United States Trust Company
Boston
Investment Management
BOSTON BALANCED FUND
Semi-Annual Report
December 31, 1997
<PAGE>
February, 1998
Dear Shareholder,
<TABLE>
<CAPTION>
COMPARATIVE PERFORMANCE*
Annualized
Since
Quarter Year Inception
Ending Ended 12/1/95 to
12/31/97 12/31/97 12/31/97
<S> <C> <C> <C>
Boston Balanced Fund 5.67% 27.08% 20.38%
Standard & Poor's 500 2.87% 33.37% 27.73%
Lehman G/C Bond Index 3.21% 9.75% 6.89%
90-Day US Treasury Bill 1.26% 5.14% 5.20%
</TABLE>
*After all expenses at an annual rate of 1%, the Advisor's expense
limitation. Results shown are past performance, which is not an indication of
future returns. Shares of the Fund are not deposits or obligations of United
States Trust Company of Boston or any Bank and are not insured by the FDIC,
Federal Reserve Board or any agency. The value of the Fund shares and returns
will fluctuate and investors may have a gain or loss when they redeem shares.
Distributed by First Fund Distributors, Inc.
================================================================================
MARKET & PERFORMANCE SUMMARY - 1997
I am pleased to report that the Boston Balanced Fund just completed an
outstanding year. Not only was the gain of 27.08% high in absolute terms, but
the return relative to other funds with similar guidelines and objectives was
among the best in the country. We were also quite pleased that, on January 8,
1998, The Boston Globe recognized Boston Balanced Fund quite favorably.
Specifically, the average balanced mutual fund tracked by Lipper Analytical
Services and Morningstar increased by about 19% in 1997. The incremental
relative return of our Fund of roughly eight percentage points was made possible
by the active decision through the year to retain an above-average (for a
balanced fund) allocation to common stocks of about 70% of total assets.
Moreover, in a year when most equity holdings of mutual funds trailed the
primary equity indices, the equity component of Boston Balanced Fund
outperformed those indices. The emphasis that was maintained in the financial
and health care industries aided results, as did general investor preference for
the higher-quality companies we have always had as the core equity holdings of
the Fund.
As enjoyable as it is to report such a superb year and as confident as we
may be in the long-term prospects of the Fund, nearly thirty years of experience
in the money management business has provided me with the perspective to know
that 1997's absolute and relative investment returns are not sustainable.
Indeed, the primary questions I
<PAGE>
policy for the Fund. As I have stated in every quarterly memorandum since then,
we have focused on the very favorable trend of gradual economic growth, low
inflation, rising corporate profits and political stability in making our
decisions. Stock valuations were moving up, but not without justification. For
stock prices to drop - and stay down - would require a deterioration in economic
and business conditions. The decision to retain an above-average exposure to
stocks has been a primary contributor to the Fund's excellent total return over
the past two years. Business conditions and stock price levels may have changed,
but the primary investment strategy question remains the same: Is it finally
time to decrease stock investments in anticipation of a prolonged period of
underperformance in comparison to returns provided by either bonds or money
market instruments?
As we enter 1998, we have not changed our view that a deterioration in
business conditions will be required to derail stock prices for an extended
period. So, what are the prospects? Most of the brief market corrections we have
had over the past two years were precipitated by fear that economic growth was
accelerating sufficiently to lead the Federal Reserve to raise interest rates.
Not only do higher interest rates adversely impact stock valuations, but the
risk of an eventual recession is enhanced if monetary policy stays restrictive
for too long. At this time, such an unfolding of events in the months ahead
appears very unlikely. Domestic economic growth is not so strong to induce the
Federal Reserve to raise interest rates, and developments in Asia and elsewhere
will serve to depress rather than support our economic growth.
We are far more concerned today that the uptrend in corporate profits
(which, in addition to interest rates, has been the other primary support for
stock prices) is at risk. Such risk comes primarily from the two sources
previously noted. First, corporate pricing flexibility will be restricted by
slower GDP growth, a strong currency and cheaper imports. More importantly, due
to record-low unemployment rates in many parts of the country, domestic
employment costs are beginning to accelerate. To the extent that pricing
flexibility does not exist and the extraordinary productivity gains of recent
years are not sustained, profit margins will moderate.
Even though our concern is greater, as of now we have yet to conclude that
the risk is sufficient to warrant moving to a lower stock allocation. If our
assessment of the risk changes due either to previously-stated or as yet
unforeseen factors, we will reduce the current stock allocation. Moreover,
within the stock segment of the Fund, we are increasing our efforts to assure
individual companies are in the best relative positions to sustain
profitability. This has involved reducing exposure to basic
industrial/manufacturing companies, and those that do not have a clear
competitive advantage in pricing specific products and services. As usual, the
complete list of holdings is outlined in the Schedule of Investments, which
follows.
On behalf of all of us at United States Trust, I thank you for your
continued confidence in our services and extend our best wishes for a healthy,
prosperous and peaceful 1998. Please feel free to contact either me or my
colleagues at (617) 726-7252 should you have any questions about our investment
views or your account.
Sincerely,
/s/
Domenic Colasacco
Portfolio Manager & President,
United States Trust Company of Boston
<PAGE>
BOSTON BALANCED FUND
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at December 31, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares COMMON STOCKS: 73.1% Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Communication Services: 3.1%
<S> <C> <C>
18,500 Ameritech Corp.......................................................... $ 1,489,250
24,000 BellSouth Corp.......................................................... 1,351,500
---------
2,840,750
---------
Consumer Cyclicals: 7.4%
30,000 Costco Companies, Inc.*................................................. 1,338,750
25,000 Ford Motor Company...................................................... 1,217,187
45,000 Gannett Company, Inc.................................................... 2,781,563
37,500 Leggett & Platt, Inc.................................................... 1,570,312
---------
6,907,812
---------
Consumer Products: 9.6%
50,000 American Greetings Corp., Class A....................................... 1,956,250
15,000 Anheuser-Busch Companies, Inc........................................... 660,000
5,000 Gillette Company........................................................ 502,187
25,000 Procter & Gamble Company................................................ 1,995,313
45,000 Sysco Corp.............................................................. 2,050,312
7,500 Walt Disney Company..................................................... 742,969
12,500 Wm. Wrigley, Jr. Company................................................ 994,531
-------
8,901,562
---------
Electronic Components: 0.3%
10,000 Applied Materials, Inc.................................................. 301,250
-------
Energy and Resources: 4.3%
10,500 Amoco Corp.............................................................. 893,812
12,000 Atlantic Richfield Company.............................................. 961,500
35,000 Exxon Corp.............................................................. 2,141,563
---------
3,996,875
---------
Finance: 16.2%
40,000 BankBoston Corp......................................................... 3,757,500
20,000 Cincinnati Financial Corp............................................... 2,815,000
24,000 Federal National Mortgage Association................................... 1,369,500
26,200 First Virginia Banks, Inc............................................... 1,354,212
17,500 NationsBank Corp........................................................ 1,064,219
40,000 T. Rowe Price Associates, Inc........................................... 2,515,000
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
SCHEDULE OF INVESTMENTS at December 31, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Finance, continued
10,000 United Asset Management Corp............................................ $ 244,375
20,000 Wachovia Corp........................................................... 1,622,500
5,000 Wilmington Trust Corp................................................... 311,875
-------
15,054,181
----------
Health Care: 11.2%
30,000 Becton, Dickinson and Company........................................... 1,500,000
27,500 Johnson & Johnson....................................................... 1,811,563
30,000 Medtronic, Inc.......................................................... 1,569,375
5,000 Merck & Company, Inc.................................................... 531,250
30,000 Pfizer Inc.............................................................. 2,236,875
45,000 Schering-Plough Corp.................................................... 2,795,625
---------
10,444,688
----------
Industrial Materials: 4.2%
15,000 PPG Industries, Inc..................................................... 856,875
25,000 Sealed Air Corp.*....................................................... 1,543,750
37,500 Sigma-Aldrich Corp...................................................... 1,490,625
---------
3,891,250
---------
Insurance: 0.8%
10,000 Chubb Corp.............................................................. 756,250
-------
Producer Products: 7.2%
35,000 Donaldson Company, Inc.................................................. 1,577,187
40,000 Emerson Electric Company................................................ 2,257,500
1,000 Honeywell, Inc.......................................................... 68,500
30,000 Illinois Tool Works, Inc................................................ 1,803,750
20,000 Johnson Controls, Inc................................................... 955,000
-------
6,661,937
---------
Publishing: 0.3%
10,000 McClatchy Newspapers, Inc............................................... 271,875
-------
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
SCHEDULE OF INVESTMENTS at December 31, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
Technology: 8.5%
15,000 Automatic Data Processing, Inc.......................................... $ 920,625
25,000 Hewlett-Packard Company................................................. 1,562,500
15,000 Intel Corp.............................................................. 1,053,750
25,000 Lucent Technologies, Inc................................................ 1,996,875
10,000 Microsoft Corp.*........................................................ 1,292,500
15,000 Xerox Corp.............................................................. 1,107,188
---------
7,933,438
---------
Total Common Stocks (cost $45,151,000).................................. 67,961,868
----------
Principal Amount CORPORATE BONDS: 10.6%
- ------------------------------------------------------------------------------------------------------------------------------------
$ 925,000 American Home Products, 7.90%, 2/15/2005................................ 1,009,726
300,000 Atlantic Richfield Company, 8.50%, 4/1/2012............................. 361,787
300,000 Chubb Capital Corp., 6.00%, 2/1/1998.................................... 300,025
300,000 Deere & Company, 8.79%, 8/6/1998........................................ 305,083
500,000 Eaton Corp., 8.90%, 8/15/2006........................................... 587,365
400,000 Equitable Resources, 8.55%, 9/1/2003.................................... 443,322
200,000 Ford Motor Credit Corp., 9.25%, 6/15/1998............................... 202,928
425,000 Ford Motor Credit Corp., 7.75%, 11/15/2002.............................. 450,094
300,000 Ford Motor Credit Corp., 6.625%, 6/30/2003.............................. 302,945
1,000,000 General Electric Capital Corp., 8.30%, 9/20/2009........................ 1,158,300
825,000 General Motors Acceptance Corp., 9.625%, 12/15/2001..................... 922,505
300,000 General Motors Acceptance Corp., 8.50%, 1/1/2003........................ 328,450
500,000 Honeywell, Inc., 7.00%, 3/15/2007....................................... 523,332
1,000,000 Leggett & Platt, Inc., 7.185%, 4/24/2002................................ 1,034,501
500,000 Leggett & Platt, Inc., 6.25%, 9/9/2008.................................. 491,088
300,000 Sears Roebuck and Company, 9.46%, 6/20/2000............................. 322,542
375,000 Sysco Corp., 6.50%, 6/15/2005........................................... 380,188
400,000 Unum Corp., 5.88%, 10/15/2003........................................... 391,850
300,000 Weyerhaeuser Company, 7.25%, 7/1/2013 ................................. 319,952
-------
Total Corporate Bonds (cost $9,709,416)................................. 9,835,983
---------
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
SCHEDULE OF INVESTMENTS at December 31, 1997 (Unaudited), Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Market Value
$ 600,000 FFCB, 6.20%, 11/30/2009................................................. $ 605,764
500,000 FHLB, 6.24%, 11/18/2002................................................. 499,450
875,000 FNMA Medium Term Note, 5.49%, 10/2/2003................................. 882,735
1,000,000 FNMA, 8.25%, 10/12/2004................................................. 1,031,883
2,000,000 U.S. Treasury Bond, 7.50%, 11/15/2016................................... 2,333,752
250,000 U.S. Treasury Note, 9.125%, 5/15/1999................................... 261,250
3,000,000 U.S. Treasury Note, 8.75%, 8/15/2000.................................... 3,220,314
3,500,000 U.S. Treasury Note, 8.00%, 5/15/2001.................................... 3,742,816
2,000,000 U.S. Treasury Note, 6.50%, 5/15/2005.................................... 2,085,626
---------
Total U.S. Government and Government Agency Obligations
(cost $14,402,267)...................................................... 14,663,590
----------
SHORT-TERM INVESTMENT: 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
136,924 SEI Daily Income Government Fund II (cost $136,924)..................... 136,924
-------
Total Investment in Securities (cost $69,399,607+): 99.6%............... 92,598,365
Other Assets less Liabilities: 0.4%..................................... 394,832
-------
Total Net Assets: 100.0% ............................................... $92,993,197
===========
<FN>
*Non-income producing security.
+ At December 31, 1997, the cost of securities for Federal tax purposes was the
same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation........................................... $23,355,450
Gross unrealized depreciation........................................... (156,692)
--------
Net unrealized appreciation.................................... $23,198,758
===========
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at December 31, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (cost $69,399,607) ................................ $92,598,365
Cash................................................................................... 9,937
Dividends and interest receivable...................................................... 487,827
Prepaid expenses and other assets...................................................... 11,781
------
Total assets .............................................................. 93,107,910
----------
LIABILITIES
Payables:
Advisory fees.................................................................... 61,592
Administration fee............................................................... 7,843
Fund shares redeemed............................................................. 25,000
Accrued expenses ...................................................................... 20,278
------
Total liabilities.......................................................... 114,713
-------
NET ASSETS .............................................................................. $92,993,197
===========
Net asset value, offering and redemption price per share ($92,993,197/909,113
shares outstanding; unlimited number of shares
authorized without par value) ......................................................... $102.29
=======
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $69,171,065
Undistributed net investment income.................................................... 125,415
Undistributed net realized gain on investments......................................... 497,959
Net unrealized appreciation on investments............................................. 23,198,758
----------
Net assets ...................................................................... $92,993,197
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - For the Six Months Ended December 31, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income
<S> <C>
Interest ........................................................................ $ 816,529
Dividends........................................................................ 484,095
-------
Total income .............................................................. 1,300,624
---------
Expenses
Advisory fees ................................................................... 330,726
Administration fee............................................................... 44,097
Fund accounting fees............................................................. 15,125
Custody fees..................................................................... 12,604
Audit fees....................................................................... 7,815
Trustee fees..................................................................... 5,547
Registration fees................................................................ 3,759
Transfer agent fees.............................................................. 2,521
Insurance........................................................................ 1,547
Legal fees....................................................................... 1,512
Reports to shareholders.......................................................... 1,512
Miscellaneous.................................................................... 1,512
-----
Total expenses............................................................. 428,277
Add: reimbursement to Advisor.............................................. 12,692
------
Net expenses............................................................... 440,969
-------
Net investment income ................................................... 859,655
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions .......................................... 1,179,287
Net change in unrealized appreciation on investments .................................. 7,635,718
---------
Net realized and unrealized gain on investments ................................. 8,815,005
---------
Net increase in net assets resulting from operations ...................... $ 9,674,660
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
December 31, 1997* June 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment income.................................................. $ 859,655 $ 1,556,244
Net realized gain from security transactions .......................... 1,179,287 1,222,746
Net change in unrealized appreciation on investments................... 7,635,718 13,242,577
--------- ----------
Net increase in net assets resulting from operations ............ 9,674,660 16,021,567
--------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income.................................................. (1,584,936) (1,387,106)
Net realized gain from security transactions........................... (1,549,116) -0-
---------- -
Net dividends and distributions to shareholders ................ (3,134,052) (1,387,106)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a)........................................... 4,419,116 5,628,009
--------- ---------
Total increase in net assets .................................... 10,959,724 20,262,470
NET ASSETS
Beginning of period ................................................... 82,033,473 61,771,003
---------- ----------
End of period (including undistributed net investment income
of $125,415 and $850,696, respectively).............................. $92,993,197 $82,033,473
=========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
Six Months Ended Year Ended
December 31, 1997* June 30, 1997
Shares Value Shares Value
Shares sold ......................................... 65,683 $ 6,538,797 161,142 $13,762,145
Shares issued in reinvestment of distribution........ 31,030 3,134,052 17,057 1,387,106
Shares redeemed...................................... (52,840) (5,253,733) (112,571) (9,521,242)
------- ---------- -------- ----------
Net increase ........................................ 43,873 $ 4,419,116 65,628 $ 5,628,009
====== =========== ====== ===========
*Unaudited.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year December 1, 1995*
Ended Ended through
December 31, 1997# June 30, 1997 June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ...................... $ 94.81 $77.25 $73.62
------- ------ ------
Income from investment operations:
Net investment income ............................... .94 1.90 1.00
Net realized and unrealized gain on investments ..... 10.07 17.43 2.78
----- ----- ----
Total from investment operations........................... 11.01 19.33 3.78
----- ----- ----
Less distributions:
From net investment income........................... (1.79) (1.77) (.15)
From net capital gains............................... (1.74) .00 .00
----- --- ---
Total distributions........................................ (3.53) (1.77) (.15)
----- ----- ----
Net asset value, end of period ............................ $102.29 $94.81 $77.25
======= ====== ======
Total return .............................................. 11.67% 25.40% 5.14%++
Ratios/supplemental data:
Net assets, end of period (millions)....................... $ 93.0 $ 82.0 $ 61.8
Ratio of expenses to average net assets:
Before expense reimbursement......................... 0.97%+ 1.02% 1.00%+
After expense reimbursement.......................... 1.00%+ 1.00% 1.00%+
Ratio of net investment income to average net assets:
Before expense reimbursement......................... 1.98%+ 2.24% 2.43%+
After expense reimbursement.......................... 1.95%+ 2.25% 2.43%+
Portfolio turnover rate ................................... 11.39% 30.78% 17.69%
Average commission rate paid per share..................... $ .0595 $.0575 $.0500
<FN>
*Commencement of operations.
#Unaudited.
+Annualized.
++Not annualized.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BOSTON BALANCED FUND
NOTES TO FINANCIAL STATEMENTS at December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Boston Balanced Fund (the "Fund") is a diversified series of shares of
beneficial interest of Professionally Managed Portfolios (the "Trust"), which is
registered under the Investment Company Act of 1940 (the "1940 Act") as an
open-end investment management company. The Fund began operations on December 1,
1995. The investment objective of the Fund is to seek income and long-term
capital growth through an actively managed portfolio of stocks, bonds, and money
market instruments. Prior to January 5, 1998, the Fund was known as the Boston
Managed Growth Fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sales price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid
price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith
by the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market
value. U.S. Government securities with less than 60 days remaining
to maturity when acquired by the Fund are valued on an amortized
cost basis. U.S. Government securities with more than 60 days
remaining to maturity are valued at the current market value (using
the mean between the bid and ask price) until the 60th day prior to
maturity, and are then valued at amortized cost based upon the value
on such date unless the Board determines during such 60-day period
that this amortized cost basis does not represent fair value.
B. Federal Income Taxes. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
C. Security Transactions, Investment Income and Distributions. As is
common in the industry, security transactions are accounted for on
the trade date. The cost of securities owned on realized
transactions are relieved on a first-in, first-out basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
<PAGE>
BOSTON BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the six months ended December 31, 1997, United States Trust Company of
Boston (the "Advisor") provided the Fund with investment management services
under an Investment Advisory Agreement. The Advisor furnished all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Advisor was entitled to a monthly fee at
the annual rate of 0.75% based upon the average daily net assets of the Fund.
For the six months ended December 31, 1997, the Fund incurred $330,726 in
Advisory fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to reduce fees payable to it by the Fund to the extent necessary to limit
the Fund's aggregate annual operating expenses to 1.00% of average net assets.
Any such reductions made by the Advisor in its fees or payments or reimbursement
of expenses which are the Fund's obligation may be subject to reimbursement by
the Fund within three years provided the Fund is able to effect such
reimbursement and remain in compliance with any applicable limitations. For the
six months ended December 31, 1997, the Advisor recouped $12,692 of such
expenses it had previously reimbursed to the Fund.
The Advisor, which is a Massachusetts-chartered banking and trust company,
acts as the Fund's Custodian and Transfer Agent under the Custody and Transfer
Agency Agreements with the Fund. For the six months ended December 31, 1997, the
Fund incurred $12,604 and $2,521 in Custody and Transfer Agency fees,
respectively.
Investment Company Administration Corporation (the "Administrator") acts
as the Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives an annual fee
equal to the greater of 0.10% of average net assets or $30,000.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, excluding
U.S. Government obligations and short-term investments, for the six months ended
December 31, 1997, were $10,455,642 and $5,684,573, respectively.
For the six months ended December 31, 1997, the cost of purchases and the
proceeds from sales of U.S. Government obligations, excluding short-term
securities, were $4,459,279 and $3,937,269, respectively.
<PAGE>
BOSTON BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
NOTE 5 - CAPITAL STOCK TRANSACTIONS
On August 19, 1997, the Board of Trustees authorized a 4-for-1 stock
split, payable January 14, 1998 to shareholders of record on January 9, 1998.
<PAGE>
Advisor, Custodian and Transfer Agent
United States Trust Company of Boston
40 Court Street
Boston, MA 02108
(617) 726-7250
o
Distributor
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
o
Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, CA 90071
o
Legal Counsel
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for the shareholders of the Fund and may not be
used as sales literature unless preceded or accompanied by a current
prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. Statements and other information herein are dated and
are subject to change.
