yields.
The Tax Free Fund's tax equivalent current yield is calculated by dividing that
portion of the Tax Free Fund's

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yield that is tax-exempt by 1 minus a stated income tax rate and adding the
quotient to that portion, if any, of the Tax Free Fund's yield that is not tax-
exempt. The Tax Free Fund's tax equivalent effective yield is calculated by
dividing that portion of the Tax Free Fund's effective yield that is tax-exempt
by 1 minus a stated income tax rate and adding the quotient to that portion, if
any, of the Tax Free Fund's effective yield that is not tax-exempt.

All yields are calculated in accordance with SEC mandated standard formulas.

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14. FINANCIAL STATEMENTS

A Statement of Assets and Liabilities of each of the Funds as of March 15,
2000, and related footnotes is set forth below.

Statements of Assets and Liabilities
March 15, 2000

Boston Advisors Boston Advisors
Boston Advisors U.S. Government Tax Free
Cash Reserves Money Market Money Market
Fund Fund Fund
Assets
Cash $50,000 $25,000 $25,000
======= ======= =======

Net Assets $50,000 $25,000 $25,000
======= ======= =======

Net Assets Consist of:
Paid in Capital $50,000 $25,000 $25,000
======= ======= =======

Net Assets
Class 1 $50,000 $25,000 $25,000

Shares Outstanding
Class 1 50,000 25,000 25,000

Net Asset Value, Offering Price
and Redemption Price per Share
($50,000/50,000 shares, $25,000/25,000 shares,
and $25,000/25,000 shares, for Boston Advisors Cash Reserves Fund
Boston Advisors U.S. Government Money Market Fund,
and Boston Advisors Tax Free Money Market Fund, respectively)

Class 1 $ 1.00 $ 1.00 $ 1.00

Note 1:

Boston Advisors Trust (the "Trust"), is a diversified open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust was established as a Massachusetts business trust on
September 30, 1999. The Trust currently offers three Funds: Boston Advisors Cash
Reserves Fund, Boston Advisors U.S. Government Money Market Fund, and Boston
Advisors Tax Free Money Market Fund (each, a "Fund"). The Trust had no
operations other than registration and organizational matters, including the
sale and issuance of 50,000 shares of the Boston Advisors Cash Reserves Fund,
25,000 shares of the Boston Advisors U.S. Government Money Market Fund, and
25,000 shares of the Boston Advisors Tax Free Money Market Fund to Boston
Advisors, Inc. for an aggregate sales price of $100,000. These financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States which require management to make certain estimates
and assumptions at the date of the financial statements.

Note 2:

Boston Advisors, Inc. (the "Advisor"), the Funds' investment adviser, will bear
all organizational expenses except the fees for registering and qualifying the
Funds and the Funds' shares for distribution under Federal and state securities
laws, which will be borne by the Funds and amortized over one year. The Funds
will purchase insurance to cover certain loss events caused by a default or
bankruptcy of issuers of securities owned by the Funds. While the Funds will pay
the premiums for this insurance coverage, a fund may incur losses to the extent
that the insurance does not cover them.

Note 3:

The Funds have agreed to pay the Advisor, a wholly owned subsidiary of The
Advest Group, Inc., a monthly advisory fee at an annual rate of 0.55% of each
Fund's average daily net assets. The Advisor has agreed to waive its advisory
fee and reimburse each Fund for its expenses through April, 30, 2001 to the
extent necessary that the total expenses of the Fund do not exceed 0.90% of the
average daily net assets of Class 1 and 0.65% of the average daily net assets of
Class 2. The Advisor reserves the right to be reimbursed for management fees
waived and fund expenses paid by it during the prior two years to the extent
that a Fund's expense ratio falls below any expense limitations. The Funds have
adopted a Rule 12b-1 distribution plan authorizing each Fund's Class 1 shares to
pay service fees equal to 0.25% of the Class 1 average daily net assets.

Report of Independent Accountants

To the Shareholder of Boston Advisors Cash Reserves Fund, Boston Advisors U.S.
Government Money Market Fund, and Boston Advisors Tax Free Money Market Fund
and Board of Trustees of Boston Advisors Trust

In our opinion, the accompanying statements of assets and liabilities present
fairly, in all material respects, the financial position of Boston Advisors Cash
Reserves Fund, Boston Advisors U.S. Government Money Market Fund, and Boston
Advisors Tax Free Money Market Fund (each a fund of Boston Advisors Trust,
hereafter referred to as the "Fund") at March 15, 2000, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the Unites States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Boston, Massachusetts
March 24, 2000

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15. APPENDIX - DESCRIPTION OF SHORT-TERM DEBT RATINGS/1/

Moody's Investors Service, Inc. ("Moody's") Prime Rating System

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:

Leading market positions in well-established industries. High rates of return on
funds employed. Conservative capitalization structure with moderate reliance on
debt and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established access to
a range of financial markets and assured sources of alternate liquidity.

Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits. Such branch
obligations are rated at the lower of the bank's rating or Moody's Sovereign
Rating for Bank Deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.

If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are

_____________________________
/1/ The ratings indicated herein are believed to be the most recent ratings
available at the date of this statement of additional information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Trust's fiscal year-end.

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<PAGE>

listed within the parenthesis beneath the name of the issuer, or there is a
footnote referring the reader to another page for the name or names of the
supporting entity or entities. In assigning ratings to such issuers, Moody's
evaluates the financial strength of the affiliated corporations, commercial
banks, insurance companies, foreign governments or other entities, but only as
one factor in the total rating assessment.

Moody's Debt Ratings

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.

Moody's bond ratings, where specified, are applicable to financial contracts,
senior bank obligations and insurance company senior policyholder and claims
obligations with an original maturity in excess of one year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated. Obligations of a branch of a bank are
considered to be domiciled in the country in which the branch is located.

Unless noted as an exception, Moody's rating on a bank's ability to repay senior
obligations extends only to branches located in countries which carry a Moody's
Sovereign Rating for Bank Deposits. Such branch obligations are rated at the
lower of the bank's rating or Moody's Sovereign Rating for the Bank Deposits for
the country in which the branch is located. When the currency in which an
obligation is denominated is not the same as the currency of the country in
which the obligation is domiciled, Moody's ratings do not incorporate an opinion
as to whether payment of the obligation will be affected by the actions of the
government controlling the currency of denomination. In addition, risk
associated with bilateral conflicts between an investor's home country and
either the issuer's home country or the country where an issuer branch is
located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the 1933 Act or issued in
conformity with any other applicable law or regulation. Nor does Moody's
represent any specific bank or insurance company obligation is legally
enforceable or a valid senior obligation of a rated issuer.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

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<PAGE>

Standard & Poor's Short-Term Issue Credit Ratings

A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.

A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

Standard & Poor's Long-Term Issue Credit Ratings

Issue credit ratings are based, in varying degrees, on the following
considerations:

Likelihood of payment-capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation; Nature of and provisions of the obligation; Protection afforded by,
and relative position of, the obligation in the event of bankruptcy,
reorganization, or other arrangement under the laws of bankruptcy and other laws
affecting creditors' rights.

The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.

AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.

AA: An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.