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ANNUAL
REPORT
1784 FUNDS (Logo)
[GRAPHIC OMITTED]
TO SHAREHOLDERS
MAY 31, 1996
<PAGE>
TABLE OF CONTENTS
=====================================================
Letter to Shareholders 1
Performance Highlights 2
Terms You Need To Know 4
Fund Objectives 5
Investment Adviser's Report 6
Management's Discussion
of Fund Performance 11
Financial Statements 27
Report of Independent Accountants 91
Notice to Shareholders 92
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THE 1784 FUNDS:
(ARROW HEAD) are not insured by the FDIC or any other governmental agency;
(ARROW HEAD) are not guaranteed by The First National Bank of Boston or any
of its affiliates;
(ARROW HEAD) are not deposits or other obligations of The First National Bank
of Boston or any of its affiliates;
(ARROW HEAD) involve investment risks, including possible loss of the
principal amount invested.
The First National Bank of Boston serves as investment adviser, custodian and
fund accountant for the 1784 Funds. The 1784 Funds are distributed by SEI
Financial Services Company, a party independent of The First National Bank of
Boston or any of its affiliates.
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1784 FUNDS (Logo)
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SOUND CHOICES. STRAIGHT TALK.
INVESTMENT MANAGEMENT STRENGTH.
<PAGE>
[GRAPHIC OMITTED]
ALLEN CROESSMANN ROBERT NESHER
MANAGING DIRECTOR PRESIDENT
1784 FUNDS
LETTER TO SHAREHOLDERS
================================================================================
THE YEAR DETAILED IN THIS ANNUAL REPORT--THE 1784 FUNDS' THIRD--
WAS LARGELY A VERY POSITIVE ONE FOR OUR INVESTORS. WE ARE PARTICULARLY PLEASED
TO NOTE THAT 11 OF OUR 13 FUNDS WERE RANKED IN THE TOP 50% OF THEIR PEER GROUPS
AS REPORTED BY LIPPER ANALYTICAL SERVICES, INC., A LEADING MUTUAL FUND RATING
SERVICE. WE'D LIKE TO NOTE PARTICULARLY STRONG PERFORMANCE FOR SEVERAL FUNDS:
(BULLET) THE 1784 INTERNATIONAL EQUITY FUND, WHICH RANKED 44TH OUT OF 293 FUNDS
IN THE LIPPER INTERNATIONAL FUNDS CATEGORY, PLACING IT IN THE TOP 15%;
AND
(BULLET) THE RHODE ISLAND TAX-EXEMPT INCOME FUND, WHICH RANKED 3RD OUT OF
67 FUNDS IN THE LIPPER OTHER STATES MUNICIPAL FUNDS CATEGORY, PLACING
IT IN THE TOP 5%; AND
(BULLET) THE 1784 TAX-FREE MONEY MARKET FUND, WHICH RANKED 8TH OUT OF 136
FUNDS IN THE IBC/DONOGHUE TAX-FREE GENERAL PURPOSE FUNDS CATEGORY,
PLACING IT IN THE TOP 6%.
YOU'LL FIND MORE COMPLETE INFORMATION ON ALL THE FUNDS IN THE MANAGEMENT'S
DISCUSSION SECTION OF THIS REPORT.
IN GENERAL, THE MANAGERS OF OUR EQUITY FUNDS CORRECTLY SHIFTED THEIR FOCUS AS
STRENGTH ROTATED FROM ONE INDUSTRY OR MARKET SECTOR TO ANOTHER DURING THE YEAR.
IN THE FIXED INCOME AREA, MOST FUND MANAGERS CORRECTLY LENGTHENED OR SHORTENED
MATURITIES IN RESPONSE TO THE "ON-AGAIN, OFF-AGAIN" ECONOMY AND THE UNCERTAINTY
IT CREATED ABOUT INTEREST RATES. WE'RE HAPPY TO REPORT THAT OUR SHAREHOLDERS
BENEFITED FROM THIS CAREFUL ATTENTION TO SHIFTING MARKETS AND THE OPPORTUNITIES
THEY PRESENTED.
AS ALWAYS WE ENCOURAGE YOU TO MEET REGULARLY WITH YOUR INVESTMENT COUNSELOR TO
ENSURE THAT YOUR INVESTMENTS ARE IN LINE WITH YOUR LONG-TERM GOALS.
IF YOU HAVE ANY QUESTIONS ON YOUR CURRENT INVESTMENTS OR ANY OF OUR SERVICES,
PLEASE FEEL FREE TO CALL YOUR INVESTMENT COUNSELOR OR 1-800-252-1784. AS ALWAYS,
WE THANK YOU FOR CHOOSING THE 1784 FUNDS TO MEET YOUR FINANCIAL OBJECTIVES.
/s/ ROBERT NESHER /s/ ALLEN CROESSMANN
Robert Nesher Allen Croessmann
President Managing Director, Investment Services
1784 Funds The First National Bank of Boston
1
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PERFORMANCE HIGHLIGHTS OF THE FUNDS
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FOR THE PERIOD JUNE 1, 1995 THROUGH MAY 31, 1996
<TABLE>
<CAPTION>
INCOME
TOTAL NET ASSETS TOTAL RETURN NAV SHARE PRICE YIELD DISTRIBUTIONS
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5-31-96 5-31-96 PER
(IN MILLIONS) 5-31-96 HIGH LOW 30-DAY 7-DAY SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
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1784 U.S. Treasury Money Market $ 79.0 5.16% $ 1.00 $ 1.00 $ 1.00 N/A 4.44% $ .05
1784 Tax-Free Money Market 549.6 3.55 1.00 1.00 1.00 N/A 3.18 .03
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BOND FUNDS
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1784 Short-Term Income $ 86.4 4.87% $ 9.93 $10.27 $ 9.93 5.84% N/A $ .60
1784 U.S. Government
Medium-Term Income 167.5 3.65 9.31 9.88 9.30 6.10 N/A .61
1784 Income 235.0 2.64 9.90 10.66 9.87 6.28 N/A .65
1784 Tax-Exempt
Medium-Term Income 196.8 4.31 9.99 10.44 9.94 4.87 N/A .51
1784 Connecticut
Tax-Exempt Income 81.4 4.20 10.17 10.63 10.11 4.91 N/A .53
1784 Massachusetts
Tax-Exempt Income 106.6 3.64 9.78 10.24 9.71 4.99 N/A .48
1784 Rhode Island
Tax-Exempt Income 37.9 4.65 10.06 10.45 9.96 5.18 N/A .53
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STOCK FUNDS
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1784 Asset Allocation $ 16.8 17.83% $12.31 $12.50 $10.93 N/A N/A $ .31
1784 Growth and Income 303.5 26.32 15.23 15.24 12.16 N/A N/A .11
1784 Growth 46.0 12.70* 11.27 11.37 10.00 N/A N/A .00
1784 International Equity 362.5 19.08 12.05 12.16 10.33 N/A N/A .27
</TABLE>
* TOTAL RETURN FOR THIS FUND IS CUMULATIVE SINCE INCEPTION (3/28/96).
PERFORMANCE DATA REPRESENT PAST RESULTS AND ARE NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. YIELD FLUCTUATES. YIELD REFLECTS THE PORTFOLIO'S EARNING POWER,
NET OF FUND EXPENSES. MONEY MARKET FUNDS SEEK TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE, BUT THERE IS NO ASSURANCE THAT THEY WILL BE ABLE TO
DO SO ON A CONTINUING BASIS. INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT.
2
<PAGE>
1784 FUNDS
TOTAL RETURN FOR THE FISCAL YEAR ENDED MAY 31, 1996
================================================================================
TOTAL RETURN FOR THE FISCAL YEAR ENDED MAY 31, 1996
PERCENT (%)
1784 FUNDS
(INCEPTION DATE)
U.S. TREASURY MONEY MARKET
(6-7-93) 5.16
TAX-FREE MONEY MARKET
(6-14-93) 3.55
SHORT-TERM INCOME
(7-1-94) 4.87
U.S. GOVERNMENT MEDIUM-TERM INCOME
(6-7-93) 3.65
INCOME
(7-1-94) 2.64
TAX-EXEMPT MEDIUM-TERM INCOME
(6-14-93) 4.31
CONNECTICUT TAX-EXEMPT INCOME
(8-1-94) 4.20
MASSACHUSETTS TAX-EXEMPT INCOME
(6-14-93) 3.64
RHODE ISLAND TAX-EXEMPT INCOME
(8-1-94) 4.65
ASSET ALLOCATION
(6-14-93) 17.83
GROWTH AND INOME
(6-7-93) 26.32
GROWTH*
(3-28-96) 12.70
INTERNATIONAL EQUITY
(1-3-95) 19.08
* TOTAL RETURN FOR THIS FUND IS CUMULATIVE SINCE INCEPTION (3/28/96).
3
<PAGE>
1784 FUNDS
TERMS YOU NEED TO KNOW
================================================================================
ADVISER is an organization employed by a mutual fund to give professional advice
on the fund's investments and asset management practices (also called the
investment adviser).
ASSETS are the investment holdings and cash owned by a mutual fund.
AVERAGE-WEIGHTED-MATURITY is an average of the maturity dates of the various
securities in a mutual fund based on the dollar value of those securities. It is
calculated by multiplying the market value of each portfolio security by the
time remaining to its maturity, adding these calculations and then dividing the
total by the market value of the portfolio.
CAPITAL APPRECIATION is the increase in the market value of a mutual fund's
securities, as reflected in the net asset value of the fund's shares. Capital
appreciation (or growth) is a specific long-term objective of many mutual funds.
DIVERSIFICATION is the practice of investing broadly across a number of
securities to reduce risk; a hallmark of mutual fund investing.
DURATION is a weighted average term-to-maturity of a mutual fund security's cash
flow.
EXPENSE RATIO is a fund's cost of doing business -- disclosed in the prospectus
- -- as a percent of its assets.
INCOME is the dividends, interest, and/or short-term capital gains paid to a
mutual fund's shareholders. Income is earned on a fund's investment portfolio
after deducting operating expenses.
INVESTMENT OBJECTIVE is the goal -- long-term capital growth or current income,
for example -- that an investor and mutual fund pursue together.
LIQUIDITY is the ability to redeem (sell back) all or part of your mutual fund
shares on any business day and receive the current value (which may be more or
less than the original cost).
MANAGEMENT FEE is the amount paid by a mutual fund to the investment adviser for
its services.
NET ASSET VALUE (NAV) is the market worth of one share of a mutual fund. This
figure is derived by taking a fund's total assets -- securities, cash and any
accrued earnings -- deducting liabilities, and dividing by the number of shares
outstanding.
PRINCIPAL is the basic amount of money you invest, not to be confused with
reinvested dividends or capital gains.
TOTAL RETURN is the change in value of an investment from the beginning to the
end of a period, assuming the reinvestment of all distributions. This is based
on a formula set by the Securities and Exchange Commission and described in the
fund's prospectus.
YIELD is the percentage rate at which a fund's portfolio earns income, based on
a formula set by the Securities and Exchange Commission and described in the
fund's prospectus.
4
<PAGE>
FUND OBJECTIVES
================================================================================
MONEY MARKET FUNDS
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(BULLET) 1784 U.S. TREASURY MONEY MARKET FUND
To preserve principal value and maintain a high degree of liquidity while
providing current income.
(BULLET) 1784 TAX-FREE MONEY MARKET FUND
To preserve principal value and maintain a high degree of liquidity while
providing current income exempt from Federal income taxes.
BOND FUNDS
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(BULLET) 1784 SHORT-TERM INCOME FUND
To maximize current income. Preservation of
capital is a secondary objective.
(BULLET) 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
To provide current income consistent with the preservation of capital.
(BULLET) 1784 INCOME FUND
To maximize current income. Preservation of
capital is a secondary objective.
(BULLET) 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
To provide current income, exempt from Federal income taxes, consistent with
the preservation of capital.
(BULLET) 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
To provide current income, exempt from both Federal and Connecticut personal
income taxes. Preservation of capital is a secondary objective.
(BULLET) 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
To provide current income, exempt from both Federal and Massachusetts
personal income taxes, consistent with the preservation of capital.
(BULLET) 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
To provide current income, exempt from both Federal and Rhode Island
personal income taxes. Preservation of capital is a secondary objective.
STOCK FUNDS
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(BULLET) 1784 ASSET ALLOCATION FUND
To achieve a favorable total rate of return
through current income and capital appreciation consistent with preservation
of capital, derived from investing in fixed income and equity securities.
(BULLET) 1784 GROWTH AND INCOME FUND
To provide long-term growth of capital with a secondary objective of income.
(BULLET) 1784 GROWTH FUND
To provide long-term growth of capital. Dividend income, if any, is
incidental to this objective.
(BULLET) 1784 INTERNATIONAL EQUITY FUND
To provide long-term growth of capital. Dividend income, if any, is a
consideration incidental to the Fund's investment objective.
5
<PAGE>
MAY 31, 1996 1784 FUNDS
INVESTMENT ADVISER'S REPORT
================================================================================
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EDWARD G. RILEY, JR.
CHIEF INVESTMENT OFFICER
In recent years, changes in interest rates have been the pivotal factor
affecting the performance of both the economy and the stock market. In the past
12 months, however, interest rate swings have had less impact on stock prices.
Instead, we witnessed the effect of enormous liquidity on the stock market, as
investors committed record amounts to equity mutual funds. In addition, it
became clear that the stock and bond markets, which had once seemed closely
linked, now react quite differently to news about the economy and interest
rates. Stocks appear to be on a "one-way" climb, regardless of the economic
headlines. At the same time, bond prices have been very volatile, with the
market reacting sharply to almost any economic news.
Over the fiscal year, that news has varied widely. Recently, the economic
sluggishness that was caused by a harsh winter has given way to a period of
rapid economic growth. In our view, however, the economy is not as strong as it
appears, and we expect to see signals of slower growth later this summer and in
the fall.
The most important reason for the slowdown will be a decline in consumer
spending, which accounts for two-thirds of all U.S.economic activity. The
economy benefited last year from a surge in mortgage refinancings on the part of
consumers, who responded to attractive interest rates. By lowering their monthly
payments, these consumers freed up cash for discretionary purchases. With recent
increases in mortgage rates, refinancing activity has declined 75% from 1995's
peaks. In addition, the 8% rate on 30-year home mortgages will have a negative
impact on home sales and the economic activity that goes along with them.
In some senses, however, slower economic growth is simply to be expected in
an economic recovery that has spanned six years. Any pent-up consumer demand has
already been satisfied. We are also seeing other indicators of a mature
recovery, including rising levels of consumer debt and bankruptcies. When these
trends are accompanied by job insecurity, as they are now, consumer spending is
likely to slow even more.
Fortunately, inflation is likely to remain low. While the abnormally cold
winter pushed up energy and food costs, core inflation rates, which do not
include these costs, have remained subdued at 2% to 3%. Although the second half
of 1996 could see some evidence of rising labor costs, slower economic growth
should help keep inflation well under control.
(CONTINUED)
6
<PAGE>
INVESTMENT ADVISER'S REPORT (CONTINUED)
================================================================================
MONEY MARKET REVIEW
- --------------------------------------------------------------------------------
The stop-and-start nature of economic activity during the past twelve months has
resulted in concern about the sustainability of 2.5% real economic growth. In
response to weak economic data, the Federal Reserve Board lowered interest rates
three times during the course of the fiscal year -- from 6.00% in June 1995 to
5.25% on May 31, 1996.
Note, however, that the last rate reduction occurred on January 31, 1996.
Improved economic news this spring has caused the Federal Reserve to hold off on
further rate reductions. As a result, short-term investors can still earn rates
in the 5.25% range, which compares favorably with rates available to bond
investors. Assuming that the economy continues to weaken as expected in 1996,
the Federal Reserve may be forced to lower rates toward year-end to forestall a
recession.
Because we anticipated the decline in short-term interest rates, our
strategy called for lengthening maturities in the 1784 money market funds. As a
result, both Funds performed well, and ended the year in the top 35% of their
Lipper peer groups. Additional performance information can be found in the
Management's Discussion section.
FEDERAL FUNDS RATE
MAY 31, 1995 - MAY 31, 1996
CHART
[GRAPHIC OMITTED]
7
<PAGE>
1784 FUNDS
================================================================================
BOND MARKET REVIEW
- --------------------------------------------------------------------------------
While low inflation is good news for all financial markets, it is particularly
welcome in the bond market. Over the past year or two, it has become evident
that the bond market reacts much faster and more dramatically than the Federal
Reserve to signs of inflation--even comparatively insignificant ones.
As a result, the bond market has been exceptionally volatile. Yields on the
30-year U.S. Treasury Bond have ranged from a low of 5.95% to a fiscal year-end
high of about 7%. Yields were at their lowest at the end of 1995 when it
appeared that the economy might be headed for a recession, and when it appeared
likely that a balanced budget agreement could be reached. They reached their
high point this spring as the economy bounced back from the difficult winter.
Keep in mind that bond yields and bond prices move in opposite directions:
that increasing yields reduce the market value of a bond, and vice versa.
Shortening the average maturity of a bond portfolio typically makes it less
sensitive to changes in interest rates. We had correctly anticipated both the
volatility and the slight increase in long-term interest rates, and positioned
our fixed income funds accordingly. As a result, most of these funds performed
well during the past year, with four funds finishing the year in the top 35% of
their Lipper peer groups, and with one fund, the 1784 Rhode Island Tax-Exempt
Income Fund, in the top 5% of its Lipper peer group. Additional performance
information can be found in the Management's Discussion section.
The weakening U.S. economy and low inflation, coupled with lower interest
rates overseas, mean that U.S. interest rates should be more stable, and perhaps
lower, in the coming months--good news for bond investors. Of course, an
unforeseen gain in economic activity or a new economic stimulus program before
the election could raise inflation fears. As we have seen, the bond market will
react sharply and negatively should that occur.
30-YEAR TREASURY BOND
MAY 31, 1995 - MAY 31, 1996
CHART
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(CONTINUED)
8
<PAGE>
INVESTMENT ADVISER'S REPORT (CONTINUED)
================================================================================
STOCK MARKET REVIEW
- --------------------------------------------------------------------------------
Although long-term interest rates remain about where they were a year ago, the
stock market--as measured by the S&P 500 Index--has increased 28.43%.
Rather than responding to interest rate movements, a major force propelling
the bull market of recent years, stocks have risen recently in response to
unprecedented liquidity. Consumers focusing on retirement have invested
tremendous amounts in equity mutual funds over the past twelve months. Inflows
to these funds are averaging $20 billion to $25 billion per month. Investors
committed nearly $125 billion to equity mutual funds in the first five months of
1996 compared with $128 billion for all of 1995.
Although the general equity market trend was upward, the best-performing
categories changed according to perceived levels of economic strength. When it
appeared that the economy was strong, cyclical industries such as steel,
aluminum, paper and chemicals did well. When the economy showed signs of
weakness, investment managers moved into "defensive" industries--those that
typically do well in times of slower growth, such as health care, non-durable
goods, soft drinks and food. For example, health care and pharmaceuticals were
among the strongest performers against 1995's weak economic backdrop, while
stocks of retailers and durable goods manufacturers have done well as the
economy improved this spring. By jumping from one industry to another in
response to economic news, mutual fund managers caused an ongoing "rotation" in
the market, with stocks in some industries soaring and stocks in others
declining.
While we correctly anticipated this market rotation, we did not foresee the
difficulties that awaited the technology sector at the end of 1995. If we had,
the one-year results recorded by the 1784 Growth and Income Fund would have been
even stronger than its actual 26.32% total return. The Fund's significant
exposure to this industry helped it outperform many of its peers early in the
fiscal year, but when high-tech stocks declined in the fourth quarter of
S&P 500 INDEX
MAY 31, 1995 - MAY 31, 1996
CHART
[GRAPHIC OMITTED]
9
<PAGE>
1784 FUNDS
================================================================================
1995, the Fund's returns declined as well. With the sector regaining strength
this spring, the Fund ended the year outperforming its Lipper peer-group
average. Additional performance information can be found in the Management's
Discussion section.
Also notable among our funds is the 1784 International Equity Fund, which
ended the year in the top 15% of its Lipper peer group. The Fund offers a well
diversified portfolio and the opportunity to participate in some of the fastest
growing international markets. Research shows that a fund of this type, when
included in a portfolio containing other types of investments, can help to
reduce volatility as it increases returns.
In the short-term, we believe that the stock market will largely maintain
the status quo - although we do have some concerns about the increasing level of
speculation and a steep rise in initial public offerings, both of which
typically signal potential market downturns. Over the long-term, however,
evidence of disinflation, the growing popularity of 401(k) plans and an aging
population should all help support stock prices.
/s/ EDWARD G. RILEY, JR.
Edward G. Riley, Jr.
Chief Investment Officer
The First National Bank of Boston
10
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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THE 1784 U.S. TREASURY MONEY MARKET FUND
The objective of the 1784 U.S. Treasury Money Market Fund is to preserve
principal value and maintain a high degree of liquidity while providing current
income. As of May 31, 1996, the Fund had grown to $79.0 million in assets.
For the year ended May 31, 1996, the Fund had a total return of 5.16%,
compared with 5.07% for the IBC/Donoghue U.S. Government & Agencies Average, and
5.02% for the Lipper U.S. Treasury Money Market Funds Average. Based on total
return, the Fund ranked among the top 30% (27 out of 92) of the Lipper U.S.
Treasury Money Market Funds for the period June 1, 1995 to May 31, 1996. The
7-day yield as of May 31, 1996, was 4.44%. The Fund's return and resulting
ranking are net of waiver of certain expenses. (See Financial Highlights).
On December 8, 1995, the Fund's `AAAm' rating was again confirmed by
Standard & Poor's. The rating is based on an analysis of the Fund's credit
quality, market price exposure and management. The rating signifies that in the
opinion of Standard & Poor's, the Fund offers excellent safety of investment
principal and superior capacity to maintain a $1.00 per share net asset value at
all times. The Fund attempts to maintain these characteristics through
conservative investment practices and strict internal controls. The Fund is
reviewed on a weekly basis by Standard & Poor's.
The Fund invests primarily in U.S. Government agency securities and U.S.
Treasury obligations. The most important factor influencing the Fund's
performance in the past fiscal year was the reduction of interest rates by the
Federal Reserve Board in its effort to forestall economic recession. By the end
of the year, the Federal Funds rate had been lowered three times, from 6.00% in
June 1995 to 5.25% on May 31, 1996. The Fund anticipated these reductions and
extended maturities when possible.
The Fund's average-weighted-maturity,
as of May 31, 1996, 50 days, remains shorter than similar funds measured by
IBC/Donoghue Money Fund Averages. As current holdings mature, the Fund will be
managed with the goal of maintaining its `AAAm' rating.
1784 U.S. Treasury Money Market Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 U.S. TREASURY MONEY MARKET FUND VERSUS THE
IBC/DONOGHUE U.S. GOVERNMENT & AGENCIES AVERAGE AND THE
LIPPER U.S. TREASURY MONEY MARKET FUNDS AVERAGE
- -----------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(6/7/93) 4.22%
- -----------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 5.16%
- -----------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 U.S. TREASURY MONEY MARKET FUND $10,000 $10,248 $10,741 $11,295
IBC/DONOGHUE U.S. GOV'T. &
AGENCIES AVERAGE $10,000 $10,250 $10,726 $11,270
LIPPER U.S. TREASURY MONEY MARKET
FUNDS AVERAGE $10,000 $10,248 $10,719 $11,257
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
11
<PAGE>
1784 FUNDS
================================================================================
THE 1784 TAX-FREE MONEY MARKET FUND
The 1784 Tax-Free Money Market Fund's objective is to preserve principal value
and maintain a high degree of liquidity while providing current income exempt
from Federal income taxes. Since inception in June 1993, the Fund has grown to
a total of $549.6 million in assets.
For the year ended May 31, 1996, the Fund had a total return of 3.55%,
compared with 3.16% for the IBC/Donoghue Stockbroker & General Purpose Tax-Free
Average, and 3.14% for the Lipper Tax-Free Money Market Funds Average. Based on
this return, the Fund was ranked in the top 6% (8th out of 136) within the
IBC/Donoghue Tax-Free General Purpose Funds category for the period of June 1,
1995 to May 31, 1996. It also places the Fund among the top 8% (10 out of 131)
of the Lipper Tax-Free Money Market Funds for the period June 1, 1995 to May 31,
1996. The 7-day yield as of May 31, 1996, was 3.18%. The Fund's return and
resulting ranking are net of waiver of management fees and certain expenses.
(See Financial Highlights).
The Fund's strong performance can also be traced to the relatively longer
average weighted maturity of the Fund (75 days on May 31, 1996) compared to
similar funds (52 days on May 31, 1996), and a strategy that includes purchasing
and holding securities of low-tax and non-tax states, and in some cases,
securities that are subject to income tax.
The Fund is an actively managed national portfolio of investment grade money
market securities. The assets of the Fund are diversified among general
obligation securities and those issued to finance hospitals, education, housing,
transportation, utilities, industrial development and other municipal purposes.
1784 Tax-Free Money Market Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 TAX-FREE MONEY MARKET FUND VERSUS THE
IBC/DONOGHUE STOCKBROKER & GENERAL PURPOSE TAX-FREE AVERAGE
AND THE LIPPER TAX-FREE MONEY MARKET FUNDS AVERAGE
- ------------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(6/14/93) 3.09%
- ------------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 3.55%
- ------------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 TAX-FREE MONEY MARKET FUND $10,000 $10,221 $10,557 $10,932
IBC/DONOGHUE STOCKBROKER &
G.P. TAX-FREE AVG. $10,000 $10,176 $10,476 $10,807
LIPPER TAX-FREE MONEY MARKET
FUNDS AVERAGE $10,000 $10,177 $10,477 $10,806
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(CONTINUED)
12
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
THE 1784 SHORT-TERM INCOME FUND
The objective of the 1784 Short-Term Income Fund is to maximize current income.
Preservation of capital is a secondary objective.
Since its inception in July 1994, the Fund has grown to a total of $86.4
million in assets. For the year ended May 31, 1996, the Fund had a total return
of 4.87%, compared with 5.01% for the Lehman Brothers Mutual Fund 1- 5 Year
Corporate Government Index, and 4.92% for the Lipper Short Investment-Grade Debt
Funds Average. Based on total return, the Fund ranked among the top half (46 out
of 92) of the Lipper Short Investment-Grade Debt Funds for the period June 1,
1995 to May 31, 1996. The Fund's return and resulting ranking are net of waiver
of management fees and certain expenses. (See Financial Highlights).
The Fund's performance can be attributed primarily to the Fund's
average-weighted- maturity and duration, which were slightly longer than the
average for the Lehman Brothers index. While this strategy benefited the Fund
during the first eight months of the period, it had a negative impact on
performance from February through April, when interest rates increased.
All bonds currently held by the Fund are investment grade and on May 31,
1996, 36% of these bonds were rated AA or higher by either Moody's or Standard &
Poor's. The assets of the Fund are diversified on a quality basis and among
government, corporate, asset-backed and taxable municipal securities. On May 31,
1996, the average-weighted- maturity of the portfolio was approximately 2.7
years, and the Fund had a duration of 1.7 years.
1784 Short-Term Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 SHORT-TERM INCOME FUND VERSUS THE LEHMAN BROTHERS
MUTUAL FUND 1-5 YEAR CORP./GOV'T. BOND INDEX AND THE LIPPER SHORT
INVESTMENT-GRADE DEBT FUNDS AVERAGE
- --------------------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(7/1/94) 6.06%
- ------------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 4.87%
- ------------------------------------------------
CHART
[GRAPHIC OMITTED]
7/31/94 5/95 5/96
1784 SHORT-TERM INCOME FUND $10,000 $10,601 $11,118
LEHMAN MUTUAL FUND 1-5 YR.
CORP./GOV'T. BOND INDEX $10,000 $10,700 $11,236
LIPPER SHORT INVESTMENT-GRADE
DEBT FUNDS AVG. $10,000 $10,541 $11,060
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
13
<PAGE>
1784 FUNDS
================================================================================
THE 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
The objective of the 1784 U.S. Government Medium-Term Income Fund is current
income consistent with preservation of capital. The Fund is an actively managed
portfolio of U.S. Treasury and agency short- to intermediate-term securities.
Since its inception in June 1993, the Fund has grown to a total of $167.5
million in assets. For the year ended May 31, 1996, the Fund had a total return
of 3.65% compared with 4.53% for the Lehman Brothers Intermediate Government
Bond Index, and 3.25% for the Lipper Intermediate Term U.S. Government Funds
Average. Based on total return, the Fund ranked among the top 35% (38 out of
114) of the Lipper Intermediate U.S. Government Funds for the period June 1,
1995 to May 31, 1996. The Fund's return and resulting ranking are net of waiver
of management fees and certain expenses. (See Financial Highlights).
The Fund's performance can be attributed to several factors, including a
focus on credit quality; a relatively longer average-weighted-maturity and
duration than similar funds, which helped performance during the first half of
the fiscal year; and a reduction in the Fund's position in discount mortgages to
realize gains.
The assets of the Fund are diversified on a sector basis and among Treasury,
agency and mortgage securities. The Fund's securities are concentrated in the
2-year to 10-year maturity range. On May 31, 1996, the average-weighted-maturity
of the portfolio was approximately 7.7
1784 U.S. Government
Medium-Term Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND VERSUS
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX AND
THE LIPPER INTERMEDIATE U.S. GOVERNMENT FUNDS AVERAGE
- ----------------------------------------------
Annualized Total Return
From Inception
(6/7/93) 3.88%
- ----------------------------------------------
Annual Total Return
(6/1/95-5/31/96) 3.65%
- ----------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 U.S. GOV'T. MEDIUM-TERM
INCOME FUND $10,000 $9,787 $10,647 $11,035
LEHMAN INTERMEDIATE GOV'T.
BOND INDEX $10,000 $9,980 $10,887 $11,380
LIPPER INTERMEDIATE U.S. GOV'T.
FUNDS AVERAGE $10,000 $9,836 $10,727 $11,076
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
years, and the Fund had a duration of 5.1 years.
During the past year, as it appeared that economic growth was beginning to
slow, we extended the Fund's maturity in anticipation of an overall decline in
interest rates. In addition, we increased the Fund's investment in current
coupon mortgages. Both moves helped to generate a higher level of income. We
will continue to increase maturities and income as opportunities arise.
(CONTINUED)
14
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
THE 1784 INCOME FUND
The objective of the 1784 Income Fund is to maximize current income.
Preservation of capital is a secondary objective. The Fund is an actively
managed portfolio of investment-grade intermediate- to long-term securities.
Since its inception in July 1994, the Fund has grown to a total of $235.0
million in assets. For the year ended May 31, 1996, the Fund had a total return
of 2.64%, compared with 4.38% for the Lehman Brothers Aggregate Bond Index, and
3.43% for the Lipper Corporate Debt A-Rated Funds Average. The Fund's return is
net of waiver of management fees and certain expenses. (See Financial
Highlights).
The Fund's underperformance can be attributed in large measure to its focus
on credit quality--the average quality of the Fund's portfolio is AA+.
Year-to-date, higher quality issues have underperformed non-investment grade
securities.
The assets of the Fund are diversified among government, corporate,
asset-backed and taxable municipal securities. On May 31, 1996 the
average-weighted-maturity of the portfolio was approximately 14 years with a
duration of approximately 6 years.
During the past year, we maintained an average-weighted-maturity that was
longer than that of the Lehman Brothers index in the belief that the economic
weakness of fourth quarter 1995 would extend into 1996. As a result, the Fund
was more sensitive to changing interest rates during the past five months. We
believe that interest rates will remain in a narrow range over the next 12
months and that the higher income generated by investing in longer- maturity
bonds will benefit investors.
1784 Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 INCOME FUND VERSUS THE LEHMAN BROTHERS AGGREGATE
BOND INDEX AND THE LIPPER CORPORATE DEBT A-RATED FUNDS AVERAGE
- ----------------------------------------------
Annualized Total Return
From Inception
(7/1/94) 6.89%
- ----------------------------------------------
Annual Total Return
(6/1/95-5/31/96) 2.64%
- ----------------------------------------------
CHART
[GRAPHIC OMITTED]
7/31/94 5/95 5/96
1784 INCOME FUND $10,000 $10,934 $11,222
LEHMAN AGGREGATE BOND INDEX $10,000 $10,955 $11,435
LIPPER CORPORATE DEBT A-RATED
FUNDS AVERAGE $10,000 $10,895 $11,269
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
15
<PAGE>
1784 FUNDS
================================================================================
THE 1784 TAX-EXEMPT MEDIUM TERM INCOME FUND
The objective of the 1784 Tax-Exempt Medium-Term Income Fund is to provide
current income exempt from Federal income taxes consistent with the preservation
of capital. On May 31, 1996, the Fund's assets totaled $196.8 million.
Total return for the year ended May 31, 1996 was 4.31%, compared with 3.86%
for the Lipper Intermediate Municipal Funds Average, and the Fund ranked in the
top 30% (36 of 134) of the Lipper Intermediate Municipal Funds. The Fund lagged
the Lehman Brothers 7-Year Municipal Bond Index's 4.64% total return, however,
which we attribute to the Fund's emphasis on maximizing current income and
optimizing total return as reflected by the Fund's slightly higher relative
average-weighted-maturity and effective duration. The Fund's return and
resulting ranking are net of waiver of management fees and certain expenses.
(See Financial Highlights).
The Fund purchases tax-exempt municipal bonds and notes with maturities
generally 10 years or less and predominantly in the top three rating categories
(AAA, AA or A) by either Moody's or Standard & Poor's. In general, no single
investment will exceed 5% of the total portfolio at cost, while no single issuer
will exceed 10% of the total portfolio at cost, unless the investment is an
obligation of the U.S. Government and/or its direct agencies. The Fund achieves
incremental income, yield, and price stability by emphasizing both geographical
and sector diversity.
1784 Tax-Exempt
Medium-Term Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND VERSUS
THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX
AND THE LIPPER INTERMEDIATE MUNICIPAL FUNDS AVERAGE
- ----------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(6/14/93) 5.33%
- ----------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 4.31%
- ----------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 TAX-EXEMPT MEDIUM-TERM
INCOME FUND $10,000 $10,212 $10,986 $11,459
LEHMAN 7-YEAR MUNICIPAL
BOND INDEX $10,000 $10,144 $10,972 $11,481
LIPPER INTERMEDIATE MUNICIPAL
FUNDS AVERAGE $10,000 $10,140 $10,843 $11,261
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
During the fiscal year, the Fund emphasized current income over total
return, an approach that is reflected in the Fund's slightly higher
average-weighted-maturity and duration as compared with the Lehman Brothers
index average. We believe that municipal bonds represent excellent value and
will materially outperform U.S. Treasury securities. Scarce dealer inventories,
a lower volume of new issues, increasing investor demand, and diminished concern
about the "flat-tax" issue should result in higher prices for tax-exempt bonds.
Currently, the Fund is also positioned to benefit from decreasing interest
rates--although current income remains our priority.
(CONTINUED)
16
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
THE 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
The objective of the 1784 Connecticut Tax-Exempt Income Fund is current income
exempt from Federal and Connecticut personal income taxes. Preservation of
capital is a secondary objective. Since its inception in August 1994, the Fund
has grown to more than $81.4 million in assets.
Total return for the year ended May 31, 1996 was 4.20%, compared with 3.60%
for the Lipper Other States Intermediate Municipal Debt Mutual Fund Average, and
the Fund ranked in the top 20% (12 out of 67) of the Lipper Other States
Intermediate Municipal Funds. The Fund lagged the Lehman Brothers 7-Year
Municipal Bond Index's 4.64% total return, as well as the Lehman Brothers
10-year Municipal Bond Index's 4.73% total return for the same period. We
attribute this performance to the Fund's emphasis on maximizing current income
and optimizing total return as reflected by the Fund's slightly higher relative
average-weighted-maturity and effective duration. The Fund's return and
resulting ranking are net of waiver of management fees and certain expenses.
(See Financial Highlights).
The Fund purchases tax-exempt municipal bonds and notes with maturities
generally 10 years or less and predominantly in the top three rating categories
(AAA, AA or A) by either Moody's or Standard & Poor's. In general, no single
investment will exceed 5% of the total portfolio at cost, while no single issuer
will exceed 10% of the total portfolio at cost, unless the investment is an
obligation of the U.S. Government and/or its direct agencies.
The Fund achieves incremental income, yield and price stability by emphasizing
both geographical and sector diversity.
During the fiscal year, the Fund emphasized current income over total
return, an approach that is reflected in the Fund's slightly higher
average-weighted-maturity and duration as
1784 Connecticut Tax-Exempt Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 CONNECTICUT TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN
BROTHERS 10-YEAR MUNICIPAL BOND INDEX, THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX AND THE LIPPER OTHER STATES INTERMEDIATE MUNI FUNDS AVERAGE
- ------------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(8/1/94) 6.37%
- ------------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 4.20%
- ------------------------------------------------
CHART
[GRAPHIC OMITTED]
8/31/94 5/95 5/96
1784 CONNECTICUT TAX-EXEMPT
INCOME FUND $10,000 $10,664 $11,111
LEHMAN 10-YEAR MUNICIPAL
BOND INDEX* $10,000 $10,722 $11,230
LEHMAN 7-YEAR MUNICIPAL
BOND INDEX $10,000 $10,629 $11,123
LIPPER OTHER STATES MUNI
FUNDS AVERAGE $10,000 $10,541 $10,920
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* Going forward, the 1784 Connecticut Tax-Exempt Income Fund will no longer
track performance against the Lehman 10-Year Municipal Bond Index. In the
Investment Adviser's opinion the Lehman 7-Year Municipal Bond Index is a more
appropriate benchmark due to the shorter expected average-weighted-maturity.
17
<PAGE>
1784 FUNDS
================================================================================
compared with the Lehman Brothers Index. We believe that municipal bonds
represent excellent value and will materially outperform U.S. Treasury
securities. Scarce dealer inventories, a lower volume of new issues, increasing
investor demand, and diminished concern about the "flat-tax" issue should result
in higher prices for tax-exempt bonds. Currently, the Fund is also positioned to
benefit from decreasing interest rates--although current income remains our
priority.
THE 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
The objective of the 1784 Massachusetts Tax-Exempt Income Fund is current income
consistent with the preservation of capital, exempt from both Federal and
Massachusetts personal income taxes. The Fund is an actively managed,
state-specific portfolio of investment-grade, intermediate- to longer-term
securities.
Since its inception in June 1993, the Fund has grown to a total of $106.6
million in assets. For the year ended May 31, 1996, the Fund had a total return
of 3.64%, compared with 4.73% for the Lehman Brothers 10-year Municipal Bond
Index and 3.60% for the Lipper MA Intermediate Municipal Funds Average. The
Fund's return is net of waiver of management fees and certain expenses. (See
Financial Highlights).
Important factors affecting the Fund's performance included the investment
in premium coupon bonds to increase income levels and a focus on high credit
quality. In addition, the Fund had a relatively longer average-weighted-maturity
and duration than similar funds--9.1 years and 6.8 years respectively.
As of May 31, 1996, 49.1% of the bonds in the Fund were rated AA or higher
by either Moody's or Standard & Poor's. The assets of the Fund are diversified
among general obligations and revenue bonds issued to finance hospitals,
education, housing, transportation, utilities, industrial development and
municipalities.
During the past year, the Fund was positioned in expectation of a continued
decline
(CONTINUED)
18
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
1784 Massachusetts Tax-Exempt Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND VERSUS THE
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX AND THE
LIPPER MASSACHUSETTS INTERMEDIATE MUNICIPAL FUNDS AVERAGE
- -----------------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION 4.27%
(6/14/93)
- -----------------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 3.64%
- -----------------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 MASSACHUSETTS TAX-EXEMPT
INCOME FUND $10,000 $10,126 $10,734 $11,125
LEHMAN 10-YEAR MUNICIPAL
BOND INDEX $10,000 $10,147 $11,044 $11,554
LIPPER MASSACHUSETTS INTER.
MUNICIPAL AVERAGE $10,000 $10,141 $10,765 $11,153
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
in interest rates. Consequently, the Fund was not defensively structured to
protect against principal fluctuations when interest rates increased during
1996. Consistent with our investment outlook, cash reserves were kept relatively
low in anticipation of market strength. We will continue to focus on improving
the Fund's current dividend yield and increasing holdings of high-quality,
tax-exempt securities as market conditions warrant.
THE 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
The objective of the 1784 Rhode Island Tax-Exempt Income Fund is to provide
current income exempt from Federal and Rhode Island personal income taxes.
Preservation of capital is a secondary objective. Since its inception in August
1994, the Fund has grown to more than $37.9 million in assets.
Total return for the year ended May 31, 1996 was 4.65%, compared with 3.60%
for the Lipper Other States Intermediate Municipal Debt Mutual Fund Average. The
Fund ranked third out of 67 in the Lipper Other States Municipal Funds peer
group. The Fund outperformed the Lehman Brothers 7-Year Municipal Bond Index's
4.64% total return and underperformed the Lehman Brothers 10-year Municipal Bond
Index's 4.73% total return for the same period. We attribute this to the Fund's
emphasis on maximizing current income and optimizing total return as reflected
by the Fund's slightly higher relative average-weighted-maturity and effective
duration. The Fund's return and resulting ranking are net of waiver of
management fees and certain expenses. (See Financial Highlights).
The Fund purchases tax-exempt municipal bonds and notes with maturities
generally 10 years or less and predominantly weighted in the top three rating
categories (AAA, AA or A) by either Moody's or Standard & Poor's. In general, no
single investment will exceed 5% of the total portfolio at cost, while no single
issuer will exceed 10% of the total portfolio at cost,
19
<PAGE>
1784 FUNDS
================================================================================
1784 Rhode Island Tax-Exempt Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE 1784 RHODE ISLAND TAX-EXEMPT
INCOME FUND VERSUS THE LEHMAN
BROTHERS 10-YEAR MUNICIPAL BOND INDEX, THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX, AND THE LIPPER OTHER STATES INTERMEDIATE MUNI FUNDS AVERAGE
- ---------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION 5.88%
(8/1/94)
- ---------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 4.65%
- ---------------------------------------------
CHART
[GRAPHIC OMITTED]
8/31/94 5/95 5/96
1784 RHODE ISLAND TAX-EXEMPT
INCOME FUND $10,000 $10,552 $11,042
LEHMAN 10-YEAR MUNICIPAL
BOND INDEX* $10,000 $10,722 $11,230
LEHMAN 7-YEAR MUNICIPAL
BOND INDEX $10,000 $10,629 $11,123
LIPPER OTHER STATES MUNI
FUNDS AVERAGE $10,000 $10,541 $10,920
LIPPER OTHER STATES MUNI FUNDS AVERAGE
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* Going forward, the 1784 Rhode Island Tax-Exempt Income Fund will no longer
track performance against the Lehman 10-Year Municipal Bond Index. In the
Investment Adviser's opinion the Lehman 7-Year Municipal Bond Index is a more
appropriate benchmark due to the shorter expected average-weighted-maturity.
unless the investment is an obligation of the U.S. Government and/or its direct
agencies. The Fund achieves incremental income, yield, and price stability by
emphasizing both geographical and sector diversity.
During the fiscal year, the Fund emphasized current income over total
return, an approach that is reflected in the Fund's slightly higher
average-weighted-maturity and duration as compared with the Lehman Brothers
Index. We believe that municipal bonds represent excellent value and will
materially outperform U.S. Treasury securities. Scarce dealer inventories, a
lower volume of new issues, increasing investor demand, and diminished concern
about the "flat-tax" issue should result in higher prices for tax-exempt bonds.
Currently, the Fund is also positioned to benefit from decreasing interest
rates--although current income remains our priority.
(CONTINUED)
20
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
THE 1784 ASSET ALLOCATION FUND
The objective of the 1784 Asset Allocation Fund is to achieve a favorable total
rate of return through current income and capital appreciation consistent with
preservation of capital, derived from investing in fixed income and equity
securities.
During the past 12 months, the Fund's assets have increased from $8.6
million to $16.8 million. For the year ended May 31, 1996, the Fund had a total
return of 17.83%, compared with 28.43% for the S&P 500 Composite Index, 4.38%
for the Lehman Brothers Aggregate Bond Index, and 18.37% for the Lipper Flexible
Portfolio Funds Average, placing it in the top half (84 out of 176) of the
Lipper Flexible Portfolio Funds for the period from June 1, 1995 to May 31,
1996. The Fund's return and resulting ranking are net of waiver of management
fees and certain expenses. (See Financial Highlights).
On May 31, 1996, the Fund's allocation was 54% common stocks, 36% bonds and
10% short-term money market instruments. This represents little change since the
end of the prior fiscal year despite considerable activity during the 12-month
period. The Fund increased its investment in bonds, particularly in the second
half of 1995, in response to the lowering of interest rates by the Federal
Reserve and a weakening economy. This strategy improved overall returns
somewhat, but much of the gain was lost as the economy strengthened and interest
rates rose in the first half of 1996.
Last year and 1996 to date have witnessed unusually strong stock market
performance. With a total return of 33% for the fiscal year, the Fund's equity
holdings exceeded the total return of the S&P 500 by almost five percentage
points. Our asset allocation strategy remained conservative throughout the year.
We continued to focus new equity investment on predictable growth companies,
with a special focus on health care. Funds were also channeled into the
financial sector, a beneficiary of consolidation and declining interest rates.
Technology investments were increased gradually to a full market weighting after
the dramatic group correction in the second half
1784 Asset Allocation Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 ASSET ALLOCATION FUND VERSUS THE S &P 500
COMPOSITE INDEX, THE LEHMAN AGGREGATE BOND INDEX
AND THE LIPPER FLEXIBLE PORTFOLIO FUNDS AVERAGE
- ----------------------------------------------
Annualized Total Return
From Inception
(6/14/93) 10.70%
- ----------------------------------------------
Annual Total Return
(6/1/95-5/31/96) 17.83%
- ----------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 ASSET ALLOCATION FUND $10,000 $10,016 $11,503 $13,554
S&P 500 COMPOSITE INDEX $10,000 $10,396 $12,492 $16,044
LEHMAN AGGREGATE BOND INDEX $10,000 $ 9,890 $11,028 $11,511
LIPPER FLEXIBLE PORTFOLIO
FUNDS AVERAGE $10,000 $10,293 $11,541 $13,661
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
21
<PAGE>
1784 FUNDS
================================================================================
of 1995. Energy and energy service holdings also performed well as world crude
prices rose sharply in early 1996.
While the Fund has generally focused on large capitalization growth
companies, we have recently added mid-capitalization growth stocks. The Fund's
33 stock holdings are broadly diversified across all major S&P sectors.
International stocks represent 12% of total equity values.
Current asset allocations reflect a cautious attitude toward the financial
markets in the near term. The fixed income portfolio of the Fund is of high
quality and moderate duration. We anticipate that the economy will slow
throughout the remainder of this year, with little inflation, which should
improve the return of our fixed income holdings. Our equity position emphasizes
defensive growth and we are maintaining modest cash reserves.
THE 1784 GROWTH AND INCOME FUND
The objective of the 1784 Growth and Income Fund is long-term growth of capital
with a secondary objective of income.
During the past 12 months, the Fund's assets have increased to $303.5
million. For the year ended May 31, 1996, the Fund had an annualized total
return of 26.32%, compared with 28.43% for the S&P 500 Composite Index, and
25.24% for the Lipper Growth and Income Average. Based on total return, the Fund
ranked among the top 40% (193 out of 483) of the Lipper Growth & Income Funds
for the period June 1, 1995 to May 31, 1996. The Fund's return and resulting
ranking are net of waiver of management fees and certain expenses. (See
Financial Highlights).
For the first quarter of the fiscal year, the Fund posted a strong total
return of 8.25%, compared with 5.96% for the S&P 500. These results can be
attributed to the Fund's high level of investment in the technology sector,
which continued to post solid gains. Representative holdings included Intel,
Motorola, and Texas Instruments. Foreign holdings such as SAP, Carrefour and
Hornbach also performed well.
During the second and third fiscal quarters, technology stocks declined,
causing the Fund to underperform the S&P 500; total returns were 6.47% and
14.91% respectively. Also, while non-technology sectors of the U.S. market
produced excellent returns, European stocks remained largely unchanged in the
third quarter as that region's recession continued.
(CONTINUED)
22
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
====================================================
1784 Growth and Income Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 GROWTH AND INCOME FUND VERSUS THE S &P 500
COMPOSITE INDEX AND THE LIPPER GROWTH AND INCOME AVERAGE
- ----------------------------------------------
Annualized Total Return
From Inception
(6/7/93) 16.58%
- ----------------------------------------------
Annual Total Return
(6/1/95-5/31/96) 26.32%
- ----------------------------------------------
CHART
[GRAPHIC OMITTED]
6/30/93 5/94 5/95 5/96
1784 GROWTH AND INCOME FUND $10,000 $10,854 $12,709 $16,054
S&P 500 COMPOSITE INDEX $10,000 $10,396 $12,492 $16,044
LIPPER GROWTH AND INCOME AVERAGE $10,000 $10,484 $12,023 $15,057
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Aiding our performance in this period were holdings in the energy, restaurant,
and specialty retail sectors, including Schlumberger, Royal Dutch, Exxon,
Outback, Lone Star Steakhouse, Papa John's, and Bed, Bath and Beyond.
In the fourth fiscal quarter, the Fund outperformed the S&P 500; total
returns were 9.60% and 3.40% respectively. The Fund's growth stocks performed
well and by the end of March, the technology sector began to improve. In
particular, the Fund benefited from investments in U.S. companies like Security
Dynamics, Cambridge Technology Partners, and Cisco Systems. In addition, the
Fund's English and French holdings--for example, J.D. Wetherspoon, Pizza
Express, and Grand Optical Photoservice--posted strong gains, while German
holdings remained flat.
In the coming year, the Fund will continue to invest primarily in stocks,
focusing on high-quality growth companies with strong revenue and earnings
increases. We expect growth stocks, technology and cyclical companies to
outperform the stock market as a whole. We plan to maintain foreign exposure at
20% to 25% of the Fund's assets because we believe many of these markets are
undervalued, and despite their underperformance over the past 12 months, they
should begin to outperform the U.S. market.
23
<PAGE>
1784 FUNDS
================================================================================
THE 1784 GROWTH FUND
The objective of the 1784 Growth Fund is capital appreciation. Dividend income,
if any, is incidental to this objective.
The Fund began on March 28, 1996, and on May 31, its assets were $46.0
million. The Fund posted a strong one-month total return of 4.06%, compared with
a one-month total return of 3.94% for the Russell 2000 Index, and 2.65% for the
Lipper Growth Average during the same period.
The Fund is a diversified portfolio invested primarily in the stocks of
small- and mid-capitalization companies. Currently, the Fund's holdings
emphasize the technology, consumer non-durables, and healthcare sectors. More
than 20% of the Fund is invested in foreign securities, which we believe will
enhance performance as well as diversification.
Since inception, strong returns in the technology sector have been the
driving force in the Fund's performance. Representative investments include
Security Dynamics, Cambridge Technology Partners, and Intel. Other strong
performers have been Chesapeake Energy, Geotek Communications, and Arterial
Vascular Engineering.
In the coming year, the Fund will continue to invest primarily in high
growth stocks, focusing on emerging growth companies with strong revenue and
earnings increases. We expect good results from technology and cyclical
companies. We plan to maintain the Fund's high exposure to international
equities. Despite the weak performance of foreign stocks compared with U.S.
markets in the past 12 months--10.55% total return for the EAFE index compared
to 28.43% for the S&P 500--we believe valuations are attractive iN these markets
and that they will begin to outperform U.S. equities.
1784 Growth Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 GROWTH FUND VERSUS THE RUSSELL 2000 INDEX,
AND THE LIPPER GROWTH AVERAGE
- ------------------------------------------------
CUMULATIVE TOTAL RETURN
FROM INCEPTION 12.70%
(3/28/96)
- ------------------------------------------------
3/31/96 5/96
1784 GROWTH FUND $10,000 $11,270
LIPPER GROWTH AVERAGE $10,000 $10,600
RUSSELL 2000 INDEX $10,000 $10,950
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(CONTINUED)
24
<PAGE>
MANAGEMENT-S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
================================================================================
THE 1784 INTERNATIONAL EQUITY FUND
The objective of the 1784 International Equity Fund is to provide long-term
growth of capital. Dividend income, if any, is a consideration incidental to the
Fund's investment objective.
Since May 31, 1995, the Fund's assets have increased from $148 million to
$362.5 million. For the year ended May 31, 1996, the Fund had a total return of
19.08%, compared with 10.68% for the Morgan Stanley EAFE Index, and 14.65% for
the Lipper International Funds Average. Based on total return, the Fund ranked
among the top 15% (44 out of 293) of the Lipper International Funds for the
period June 1, 1995 to May 31, 1996. The Fund's return and resulting ranking are
net of waiver of management fees and certain expenses. (See Financial
Highlights).
Investors in the Fund enjoyed a rewarding year following a recovery from the
international market retrenchment of 1995, when the financial crisis in Latin
America eroded investor confidence. The beginning of an economic recovery in
Japan, the world's second largest stock market, has been positive for investor
sentiment. Nevertheless, economic recovery in Europe, the United Kingdom
excepted, has been slow as the tight monetary policies necessitated by the
Maastricht treaty remained in place.
As of May 31, the Fund was invested in 34 countries with positions in more
than 150 companies. The investment policy of the Fund stresses the management of
risk by diversification, particularly in smaller markets. Although opportunity
for growth in these markets is high, the Fund's managers attempt to offset
individual stock volatility by maintaining an investment exposure in many
industries and countries.
We also emphasize each company's long-term growth prospects and seek to
identify a "fair" price for its shares. Consequently, a reevaluation of the
political developments in Japan led to an increase in the Fund's exposure in the
past six months. Similarly, holdings in the Netherlands are proportionately
higher than many comparable funds. Because the Netherlands is a traditional
haven for non-U.S. investors when the dollar is
1784 International Equity Fund
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE 1784 INTERNATIONAL EQUITY FUND VERSUS THE MORGAN STANLEY EAFE
INDEX IN U.S. $ AND THE LIPPER INTERNATIONAL FUNDS AVERAGE
- -------------------------------------------------------------
ANNUALIZED TOTAL RETURN
FROM INCEPTION
(1/3/95) 16.48%
- -------------------------------------------------------------
ANNUAL TOTAL RETURN
(6/1/95-5/31/96) 19.08%
- -------------------------------------------------------------
CHART
[GRAPHIC OMITTED]
1/3/95 5/95 5/96
1784 INTERNATIONAL EQUITY FUND $10,000 $10,410 $12,397
MORGAN STANLEY EAFE INDEX $10,000 $10,444 $11,546
LIPPER INTERNATIONAL FUNDS AVERAGE $10,000 $10,213 $11,709
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
25
<PAGE>
1784 FUNDS
================================================================================
strong, this move has enhanced the Fund's overall return.
During the coming year, we expect the Fund to continue investing in shares
of growth companies with strong revenue and earnings increases. In particular,
we continue to focus on companies that are providing infrastructure improvements
in fast-growing southeast Asian economies. In addition, declining interest rates
and more political stability in continental Europe are likely to create
opportunities as consumer confidence is restored after a longer economic
downturn than was expected.
26
<PAGE>
AS OF MAY 31, 1996 1784 FUNDS
STATEMENT OF NET ASSETS
THE 1784 U.S. TREASURY MONEY MARKET FUND
- ------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 28.6%
U.S. Treasury Bills(DAGGER)
4.790%, 06/20/96 $ 5,000 $ 4,987
4.980%, 07/25/96 4,000 3,970
5.320%, 08/22/96 1,000 988
5.380%, 10/17/96 1,000 980
5.160%, 11/14/96 2,000 1,953
4.950%, 02/06/97 1,000 967
5.400%, 03/07/97 2,000 1,919
5.480%, 04/03/97 3,000 2,866
5.550%, 05/01/97 1,000 951
U.S. Treasury Notes
4.375%, 08/15/96 1,000 997
6.500%, 09/30/96 1,000 1,002
4.375%, 11/15/96 1,000 995
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $22,575) 22,575
-------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 28.1%
Federal Farm Credit Bank
Discount Notes(DAGGER)
4.860%, 06/11/96 2,500 2,496
5.030%, 07/01/96 1,000 996
5.180%, 08/07/96 1,500 1,485
Federal Farm Credit Bank
5.600%, 11/01/96 250 250
Federal Home Loan Bank
Discount Note(DAGGER)
4.940%, 06/13/96 2,500 2,496
Federal Home Loan Bank
4.860%, 02/07/97 250 249
Federal Home Loan Mortgage
Corporation Discount Notes(DAGGER)
4.160%, 06/05/96 4,000 3,998
5.110%, 07/15/96 8,000 7,949
Federal National Mortgage
Association Discount Note(DAGGER)
4.330%, 06/06/96 2,000 1,999
Student Loan Marketing
Association (A)
5.510%, 06/04/96 250 250
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $22,168) 22,168
-------
- -------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------------
CASH EQUIVALENTS -- 1.8%
Dreyfus U.S. Treasury Cash
Management Money Market
Fund $ 715 $ 715
Lehman Brothers Institutional
U.S. Treasury Instrument
Money Market Fund 714 714
-------
TOTAL CASH EQUIVALENTS
(Cost $1,429) 1,429
-------
REPURCHASE AGREEMENTS -- 41.5%
Goldman Sachs
5.30%, dated 05/31/96, matures
06/03/96, repurchase price
$11,004,858 (collateralized by
various U.S. Treasury Bonds
ranging in par value $1,500,000 -
$10,000,000, 6.25% - 13.875%,
11/15/02 - 11/15/24; U.S. Treasury
Notes ranging in par value
$975,000 - $10,000,000,
5.75% - 7.875%, 08/31/97 -
11/15/04; U.S. Treasury STRIPS
par value $280,530,000,
11/15/18; total market
value $11,220,000) 11,000 11,000
J.P. Morgan
5.30%, dated 05/31/96,
matures 06/03/96, repurchase
price $11,004,858
(collateralized by various
U.S. Treasury Notes ranging
in par value $20,493,000 -
$100,000,000, 4.75% -
8.875%, 08/31/98 - 11/15/98;
total market value
$11,220,154) 11,000 11,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
27
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 U.S. TREASURY MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Lehman Brothers
5.22%, dated 05/31/96,
matures 06/03/96, repurchase
price $10,834,884
(collateralized by various
U.S. Treasury Bonds ranging
in par value $340,000 -
$16,585,000, 6.00% - 8.125%,
02/15/21 - 02/15/26;
U.S. Treasury Notes ranging
in par value $97,355 -
$44,415,000, 5.50% - 8.875%,
01/31/00 - 07/31/00; total
market value $11,043,315) $10,830 $10,830
-------
TOTAL REPURCHASE AGREEMENTS
(Cost $32,830) 32,830
-------
TOTAL INVESTMENTS -- 100.0%
(Cost $79,002) 79,002
-------
- ----------------------------------------------------------------
DESCRIPTION VALUE (000)
- ----------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES,
NET-- (0.0%) $ (3)
-------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 79,005,171
outstanding shares of beneficial interest 79,005
Accumulated net realized loss
on investments (6)
-------
TOTAL NET ASSETS-- 100.0% $78,999
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
=======
(DAGGER)EFFECTIVE YIELD IN EFFECT ON MAY 31, 1996.
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1996.
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28
<PAGE>
AS OF MAY 31, 1996 1784 FUNDS
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
OTHER REVENUE BONDS 12%
TAX-EXEMPT COMMERCIAL PAPER 3%
EDUCATION BONDS 4%
INDUS. DEV. & POLLUTION CONTROL BONDS 6%
TRANSPORTATION BONDS 2%
UTILITY BONDS 2%
WATER & SEWER BONDS 1%
HEALTH CARE BONDS 5%
VARIABLE RATE NOTES 39%
ALT. MIN. TAX BONDS 4%
GENERAL OBLIGATION BONDS 9%
CASH EQUIVALENTS 10%
HOUSING BONDS 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
MUNICIPAL BONDS -- 91.8%
ALABAMA -- 1.4%
Phenix City, Alabama, Industrial
Development Revenue Bond,
Mead Coated Board Project,
Series B (A) (B) (C) (D)
3.800%, 06/01/96 $1,600 $1,600
Selma, Alabama, Industrial
Development Authority
Revenue Bond, International
Paper Company Project
4.000%, 07/15/96 6,300 6,300
------
7,900
------
ARIZONA -- 0.2%
Arizona State, Wastewater
Management Authority
Revenue Bond
5.400%, 07/01/96 1,005 1,006
------
ARKANSAS -- 1.0%
Crossett, Arkansas Pollution
Control Revenue Bond
(A) (B) (C) (D)
3.550%, 06/07/96 5,400 5,400
------
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
CALIFORNIA -- 3.8%
Contra Costa County, California,
TRAN
4.500%, 07/03/96 $ 4,000 $ 4,003
Los Angeles, California,
American Airlines, Series C
(A) (B) (C) (D)
3.650%, 06/01/96 4,200 4,200
Orange County, California, TRAN
5.500%, 06/30/96 7,500 7,500
San Diego, California, TRAN
4.750%, 07/03/96 5,000 5,004
-------
20,707
-------
DISTRICT OF COLUMBIA -- 1.3%
District of Columbia, GO
(B) (C) (E)
7.750%, 06/01/96 1,000 1,046
District of Columbia, Series B2,
GO (A) (B) (C) (D)
3.950%, 06/01/96 6,200 6,200
-------
7,246
-------
FLORIDA -- 3.2%
Dade County, Florida, Housing
Financial Authority Revenue
Bond (A) (B) (C) (E)
3.500%, 06/07/96 3,900 3,900
Florida Housing Financial
Agency, Multi-Family Revenue
Bond, Series A (A) (B) (C) (D)
3.600%, 06/07/96 3,410 3,410
Hillsborough County, Florida,
Utility Bond, Tampa Electric
Project (A) (B) (C)
3.700%, 06/07/96 10,000 10,000
-------
17,310
-------
GEORGIA -- 1.5%
Georgia State, Series B, GO
6.250%, 04/01/97 5,530 5,658
Georgia Tech Foundation
Facility Revenue Bond,
Wardlaw Project, Series B
(A) (B) (C)
3.550%, 06/07/96 2,700 2,700
-------
8,358
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
29
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
ILLINOIS -- 6.4%
Chicago Illinois, GO (B) (C)
3.100%, 02/04/97 $ 4,300 $ 4,300
Illinois Educational Facility
Authority Revenue Bond,
National College Educational
Project (A) (B) (C)
3.600%, 06/07/96 7,600 7,600
Illinois Educational Facility
Authority Revenue Bond,
Shedd Aquarium Society
Project, Series B (B) (C) (D)
3.350%, 08/08/96 6,000 6,000
Illinois Health Facility Authority
Revenue Bond, Lutheran
Institution, Series C
(A) (B) (C)
3.350%, 06/01/96 7,500 7,500
Illinois Metropolitan Fair &
Exposition Authority
Revenue Bond (B) (C)
8.000%, 06/01/96 6,500 6,856
Joliet, Illinois, Gas Supply
Revenue Bond, People's Gas
Light & Coke Project,
Series C (B) (C)
6.350%, 10/02/96 3,000 3,000
-------
35,256
-------
INDIANA -- 2.4%
Indiana State Housing
Financial Authority Revenue
Bond (B) (C)
3.900%, 07/01/96 3,400 3,400
Indianapolis, Indiana, Local
Improvement Board Note,
Series F
4.500%, 07/11/96 3,000 3,003
Mount Vernon, Indiana, Pollution
Control Revenue Bond,
Southern Indiana Gas &
Electric Project (B) (C)
4.000%, 11/01/96 7,000 7,017
-------
13,420
-------
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
IOWA -- 0.2%
Iowa Finance Authority Revenue
Bond, Series A (B) (C)
3.100%, 02/27/97 $ 1,120 $ 1,120
-------
KANSAS -- 0.9%
Kansas City, Kansas, Industrial
Development Authority
Revenue Bond, Resh Health
Services System Project
(A) (B) (C) (E)
3.850%, 06/01/96 4,800 4,800
-------
KENTUCKY -- 1.4%
Ashland, Kentucky, Pollution
Control Revenue Bond,
Ashland Oil Project
(A) (B) (C) (D)
3.450%, 06/07/96 3,500 3,500
Boone County, Kentucky,
Pollution Control Revenue
Bond, Cincinnati Gas &
Electric Project (A) (B) (C) (D)
3.650%, 06/07/96 4,100 4,100
-------
7,600
-------
LOUISIANA -- 3.9%
Louisiana State Offshore
Terminal Authority Revenue
Bond, Deepwater Port
Project (A) (B) (C)
3.700%, 06/01/96 13,900 13,900
Plaquemines, Louisiana, Port
Facilities Revenue Bond,
International Marine Terminal
Project, Series B (A) (B) (C) (D)
3.250%, 03/15/97 7,500 7,500
-------
21,400
-------
MAINE -- 4.3%
Jay, Maine, Pollution Control
Revenue Bond, Solid Waste
Disposal Project, AMT
(A) (B) (C) (E)
4.500%, 06/01/96 21,000 21,000
Portland, Maine, GO
4.750%, 06/01/96 1,110 1,110
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<PAGE>
1784 FUNDS
================================================================================
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
MAINE (CONTINUED)
Topsham, Maine, Revenue
Bond, Frank Goodwin Project,
Series A (B) (C) (D)
7.200%, 09/01/96 $ 1,500 $ 1,513
-------
23,623
-------
MASSACHUSETTS -- 2.4%
Massachusetts Bay Transit
Authority Revenue Bond,
General Transit System
Project, Series 1984-A
(B) (C) (D)
3.050%, 09/01/96 3,400 3,400
Massachusetts Bay Transit
Authority Revenue Bond,
General Transit System
Project, Series A
4.700%, 03/01/97 2,965 2,991
Massachusetts State Housing
Finance Agency Revenue
Bond, Series 50 (B) (C) (D)
3.700%, 06/02/97 5,735 5,735
Massachusetts State, GO,
Series A (E)
7.250%, 06/01/96 1,000 1,000
-------
13,126
-------
MICHIGAN -- 4.8%
Delta County, Michigan,
Economic Development
Revenue Bond (A) (B) (C) (D)
3.600%, 06/01/96 4,700 4,700
Detroit, Michigan, Downtown
Development Authority
Revenue Bond, Millender
Center Project (A) (B) (C) (D)
3.700%, 06/07/96 12,000 12,000
Grand Rapids, Michigan,
Economic Development
Revenue Bond, Amway Hotel
Project, Series A (A) (B) (C) (D)
4.550%, 06/07/96 9,800 9,800
-------
26,500
-------
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
MINNESOTA -- 0.7%
Minnesota School Districts,
Series B TAN
4.000%, 03/14/97 $ 4,000 $ 4,023
-------
MISSISSIPPI -- 0.7%
Jackson County, Mississippi,
Pollution Control Authority
Revenue Bond, Chevron
USA Project (A) (B) (C)
3.600%, 06/01/96 3,550 3,550
-------
MISSOURI -- 2.2%
Kansas City, Missouri, Industrial
Development Authority
Revenue Bond (A) (B) (C)
3.850%, 06/01/96 7,200 7,200
Missouri State Housing Finance
Authority Revenue Bond,
Series B (B) (C) (E)
4.000%, 07/01/96 5,000 5,000
-------
12,200
-------
NEW HAMPSHIRE -- 4.2%
New Hampshire Health &
Higher Education Facilities
Revenue Bond, Mary
Hitchcock Project, Series 85D
(A) (B) (C) (E)
3.600%, 06/07/96 12,600 12,600
New Hampshire Health &
Higher Education Facilities
Revenue Bond, Mary
Hitchcock Project, Series 85H
(A) (B) (C) (E)
3.600%, 06/07/96 2,700 2,700
New Hampshire Health &
Higher Education Facilities
Revenue Bond, St. Paul's
School Project (A) (B) (C) (D)
3.550%, 06/07/96 2,000 2,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
31
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
NEW HAMPSHIRE (CONTINUED)
New Hampshire Health &
Higher Education Facilities
Revenue Bond, Veterans
Hospital Administration New
England Project, Series C
(A) (B) (C) (E)
3.600%, 06/07/96 $ 4,000 $ 4,000
New Hampshire Health &
Higher Education Facilities
Revenue Bond, Veterans
Hospital Administration New
England Project, Series F
(A) (B) (C) (E)
3.600%, 06/07/96 2,000 2,000
-------
23,300
-------
NEW YORK -- 5.9%
New York State Pollution
Control Revenue Bond,
New York State Gas &
Electric (B) (C) (D)
3.300%, 03/15/97 14,000 14,000
New York State Power
Authority Revenue Bond
3.250%, 09/01/96 (A)(B)(C) 8,500 8,500
New York State Revenue Bond,
Energy Research, LILCO
Project, Series B (B) (C) (D)
3.250%, 03/01/97 10,000 10,000
-------
32,500
-------
NORTH CAROLINA -- 6.3%
Care System Revenue Bond,
Series F (B) (C)
8.250%, 10/01/96 1,495 1,546
North Carolina Medical Center
Revenue Bond, Pooled
Financing Project, Series A-2
(A) (B) (C)
3.700%, 06/07/96 1,370 1,370
North Carolina State
Educational Facility Revenue
Bond, Bowman Grey School
Medical Project (A) (B) (C)
3.600%, 06/07/96 11,600 11,600
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
Wake County, North Carolina,
Industrial Facilities &
Pollution Control Revenue
Bond, Carolina Power &
Light Project, Series B
(A) (B) (C) (D)
3.540%, 06/07/96 $10,400 $10,400
Wake County, North Carolina,
Industrial Facilities &
Pollution Control Revenue
Bond, Carolina Power &
Light Project, Series C
(A) (B) (C) (D)
3.550%, 06/07/96 9,800 9,800
-------
34,716
-------
NORTH DAKOTA -- 0.4%
Oliver County, North Dakota,
Pollution Control Revenue
Bond, Square Butte Electric
Project, Series B (B) (C)
4.500%, 09/01/96 2,000 2,000
-------
OHIO -- 2.2%
Clermont County, Ohio,
Hospital Facilities Revenue
Bond, Mercy Health Care
System, Series B
(A) (B) (C) (E)
3.600%, 06/07/96 5,060 5,060
Muskingum County, Ohio,
Health Facilities Revenue
Bond, Franciscan Health
Project (B) (C)
7.500%, 03/01/97 6,500 6,816
-------
11,876
-------
OKLAHOMA -- 1.4%
Oklahoma State Water Resource
Revenue Bond (B) (C) (D)
3.100%, 03/01/97 7,500 7,500
-------
PENNSYLVANIA -- 3.1%
Dauphin County, Pennsylvania,
General Authority Revenue
Bond (B) (C) (E)
4.300%, 06/03/96 1,000 1,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
1784 FUNDS
================================================================================
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania State
Intergovernmental
Cooperation Authority,
Special Tax Revenue Bond,
Philadelphia Funding
Project (E)
5.000%, 06/15/97 $ 1,000 $ 1,013
Philadelphia, Pennsylvania
TRAN, Series A
4.500%, 06/27/96 5,000 5,002
Temple University of
Pennsylvania, Commonwealth
System of Higher Education
Revenue Bond
4.625%, 05/20/97 10,000 10,086
-------
17,101
-------
RHODE ISLAND -- 1.9%
Rhode Island Housing and
Mortgage Revenue Bond,
Series 18-A (E)
3.850%, 06/27/96 5,340 5,340
Rhode Island Housing
Mortgage Finance Revenue
Bond (B) (C)
3.450%, 01/30/97 2,200 2,200
Rhode Island State, Landfill
Lease Note, BAN (E)
4.750%, 08/01/96 3,000 3,002
-------
10,542
-------
SOUTH CAROLINA -- 4.8%
Berkeley County, South
Carolina, Pollution Control
Revenue Bond, Mobay
Chemical Project
(A) (B) (C) (D)
3.650%, 06/07/96 4,300 4,300
Georgetown County, South
Carolina, Pollution Control
Revenue Bond International
Paper Project (A) (B) (C)
4.300%, 09/01/96 11,955 11,955
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
York County, South Carolina,
Pollution Control Revenue
Bond, Series 84E
(A) (B) (C) (D)
3.100%, 08/15/96 $10,000 $10,000
-------
26,255
-------
SOUTH DAKOTA -- 1.8%
South Dakota School District
Certificate of Participation (E)
4.750%, 07/30/96 10,000 10,013
-------
TEXAS -- 7.6%
Brazos, Texas, Industrial
Development Revenue Bond,
Badische Corporate Port
Authority (A) (B) (C) (D)
3.650%, 06/07/96 6,300 6,300
Grand Prairie, Texas, Housing
Finance Corporate Authority,
Multi-Family Housing Revenue
Bond, Lincoln Property
Project (A) (B) (C)
3.600%, 06/07/96 5,000 5,000
Grand Prairie, Texas, Housing
Finance Corporate Authority,
Multi-Family Housing Revenue
Bond, Winridge Grand Prairie
Project (A) (B) (C)
3.600%, 06/07/96 7,200 7,200
Grapevine, Texas, Industrial
Development Revenue
Bond (A) (B) (C) (D)
3.600%, 06/07/96 4,600 4,600
Lower Colorado River
Authority, Texas
3.650%, 07/24/96 17,100 17,100
Tarrant County, Texas, Health
Facility Revenue Bond,
Harris Methodist Health
Services Project, Series B (E)
3.350%, 09/01/96 1,525 1,525
-------
41,725
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
33
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
UTAH -- 1.9%
Intermountain, Utah, Power
Agency Revenue Bond,
Series F (A) (B) (C) (D)
3.350%, 06/07/96 $ 6,500 $ 6,500
Utah State Board Regents
Student Loan Revenue Bond,
Series B (A) (B) (C) (E)
3.550%, 06/07/96 4,000 4,000
-------
10,500
-------
VERMONT -- 2.0%
Vermont Education & Health
Facilities Revenue Bond,
Series D (A) (B) (C) (E)
3.600%, 06/07/96 5,900 5,900
Vermont Education & Health
Building Finance Revenue
Bond, Middlebury College
Project, Series A (B) (C)
3.700%, 05/01/97 5,250 5,250
-------
11,150
-------
WASHINGTON -- 2.4%
Washington State Health Care
Facility Revenue Bond, Sisters
of Providence Project,
Series C (A) (B) (C)
3.700%, 06/01/96 6,800 6,800
Washington State Housing
Finance Commission Revenue
Bond, Series 1N-S (B) (C) (E)
3.750%, 09/01/96 4,875 4,875
Washington State Public Power
Supply Revenue Bond, Series A
4.650%, 07/01/96 1,500 1,501
-------
13,176
-------
WISCONSIN -- 2.9%
Pleasant Prairie, Wisconsin,
Industrial Development
Revenue Bond, Electric
Power Project (A) (B) (C)
3.600%, 06/07/96 8,000 8,000
- --------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------
Wisconsin State Health Facility
Revenue Bond, Franciscan
Health Advisory Project (B) (C)
7.800%, 03/01/97 $ 7,400 $ 7,779
--------
15,779
--------
WYOMING -- 0.3%
University of Wyoming
Revenue Bond (E)
4.000%, 06/01/97 1,615 1,615
--------
TOTAL MUNICIPAL BONDS
(Cost $504,293) 504,293
--------
CASH EQUIVALENTS -- 5.4%
Clipper Blue Tax-Exempt Trust
4.000%, 06/07/96 15,530 15,530
Clipper Blue Tax-Exempt Trust
1994-1, Certificates of
Participation, Class A
4.200%, 06/07/96 6,919 6,919
Clipper CT Tax-Exempt Trust
3.600%, 06/07/96 7,341 7,341
--------
TOTAL CASH EQUIVALENTS
(Cost $29,790) 29,790
--------
REPURCHASE AGREEMENT -- 4.0%
Paine Webber 5.32%, dated 05/31/96,
matures 06/03/96, repurchase
price $22,209,050
(collateralized by various
U.S. Treasury CUBEs ranging
in par value $1,000 -
1,083,263, 11/15/96 -
11/15/06; U.S. Treasury STRIPS
ranging in par value $65,000 -
65,360,000, 11/15/99 -
05/15/17, total market
value $22,643,987) 22,199 22,199
--------
TOTAL REPURCHASE AGREEMENT
(Cost $22,199) 22,199
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
34
<PAGE>
1784 FUNDS
================================================================================
- ----------------------------------------------------------------
DESCRIPTION VALUE (000)
- ----------------------------------------------------------------
TOTAL INVESTMENTS -- 101.2%
(Cost $556,282) $ 556,282
---------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- (1.2%) (6,654)
---------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 549,660,117
outstanding shares of beneficial interest 549,660
Accumulated net realized loss on
investments (32)
---------
TOTAL NET ASSETS-- 100.0% $ 549,628
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
=========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(A) VARIABLE RATE SECURITIES - THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1996.
(B) PUT OR DEMAND FEATURE EXISTS REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY.
(C) THE MATURITY DATE SHOWN IS THE LESSER OF THE PUT, DEMAND, OR MATURITY DATE.
(D) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
(E) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE ISSUED BY ALLIED
SIGNAL, AMBAC, FGIC, FSA, GENERAL ELECTRIC, GOLDMAN SACHS, INTERNATIONAL
PAPER, MBIA, MORGAN GUARANTY TRUST, NATIONAL RURAL, SEMINOLE ELECTRIC, SLMA,
SOCIETY GENERAL, SQUARE BUTTE ELECTRIC, TAMPA ELECTRIC, OR TEXACO.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT--ALTERNATIVE MINIMUM TAX
BAN--BOND ANTICIPATION NOTE
CUBE--COUPON UNDER BOOK ENTRY
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INVESTORS ASSURANCE
SLMA--STUDENT LOAN MORTGAGE ASSOCIATION
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
TAN--TAX ANTICIPATION NOTE
TRAN--TAX AND REVENUE ANTICIPATION NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
MUNICIPAL BONDS 9%
ASSET-BACKED SECURITIES 16%
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 4%
U.S. GOVERNMENT AGENCY OBLIGATIONS 5%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 1%
CORPORATE OBLIGATIONS 49%
CASH EQUIVALENTS 3%
U.S. TREASURY OBLIGATIONS 13%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 13.6%
U.S. Treasury Notes
6.000%, 08/31/97 $ 1,500 $ 1,499
7.875%, 01/15/98 2,500 2,565
5.000%, 01/31/99 1,000 966
6.875%, 07/31/99 2,000 2,020
6.875%, 08/31/99 1,000 1,010
7.125%, 02/29/00 1,200 1,220
6.125%, 07/31/00 2,500 2,454
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $11,879) 11,734
-------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 4.6%
Federal National Mortgage
Association
9.550%, 12/10/97 1,000 1,054
6.080%, 09/25/00 1,000 972
6.160%, 03/29/01 2,000 1,942
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $3,996) 3,968
-------
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS -- 3.9%
Federal National Mortgage
Association REMIC, Series
1988-10, Class B
8.950%, 05/25/03 $1,596 $1,647
Federal Home Loan Mortgage
Corporation REMIC, Series
41, Class B
7.250%, 04/25/24 1,000 1,003
Federal Home Loan Mortgage
Corporation REMIC, Series
1360, Class VA
7.500%, 05/15/97 469 472
Federal Home Loan Mortgage
Corporation REMIC, Series
1575, Class PB
5.000%, 02/15/00 247 246
------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $3,360) 3,368
------
MUNICIPAL BONDS -- 9.4%
Alaska State Housing Finance
Authority Revenue Bond,
Series C
9.250%, 06/01/01 1,400 1,400
New York, New York, GO,
Series F
10.000%, 11/15/96 2,000 2,030
Providence, Rhode Island,
Note, Series A
6.280%, 08/01/97 1,600 1,604
Richmond County, Georgia,
Development Authority
Revenue Bond, Monsanto
Company Project
6.270%, 06/01/20 1,100 1,100
Rochester, New York, BAN,
Series II
5.500%, 03/11/97 2,000 1,988
------
TOTAL MUNICIPAL BONDS
(Cost $8,126) 8,122
------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<PAGE>
1784 FUNDS
================================================================================
- --------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 1.4%
Advanta Home Equity Loan
Trust, Series 1993-2
6.150%, 10/25/09 $ 263 $ 250
Green Tree Financial Corporation,
Series 1993-3
5.200%, 10/15/18 850 838
Security Pacific Acceptance
Corporation, Series 1991-3
7.250%, 12/15/11 93 94
-------
TOTAL NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $1,176) 1,182
-------
ASSET BACKED SECURITIES -- 16.4%
CIT RV Owners Trust,
Series 1995-A
6.250%, 01/15/11 729 720
Citibank Credit Card Master
Trust, Series 1996-1
7.010%, 02/07/01(DAGGER) 1,000 721
Fleetwood Credit Corporation
Grantor Trust, Series 1995-B
6.550%, 05/15/11 1,638 1,627
General Motors Acceptance
Corporation
7.150%, 03/15/00 522 528
Honda Auto Receivables Grantor
Trust, Series 1995-A
6.200%, 12/15/00 698 699
MS Auto Grantor Trust, Series 1995-1
6.200%, 07/01/01 1,452 1,449
NAFCO Auto Trust, Series 2
7.000%, 12/31/01 1,544 1,548
Olympic Automobile Receivables
Trust, Series 1995-C
6.200%, 01/15/02 1,563 1,556
Signet Credit Card Master Trust,
Series 1993-3
5.250%, 04/15/00 1,225 1,213
Standard Credit Card Master
Trust, Series 1995-6-B
6.900%, 06/07/00(DAGGER) 4,000 4,007
University Support Services,
Series 1993-A
7.870%, 08/20/08 138 139
-------
TOTAL ASSET BACKED SECURITIES
(Cost $14,240) 14,207
-------
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
CORPORATE OBLIGATIONS -- 49.1%
Associates Corporation of
North America
6.750%, 06/13/97 $2,000 $2,017
6.750%, 08/29/00 2,000 1,983
BankAmerica
9.625%, 02/13/01 2,000 2,195
Colgate Palmolive
6.430%, 12/01/97 3,000 3,008
Dean Witter Discover
6.750%, 08/15/00 2,000 1,980
Eaton Corporation
6.375%, 04/01/99 1,500 1,481
Electronic Data Systems
6.850%, 05/15/00 1,000 990
Equitable Companies
6.750%, 12/01/00 1,500 1,494
Exxon Capital
6.500%, 07/15/99 2,000 1,985
Ford Motor Credit
6.850%, 08/15/00 4,000 3,970
Franklin Universal Trust
5.625%, 09/01/98 2,000 1,963
General Motors Acceptance
Corporation
9.375%, 04/01/00 1,000 1,077
7.875%, 03/07/01 2,000 2,060
9.125%, 07/15/01 1,000 1,080
Heller Financial
7.875%, 11/01/99 2,000 2,055
Hertz
8.300%, 02/02/98 1,000 1,026
J.B. Hunt Transport Services
6.000%, 12/12/00 3,000 2,880
Manufacturers Hanover
Corporation
8.500%, 02/15/99 1,500 1,556
Merrill Lynch
6.800%, 04/26/01 1,000 984
Middletown Trust
10.875%, 07/15/98 1,948 2,023
Nabisco
8.000%, 01/15/00 2,500 2,566
Smith Barney Holdings
7.875%, 10/01/99 1,000 1,027
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
37
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 SHORT-TERM INCOME FUND (CONTINUED)
- -----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
Travelers/Aetna
6.750%, 04/15/01 $ 1,000 $ 985
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $42,811) 42,385
-------
REPURCHASE AGREEMENT -- 2.8%
Lehman Brothers
5.22%, dated 05/31/96, matures
06/03/96, repurchase price
$2,440,784 (collateralized by
various U.S. Treasury Bonds
ranging in par value $340,000 -
$16,585,000, 6.000% - 8.125%,
02/15/21 - 02/15/26;
U.S. Treasury Notes ranging
in par value $97,355 -
$44,415,000, 5.500% -8.875%,
01/31/00 - 07/31/00; total
market value $2,487,738) 2,440 2,440
-------
TOTAL REPURCHASE AGREEMENT
(Cost $2,440) 2,440
-------
TOTAL INVESTMENTS -- 101.2%
(Cost $88,028) 87,406
-------
- ---------------------------------------------------------------
DESCRIPTION VALUE (000)
- ---------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- (1.2%) $(1,023)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 8,701,935
outstanding shares of beneficial interest 87,155
Accumulated net realized loss on
investments (168)
Net unrealized depreciation on investments (622)
Undistributed net investment income 18
--------
TOTAL NET ASSETS-- 100.0% $ 86,383
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.93
=====
(DAGGER) EFFECTIVE YIELD IN EFFECT ON MAY 31, 1996.
BAN--BOND ANTICIPATION NOTE
GO--GENERAL OBLIGATION
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38
<PAGE>
AS OF MAY 31, 1996 1784 FUNDS
STATEMENT OF NET ASSETS
================================================================================
THE 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
CASH EQUIVALENTS 5%
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 28%
U.S. GOVERNMENT AGENCY OBLIGATIONS 23%
U.S. GOVERNMENT GUARANTEED BONDS 19%
U.S. TREASURY OBLIGATIONS 25%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 24.4%
U.S. Treasury Bonds
10.750%, 08/15/05 $ 5,000 $ 6,291
11.250%, 02/15/15 700 995
U.S. Treasury Notes
6.000%, 08/31/97 3,700 3,699
5.750%, 10/31/00 5,500 5,316
5.625%, 11/30/00 5,300 5,092
8.000%, 05/15/01 2,000 2,112
7.500%, 11/15/01 1,000 1,036
6.250%, 02/15/03 3,000 2,920
7.875%, 11/15/04 3,700 3,935
7.500%, 02/15/05 4,000 4,162
6.500%, 05/15/05 5,000 4,878
U.S. Treasury STRIPS(DAGGER)
7.130%, 08/15/10 1,000 364
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $41,364) 40,800
-------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 22.7%
Costa Rica Aid
7.360%, 08/01/01 2,420 2,453
Federal Farm Credit Bank
5.420%, 08/04/98 3,000 2,933
8.650%, 10/01/99 1,900 2,011
Federal Home Loan Bank
6.500%, 11/29/05 5,000 4,753
- --------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation
8.530%, 02/02/05 $ 1,000 $ 1,039
5.950%, 01/19/06 5,000 4,581
6.600%, 02/02/06 8,500 7,947
Federal National Mortgage
Association
7.550%, 06/10/04 1,500 1,498
7.320%, 05/03/06 4,000 3,986
6.580%, 03/01/06 1,000 938
Financing Corporation STRIPS(DAGGER)
7.410%, 05/11/11 3,000 977
7.740%, 05/02/15 3,000 713
Housing Urban Development
8.240%, 08/01/02 2,000 2,129
International Bank for
Reconstruction &
Development
9.150%, 08/05/97 1,000 1,034
International Bank for
Reconstruction &
Development, Colts
Project
5.420%, 03/15/97 1,000 996
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $39,749) 37,988
-------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS -- 28.1%
Federal Home Loan Mortgage
Corporation
7.000%, 07/15/03 1,400 1,368
Federal Home Loan Mortgage
Corporation Gold
7.000%, 12/01/10 2,441 2,400
Federal Home Loan Mortgage
Corporation REMIC
7.000%, 06/15/22 4,000 3,717
Federal National Mortgage
Association
6.500%, 05/01/11 2,488 2,390
10.000%, 10/01/20 4,092 4,445
10.000%, 12/01/20 6,872 7,474
6.500%, 12/01/25 1,295 1,203
6.500%, 01/01/26 3,590 3,332
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
39
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND (CONTINUED)
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS (CONTINUED)
Federal National Mortgage
Association REMIC
7.000%, 01/25/21 $ 1,345 $ 1,344
Government National Mortgage
Association
9.000%, 11/15/17 1,871 1,985
7.000%, 10/15/23 887 848
7.500%, 04/15/26 7,544 7,388
7.125%, 01/15/29 6,394 6,136
Government National Mortgage
Association REMIC
6.500%, 04/16/22 3,122 3,079
-------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $48,042) 47,109
-------
U.S. GOVERNMENT GUARANTEED
BONDS -- 18.7%
Goldman Sachs Trust
8.500%, 02/20/21 10,000 10,196
Maryland Marine Title XI
6.570%, 11/21/15 4,491 4,206
Merrill Lynch Trust
9.450%, 06/01/18 10,000 10,804
Private Export Funding
Corporation
6.620%, 10/01/05 1,740 1,672
5.500%, 03/15/01 2,500 2,362
Sulphur Carriers
8.300%, 10/15/09 2,024 2,129
-------
TOTAL U.S. GOVERNMENT
GUARANTEED BONDS
(Cost $31,901) 31,369
-------
- -------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 5.4%
Goldman Sachs
5.30%, dated 05/31/96, matures
06/03/96, repurchase price
$9,102,875 (collateralized by
various U.S. Treasury Bonds
ranging in par value $1,500,000 -
$10,000,000, 6.250% - 13.875%,
11/15/02 - 11/15/24;
U.S. Treasury Notes ranging in
par value $975,000 -
$10,000,000, 5.750% - 7.875%,
08/31/97 - 11/15/04;
U.S. Treasury STRIPS par value
260,530,000, 11/15/18; total
market value $9,280,833) $ 9,099 $ 9,099
---------
TOTAL REPURCHASE AGREEMENT
(Cost $9,099) 9,099
---------
TOTAL INVESTMENTS -- 99.3%
(Cost $170,155) 166,365
---------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 0.7% 1,129
---------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 17,981,182
outstanding shares of beneficial interest 175,839
Accumulated net realized loss on
investments (4,196)
Net unrealized depreciation on investments (3,790)
Distributions in excess of
net investment income (359)
---------
TOTAL NET ASSETS-- 100.0% $ 167,494
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.31
=====
(DAGGER) EFFECTIVE YIELD IN EFFECT ON MAY 31, 1996.
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
40
<PAGE>
AS OF MAY 31, 1996 1784 FUNDS
STATEMENT OF NET ASSETS
================================================================================
THE 1784 INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS 11%
U.S. TREASURY OBLIGATIONS 8%
CASH EQUIVALENTS 11%
PREFERRED STOCKS 4%
ASSET-BACKED SECURITIES 10%
FOREIGN BONDS 14%
U.S. GOVERNMENT AGENCY OBLIGATIONS 8%
CORPORATE OBLIGATIONS 25%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 9%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 8.1%
Federal Home Loan Bank
6.500%, 11/29/05 $ 8,000 $ 7,604
Federal Home Loan Mortgage
Corporation
8.530%, 02/02/05 5,000 5,195
6.600%, 02/02/06 (A) 5,000 4,675
Financing Corporation STRIPS(DAGGER)
7.740%, 05/02/15 7,005 1,666
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $20,029) 19,140
-------
U.S. TREASURY OBLIGATIONS -- 7.5%
U.S. Treasury Notes
7.875%, 01/15/98 2,000 2,052
9.250%, 08/15/98 1,000 1,059
4.750%, 08/31/98 2,000 1,936
5.750%, 10/31/00 9,000 8,698
5.500%, 12/31/00 4,000 3,821
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $18,093) 17,566
-------
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 10.8%
Federal Home Loan Mortgage
Corporation
7.750%, 09/01/05 $ 1,224 $ 1,218
Federal National Mortgage
Association
6.500%, 05/01/11 4,976 4,781
Federal National Mortgage
Association REMIC
6.000%, 12/25/16 3,000 2,703
7.000%, 10/25/23 4,806 4,337
7.000%, 03/25/19 725 725
Government National Mortgage
Association
7.000%, 10/15/23 1,782 1,702
7.500%, 04/15/26 4,996 4,893
7.125%, 01/15/29 5,206 4,995
-------
TOTAL U.S. AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $25,092) 25,354
-------
ASSET-BACKED SECURITIES -- 10.5%
Discover Card Master Trust
Series 1993-1, Class B
5.300%, 10/16/01 5,000 4,792
Discover Card Master Trust
Series 1993-2, Class B
5.750%, 11/16/01 1,275 1,234
Fleetwood Credit Corporation
Grantor Trust Series 1995B,
Class A
6.550%, 05/15/11 2,457 2,440
Green Tree Financial
Corporation Series 95-7
7.350%, 12/15/25 5,500 5,159
NAFCO Auto Trust
7.000%, 12/31/01 2,317 2,322
Oakwood Mortgage Investors
Series 1995-B Class A3
6.900%, 01/15/21 4,040 3,760
Prime Credit Card Master Trust
Series 1992-1, Class A1
7.050%, 12/15/97 5,000 5,034
-------
TOTAL ASSET BACKED SECURITIES
(Cost $25,192) 24,741
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 INCOME FUND (CONTINUED)
- -------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS -- 8.7%
Capstead Securities IV
Series 1992-5, Class E
8.500%, 10/25/21 $ 2,000 $ 2,033
CS First Boston Series 1995-WF1,
Class A1
6.452%, 12/21/27 4,927 4,634
Merrill Lynch Mortgage Investors
Series 1989H, Class B
10.000%, 01/15/10 3,760 3,957
Merrill Lynch Mortgage Investors
Series 1994G, Class A3
8.350%, 05/15/14 5,000 5,042
Nomura Asset Securities
Corporation Series 1996-MD5,
Class A1B
7.120%, 04/13/36 5,000 4,835
-------
TOTAL NON-AGENCY MORTGAGE-BACKED
BONDS
(Cost $20,647) 20,501
-------
CORPORATE OBLIGATIONS -- 25.1%
Auburn Hills Trust
12.000%, 05/01/20 5,000 7,150
Champion International
6.400%, 02/15/26 5,000 4,581
Chase Manhattan Corporation
5.500%, 02/15/01 2,500 2,353
CIT Group Holdings
8.950%, 08/15/20 4,500 4,621
Equitable Life Assurance Society
7.240%, 05/15/06 5,000 4,975
First Union (A)
6.550%, 10/15/35 2,500 2,372
Ford Motor
8.875%, 01/15/22 5,000 5,519
General Motors
9.125%, 07/15/01 5,000 5,400
General Motors Acceptance
Corporation
8.250%, 02/28/02 5,000 5,219
Green Tree Financial
Corporation
7.650%, 10/15/25 5,000 4,596
- --------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------
Mayne Nickless Limited
6.250%, 02/01/06 $ 4,000 $ 3,645
Municipal Bond Investor
Assurance
8.200%, 10/01/22 3,000 3,176
Travelers Group
6.875%, 06/01/25 (A) 1,000 964
7.000%, 12/01/25 5,000 4,494
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $61,315) 59,065
--------
FOREIGN BONDS -- 14.0%
Bank China
8.250%, 03/15/14 6,200 5,596
Chilgener S.A
6.500%, 01/15/06 5,000 4,569
Endesa - Chile Overseas
7.200%, 04/01/06 5,000 4,819
Hydro-Quebec (A)
8.050%, 07/07/24 5,000 5,244
Midland Bank
7.650%, 05/01/25 10,000 10,175
Noranda
7.000%, 07/15/05 2,500 2,381
--------
TOTAL FOREIGN BONDS
(Cost $34,036) 32,784
--------
PREFERRED STOCKS -- 4.1%
MCI Capital
8.000%, 06/30/26 200,000 4,760
Travelers P&C, Series E
8.080%, 04/30/36 200,000 4,925
--------
TOTAL PREFERRED STOCKS
(Cost $10,000) 9,685
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42
<PAGE>
1784 FUNDS
================================================================================
- -----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------
REPURCHASE AGREEMENT -- 10.6%
Goldman Sachs
5.30%, dated 05/31/96,
matures 06/03/96, repurchase
price $24,798,588
(collateralized by various
U.S. Treasury Bonds ranging
in par value $1,500,000 -
$10,000,000, 6.250% - 13.875%,
11/15/02 - 11/15/24;
U.S. Treasury Notes ranging in
par value $975,000 -
$10,000,000, 5.750% - 7.875%,
08/31/97 - 11/15/04;
U.S. Treasury STRIPS par value
260,530,000, 11/15/18; total
market value $25,283,386) $ 24,788 $ 24,788
--------
TOTAL REPURCHASE AGREEMENT
(Cost $24,788) 24,788
--------
TOTAL INVESTMENTS -- 99.4%
(Cost $239,192) 233,624
--------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 0.6% 1,398
--------
- ----------------------------------------------------------------
DESCRIPTION VALUE (000)
- ----------------------------------------------------------------
NET ASSETS
Capital Shares (unlimited authorization --
no par value) based on 23,742,836
outstanding shares of beneficial interest $237,792
Accumulated net realized gain on
investments 2,801
Net unrealized depreciation on
investments (5,568)
Distribution in excess of
net investment income (3)
--------
TOTAL NET ASSETS-- 100.0% $235,022
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.90
=====
(DAGGER)EFFECTIVE YIELD IN EFFECT ON MAY 31, 1996.
(A) PUT OR DEMAND FEATURES EXISTS REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY.
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
STRIPS--SEPERATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
43
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
CASH EQUIVALENTS 6%
TRANSPORTATION BONDS 4%
WATER & SEWER BONDS 7%
GENERAL OBLIGATION BONDS 24%
ALT. MIN. TAX BONDS 8%
INDUS. DEVELOP. & POLLUTION CONTROL BONDS 1%
OTHER REVENUE BONDS 14%
HOUSING BONDS 9%
UTILITY BONDS 14%
HEALTH CARE BONDS 9%
EDUCATION BONDS 4%
% OF TOTAL PORTFOLIO INVESTMENTS
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
MUNICIPAL BONDS -- 96.1%
ALABAMA -- 0.5%
Alabama State Agricultural &
Mechanical University
Revenue Bond (A)
6.000%, 11/01/09 $1,000 $1,023
------
ALASKA -- 1.6%
Alaska State Industrial
Development & Export
Authority Revenue Bond,
Series B
5.850%, 04/01/05 1,000 1,028
Alaska State Student Loan
Corporation Revenue
Bond AMT
6.700%, 07/01/01 2,100 2,184
------
3,212
------
ARIZONA -- 0.6%
Arizona State Transportation
Board Highway Revenue
Bond AMT
6.500%, 07/01/11 1,000 1,100
------
CALIFORNIA -- 4.5%
California State GO
5.750%, 03/01/08 3,000 3,030
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
California State GO (A)
5.500%, 04/01/06 $1,500 $1,530
California State Housing Finance
Agency Revenue Bond,
Series A (A)
5.400%, 08/01/07 1,000 986
Los Angeles, California,
Series A (A)
5.800%, 09/01/09 1,250 1,269
Los Angeles County, California,
Metropolitan Transportation
Authority Sales Tax Revenue
Bond (A)
5.700%, 07/01/12 1,135 1,114
San Francisco, California, City &
County Sewer Revenue Bond,
Series A (A)
5.700%, 10/01/11 1,000 991
------
8,920
------
CONNECTICUT -- 4.3%
Connecticut State Housing
Finance Authority Revenue
Bond, Housing Mortgage
Finance Program, Series B-4,
Sub B-4
7.300%, 11/15/03 3,435 3,607
Connecticut State Resource
Recovery Authority Revenue
Bond, Mid-Connecticut
System Project, Series A (A) (B)
5.500%, 11/15/11 3,000 2,854
Connecticut State Resource
Recovery Authority Revenue
Bond, Wallingford Resources
Project, Series 1 AMT
6.625%, 11/15/01 1,990 2,060
------
8,521
------
DISTRICT OF COLUMBIA -- 1.7%
District of Columbia GO,
Series B (A)
6.000%, 06/01/08 2,305 2,334
District of Columbia GO,
Series B3 (A)
5.300%, 06/01/05 1,000 984
------
3,318
------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44
<PAGE>
1784 FUNDS
================================================================================
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
FLORIDA -- 2.5%
Dade County, Florida, Special
Obligation Revenue Bond,
Courthouse Center Project
5.900%, 04/01/10 $1,500 $1,494
Florida State Department of
General Services Revenue
Bond (A)
5.400%, 09/01/14 1,000 950
Tallahassee, Florida, Utility
System Revenue Bond
5.625%, 10/01/14 2,500 2,384
------
4,828
------
GEORGIA -- 1.1%
Georgia State GO, Series E
5.500%, 07/01/07 1,000 1,016
Municipal Electric Authority of
Georgia, 6th Crossover
Project, Series 1 (A)
7.000%, 01/01/08 1,000 1,129
------
2,145
------
ILLINOIS -- 1.1%
Illinois State Health Facilities
Authority Revenue Bond, OSF
Healthcare System Project
6.000%, 11/15/13 2,250 2,163
------
INDIANA -- 0.3%
Indiana State Bond Bank
Revenue Bond, State
Revolving Fund Project,
Series A
6.875%, 02/01/12 500 537
------
LOUISIANA -- 1.4%
Louisiana State Offshore
Terminal Revenue Bond, Loop
Incorporated Project, Series B
7.200%, 09/01/08 2,520 2,750
------
MAINE -- 0.5%
Maine Municipal Bond Bank
Revenue Bond, Series A
5.700%, 11/01/13 1,090 1,061
------
MARYLAND -- 2.7%
Frederick, Maryland GO (A)
5.900%, 12/01/03 1,000 1,051
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
Maryland State GO
5.600%, 03/15/08 $4,275 $4,328
------
5,379
------
MASSACHUSETTS -- 20.0%
Boston, Massachusetts, Revenue
Bond, Boston City Hospital
Project, Series B (A)
5.750%, 02/15/13 2,800 2,685
Boston, Massachusetts, Water &
Sewer Commission Revenue
Bond, Series A
6.100%, 11/01/06 3,950 4,143
Holyoke, Massachusetts, GO
Series A (A)
5.600%, 06/15/10 1,365 1,352
Massachusetts Bay Transportation
Revenue Bond, Series B
5.800%, 03/01/11 1,000 996
Massachusetts Educational Loan
Authority Revenue Bond,
Series A AMT (A)
6.800%, 01/10/02 1,640 1,749
Massachusetts Municipal
Wholesale Electric Revenue
Bond, Series D
6.000%, 07/01/05 1,625 1,674
Massachusetts Municipal
Wholesale Electric Revenue
Bond, Series D (A)
6.000%, 07/01/11 2,650 2,670
Massachusetts State GO, Series D
5.750%, 05/01/12 2,000 2,000
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
Dana Farber Cancer Project,
Series G-1
6.250%, 12/01/08 1,000 1,009
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
Faulkner Hospital Project,
Series C
5.750%, 07/01/03 2,500 2,488
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
45
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
Medical, Academic &
Scientific Project, Series A
6.200%, 01/01/03 $1,140 $1,190
6.250%, 01/01/05 1,060 1,118
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
New England Deaconess
Hospital Project, Series D
6.625%, 04/01/12 1,000 1,017
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
New England Medical
Center Project, Series F (A)
6.500%, 07/01/12 1,000 1,044
Massachusetts State Health &
Educational Facilities
Authority Revenue Bond,
Suffolk University Project,
Series C (A)
5.850%, 07/01/16 1,000 966
Massachusetts State Housing
Finance Agency Revenue
Bond, Series 44
5.900%, 12/01/13 1,000 986
Massachusetts State Housing
Finance Agency Revenue
Bond, Series A (A)
5.600%, 07/01/07 600 607
5.700%, 07/01/08 600 607
Massachusetts State Housing
Finance Agency Revenue
Bond, Series A AMT
5.900%, 07/01/03 1,750 1,816
Massachusetts State Housing
Finance Agency Revenue
Bond, Series E (A)
6.250%, 11/15/12 2,600 2,646
Massachusetts State Industrial
Finance Agency Pollution
Control Revenue Bond,
General Motors Corporation
Project
5.550%, 04/01/09 1,750 1,673
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
Massachusetts State Industrial
Finance Agency Resource
Recovery Revenue Bond,
Refusetech Project, Series A
6.150%, 07/01/02 $ 1,595 $ 1,633
6.300%, 07/01/05 3,220 3,288
-------
39,357
-------
MICHIGAN -- 0.8%
Michigan State Hospital Finance
Authority Revenue Bond,
Oakwood Hospital Obligation
Group Project, Series A (A)
5.400%, 11/01/07 1,500 1,493
-------
NEW HAMPSHIRE -- 0.3%
New Hampshire State Housing
Finance Authority Revenue
Bond, Series B (A)
5.850%, 07/01/10 500 500
-------
NEW JERSEY -- 2.1%
Union County, New Jersey,
Utility Authority Revenue
Bond, Series A AMT
7.100%, 06/15/06 4,000 4,050
-------
NEW YORK -- 10.7%
Metropolitan Transit Authority,
New York, Commuter
Facilities Revenue Bond,
Series A (A)
5.750%, 07/01/11 1,000 988
New York, New York GO
6.500%, 02/15/07 2,865 2,904
New York, New York GO,
Series A
7.500%, 03/15/09 1,000 1,106
New York, New York GO,
Series C
6.500%, 08/01/05 2,500 2,559
New York, New York GO,
Series D
5.700%, 08/15/06 2,000 1,923
6.000%, 02/15/09 1,000 964
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
46
<PAGE>
1784 FUNDS
================================================================================
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
NEW YORK (CONTINUED)
New York, New York GO,
Series G
5.750%, 02/01/06 $ 2,000 $ 1,933
5.750%, 02/01/07 2,000 1,920
New York State Dormitory
Authority Revenue Bond,
State University Educational
Facilities Project, Series A
5.875%, 05/15/07 1,000 981
5.900%, 05/15/08 1,250 1,223
New York State GO, Series B
5.625%, 08/15/08 3,000 3,011
New York State Urban
Development Revenue Bond,
Youth Facilities Project (A)
5.700%, 04/01/14 1,505 1,480
-------
20,992
-------
NORTH CAROLINA -- 1.5%
North Carolina Eastern
Municipal Power Revenue
Bond, Series B
6.000%, 01/01/05 3,000 3,015
-------
OHIO -- 1.6%
Cleveland, Ohio Water Works
Revenue Bond,
Series F-92 A (A)
6.500%, 01/01/21 2,000 2,195
Ohio State Building Authority
Revenue Bond, Adult
Correctional Facilities
Project (A)
5.700%, 10/01/06 1,000 1,030
-------
3,225
-------
PENNSYLVANIA -- 3.4%
Beaver County, Pennsylvania,
Hospital Authority Revenue
Bond, Medical Center
Project (A)
6.600%, 07/01/04 1,250 1,347
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
Pennsylvania State GO, Third
Series
6.000%, 11/15/02 $1,630 $1,724
Pennsylvania State GO, Third
Series (A)
6.100%, 11/15/04 1,000 1,061
Pennsylvania State Higher
Education Authority Revenue
Bond, Series A (A)
6.800%, 12/01/00 1,490 1,596
Pennsylvania State
Intergovernmental
Cooperative Authority
Special Tax Revenue Bond,
City of Philadelphia Funding
Project (A)
5.600%, 06/15/15 1,000 954
------
6,682
------
PUERTO RICO -- 3.0%
Puerto Rico Commonwealth
Highway & Transportation
Authority Revenue Bond,
Series V (A)
6.375%, 07/01/07 2,210 2,362
Puerto Rico Municipal Finance
Agency Revenue Bond,
Series A (A)
5.600%, 07/01/05 2,000 2,050
Puerto Rico Public Buildings
Authority Revenue Bond,
Series K
6.875%, 07/01/21 1,265 1,415
------
5,827
------
RHODE ISLAND -- 8.7%
Bristol County, Rhode Island,
Water Authority Revenue
Bond, Series A (A)
5.200%, 12/01/13 1,080 996
Pawtucket, Rhode Island GO (A)
5.625%, 04/15/07 1,600 1,622
Providence, Rhode Island GO (A)
6.750%, 01/15/09 1,415 1,505
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
47
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
RHODE ISLAND (CONTINUED)
Rhode Island Depositors
Economic Protection
Revenue Bond, Series B (A)
5.800%, 08/01/09 $ 1,000 $ 1,014
Rhode Island Housing &
Mortgage Finance Revenue
Bond, Series 7B AMT
6.700%, 10/01/12 1,750 1,813
Rhode Island Housing &
Mortgage Finance Revenue
Bond, Series 15B
6.100%, 10/01/05 500 515
6.200%, 10/02/06 1,110 1,135
Rhode Island Housing &
Mortgage Finance Revenue
Bond, Series 19A
5.700%, 04/01/15 2,500 2,422
Rhode Island Housing &
Mortgage Finance Revenue
Bond, Series A (A)
5.700%, 07/01/07 1,000 1,015
Rhode Island State GO, Series B
6.250%, 05/15/05 1,940 2,071
Rhode Island State Student
Loan Authority Revenue
Bond, Series A
6.550%, 12/01/00 1,600 1,670
Rhode Island State Student
Loan Authority Revenue
Bond, Series B AMT
6.900%, 12/01/03 1,300 1,399
-------
17,177
-------
TEXAS -- 3.7%
Dallas-Fort Worth, Texas,
Regional Airport Revenue
Bond, Series A (C)
5.800%, 11/01/07 2,000 2,045
Tarrant County, Texas, Health
Facilities Revenue Bond,
Harris Methodist Health
System Project, Series A (A)
5.125%, 09/01/12 2,700 2,491
Texas State GO, Series A
5.700%, 10/01/07 1,500 1,517
5.750%, 10/01/08 1,280 1,296
-------
7,349
-------
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
UTAH -- 1.3%
Intermountain Power Agency,
Utah, Power Supply Revenue
Bond, Series A (A) (B)
6.250%, 07/01/08 $2,500 $2,613
------
VERMONT -- 1.6%
Vermont Educational & Health
Buildings Revenue Bond,
Medical Center Hospital of
Vermont Project (A)
5.750%, 09/01/07 1,800 1,811
Vermont State Student
Assistance Revenue Bond,
Series A3 AMT (A)
6.050%, 06/15/01 1,300 1,357
------
3,168
------
VIRGINIA -- 2.2%
Norfolk, Virginia, Industrial
Development Authority
Revenue Bond, Daughters
Charity-DePaul Project
6.500%, 12/01/07 3,000 3,191
Virginia State Housing
Development Authority
Revenue Bond, Series H
5.700%, 11/01/07 1,155 1,168
------
4,359
------
WASHINGTON -- 9.9%
Washington State GO,
Series R92-A
6.625%, 09/01/06 2,000 2,128
Washington State Public
Power Supply Systems
Nuclear Power Project No. 1
Revenue Bond
7.500%, 07/01/07 1,000 1,075
5.400%, 07/01/12 5,800 5,256
Washington State Public
Power Supply Systems
Nuclear Power Project
No. 1 Revenue Bond, Series A
5.500%, 07/01/04 2,000 1,990
6.300%, 07/01/09 2,000 2,030
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
48
<PAGE>
1784 FUNDS
================================================================================
- --------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------
WASHINGTON (CONTINUED)
Washington State Public Power
Supply Systems Nuclear
Power Project No. 2
Revenue Bond, Series A
5.500%, 07/01/04 $ 3,000 $ 2,996
6.100%, 07/01/06 1,030 1,056
6.000%, 07/01/12 1,000 975
6.250%, 07/01/12 2,000 2,000
--------
19,506
--------
WISCONSIN -- 2.5%
Wisconsin State GO, Series A
5.750%, 05/01/03 3,305 3,441
5.800%, 05/01/07 1,355 1,389
--------
4,830
--------
TOTAL MUNICIPAL BONDS
(Cost $186,175) 189,100
--------
CASH EQUIVALENTS -- 0.6%
Fidelity Tax-Exempt Money
Market Fund 592 592
Lehman Brothers Institutional
Tax-Free Money
Market Fund 592 592
--------
TOTAL CASH EQUIVALENTS
(Cost $1,184) 1,184
--------
REPURCHASE AGREEMENT -- 5.3%
Goldman Sachs
5.30%, dated 05/31/96, matures
06/03/96, repurchase price
$10,490,995 (collateralized by
various U.S. Treasury Bonds
ranging in par value $1,500,000 -
$10,000,000, 6.25% - 13.875%,
11/15/02 - 11/15/24;
U.S. Treasury Notes ranging
in par value $975,000 -
$10,000,000, 5.75% - 7.875%,
08/31/97 - 11/15/04;
U.S. Treasury STRIPS par value
260,530,000, 11/15/18; total
market value $10,696,090) 10,486 10,486
--------
TOTAL REPURCHASE AGREEMENT
(Cost $10,486) 10,486
--------
- ------------------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------------------
TOTAL INVESTMENTS -- 102.0%
(Cost $197,845) $200,770
--------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- (2.0%) (3,983)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 19,688,611
outstanding shares of beneficial interest 192,366
Accumulated net realized gain on
investments 1,496
Net unrealized appreciation on investments 2,925
--------
TOTAL NET ASSETS-- 100.0% $196,787
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.99
=====
(A) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE FROM AMBAC, CAPITAL
GUARANTY, CONNIE LEE, FGIC, FSA OR MBIA.
(B) WHEN ISSUED SECURITY
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT--ALTERNATIVE MINIMUM TAX
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INVESTORS ASSURANCE
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
49
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
UTILITY BONDS 2%
EDUCATION BONDS 1%
WATER & SEWER BONDS 3%
INDUS. DEVELOP. & POLLUTION CONTROL BONDS 4%
HEALTH CARE BONDS 18%
OTHER REVENUE BONDS 22%
CASH EQUIVALENTS 11%
GENERAL OBLIGATION BONDS 10%
TRANSPORTATION BONDS 12%
ALT. MIN. TAX BONDS 7%
HOUSING BONDS 10%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
MUNICIPAL BONDS -- 91.4%
CONNECTICUT -- 78.7%
Bridgeport, Connecticut GO (B)
8.750%, 08/15/05 $ 500 $ 614
Bridgeport, Connecticut GO,
Series A
6.125%, 03/01/05 2,000 2,090
Bristol, Connecticut, Resource
Recovery Bond, Ogden Martin
System Project
6.500%, 07/01/14 3,000 3,056
Connecticut State Airport
Revenue Bond, Bradley
International Airport (B)
7.650%, 10/01/12 2,000 2,265
Connecticut State Clean Water
Funding Revenue Bond
5.600%, 06/01/09 750 750
7.000%, 01/01/11 300 327
Connecticut State Development
Bond (B)
6.550%, 06/15/09 500 536
Connecticut State Development
Bond, Duncaster Project
6.700%, 09/01/07 3,350 3,534
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
Connecticut State Development
Bond, Jewish Community
Center AMT (A)
6.400%, 09/01/07 $ 400 $ 424
Connecticut State Development
Bond, Pfizer Project
6.550%, 02/15/13 250 267
Connecticut State Development
Bond, Series A
6.000%, 11/15/08 500 519
Connecticut State Health &
Educational Facilities Bond,
Bridgeport Hospital, Series A (B)
6.500%, 07/01/05 250 271
6.550%, 07/01/06 400 433
6.500%, 07/01/12 500 519
Connecticut State Health &
Educational Facilities Bond,
Bridgeport Hospital, Series C (B)
5.250%, 07/01/15 1,000 903
Connecticut State Health &
Educational Facilities Bond,
Choate Rosemary Hall,
Series A (B)
6.800%, 07/01/15 750 809
Connecticut State Health &
Educational Facilities Bond,
Connecticut State University
System, Series A (B)
5.125%, 11/01/12 500 465
Connecticut State Health &
Educational Facilities Bond,
Danbury Hospital, Series E (B)
6.500%, 07/01/05 500 536
Connecticut State Health &
Educational Facilities Bond,
Greenwich Hospital,
Series A (B)
5.750%, 07/01/16 2,000 1,950
Connecticut State Health &
Educational Facilities Bond,
New Britian Hospital,
Series B (B)
6.000%, 07/01/09 500 511
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
50
<PAGE>
1784 FUNDS
================================================================================
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
Connecticut State Health &
Educational Facilities Bond,
New Horizons Village
Project (B)
7.050%, 11/01/09 $1,000 $1,128
Connecticut State Health &
Educational Facilities Bond,
Newington Children's
Hospital, Series A (B)
5.850%, 07/01/07 1,110 1,143
Connecticut State Health &
Educational Facilities Bond,
Sacred Heart University,
Series A (A)
6.600%, 07/01/07 300 330
Connecticut State Health &
Educational Facilities Bond,
Sharon Health Care
Project (B)
6.000%, 11/01/09 1,000 1,025
Connecticut State Health &
Educational Facilities Bond,
St. Raphael Hospital,
Series F (B)
6.200%, 07/01/14 500 508
Connecticut State Health &
Educational Facilities Bond,
University of Hartford, Series D
6.750%, 07/01/12 250 250
Connecticut State Health &
Educational Facilities Bond,
Wadsworth Nursing Home (B)
7.125%, 11/01/14 500 550
Connecticut State Higher
Education Revenue Bond,
Family Education Loan
Program, Series A AMT
7.000%, 11/15/05 655 689
Connecticut State Higher
Education Revenue Bond,
Series A
6.500%, 11/15/00 270 285
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series A
5.950%, 05/15/11 2,715 2,749
6.200%, 05/15/14 650 652
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series B
6.050%, 11/15/03 $ 500 $ 522
6.350%, 11/15/06 400 418
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series B (A)
7.200%, 11/15/01 500 508
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series B1 (A)
7.550%, 11/15/08 545 553
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
SubSeries B1
6.000%, 11/15/15 2,000 1,973
6.000%, 05/15/08 300 310
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
SubSeries B4
7.300%, 11/15/03 1,000 1,050
Connecticut State Resource
Recovery Bond, Bridgeport
Resources, Series A
7.625%, 01/01/09 600 623
Connecticut State Resource
Recovery Bond, Mid-Connecticut
System Project, Series A
5.375%, 11/15/10 (C) 2,000 1,893
Connecticut State Resource
Recovery Bond, Series A AMT
8.000%, 11/15/08 1,500 1,626
8.000%, 11/15/15 2,000 2,167
Connecticut State Resource
Recovery Bond, Wallingford
Project, Series A AMT (A)
7.125%, 11/15/08 250 260
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
51
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 CONNECTICUT TAX-EXEMPT INCOME FUND (CONTINUED)
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
Connecticut State Resource
Recovery Bond, Wallingford
Resources Project, Series 1-
Sub AMT
6.700%, 11/15/02 $ 800 $ 832
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series A
5.400%, 09/01/09 500 484
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series A (B)
5.600%, 06/01/13 500 485
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series B
6.250%, 10/10/09 500 524
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series B (B)
6.100%, 09/01/08 500 526
5.500%, 10/01/11 4,920 4,742
5.600%, 10/01/12 1,000 975
5.600%, 10/01/13 1,000 969
Connecticut State, Certificates
of Participation, Middletown
Courthouse Facilities
Project (B)
6.250%, 12/15/08 1,500 1,577
Connecticut State, Series A GO
6.500%, 03/15/07 750 819
Connecticut State, Series C GO
5.800%, 08/15/08 1,500 1,534
Eastern Connecticut, Resource
Recovery Bond, Wheelabrator
Libson Project, Series A
5.500%, 01/01/14 2,775 2,497
Hartford, Connecticut, GO (B)
5.700%, 10/01/12 500 491
5.750%, 10/01/13 1,000 971
New Haven, Connecticut
Revenue Bond, Air Right
Packaging Facility (B)
6.500%, 12/01/15 2,000 2,120
- --------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------
South Central Connecticut
Regional Water Authority
Revenue Bond, Series A (B)
6.000%, 08/01/09 $ 985 $ 1,011
6.000%, 08/01/10 1,045 1,066
Stratford, Connecticut GO (B)
5.600%, 04/15/12 440 423
-------
64,037
-------
GUAM -- 2.2%
Guam Government Limited
Obligation Highway,
Series A (B)
6.250%, 05/01/07 750 796
Guam Power Authority Revenue
Bond, Series A (B)
5.900%, 10/01/08 1,000 1,032
-------
1,828
-------
PUERTO RICO -- 10.5%
Puerto Rico Commonwealth,
Aqueduct & Sewer Revenue
Bond
6.000%, 07/01/09 250 257
Puerto Rico Commonwealth,
Highway & Transportation
Revenue Bond, Series X
5.300%, 07/01/04 700 690
Puerto Rico Industrial, Medical &
Environmental Revenue Bond,
Abbott Chemicals Project
6.500%, 07/01/09 500 501
Puerto Rico Industrial, Medical &
Environmental Revenue Bond,
PepsiCo Project
6.250%, 11/15/13 2,750 2,870
Puerto Rico Municipal Finance
Agency Revenue Bond,
Series A (B)
6.000%, 07/01/09 2,650 2,713
Puerto Rico Telephone Revenue
Bond, Series L
5.750%, 01/01/08 1,000 1,004
6.000%, 01/01/12 500 501
-------
8,536
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
52
<PAGE>
1784 FUNDS
================================================================================
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $73,469) $74,401
-------
CASH EQUIVALENTS -- 1.8%
Fidelity Tax-Exempt Money
Market Fund $ 751 751
Lehman Brothers Institutional
Tax-Free Money Market Fund 752 752
-------
TOTAL CASH EQUIVALENTS
(Cost $1,503) 1,503
-------
REPURCHASE AGREEMENT -- 9.5%
Lehman Brothers
5.22%, dated 05/31/96,
matures 06/03/96, repurchase
price $7,748,950
(collateralized by various
U.S. Treasury Bonds ranging
in par value $340,000 -
$16,585,000, 6.0% - 8.125%,
02/15/21 - 02/15/26;
U.S. Treasury Notes ranging
in par value $97,355 -
$44,415,000, 5.5% -8.875%,
01/31/00 - 07/31/00; total
market value $7,898,017) 7,746 7,746
-------
TOTAL REPURCHASE AGREEMENT
(Cost $7,746) 7,746
-------
- -------------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------------
TOTAL INVESTMENTS -- 102.7%
(Cost $82,718) $83,650
-------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- (2.7%) (2,209)
-------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 8,008,158
outstanding shares of beneficial interest 80,469
Accumulated net realized gain on
investments 40
Net unrealized appreciation on investments 932
-------
TOTAL NET ASSETS-- 100.0% $81,441
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.17
======
(A) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
(B) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE FROM AMBAC, CAPITAL
GUARANTY, CONNIE LEE, FGIC, FSA, OR MBIA.
(C) WHEN ISSUED SECURITY
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT--ALTERNATIVE MINIMUM TAX
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INVESTOR ASSURANCE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
53
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
OTHER REVENUE BONDS 2%
CASH EQUIVALENTS 5%
ALT. MIN. TAX BONDS 6%
WATER & SEWER BONDS 9%
GENERAL OBLIGATION BONDS 30%
HEALTH CARE BONDS 15%
HOUSING BONDS 10%
TRANSPORTATION BONDS 10%
EDUCATION BONDS 11%
UTILITY BONDS 2%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
MUNICIPAL BONDS -- 93.5%
MASSACHUSETTS -- 92.5%
Boston, Massachusetts GO,
Series A (A)
5.650%, 02/01/09 $1,500 $1,504
Chelsea, Massachusetts GO,
School Loan Project (A)
6.000%, 06/15/02 1,000 1,058
6.000%, 06/15/04 650 689
5.700%, 06/15/06 1,000 1,033
Holyoke, Massachusetts GO,
Series A (A)
5.600%, 06/15/11 1,000 983
5.500%, 06/15/16 815 771
Lawrence, Massachusetts GO
5.375%, 09/15/05 410 402
Lawrence, Massachusetts GO (A)
6.250%, 02/15/09 1,475 1,543
Lowell, Massachusetts GO (A)
5.500%, 08/01/11 2,740 2,706
6.625%, 04/01/15 1,000 1,038
Lynn, Massachusetts,
Water & Sewer Commission
Revenue Bond (A)
5.250%, 12/01/05 475 475
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
Massachusetts Bay Transportation
Authority Revenue Bond,
Series A
5.500%, 03/01/07 $1,500 $1,500
Massachusetts Bay Transportation
Authority Revenue Bond,
Series A (A)
5.750%, 03/01/18 1,000 981
Massachusetts Bay Transportation
Authority Revenue Bond,
Series B
6.000%, 03/01/12 4,000 4,060
Massachusetts Bay Transportation
Authority Revenue Bond,
Series D
5.600%, 03/01/08 1,885 1,906
Massachusetts State Educational
Loan Authority, Issue E,
Series B (A)
6.000%, 01/01/12 450 444
Massachusetts State Educational
Loan Revenue Bond, Issue E,
Series B (A)
6.300%, 07/01/12 1,000 1,016
Massachusetts State GO, Series A
6.250%, 07/01/02 1,250 1,338
7.500%, 06/01/04 1,500 1,721
5.500%, 02/01/11 3,500 3,452
Massachusetts State GO, Series B
5.500%, 11/01/07 1,000 1,006
6.500%, 08/01/08 5,315 5,820
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Brigham & Women's Hospital
Project, Issue D
6.250%, 07/01/01 500 521
6.750%, 07/01/13 1,500 1,554
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Dana Farber Cancer Project,
Series E
6.250%, 10/01/09 1,000 1,026
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
54
<PAGE>
1784 FUNDS
================================================================================
- ---------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ---------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Dana Farber Cancer Project,
Series F (A)
6.000%, 12/01/15 $1,445 $1,443
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Dana Farber Cancer Project,
Series G-1
6.250%, 12/01/09 1,175 1,181
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Emerson Hospital Project,
Series D (A)
5.800%, 08/15/18 3,000 2,888
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Harvard University Project,
Series M
5.750%, 12/01/11 1,000 1,009
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Lahey Clinic Medical Center
Project, Series B (A)
5.625%, 07/01/15 2,085 1,986
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
New England Deaconess
Hospital Project, Series C
7.200%, 04/01/11 830 861
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Newton-Wellesley Hospital
Project, Issue E (A)
5.875%, 07/01/15 3,000 2,955
- ---------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ---------------------------------------------------------
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Northeastern University
Project, Series E (A)
6.500%, 10/01/12 $1,000 $1,056
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Smith College Project,
Series D
5.750%, 07/01/16 1,250 1,202
Massachusetts State Health
& Educational Facilities
Authority Revenue Bond,
Tufts University Project,
Series F
5.950%, 08/15/18 3,000 2,985
Massachusetts State Health
& Educational Facilities,
Baystate Medical Center
Project, Series D (A)
6.000%, 07/01/15 2,000 1,988
Massachusetts State Housing
Finance Agency Revenue
Bond, Housing Project,
Series A
6.300%, 10/01/13 4,950 4,962
Massachusetts State Housing
Finance Agency Revenue
Bond, Series A (A)
5.850%, 12/01/08 1,245 1,262
Massachusetts State Housing
Finance Agency Revenue
Bond, Residential Development
Project, Series A
6.875%, 11/15/11 1,750 1,870
Massachusetts State Housing
Finance Agency Revenue
Bond, Single Family Housing
Project, Series 14
7.700%, 12/01/14 1,945 2,020
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
55
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND (CONTINUED)
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Industrial
Finance Agency Revenue
Bond, Babson College Project,
Series A (A)
6.375%, 10/01/09 $1,000 $1,058
5.750%, 10/01/15 1,000 969
Massachusetts State Municipal
Wholesale Electric Revenue
Bond, Series B
6.750%, 07/01/05 1,000 1,076
Massachusetts State Municipal
Wholesale Electric Revenue
Bond, Series D
6.000%, 07/01/05 1,000 1,030
Massachusetts State Port
Authority Revenue Bond,
Series A
6.000%, 07/01/13 1,050 1,043
Massachusetts State Resource
Recovery Revenue Bond,
Refusetech Project, Series A
6.150%, 07/01/02 900 921
6.300%, 07/01/05 1,000 1,021
Massachusetts State Special
Obligation Revenue Bond,
Series A
5.500%, 06/01/07 2,000 1,992
Massachusetts State Water
Pollution Abatement Trust
Revenue Bond, Pooled Loan
Program, Series 2
6.125%, 02/01/07 730 777
Massachusetts State Water
Resource Authority Revenue
Bond, Series B
5.875%, 11/01/04 1,000 1,045
6.250%, 11/01/10 3,175 3,282
5.500%, 03/01/17 2,000 1,852
- -------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------------
Massachusetts State Water
Resource Authority Revenue
Bond, Series C
6.000%, 12/01/11 $ 2,000 $ 2,055
Nantucket Islands Land Bank,
Massachusetts GO, Series E
7.000%, 07/01/05 1,505 1,616
Nantucket, Massachusetts GO
6.800%, 12/01/11 1,425 1,548
New England Educational Loan
Marketing Corporation,
Student Loan
Project, Series A
5.700%, 07/01/05 4,000 4,005
Rockport, Massachusetts
GO (A)
6.800%, 12/15/02 1,100 1,198
Southbridge, Massachusetts
GO (A)
6.375%, 01/01/12 500 519
University of Lowell
Building Authority,
Massachusetts,
Fifth Series A (A)
5.625%, 11/01/14 3,000 2,967
Worcester, MA GO (A)
6.250%, 10/01/08 430 454
-------
98,643
-------
PUERTO RICO -- 1.0%
Commonwealth of Puerto
Rico GO, Series A
6.000%, 07/01/06 1,000 1,030
-------
TOTAL MUNICIPAL BONDS
(Cost $100,947) 99,673
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
56
<PAGE>
1784 FUNDS
================================================================================
- ------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.8%
Lehman Brothers 5.22%, dated
05/31/96, matures 06/03/96,
repurchase price $5,179,293
(collateralized by various U.S.
Treasury Bonds ranging in par
value $340,000 - $16,585,000,
6.0% - 8.125%, 02/15/21 -
02/15/26; U.S. Treasury Notes
ranging in par value $97,355 -
$44,415,000, 5.5% -8.875%,
01/31/00 - 07/31/00; total
market value $5,278,927) $ 5,177 $ 5,177
--------
TOTAL REPURCHASE AGREEMENT
(Cost $5,177) 5,177
--------
TOTAL INVESTMENTS -- 98.3%
(Cost $106,124) 104,850
--------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 1.7% 1,769
--------
- -----------------------------------------------------------------
DESCRIPTION VALUE (000)
- -----------------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 10,900,209
outstanding shares of beneficial interest $108,788
Accumulated net realized loss on
investments (895)
Net unrealized depreciation on investments (1,274)
---------
TOTAL NET ASSETS-- 100.0% $106,619
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.78
======
(A) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE FROM AMBAC, FGIC, FSA,
OR MBIA.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT--ALTERNATIVE MINIMUM TAX
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FSA--FINANCIAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INVESTORS ASSURANCE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
57
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
CASH EQUIVALENTS 10%
TRANSPORTATION BONDS 3%
UTILITY BONDS 1%
WATER & SEWER BONDS 4%
GENERAL OBLIGATION BONDS 18%
INDUS. DEVELOP. & POLLUTION CONTROL BONDS 12%
EDUCATION BONDS 13%
ALT. MIN. TAX BONDS 12%
HOUSING BONDS 13%
OTHER REVENUE BONDS 8%
HEALTH CARE BONDS 6%
% OF TOTAL PORTFOLIO INVESTMENTS
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
MUNICIPAL BONDS -- 89.2%
RHODE ISLAND -- 84.7%
Cranston, Rhode Island GO (B)
6.100%, 06/15/10 $1,000 $1,036
6.100%, 06/15/15 1,000 1,006
Cumberland, Rhode
Island GO(B)
5.900%, 10/01/06 500 519
Foster & Glocester, Rhode
Island GO (B)
6.900%, 09/01/11 500 536
Kent County, Rhode Island,
Water Authority General
Revenue Bond (B)
6.000%, 07/15/08 500 514
Pawtucket, Rhode Island
GO (B)
5.625%, 04/15/07 750 760
5.750%, 04/15/08 500 508
Providence, Rhode Island
GO (B)
6.750%, 01/15/07 500 532
Providence, Rhode Island,
Housing Development
Revenue Bond, Barbara
Jordan Apartments Project,
Series A (B)
6.500%, 07/01/09 475 488
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
Providence, Rhode Island,
Public Building Authority
GO, Series A (B)
5.400%, 12/15/11 $ 500 $ 478
Rhode Island Capital
Development GO, Series B
6.250%, 05/15/05 1,000 1,068
Rhode Island Clean Water
Agency Revenue Bond,
Safe Drinking Water Project,
Series A (B)
6.500%, 01/01/09 500 525
Rhode Island Clean Water
Agency Revenue Bond,
Series A (B)
6.600%, 10/01/08 500 535
6.750%, 10/01/13 500 537
Rhode Island Convention
Center Authority Revenue
Bond, Series A (B)
5.500%, 05/15/13 1,000 952
Rhode Island Depositor's
Economic Protection Agency
Revenue Bond, Series A (B)
6.500%, 08/01/07 500 539
Rhode Island Depositor's
Economic Protection Agency
Revenue Bond, Series B (B)
5.800%, 08/01/12 1,000 1,004
Rhode Island Health &
Educational Building Revenue
Bond, Kent Hospital Project (B)
7.000%, 07/01/10 500 543
Rhode Island Health &
Educational Building Revenue
Bond, Miriam Hospital Project
7.250%, 04/01/11 500 516
Rhode Island Health &
Educational Building Revenue
Bond, New England
Institutional Project (B)
5.900%, 03/01/10 400 393
Rhode Island Health &
Educational Building Revenue
Bond, Roger Williams
Hospital Project
7.750%, 07/01/16 1,000 1,026
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58
<PAGE>
1784 FUNDS
================================================================================
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
RHODE ISLAND (CONTINUED)
Rhode Island Health &
Educational Building Revenue
Bond, Roger Williams
Project (A)
6.500%, 11/15/08 $ 500 $ 521
Rhode Island Health &
Educational Building Revenue
Bond, Roger Williams
Project (B)
7.000%, 11/15/09 545 586
7.200%, 11/15/14 1,500 1,628
Rhode Island Health &
Educational Building Revenue
Bond, Salve Regina
Project (B)
6.200%, 03/15/08 1,000 1,027
Rhode Island Housing &
Mortgage Financing Revenue
Bond, Series 2
7.700%, 10/01/10 500 523
Rhode Island Housing &
Mortgage Financing Revenue
Bond, Series 7-B
6.700%, 10/01/12 750 777
Rhode Island Housing &
Mortgage Financing Revenue
Bond, Series 13
6.700%, 10/01/15 2,000 2,063
Rhode Island Housing &
Mortgage Financing Revenue
Bond, Series 19-A
5.700%, 04/01/15 1,500 1,453
Rhode Island Housing &
Mortgage Financing Revenue
Bond, Series E-1 (B)
7.500%, 10/01/11 990 1,046
Rhode Island Industrial
Development Revenue Bond,
Cre Corporation Project,
AMT (A)
6.500%, 03/01/14 500 489
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
Rhode Island Industrial
Facilities Revenue Bond
6.000%, 11/01/14 $ 2,850 $ 2,832
Rhode Island Port Authority
& Economic Development
Revenue Bond, Shepard
Building Project, Series B (B)
6.500%, 06/01/08 500 536
6.750%, 06/01/15 515 547
Rhode Island Student Loan
Authority Revenue Bond,
AMT, Series A
6.550%, 12/01/00 500 522
Rhode Island Student Loan
Authority Revenue Bond,
AMT, Series B
6.850%, 12/01/02 500 523
7.000%, 12/01/04 1,390 1,496
Villa Excelsior, Rhode Island
Housing Development
Mortgage Revenue Bond (B)
6.650%, 07/01/12 490 509
Warwick, Rhode Island GO,
Series A (B)
6.600%, 11/15/06 500 535
Westerly, Rhode Island GO (B)
5.850%, 09/15/08 450 459
-------
32,087
-------
PUERTO RICO -- 4.5%
Puerto Rico Highway &
Transportation Authority
Revenue Bond, Series V
6.375%, 07/01/07 1,135 1,199
Puerto Rico Industrial Medical
& Environmental Pollution
Control Revenue Bond,
PepsiCo Project, Series A
6.250%, 11/15/13 500 524
-------
1,723
-------
TOTAL MUNICIPAL BONDS
(Cost $33,291) 33,810
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
59
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND (CONTINUED)
- -----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------
CASH EQUIVALENTS -- 1.7%
Fidelity Tax-Exempt Money
Market Fund $ 317 $ 317
Lehman Brothers Institutional
Tax-Free Money Market Fund 317 317
-------
TOTAL CASH EQUIVALENTS
(Cost $634) 634
-------
REPURCHASE AGREEMENT -- 8.0%
Lehman Brothers 5.22%, dated
05/31/96, matures 06/03/96,
repurchase price $3,044,561
(collateralized by various U.S.
Treasury Bonds ranging in par
value $340,000 - $16,585,000,
6.0% - 8.125%, 02/15/21 -
02/15/26; U.S. Treasury Notes
ranging in par value $97,355 -
$44,415,000, 5.5% - 8.875%,
01/31/00 - 07/31/00; total
market value $3,043,237) 3,043 3,043
-------
TOTAL REPURCHASE AGREEMENT
(Cost $3,043) 3,043
-------
TOTAL INVESTMENTS -- 98.9%
(Cost $36,968) 37,487
-------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 417
-------
- ---------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ---------------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 3,768,322
outstanding shares of beneficial interest $37,406
Accumulated net realized loss on
investments (21)
Net unrealized appreciation on investments 519
-------
TOTAL NET ASSETS-- 100.0% $37,904
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.06
=======
(A) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
(B) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE FROM AMBAC, CONNIE
LEE, FGIC, FHA, FSA, OR MBIA
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT--ALTERNATIVE MINIMUM TAX
FGIC--FINANCIAL GUARANTY INSURANCE COMPANY
FHA--FINANCIAL HOUSING AUTHORITY
FSA--FINANCIAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INVESTOR ASSURANCE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
60
<PAGE>
AS OF MAY 31, 1996 1784 FUNDS
STATEMENT OF NET ASSETS
================================================================================
THE 1784 ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 5%
U.S. TREASURY OBLIGATIONS 22%
CASH EQUIVALENTS 10%
COMMON STOCK 54%
ASSET-BACKED SECURITIES 2%
CORPORATE OBLIGATIONS 6%
MEDIUM-TERM NOTES 1%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 54.9%
AEROSPACE & DEFENSE -- 1.6%
Raytheon 5,000 $ 266
-----
AIR TRANSPORTATION -- 2.0%
AMR (A) 3,500 330
-----
AUTOMOTIVE -- 1.5%
Ford Motor 7,000 256
-----
BANKS -- 2.6%
BankAmerica 3,500 263
Norwest 5,000 174
-----
437
-----
BASIC INDUSTRIES -- 3.3%
E.I. du Pont de Nemours 4,000 319
Willamette Industries 4,000 240
-----
559
-----
CAPITAL GOODS/MACHINERY
CONSTRUCTION -- 3.1%
Fluor 3,500 228
General Electric 3,500 290
-----
518
-----
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER NON-DURABLES/
WHOLESALE TRADE -- 5.4%
Nestle ADR 6,000 $ 338
PepsiCo 9,000 299
Procter & Gamble 3,000 264
------
901
------
ENERGY -- 5.7%
Exxon 4,000 339
Mobil 2,500 282
Schlumberger 4,000 334
------
955
------
ENTERTAINMENT -- 1.4%
Walt Disney 4,000 243
------
FINANCIAL SERVICES -- 5.5%
American International Group 4,000 377
Aon 3,500 176
FNMA 12,000 371
------
924
------
HEALTH CARE -- 8.3%
Bristol-Myers Squibb 3,000 256
Elan ADR (A) 3,000 188
Genzyme (A) 3,600 210
Johnson & Johnson 4,000 390
Merck 5,500 355
------
1,399
------
MEASURING DEVICES -- 1.7%
Thermo Electron 4,500 287
------
RAILROADS -- 1.8%
CSX 6,000 297
------
TECHNOLOGY -- 5.8%
AMP 4,500 189
Computer Associates
International 3,500 255
Ericsson Telephone ADR (A) 12,000 277
Hewlett Packard 2,400 256
------
977
------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
61
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
===========================================
THE 1784 ASSET ALLOCATION FUND (CONTINUED)
- -------------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -------------------------------------------------------------
TELEPHONES &
TELECOMMUNICATIONS -- 3.2%
AT&T 5,000 $ 312
NYNEX 5,000 231
-------
543
-------
WHOLESALE -- 2.0%
Sysco 10,000 341
-------
TOTAL COMMON STOCKS
(Cost $7,606) 9,233
-------
U.S. TREASURY OBLIGATIONS -- 21.7%
U.S. Treasury Bonds
8.125%, 08/15/19 $ 100 111
7.250%, 08/15/22 500 504
7.125%, 02/15/23 300 299
U.S. Treasury Notes
6.000%, 06/30/96 80 80
6.500%, 09/30/96 100 100
5.000%, 01/31/99 100 97
5.500%, 04/15/00 200 193
6.125%, 07/31/00 1,100 1,080
5.625%, 11/30/00 250 240
6.500%, 08/15/05 500 487
5.625%, 02/15/06 500 458
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,770) 3,649
-------
U.S. GOVERNMENT MORTGAGE-BACKED
BONDS -- 4.5%
Federal National Mortgage
Association
6.500%, 05/01/11 606 582
Government National Mortgage
Association
7.500%, 06/12/23 183 180
-------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED BONDS
(Cost $778) 762
-------
MEDIUM TERM NOTES -- 0.6%
Federal National Mortgage
Association
7.720%, 12/16/96 100 101
-------
TOTAL MEDIUM TERM NOTES
(Cost $100) 101
-------
- -----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------------
CORPORATE OBLIGATIONS -- 6.0%
Allstate
5.875%, 06/15/98 $ 100 $ 99
Associates of North America
9.700%, 05/01/97 100 103
AT&T
7.000%, 05/15/05 200 196
Chase Manhattan
8.000%, 06/15/99 200 206
Ford Motor Credit
6.750%, 05/15/05 100 95
General Motors Acceptance
6.625%, 10/01/02 200 193
North Carolina National Bank
8.500%, 11/01/96 100 101
Private Export Funding
8.400%, 07/31/01 25 27
------
TOTAL CORPORATE OBLIGATIONS
(Cost $1,043) 1,020
------
ASSET-BACKED SECURITIES -- 1.9%
Ford Credit Grantor, Series 1994-B
Class A
7.300%, 10/15/99 51 52
Premier Auto Trust, Series 1993-4
Class A2
4.650%, 02/02/99 63 62
Signet Credit Card Master Trust,
Series 1993-3 Class B
5.250%, 04/15/00 100 99
Standard Credit Card Master
Trust, Series 1991-1 Class B
9.000%, 08/07/96 100 102
------
TOTAL ASSET-BACKED SECURITIES
(Cost $314) 315
------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
62
<PAGE>
1784 FUNDS
================================================================================
- ----------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------
REPURCHASE AGREEMENT -- 9.5%
Lehman Brothers
5.22%, dated 05/31/96, matures
06/03/96, repurchase price
$1,592,989 (collateralized by
various U.S. Treasury Bonds
ranging in par value $340,000 -
$16,585,000, 6.0% - 8.125%,
02/15/21 - 02/15/26;
U.S. Treasury Notes ranging
in par value $97,355 -
$44,415,000, 5.5% -8.875%,
01/31/00 - 07/31/00; total
market value $1,623,633) $ 1,592 $ 1,592
-------
TOTAL REPURCHASE AGREEMENT
(Cost $1,592) 1,592
-------
TOTAL INVESTMENTS -- 99.1%
(Cost $15,203) 16,672
-------
OTHER ASSETS AND LIABILITIES,
NET-- 0.9% 159
-------
- ----------------------------------------------------------------
DESCRIPTION VALUE (000)
- ----------------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 1,367,096
outstanding shares of beneficial interest $14,818
Accumulated net realized gain on
investments 456
Net unrealized appreciation on investments 1,469
Undistributed net investment income 88
-------
TOTAL NET ASSETS-- 100.0% $16,831
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $12.31
=======
(A) NON-INCOME PRODUCING SECURITY.
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
63
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
BANKS 1%
AIR TRANSPORTATION 1%
BASIC INDUSTRIES 5%
BEVERAGES 2%
CAPITAL GOODS/MACHINERY 6%
CONSUMER DURABLES 3%
CONSUMER NON-DURABLES 1%
ENERGY 9%
ENTERTAINMENT 2%
FINANCIAL SERVICES 9%
HEALTH CARE 8%
MERCHANDISE STORES 9%
RESTAURANTS 12%
CASH EQUIVALENTS 4%
TECHNOLOGY 25%
TELEPHONES & TELECOMMUNICATIONS 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCKS -- 95.8%
AIR TRANSPORTATION -- 0.7%
Delta Air Lines 25,000 $ 2,072
-------
BANKS -- 0.9%
First Tennessee National Bank 80,000 2,690
-------
BASIC INDUSTRIES -- 5.1%
AK Steel Holding 100,000 4,325
E.I. du Pont de Nemours 50,000 3,988
Newmont Mining 50,000 3,013
Nucor 75,000 4,125
-------
15,451
-------
BEVERAGES -- 2.4%
Coca Cola 158,112 7,273
-------
CAPITAL GOODS/MACHINERY
CONSTRUCTION -- 5.5%
Fluor 50,000 3,262
General Electric 40,000 3,310
Hardinge 109,375 3,418
NN Ball and Roller 60,000 1,410
TB Wood's (A) 74,400 763
UCAR International (A) 102,500 4,382
-------
16,545
-------
- --------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------
CONSUMER DURABLES -- 3.1%
Cintas 30,000 $ 1,605
Newell 125,000 3,750
Rentokil Group 650,000 4,131
-------
9,486
-------
CONSUMER NON-DURABLES/
WHOLESALE TRADE -- 1.2%
Gillette 60,000 3,548
-------
ENERGY -- 9.4%
Amoco 45,000 3,263
Arakis Energy (A) 310,000 1,724
Chesapeake Energy (A) 32,500 2,494
Enron 100,000 4,000
Exxon 75,000 6,356
Mobil 40,000 4,515
Schlumberger 75,000 6,253
-------
28,605
-------
ENTERTAINMENT -- 1.8%
Walt Disney 90,000 5,468
-------
FINANCIAL SERVICES -- 9.2%
American International Group 40,000 3,770
Equity Inns 200,000 2,375
Felcor Suite Hotels 200,000 6,175
Hospitality Properties Trust 120,000 3,120
Litchfield Financial (A) 170,000 2,465
Mid-America Apartment
Communities 75,000 1,894
RFS Hotel Investors 281,000 4,847
Storage USA 50,000 1,681
Winston Hotels 150,000 1,725
-------
28,052
-------
HEALTH CARE -- 8.3%
Abbott Laboratories 84,633 3,650
Cardinal Health 48,786 3,116
Elan Corp PLC (A) 50,000 3,137
Eli Lilly 50,000 3,213
Johnson & Johnson 50,000 4,869
Medtronic 60,000 3,375
Merck 60,000 3,877
-------
25,237
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
64
<PAGE>
1784 FUNDS
================================================================================
- -----------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -----------------------------------------------------------------------
MERCHANDISE STORES -- 8.7%
Bed Bath and Beyond (A) 200,000 $ 5,625
Carrefour Supermarche (A) 12,000 6,570
Grand Optical Photoservice (A) 30,000 4,040
Home Depot 142,300 7,275
Moebel Walther (A) 75,000 2,899
---------
26,409
---------
RESTAURANTS -- 12.0%
J.D. Wetherspoon 700,000 10,199
Lone Star Steakhouse &
Saloon (A) 220,000 8,883
Outback Steakhouse (A) 70,000 2,651
Papa John's International (A) 150,000 7,387
Pizza Express (A) 1,000,000 5,735
Rainforest Cafe (A) 37,500 1,519
---------
36,374
---------
TECHNOLOGY -- 24.5%
AVX 40,000 870
Baan ADR (A) 70,000 2,520
Bay Networks (A) 129,375 3,752
Cambridge Technology
Partners (A) 83,000 6,350
Cisco Systems (A) 75,000 4,106
Intel 105,000 7,927
Microsoft (A) 55,000 6,531
Motorola 75,000 5,006
Oracle (A) 150,000 4,969
Pinnacle Micro (A) 160,000 1,600
Robotic Vision Systems (A) 275,000 5,225
Sap AG (A) 113,250 15,669
Security Dynamics Tech (A) 60,000 5,325
Texas Instruments 80,000 4,500
---------
74,350
---------
TELEPHONES & TELECOMMUNICATION -- 3.0%
AT&T 100,000 6,238
U.S. West Media Group (A) 150,000 2,831
---------
9,069
---------
TOTAL COMMON STOCKS
(Cost $199,319) 290,629
---------
- ----------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.0%
J.P. Morgan
5.30%, dated 05/31/96,
matures 06/03/96, repurchase
price $12,330,772
(collateralized by various
U.S. Treasury Notes ranging
in par value $20,493,000 -
$100,000,000, 4.75% -
8.875%, 08/31/98 - 11/15/98;
total market value
$12,571,964) $ 12,325 $ 12,325
--------
TOTAL REPURCHASE AGREEMENT
(Cost $12,325) 12,325
--------
TOTAL INVESTMENTS -- 99.8%
(Cost $211,644) 302,954
--------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 0.2% 509
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 19,922,833
outstanding shares of beneficial interest 206,739
Accumulated net realized gain on
investments 5,057
Net unrealized appreciation on investments 91,310
Undistributed net investment
income 357
--------
TOTAL NET ASSETS-- 100.0% $303,463
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $15.23
========
(A) NON-INCOME PRODUCING SECURITY
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
65
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 GROWTH FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
CAPITAL GOODS/MACHINERY 5%
CONSUMER DURABLES 3%
ENERGY 6%
ENTERTAINMENT 2%
HEALTH CARE 15%
MERCHANDISE STORES 6%
MISCELLANEOUS CONSUMER SERVICES 3%
PRINTING & PUBLISHING 3%
RESTAURANTS 9%
TECHNOLOGY 17%
TELEPHONES & TELECOMMUNICATIONS 2%
CASH EQUIVALENTS 24%
AGRICULTURE 2%
BASIC INDUSTRIES 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------
COMMON STOCKS -- 74.9%
AGRICULTURE -- 1.6%
Northland Cranberries 27,000 $ 756
-------
BASIC INDUSTRIES -- 2.6%
AK Steel Holding 15,000 649
Nucor 10,000 550
-------
1,199
-------
CAPITAL GOODS/MACHINERY
CONSTRUCTION -- 4.6%
Bolder Technologies (A) 25,000 322
Hardinge 19,500 609
NN Ball and Roller 23,000 540
UCAR International (A) 15,000 641
-------
2,112
-------
CONSUMER DURABLES -- 3.2%
GTS Duratek (A) 30,000 510
Rentokil Group 150,000 953
-------
1,463
-------
ENERGY -- 6.4%
Chesapeake Energy (A) 11,000 844
GeoScience (A) 40,000 810
- ----------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ----------------------------------------------------------
Maverick Tube (A) 50,000 $ 656
Nuevo Energy (A) 20,000 620
-------
2,930
-------
ENTERTAINMENT -- 2.3%
Q-Zar (A) 170,000 1,063
-------
HEALTH CARE -- 14.5%
Arterial Vascular (A) 20,000 844
Boston Scientific (A) 20,000 858
Cardiogenesis (A) 15,000 259
Dentsply International 20,000 860
Elan ADR (A) 15,000 941
General Surgical
Innovations (A) 20,000 400
Healthcare Compare (A) 14,000 677
Healthsource (A) 35,000 792
Medtronic 15,000 844
Sonus Pharmaceuticals (A) 10,000 201
-------
6,676
-------
MISCELLANEOUS CONSUMER
SERVICES -- 2.5%
Wolford (A) 5,000 1,164
-------
MERCHANDISE STORES -- 6.2%
Bed Bath and Beyond (A) 10,000 281
Carrefour Supermarche (A) 1,350 739
Grand Optical-Photoservice (A) 8,000 1,077
Moebel Walther (A) 20,000 773
-------
2,870
-------
PRINTING & PUBLISHING -- 3.4%
Applied Graphics
Technologies (A) 60,000 885
IVI Publishing (A) 70,000 674
-------
1,559
-------
RESTAURANTS -- 8.6%
J.D. Wetherspoon 72,000 1,049
Lone Star Steakhouse &
Saloon (A) 17,500 707
Papa John's International (A) 15,000 739
Pizza Express (A) 150,000 860
Rainforest Cafe (A) 15,000 607
-------
3,962
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
66
<PAGE>
1784 FUNDS
================================================================================
- ---------------------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ---------------------------------------------------------------------
TECHNOLOGY -- 17.0%
Baan ADR (A) 20,000 $ 720
Cambridge Technology
Partners (A) 12,500 956
Cisco Systems (A) 20,000 1,095
I2 Technologies (A) 10,000 403
Intel 10,000 755
Lanvision Systems (A) 50,000 863
Oracle (A) 22,500 745
Robotic Vision Systems (A) 32,000 608
Sap AG (A) 4,000 553
Security Dynamics
Technologies (A) 12,500 1,109
-------
7,807
-------
TELEPHONE & TELECOMMUNICATIONS -- 2.0%
Geotek Communications (A) 65,000 902
-------
TOTAL COMMON STOCKS
(Cost $31,073) 34,463
-------
REPURCHASE AGREEMENTS -- 24.8%
Goldman Sachs
5.30%, dated 05/31/96,
matures 06/03/96, repurchase
price $5,702,178
(collateralized by various
U.S. Treasury Bonds ranging
in par value $1,500,000 -
$10,000,000, 6.25% -
13.875%, 11/15/02 -
11/15/24; U.S. Treasury
Notes ranging in par value
$975,000 - $10,000,000,
5.75% - 7.875%, 08/31/97 -
11/15/04; U.S. Treasury
STRIPS par value $260,530,000,
11/15/18; total market
value $5,813,858) $ 5,700 5,700
- --------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------
Lehman Brothers
5.22%, dated 05/31/96,
matures 06/03/96, repurchase
price $5,702,140
(collateralized by various
U.S. Treasury Bonds ranging
in par value $340,000 -
$16,585,000, 6.0% - 8.125%,
02/15/21 - 02/15/26;
U.S. Treasury Notes ranging
in par value $97,355 -
$44,415,000, 5.5% -8.875%,
01/31/00 - 07/31/00; total
market value $5,813,734) $ 5,700 $ 5,700
-------
TOTAL REPURCHASE AGREEMENTS
(Cost $11,400) 11,400
-------
TOTAL INVESTMENTS -- 99.7%
(Cost $42,473) 45,863
-------
TOTAL OTHER ASSETS AND LIABILITIES,
NET -- 0.3% 163
-------
NET ASSETS
Capital Shares (unlimited authorization --
no par value) based on 4,084,644
shares of beneficial interest 42,546
Net unrealized appreciation on investments 3,390
Undistributed net investment income 90
-------
TOTAL NET ASSETS-- 100.0% $46,026
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $11.27
=======
(A) NON-INCOMING PRODUCING SECURITIES
ADR--AMERICAN DEPOSITORY RECEIPT
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
67
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PIE CHART
[GRAPHIC OMITTED]
GERMANY 4%
HONG KONG 4%
OTHER EUROPE 13%
OTHER PACIFIC RIM 9%
EMERGING MARKETS 7%
CASH EQUIVALENTS 7%
JAPAN 31%
UNITED KINGDOM 10%
NETHERLANDS 8%
FRANCE 7%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------------------
FOREIGN STOCKS -- 91.2%
ARGENTINA -- 1.0%
Cia Naviera Perez, Series B 161,000 $ 1,030
Quilmes Industrial SA ADR (A) 104,400 1,279
Telefonica de Argentina ADR 43,050 1,254
----------
3,563
----------
AUSTRALIA -- 3.7%
Brambles Industries 124,000 1,743
Broken Hill Proprietary 143,680 2,168
M.I.M. Holdings 1,000,000 1,421
Mayne Nickless 256,200 1,508
News Corporation 289,000 1,622
Sydney Harbour Casino
Holdings (A) 1,600,000 2,415
Western Mining 337,750 2,559
----------
13,436
----------
BRAZIL -- 0.7%
Compania Energie
de Minas ADR 44,501 1,179
Telebras SA 30,400,000 1,523
----------
2,702
----------
- ----------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ----------------------------------------------------------
CHILE -- 1.0%
Empresa Nacional
de Electricidad 50,400 $ 970
Five Arrows Chile Fund 383,000 1,063
Genesis Chile Fund 37,015 1,481
---------
3,514
---------
COLOMBIA -- 0.6%
Carulla SA ADR 156,940 1,276
Corp Fin de Valle ADR 115,967 1,001
---------
2,277
---------
FRANCE -- 6.9%
Accor 9,912 1,427
Alcatel Aslthom 18,900 1,720
Castorama Dubois Investisse 22,442 4,153
Groupe Danone 5,753 840
L'Oreal 11,240 3,416
LVMH 14,570 3,530
Promodes 15,400 4,019
Roussel-Uclaf 18,900 4,374
Television Francaise TF1 11,800 1,375
---------
24,854
---------
GERMANY -- 3.0%
Degussa 9,500 3,272
Deutsche Pfandbrief &
Hypobank 38,060 1,526
GEA AG 1,000 339
Gehe AG 5,600 3,556
Gehe AG New 825 519
Hoechst AG 5,000 1,670
---------
10,882
---------
HONG KONG -- 4.0%
China Light & Power 237,500 1,130
Giordano International 1,550,000 1,392
Guangdong Investment 1,962,000 1,280
HSBC Holdings 154,800 2,341
Hutchison Whampoa 333,000 2,139
Shangri-La Asia 832,000 1,151
Sun Hung Kai Properties 240,080 2,451
Swire Pacific, Series A 179,500 1,595
Television Broadcasts 273,500 1,082
---------
14,561
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
68
<PAGE>
1784 FUNDS
================================================================================
- --------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------
HUNGARY -- 0.3%
Gedeon Richter 27,000 $ 1,093
-------
INDIA -- 0.6%
Hindalco Industries GDR (A) 30,000 1,271
Tata Engineering &
Locom GDR 58,800 1,029
-------
2,300
-------
INDONESIA -- 0.6%
PT Astra International 640,000 960
PT Gudang Garam 160,000 1,303
-------
2,263
-------
IRELAND -- 0.4%
Cement Roadstone 130,826 1,236
CRH 25,160 240
-------
1,476
-------
ITALY -- 2.4%
Edison SPA 348,500 2,022
Luxottica Group ADR 45,500 3,520
Stet Societa' Finanziara
Telefonica SPA 856,000 3,061
-------
8,603
-------
JAPAN -- 30.6%
Asahi Chemical Industries 450,000 3,264
Canon Sales 190,000 5,167
Citizen Watch 360,000 2,927
Daiichi Pharmaceutical 220,000 3,399
Dainippon Ink & Chemical 600,000 2,931
Fuji Bank 140,000 3,043
Fujitsu 320,000 2,901
Hitachi 450,000 4,163
House Food 76,000 1,495
Hoya 104,000 3,338
Inax 85,000 865
Kao 310,000 4,129
Keyence 25,500 3,350
Kyocera 57,000 3,902
Marui 150,000 3,080
Matsushita Electric 190,000 3,269
Mitsubishi Bank 157,500 3,497
Mitsubishi Heavy Industries 400,000 3,438
Mori Seiki 130,000 2,429
NGK Spark Plug 160,000 1,850
- ---------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ---------------------------------------------------------
Nikon 306,000 $ 3,737
Nippon Comsys 250,700 3,200
Nippon Express 300,000 2,997
Nippon Steel 1,000,000 3,395
Sanwa Bank 150,000 2,886
Sanyo Electric 597,000 3,551
Secom 44,000 2,849
Sharp 213,000 3,468
Shimano 120,000 2,276
Shin-Etsu Chemical 180,000 3,597
TDK 50,000 2,845
Tokio Marine & Fire
Insurance 310,000 4,015
Toppan Printing 230,000 3,277
Toyota Motor 150,000 3,427
York Benimaru 69,000 2,815
--------
110,772
--------
KOREA -- 0.4%
Korea Fund 69,825 1,536
--------
MALAYSIA -- 0.8%
Genting Berhad 114,500 971
Renong Berhad 660,000 1,099
Sime Darby Berhad 333,000 893
--------
2,963
--------
MEXICO -- 1.0%
Cifra de C.V. SA ADR (A) 710,300 1,073
Coca Cola Femsa SA ADR 33,450 966
Desc de C.V. SA ADR (A) 66,454 1,420
Grupo Industrial Durango
ADR (A) 15,000 127
--------
3,586
--------
MOROCCO -- 0.1%
Banque Marocaine GDR (A) 11,700 174
--------
NETHERLANDS -- 8.1%
Getronics 42,193 3,498
Hunter Douglas 50,000 3,461
Koninklijke Ahold 92,543 4,952
Nutricia Vereenigde Bedrijven 40,000 4,265
Philips Electronics 87,600 3,101
Randstad Holdings 75,000 5,437
Wolters Kluwer 41,263 4,602
--------
29,316
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
69
<PAGE>
AS OF MAY 31, 1996
STATEMENT OF NET ASSETS
================================================================================
THE 1784 INTERNATIONAL EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------
NORWAY -- 0.3%
Norsk Hydro 23,300 $ 1,104
---------
PHILIPPINES -- 0.7%
Manila Electric, Series B 142,650 1,457
Philippine Long Distance
Telephone ADR 19,000 1,092
---------
2,549
---------
POLAND -- 0.4%
Elektrim 155,000 1,039
Mostostal Export (A) 137,000 413
---------
1,452
---------
PORTUGAL -- 0.7%
Banco Comercial Portugues 35,000 430
Banco Totta & Acores, Series B 22,000 430
Jeronimo Martins 12,200 967
Sonae Investimentos 28,000 707
---------
2,534
---------
SINGAPORE -- 2.3%
City Developments 221,100 1,694
Development Bank of
Singapore 176,837 2,095
Fraser & Neave 196,720 2,135
Keppel 306,000 2,561
---------
8,485
---------
SOUTH AFRICA -- 0.6%
Barlow ADR 40,000 422
De Beers Consolidated
Mines ADR 15,802 512
Gencor ADR 120,000 468
Impala Platinum Holdings
ADR 25,000 395
South African Breweries ADR 16,000 471
---------
2,268
---------
SPAIN -- 2.6%
Empresa Nacional
de Electricidad SA 67,000 4,152
Gas Natural, Series E 24,400 4,296
Repsol SA 28,000 956
---------
9,404
---------
- --------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------
SWEDEN -- 1.4%
Atlas Copco, Series A 148,000 $ 2,749
Atlas Copco, Series B 15,000 280
Ericsson LM, Series B 99,000 2,214
---------
5,243
---------
SWITZERLAND -- 3.9%
ABB 3,830 4,576
Nestle SA 1,560 1,756
Roche Holding Genusscheine 740 5,673
Sandoz 2,000 2,073
---------
14,078
---------
TAIWAN -- 0.5%
Advanced Semiconductor
Engineering GDR (A) 82,800 725
Taipei Fund (A) 14 1,113
---------
1,838
---------
THAILAND -- 0.9%
Bangkok Bank 89,000 1,294
Electricity Generating Public 220,000 938
United Communication
Industry 82,300 1,144
---------
3,376
---------
TURKEY -- 0.2%
Arcelik AS 2,028,998 163
Tat Konserve Sanayii 700,000 325
---------
488
---------
UNITED KINGDOM -- 10.1%
BAA 270,000 2,054
BOC Group 180,000 2,596
BTR 20,000 87
EMAP 222,200 2,424
Farnell Electronic 220,000 2,481
Granada Group 228,497 2,914
Invesco 405,000 1,575
Morgan Crucible 359,005 2,375
Reckitt & Colman 220,000 2,362
Reuters Holdings 201,000 2,337
Royal Bank of Scotland 244,000 1,973
Security Services 139,100 2,647
Standard Chartered 284,574 2,831
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
70
<PAGE>
1784 FUNDS
================================================================================
- ----------------------------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ----------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
Shell Transportation & Trading 150,000 $ 2,134
WPP Group 985,000 3,022
Zeneca Group 127,000 2,698
-----------
36,510
-----------
VENEZUELA -- 0.4%
Corimon SA ADR(DAGGER) 66,410
Mavesa SA ADR 287,647 1,208
Mavesa SA ADR 144a (B) 49,200 207
-----------
1,415
-----------
TOTAL FOREIGN STOCKS
(Cost $288,871) 330,615
-----------
FOREIGN PREFERRED STOCKS -- 1.5%
AUSTRALIA -- 0.1%
News Corporation 41,200 201
-----------
BRAZIL -- 0.5%
Banco Bradesco SA 91,784,246 1,071
Brasmotor SA 3,610,000 985
-----------
2,056
-----------
GERMANY -- 0.9%
Fielmann AG 42,000 1,932
GEA AG 4,100 1,269
-----------
3,201
-----------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $5,519) 5,458
-----------
REPURCHASE AGREEMENT -- 7.8%
J.P. Morgan
5.30%, dated 05/31/96,
matures 06/03/96, repurchase
price $28,253,816
(collateralized by various U.S.
Treasury Bonds ranging
in par value $4,014,579-
$9,795,000, 4.750%-8.875%,
8/31/98-11/15/98, total
market value $28,801,532) $28,241 28,241
-----------
- -----------------------------------------------------------
DESCRIPTION VALUE (000)
- -----------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $28,241) $ 28,241
---------
TOTAL INVESTMENTS -- 100.5%
(Cost $322,631) $ 364,314
---------
OTHER ASSETS AND LIABILITIES -- (0.5%)
Unrealized appreciation on forward
foreign currency contracts 1,308
Other assets and liabilities (3,162)
---------
TOTAL OTHER ASSETS AND LIABILITIES, NET (1,854)
---------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 30,085,924
outstanding shares of beneficial interest 316,359
Accumulated net realized gain on
investments 1,485
Net unrealized appreciation on forward
foreign currency contracts, currency
and transactions of other assets and
liabilities in foreign currency 1,298
Net unrealized appreciation on
investments 41,683
Undistributed net investment income 1,635
---------
TOTAL NET ASSETS-- 100.0% $ 362,460
=========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE $12.05
=========
(A) NON-INCOME PRODUCING SECURITY
(B) SECURITY SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER SECTION 4(2) OR 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED" INVESTORS. THESE SECURITIES HAVE BEEN DETERMINED TO BE LIQUID
UNDER GUIDELINES ESTABLISHED BY THE BOARD OF DIRECTORS.
ADR -- AMERICAN DEPOSITORY RECEIPTS
GDR --GLOBAL DEPOSITORY RECEIPTS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
71
<PAGE>
FOR THE PERIOD ENDED MAY 31
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (000)
====================================================================================================================================
1784 1784
1784 1784 1784 U.S. GOVERNMENT TAX-EXEMPT
U.S. TREASURY TAX-FREE SHORT-TERM MEDIUM-TERM 1784 MEDIUM-TERM
MONEY MARKET MONEY MARKET INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
INCOME:
DIVIDEND INCOME ........................... $ -- $ -- $ -- $ -- $ 4 $ --
INTEREST INCOME ........................... 3,906 23,448 4,773 10,624 14,590 10,598
LESS: FOREIGN TAXES WITHHELD .............. -- -- -- -- -- --
------- ------- ------- ------- ------- -------
TOTAL INCOME ............................ 3,906 23,448 4,773 10,624 14,594 10,598
------- ------- ------- ------- ------- -------
EXPENSES:
INVESTMENT ADVISORY FEES .................. 276 2,329 367 1,117 1,550 1,376
WAIVER OF INVESTMENT ADVISORY FEES ........ -- (333) (19) (211) (293) (260)
REIMBURSEMENT OF EXPENSES BY ADVISER ...... -- -- -- (81) (27) (60)
ADMINISTRATOR FEES ........................ 75 631 79 164 227 202
WAIVER OF ADMINISTRATOR FEES .............. (75) -- (79) -- -- --
12B-1 FEES ................................ -- -- 184 378 524 465
WAIVER OF 12B-1 FEES ...................... -- -- (184) (378) (524) (465)
TRANSFER AGENT FEES & EXPENSES ............ 55 110 55 62 55 58
WAIVER OF TRANSFER AGENT FEES ............. -- -- (29) -- -- --
FUND ACCOUNTING FEES ...................... 30 30 30 30 30 30
REGISTRATION FEES ......................... 6 48 5 35 13 10
TRUSTEE FEES .............................. 2 26 2 7 7 6
PRINTING .................................. 8 80 12 20 27 26
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS .................... 12 10 1 10 1 10
PROFESSIONAL FEES ......................... 15 120 14 26 40 37
CUSTODIAN FEES ............................ 30 43 20 23 28 31
OTHER EXPENSES ............................ 7 41 7 6 9 5
------- ------- ------- ------- ------- -------
TOTAL EXPENSES, NET OF WAIVERS .......... 441 3,135 465 1,208 1,667 1,471
------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME ....................... 3,465 20,313 4,308 9,416 12,927 9,127
------- ------- ------- ------- ------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS ... 3 (26) 101 1,423 6,246 2,268
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS ................... -- -- -- -- -- --
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS .......................... -- -- (1,448) (6,162) (14,855) (4,081)
NET UNREALIZED APPRECIATION ON FORWARD
FOREIGN CURRENCY CONTRACTS, FOREIGN
CURRENCIES AND TRANSLATION OF OTHER
ASSETS AND LIABILITIES IN FOREIGN
CURRENCY ................................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ....... 3 (26) (1,347) (4,739) (8,609) (1,813)
------- ------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................... $ 3,468 $ 20,287 $ 2,961 $ 4,677 $ 4,318 $ 7,314
======== ======== ======== ======== ======== ========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
72
<PAGE>
1784 FUNDS
<TABLE>
<CAPTION>
====================================================================================================================================
1784 1784 1784
CONNECTICUT MASSACHUSETTS RHODE ISLAND 1784 1784 1784
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT ASSET GROWTH AND 1784 INTERNATIONAL
INCOME INCOME INCOME ALLOCATION INCOME GROWTH EQUITY
FUND FUND FUND FUND FUND FUND(1) FUND
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
DIVIDEND INCOME ........................... $ -- $ -- $ -- $ 145 $ 3,920 $ 23 $ 4,075
INTEREST INCOME ........................... 4,031 5,054 2,054 356 725 78 888
LESS: FOREIGN TAXES WITHHELD .............. -- -- -- -- (14) (1) (338)
------- ------- ------- ------- ------- ------- -------
TOTAL INCOME ............................ 4,031 5,054 2,054 501 4,631 100 4,625
------- ------- ------- ------- ------- ------- -------
EXPENSES:
INVESTMENT ADVISORY FEES ................ 516 676 256 90 1,997 37 2,445
WAIVER OF INVESTMENT ADVISORY FEES ...... (98) (128) (48) -- -- (37) (587)
REIMBURSEMENT OF EXPENSES BY ADVISER .... -- (80) -- (36) (137) (23) --
ADMINISTRATOR FEES ...................... 76 99 38 13 293 5 265
WAIVER OF ADMINISTRATOR FEES ............ (76) -- (38) (13) -- (5) --
12B-1 FEES .............................. 174 229 87 30 675 13 611
WAIVER OF 12B-1 FEES .................... (174) (229) (87) (30) (675) (13) (611)
TRANSFER AGENT FEES & EXPENSES .......... 49 51 40 33 121 6 70
WAIVER OF TRANSFER AGENT FEES ........... (32) -- (32) -- -- -- --
FUND ACCOUNTING FEES .................... 30 30 30 30 30 5 50
REGISTRATION FEES ....................... 3 18 -- 3 31 14 51
TRUSTEE FEES ............................ 2 3 1 -- 14 -- 11
PRINTING ................................ 11 11 4 2 42 1 57
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS .................. 1 10 1 12 10 -- 2
PROFESSIONAL FEES ....................... 17 15 5 2 50 2 40
CUSTODIAN FEES .......................... 18 23 7 16 69 4 340
OTHER EXPENSES .......................... 8 4 2 -- 13 1 15
------- ------- ------- ------- ------- ------- -------
TOTAL EXPENSES, NET OF WAIVERS ........ 525 732 266 152 2,533 10 2,759
------- ------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME ..................... 3,506 4,322 1,788 349 2,098 90 1,866
------- ------- ------- ------- ------- ------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS . 311 932 167 662 6,904 -- 2,378
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS ................. -- -- -- -- -- -- 4,638
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS ........................ (1,223) (2,444) (451) 850 54,488 3,390 33,464
NET UNREALIZED APPRECIATION ON FORWARD
FOREIGN CURRENCY CONTRACTS, FOREIGN
CURRENCIES AND TRANSLATION OF OTHER
ASSETS AND LIABILITIES IN FOREIGN -- -- -- -- -- -- 1,633
CURRENCY .............................. ------- ------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ..... (912) (1,512) (284) 1,512 61,392 3,390 42,113
------- ------- ------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ......................... $ 2,594 $ 2,810 $ 1,504 $ 1,861 $63,490 $ 3,480 $43,979
======= ======== ======== ======= ======= ======= =======
<FN>
(1) THE GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996.
</FN>
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (000)
====================================================================================================================================
1784 1784
1784 1784 1784 U.S. GOVERNMENT TAX-EXEMPT
U.S. TREASURY TAX-FREE SHORT-TERM MEDIUM-TERM 1784 MEDIUM-TERM
MONEY MARKET MONEY MARKET INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
====================================================================================================================================
6/1/95 6/1/94 6/1/95 6/1/94 6/1/95 7/1/94(1) 6/1/95 6/1/94 6/1/95 7/1/94(1) 6/1/95 6/1/94
TO TO TO TO TO TO TO TO TO TO TO TO
5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT
INCOME $ 3,465 $ 1,322 $ 20,313 $ 15,403 $ 4,308 $ 1,811 $ 9,416 $ 7,061 $ 12,927 $ 10,507 $ 9,127 $ 5,039
NET REALIZED GAIN
(LOSS) ON
INVESTMENTS 3 (9) (26) (1) 101 28 1,423 (4,071) 6,246 (996) 2,268 777
NET REALIZED GAIN
FROM FORWARD FOREIGN
CURRENCY CONTRACTS
AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- -- -- -- -- -- --
NET UNREALIZED
APPRECIATION
(DEPRECIATION) ON
INVESTMENTS -- -- -- -- (1,448) 826 (6,162) 7,084 (14,855) 9,287 (4,081) 7,776
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON FOREIGN FORWARD
CURRENCY CONTRACTS,
FOREIGN CURRENCIES
AND TRANSLATION OF
OTHER ASSETS AND
LIABILITIES IN
FOREIGN CURRENCY -- -- -- -- -- -- -- -- -- -- -- --
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- --------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS 3,468 1,313 20,287 15,402 2,961 2,665 4,677 10,074 4,318 18,798 7,314 13,592
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT
INCOME (3,465) (1,322) (20,313) (15,403) (4,308) (1,811) (9,416) (7,061) (12,927) (10,507) (9,127) (5,039)
REALIZED CAPITAL
GAINS -- -- -- (4) (279) -- -- -- (2,452) -- (1,195) --
IN EXCESS OF NET
REALIZED GAINS -- -- -- (5) -- -- -- -- -- -- -- --
-------- ------- -------- -------- ------- ------- -------- ------- -------- -- ------ -------- --------
TOTAL DISTRIBUTIONS (3,465) (1,322) (20,313) (15,412) (4,587) (1,811) (9,416) (7,061) (15,379) (10,507) (10,322) (5,039)
SHARE TRANSACTIONS:
PROCEEDS FROM SHARES
ISSUED 168,949 103,005 975,978 1,061,511 55,768 62,624 75,943 67,712 71,632 203,201 55,578 164,271
REINVESTMENT OF
CASH DISTRIBUTIONS 3,581 1,028 3,201 2,007 1,984 701 1,592 1,160 1,648 502 542 327
COST OF SHARES
REDEEMED (148,602) (54,549) (968,937) (931,544 (22,324) (11,598) (35,383) (34,191) (23,712 (15,479) (32,670) (33,171)
-------- ------- -------- -------- ------- ------- -------- ------- ------- -------- -------- --------
INCREASE IN NET
ASSETS FROM SHARE
TRANSACTIONS 23,928 49,484 10,242 131,974 35,428 51,727 42,152 34,681 49,568 188,224 23,450 131,427
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- --------
TOTAL INCREASE IN NET
ASSETS 23,931 49,475 10,216 131,964 33,802 52,581 37,413 37,694 38,507 196,515 20,442 139,980
NET ASSETS:
BEGINNING OF PERIOD 55,068 5,593 539,412 407,448 52,581 -- 130,081 92,387 196,515 -- 176,345 36,365
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- --------
NET ASSETS:
END OF PERIOD $ 78,999 $ 55,068 $ 549,628 $539,412 $ 86,383 $ 52,581 $ 167,494 $130,081 $ 235,022 $196,515 $ 196,787$176,345
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- --------
CAPITAL SHARE
TRANSACTIONS:
SHARES ISSUED 168,949 103,005 975,978 1,061,511 5,508 6,309 7,927 7,316 6,986 20,419 5,455 17,066
SHARES ISSUED IN
LIEU OF CASH
DISTRIBUTIONS 3,581 1,028 3,201 2,007 196 71 165 126 159 51 53 33
SHARES REDEEMED 148,602) (54,549) (968,937) (931,544) (2,212) (1,170) (3,710) (3,711) (2,310) (1,562) (3,212) (3,381)
-------- ------- -------- -------- ------- ------- -------- ------- -------- -------- -------- -------
NET INCREASE IN
CAPITAL SHARES 23,928 49,484 10,242 131,974 3,492 5,210 4,382 3,731 4,835 18,908 2,296 13,718
======== ======= ======== ======== ======= ======= ======= ======= ======= ======= ======== =======
UNDISTRIBUTED NET
INVESTMENT INCOME -- -- -- -- -- -- -- -- -- -- -- --
======== ======= ======== ======== ======= ======= ======= ======= ======= ======= ======== =======
<FN>
(1) THE SHORT-TERM INCOME AND INCOME FUNDS COMMENCED OPERATIONS ON JULY 1, 1994.
(2) THE CONNECTICUT TAX-EXEMPT INCOME AND RHODE ISLAND TAX-EXEMPT INCOME FUNDS
COMMENCED OPERATIONS ON AUGUST 1, 1994.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
74
<PAGE>
1784 FUNDS
<TABLE>
<CAPTION>
=====================================================================================================================
1784 1784 1784
CONNECTICUT MASSACHUSETTS RHODE ISLAND 1784
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT ASSET
INCOME INCOME INCOME ALLOCATION
FUND FUND FUND FUND
=====================================================================================================================
6/1/95 8/1/94(2) 6/1/95 6/1/94 6/1/95 8/1/94(2) 6/1/95 6/1/94
TO TO TO TO TO TO TO TO
5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95 5/31/96 5/31/95
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT
INCOME $ 3,506 $ 2,212 $ 4,322 $ 2,982 $ 1,788 $ 1,232 $ 349 $ 214
NET REALIZED GAIN
(LOSS) ON
INVESTMENTS 311 (271) 932 (1,525) 167 (188) 662 87
NET REALIZED GAIN
FROM FORWARD FOREIGN
CURRENCY CONTRACTS
AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- -- --
NET UNREALIZED
APPRECIATION
(DEPRECIATION) ON
INVESTMENTS (1,223) 2,155 (2,444) 3,348 (451) 970 850 775
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON FOREIGN FORWARD
CURRENCY CONTRACTS,
FOREIGN CURRENCIES
AND TRANSLATION OF
OTHER ASSETS AND
LIABILITIES IN
FOREIGN CURRENCY -- -- -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------- -------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS 2,594 4,096 2,810 4,805 1,504 2,014 1,861 1,076
------- -------- -------- -------- -------- -------- -------- -------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT
INCOME (3,506) (2,212) (4,322) (2,982) (1,788) (1,232) (310) (198)
REALIZED CAPITAL
GAINS -- -- -- -- -- -- (295) (6)
IN EXCESS OF NET
REALIZED GAINS -- -- -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------- -------
TOTAL DISTRIBUTIONS (3,506) (2,212) (4,322) (2,982) (1,788) (1,232) (605) (204)
SHARE TRANSACTIONS:
PROCEEDS FROM SHARES
ISSUED 27,716 67,123 41,705 52,814 9,493 35,663 8,701 2,666
REINVESTMENT OF
CASH DISTRIBUTIONS 611 83 1,164 677 116 12 541 174
COST OF SHARES
REDEEMED (7,343) (7,721) (16,796) (22,918) (3,916) (3,962) (2,289) (2,018)
------- -------- -------- -------- -------- -------- -------- -------
INCREASE IN NET
ASSETS FROM SHARE
TRANSACTIONS 20,984 59,485 26,073 30,573 5,693 31,713 6,953 822
------- -------- -------- -------- -------- -------- -------- -------
TOTAL INCREASE IN NET
ASSETS 20,072 61,369 24,561 32,396 5,409 32,495 8,209 1,694
NET ASSETS:
BEGINNING OF PERIOD 61,369 -- 82,058 49,662 32,495 -- 8,622 6,928
------- -------- -------- -------- -------- -------- -------- -------
NET ASSETS:
END OF PERIOD $81,441 $ 61,369 $106,619 $ 82,058 $ 37,904 $ 32,495 $ 16,831 $ 8,622
======= ======== ======== ======== ======== ======== ======== =======
CAPITAL SHARE
TRANSACTIONS:
SHARES ISSUED 2,687 6,749 4,183 5,541 935 3,612 728 263
SHARES ISSUED IN
LIEU OF CASH
DISTRIBUTIONS 57 8 117 70 11 1 45 18
SHARES REDEEMED (711) (782) (1,688) (2,386) (386) (405) (190) (201)
------- -------- -------- -------- -------- -------- -------- -------
NET INCREASE IN
CAPITAL SHARES 2,033 5,975 2,612 3,225 560 3,208 583 80
======= ======== ======== ======== ======== ======== ======== =======
UNDISTRIBUTED NET
INVESTMENT INCOME -- -- -- -- -- -- $ 90 $ 51
======= ======== ======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
===================================================================================
1784 1784
GROWTH AND 1784 INTERNATIONAL
INCOME GROWTH EQUITY
FUND FUND FUND
===================================================================================
6/1/95 6/1/94 3/28/96(4) 6/1/95 1/3/95(3)
TO TO TO TO TO
5/31/96 5/31/95 5/31/96 5/31/96 5/31/95
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT
INCOME $ 2,098 $ 1,987 $ 90 $ 1,866 $ 819
NET REALIZED GAIN
(LOSS) ON
INVESTMENTS 6,904 (66) -- 2,378 159
NET REALIZED GAIN
FROM FORWARD FOREIGN
CURRENCY CONTRACTS
AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- 4,638 5
NET UNREALIZED
APPRECIATION
(DEPRECIATION) ON
INVESTMENTS 54,488 32,385 3,390 33,464 8,219
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON FOREIGN FORWARD
CURRENCY CONTRACTS,
FOREIGN CURRENCIES
AND TRANSLATION OF
OTHER ASSETS AND
LIABILITIES IN
FOREIGN CURRENCY -- -- -- 1,633 (335)
--------- -------- ------- -------- --------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS 63,490 34,306 3,480 43,979 8,867
--------- -------- ------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT
INCOME (2,206) (1,640) -- (5,737) --
REALIZED CAPITAL
GAINS (32) (1,553) -- (1,052) --
IN EXCESS OF NET
REALIZED GAINS -- -- -- -- --
--------- -------- ------- -------- --------
TOTAL DISTRIBUTIONS (2,238) (3,193) -- (6,789) --
SHARE TRANSACTIONS:
PROCEEDS FROM SHARES
ISSUED 171,958 118,950 43,993 204,535 141,128
REINVESTMENT OF
CASH DISTRIBUTIONS 675 1,935 -- 20 --
COST OF SHARES
REDEEMED (159,622) (44,515) (1,447) (27,724) (1,556)
--------- -------- ------- -------- --------
INCREASE IN NET
ASSETS FROM SHARE
TRANSACTIONS 13,011 76,370 42,546 176,831 139,572
--------- -------- ------- -------- --------
TOTAL INCREASE IN NET
ASSETS 74,263 107,483 46,026 214,021 148,439
NET ASSETS:
BEGINNING OF PERIOD 229,200 121,717 -- 148,439 --
--------- -------- ------- -------- --------
NET ASSETS:
END OF PERIOD $ 303,463 $229,200 $46,026 $362,460 $148,439
========= ======== ======= ======== ========
CAPITAL SHARE
TRANSACTIONS:
SHARES ISSUED 12,666 11,148 4,219 18,260 14,422
SHARES ISSUED IN
LIEU OF CASH
DISTRIBUTIONS 51 186 -- 2 --
SHARES REDEEMED (11,641) (4,001) (134) (2,441) (157)
--------- -------- ------- -------- --------
NET INCREASE IN
CAPITAL SHARES 1,076 7,333 4,085 15,821 14,265
========= ======== ======= ======== ========
UNDISTRIBUTED NET
INVESTMENT INCOME $ 381 $ 489 $ 90 $ 1,635 $ 819
========= ======== ======= ======== ========
<FN>
(3) THE INTERNATIONAL EQUITY FUND COMMENCED OPERATIONS ON JANUARY 3, 1995.
(4) THE GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
75
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
1784 MONEY MARKET FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
NET NET NET
ASSET DISTRIBUTIONS ASSET ASSETS
VALUE NET FROM NET VALUE END
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD
OF PERIOD INCOME INCOME OF PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1784 U.S. TREASURY
MONEY MARKET
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068
FOR THE PERIOD ENDED
MAY 31, 1994 (1) $1.00 0.03 (0.03) $1.00 2.64%* $ 5,593
- ------------------------------------------------------------------------------------------------
1784 TAX-FREE
MONEY MARKET
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $549,628
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $539,412
FOR THE PERIOD ENDED
MAY 31, 1994 (2) $1.00 0.02 (0.02) $1.00 2.31%* $407,448
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
RATIO OF NET TO AVERAGE TO AVERAGE
OF EXPENSES INCOME NET ASSETS NET ASSETS
TO AVERAGE TO AVERAGE (EXCLUDING) (EXCLUDING
NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1784 U.S. TREASURY
MONEY MARKET
FOR THE YEAR ENDED
MAY 31, 1996 0.64% 5.02% 0.75% 4.91%
FOR THE YEAR ENDED
MAY 31, 1995 0.60% 5.13% 0.92% 4.81%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) 0.65% 2.91% 6.42% (2.86)%
- ------------------------------------------------------------------------
1784 TAX-FREE
MONEY MARKET
FOR THE YEAR ENDED
MAY 31, 1996 0.54% 3.49% 0.60% 3.43%
FOR THE YEAR ENDED
MAY 31, 1995 0.50% 3.28% 0.61% 3.17%
FOR THE PERIOD ENDED
MAY 31, 1994 (2) 0.27% 2.39% 0.71% 1.95%
- ------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) THE U.S. TREASURY MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) THE TAX-FREE MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 14, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
76
<PAGE>
1784 FUNDS
================================================================================
1784 BOND FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ---------------------------------------------------------------------------------------------------------------------
1784 SHORT-TERM
INCOME
FOR THE YEAR ENDED
<S> <C> <C> <C> <C> <C> <C> <C>
MAY 31, 1996 $10.09 0.60 (0.12) (0.60) (0.04) $ 9.93 4.87%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $10.00 0.56 0.09 (0.56) -- $10.09 6.74%*
- ---------------------------------------------------------------------------------------------------------------------
1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $ 9.57 0.61 (0.26) (0.61) -- $ 9.31 3.65%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.36 0.58 0.21 (0.58) -- $ 9.57 8.79%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $10.00 0.59 (0.64) (0.59) -- $ 9.36 (0.65)%*
- ---------------------------------------------------------------------------------------------------------------------
1784 INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $10.39 0.65 (0.37) (0.65) (0.12) $ 9.90 2.64%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $10.00 0.62 0.39 (0.62) -- $10.39 10.69%*
- ---------------------------------------------------------------------------------------------------------------------
1784 TAX-EXEMPT
MEDIUM-TERM INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $10.14 0.51 (0.09) (0.51) (0.06) $ 9.99 4.31%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.90 0.48 0.24 (0.48) -- $10.14 7.58%
FOR THE PERIOD ENDED
MAY 31, 1994(3) $10.00 0.49 (0.10) (0.49) -- $ 9.90 3.93%*
- ---------------------------------------------------------------------------------------------------------------------
1784 CONNECTICUT
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $10.27 0.53 (0.10) (0.53) -- $10.17 4.20%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $10.00 0.45 0.27 (0.45) -- $10.27 7.45%*
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------
1784 SHORT-TERM
INCOME
FOR THE YEAR ENDED
<S> <C> <C> <C> <C> <C> <C>
MAY 31, 1996 $ 86,383 0.63% 5.87% 1.06% 5.44% 95.06%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $ 52,581 0.48% 6.31% 1.27% 5.52% 84.54%
- ------------------------------------------------------------------------------------------------------
1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $167,494 0.80% 6.23% 1.24% 5.79% 158.66%
FOR THE YEAR ENDED
MAY 31, 1995 $130,081 0.80% 6.24% 1.27% 5.77% 142.14%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $ 92,387 0.31% 6.08% 1.35% 5.04% 144.77%
- ------------------------------------------------------------------------------------------------------
1784 INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $235,022 0.80% 6.17% 1.20% 5.77% 100.51%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $196,515 0.55% 7.01% 1.23% 6.33% 80.53%
- ------------------------------------------------------------------------------------------------------
1784 TAX-EXEMPT
MEDIUM-TERM INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $196,787 0.79% 4.90% 1.21% 4.48% 37.35%
FOR THE YEAR ENDED
MAY 31, 1995 $176,345 0.80% 5.02% 1.26% 4.56% 74.74%
FOR THE PERIOD ENDED
MAY 31, 1994(3) $ 36,365 0.32% 5.06% 1.61% 3.77% 98.83%
- ------------------------------------------------------------------------------------------------------
1784 CONNECTICUT
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $ 81,441 0.75% 5.02% 1.29% 4.48% 20.41%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $ 61,369 0.52% 5.44% 1.40% 4.56% 35.56%
- ------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) THE SHORT-TERM INCOME AND INCOME FUNDS COMMENCED OPERATIONS ON JULY 1, 1994.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) THE U.S. GOVERNMENT MEDIUM-TERM INCOME FUND COMMENCED OPERATIONS ON JUNE 7,
1993. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(3) THE TAX-EXEMPT MEDIUM-TERM INCOME FUND COMMENCED OPERATIONS ON JUNE 14,
1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(4) THE CONNECTICUT TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON AUGUST 1,
1994.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
77
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
1784 BOND FUNDS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1784 MASSACHUSETTS
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $ 9.90 0.48 (0.12) (0.48) -- $ 9.78 3.64%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.81 0.47 0.09 (0.47) -- $ 9.90 6.00%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $10.00 0.50 (0.19) (0.50) -- $ 9.81 3.04%*
- ------------------------------------------------------------------------------------------------------------------
1784 RHODE ISLAND
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $10.13 0.53 (0.07) (0.53) -- $10.06 4.65%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $10.00 0.45 0.13 (0.45) -- $10.13 6.09%*
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1784 MASSACHUSETTS
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $106,619 0.80% 4.73% 1.28% 4.25% 47.00%
FOR THE YEAR ENDED
MAY 31, 1995 $ 82,058 0.80% 4.93% 1.35% 4.38% 34.59%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 49,662 0.33% 5.10% 1.41% 4.02% 13.99%
- -----------------------------------------------------------------------------------------------------
1784 RHODE ISLAND
TAX-EXEMPT INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $ 37,904 0.77% 5.16% 1.35% 4.58% 19.68%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $ 32,495 0.54% 5.56% 1.60% 4.50% 57.51%
- -----------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED
(1) THE MASSACHUSETTS TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 14,
1993. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) THE RHODE ISLAND TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON AUGUST 1,
1994. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
78
<PAGE>
1784 FUNDS
================================================================================
<TABLE>
<CAPTION>
1784 STOCK FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1784 ASSET ALLOCATION
FOR THE YEAR ENDED
MAY 31, 1996 $10.99 0.31 1.61 (0.31) (0.29) $12.31 17.83%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.84 0.28 1.15 (0.27) (0.01) $10.99 14.84%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $10.00 0.19 (0.20) (0.15) (0.00) $ 9.84 (0.15)%*
- ------------------------------------------------------------------------------------------------------------------
1784 GROWTH
AND INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $12.16 0.10 3.08 (0.11) (0.00) $15.23 26.32%
FOR THE YEAR ENDED
MAY 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $10.00 0.12 0.56 (0.11) (0.00) $10.57 6.80%*
- ------------------------------------------------------------------------------------------------------------------
1784 GROWTH
FOR THE PERIOD ENDED
MAY 31, 1996(3) $10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%*
- ------------------------------------------------------------------------------------------------------------------
1784 INTERNATIONAL
EQUITY
FOR THE YEAR ENDED
MAY 31, 1996 $10.41 0.11 1.85 (0.27) (0.05) $12.05 19.08%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%*
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1784 ASSET ALLOCATION
FOR THE YEAR ENDED
MAY 31, 1996 $ 16,831 1.25% 2.86% 1.90% 2.21% 39.56%
FOR THE YEAR ENDED
MAY 31, 1995 $ 8,622 1.25% 2.88% 2.51% 1.62% 67.23%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 6,928 1.25% 2.62% 3.61% 0.26% 28.19%
- -----------------------------------------------------------------------------------------------------
1784 GROWTH
AND INCOME
FOR THE YEAR ENDED
MAY 31, 1996 $303,463 0.94% 0.78% 1.24% 0.48% 39.50%
FOR THE YEAR ENDED
MAY 31, 1995 $229,200 0.94% 1.05% 1.23% 0.76% 38.94%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $121,717 0.35% 1.23% 1.36% 0.22% 31.55%
- -----------------------------------------------------------------------------------------------------
1784 GROWTH
FOR THE PERIOD ENDED
MAY 31, 1996(3) $ 46,026 0.20% 1.75% 1.73% 0.22% 0.00%
- -----------------------------------------------------------------------------------------------------
1784 INTERNATIONAL
EQUITY
FOR THE YEAR ENDED
MAY 31, 1996 $362,460 1.13% 0.76% 1.61% 0.28% 15.55%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $148,439 0.89% 2.06% 1.70% 1.25% 11.03%
- -----------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) THE ASSET ALLOCATION FUND COMMENCED OPERATIONS ON JUNE 14, 1993. ALL RATIOS
FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) THE GROWTH AND INCOME FUND COMMENCED OPERATIONS ON JUNE 7, 1993. ALL RATIOS
FOR THE PERIOD HAVE BEEN ANNUALIZED.
(3) THE GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996. ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
(4) THE INTERNATIONAL EQUITY FUND COMMENCED OPERATIONS ON JANUARY 3, 1995.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE INANCIAL STATEMENTS.
79
<PAGE>
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The 1784 U.S. Treasury Money Market, 1784 Tax-Free Money Market, (the "Money
Market Funds"), 1784 Short-Term Income, 1784 U.S. Government Medium-Term Income,
1784 Income, 1784 Tax-Exempt Medium-Term Income, 1784 Connecticut Tax-Exempt
Income, 1784 Massachusetts Tax-Exempt Income, 1784 Rhode Island Tax-Exempt
Income, (the "Bond Funds"), 1784 Asset Allocation, 1784 Growth and Income, 1784
Growth, and 1784 International Equity Funds (the "Stock Funds") are portfolios
offered by 1784 Funds (the "Trust"), a diversified, open-end investment company
registered under the Investment Company Act of 1940, as amended. The Trust is
presently offering shares in 14 separate portfolios (the "Funds"):
MONEY MARKET FUNDS:
1784 U.S. TREASURY MONEY MARKET FUND
1784 TAX-FREE MONEY MARKET FUND
1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
BOND FUNDS:
1784 SHORT-TERM INCOME FUND
1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
1784 INCOME FUND
1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
1784 CONNECTICUT TAX-EXEMPT INCOME FUND
1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS:
1784 ASSET ALLOCATION FUND
1784 GROWTH AND INCOME FUND
1784 GROWTH FUND
1784 INTERNATIONAL EQUITY FUND
The Funds' prospectuses provide a description of each Fund's investment
objectives, policies and strategies. The financial statements of the 1784
Institutional U.S. Treasury Money Market Fund are not presented herein but are
presented separately. The assets of each Fund are segregated, and a
Shareholder's interest is limited to the Fund in which shares are held. The
financial statements have been prepared in accordance with generally accepted
accounting principles which requires the use of estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds.
SECURITY VALUATION --
Investment securities of the Bond and Stock Funds which are listed on a
securities exchange for which market quotations are available are valued by an
independent pricing service at the last quoted sales price for such securities
on each business day. If there is no such reported sale, these securities and
unlisted securities for which market quotations are readily available are valued
at the most recent bid price using procedures determined in good faith by the
Board of Trustees. Debt obligations with sixty days or less remaining until
maturity may be valued at their amortized
80
<PAGE>
1784 FUNDS
================================================================================
cost. Under this valuation method, purchase discounts and premiums are accreted
and amortized ratably to maturity and are included in interest income.
Investment securities of the Money Market Funds are stated at amortized
cost which approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity and are
included in interest income.
FOREIGN CURRENCY TRANSACTIONS --
The books and records of the 1784 Growth and Income, Growth and
International Equity Funds are maintained in U.S. dollars. Foreign currency
amounts are translated into U.S. dollars on the following basis:
I. market value of investment securities, assets and liabilities at the
current rate of exchange; and
II. purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The 1784 Growth and Income, Growth and International Equity Funds do
not isolate that portion of gains and losses on investment securities which
is due to changes in the foreign exchange rates from that which is due to
changes in market prices of such securities.
The 1784 Growth and Income, Growth and International Equity Funds report
certain foreign currency related transactions as components of unrealized and
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for Federal income tax purposes.
FORWARD FOREIGN CURRENCY CONTRACTS --
The 1784 International Equity Fund enters into foreign currency contracts
as hedges against specific transactions or portfolio positions. The aggregate
principal amounts of the contracts are not recorded as the Fund does not intend
to hold the contracts to maturity. All commitments are "marked-to market" daily
at the applicable foreign exchange rate and any resulting unrealized gains or
losses are recorded currently. The Fund realizes gains and losses at the time
forward contracts are extinguished. Unrealized gains and losses on outstanding
positions in forward foreign currency contracts held at the close of the year
will be recognized as ordinary income for Federal income tax purposes.
SECURITY TRANSACTIONS AND INVESTMENT INCOME --
Security transactions are accounted for on the trade date of the security
purchase or sale. Costs used in determining net realized capital gains and
losses on the sale of securities are those of the specific securities sold,
adjusted for the accretion and amortization of the purchase discounts and
premiums during the respective holding period. Interest income is recorded on
the accrual basis. Dividend income is recorded on ex-date.
REPURCHASE AGREEMENTS --
Securities pledged as collateral for Repurchase Agreements are held by each
Fund's custodian bank until maturity of the Repurchase Agreements. Provisions of
the Agreements and procedures adopted by the Adviser ensure that the market
value
81
<PAGE>
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
of the collateral, including accrued interest thereon, is sufficient in the
event of default by the counterparty. If the counterparty defaults and the value
of the collateral declines or if the counterparty enters into insolvency
proceedings, realization of the collateral by the Fund may be delayed or
limited.
EXPENSES --
Expenses that are directly related to one of the Funds are charged directly to
that Fund. Other operating expenses of the Trust are prorated to the Funds on
the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS --
The Money Market and Bond Funds'
distributions from net investment income are declared on a daily basis and are
payable on the first business day of the following month. The 1784 Asset
Allocation and 1784 Growth and Income Funds declare and pay dividends on a
quarterly basis. The 1784 Growth Fund declares and pays dividends on a
semi-annual basis. The 1784 International Equity Fund declares and pays
dividends on an annual basis. Any net realized capital gains on sales of
securities for a Fund are distributed to its shareholders at least annually.
FEDERAL INCOME TAXES --
The Trust's policy is 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. Accordingly, no provision for Federal income
taxes is required in the financial statements. The Funds may be subject to taxes
imposed by countries in which they invest with respect to their investments in
issuers existing or operating in such countries. Such taxes are generally based
on either income earned or repatriated. The Funds accrue such taxes when related
income is earned. The timing and characterization of certain income and capital
gains distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences relate primarily to foreign currency denominated investments,
paydowns on asset-backed securities and certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Funds may periodically make
reclassifications among certain capital accounts without impacting the net asset
value of the Funds.
ORGANIZATION COSTS --
These costs have been deferred in the accounts of the Funds and are being
amortized on a straight line basis over a
period of sixty months commencing with operations. In the event any of the
initial shares of the Funds are redeemed by any holder thereof during the period
that the Funds are amortizing their organizational costs, the redemption
proceeds payable to the
82
<PAGE>
1784 FUNDS
================================================================================
holders thereof by the Funds will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares outstanding at the time
of redemption.
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
Pursuant to an investment advisory agreement dated June 1, 1993, investment
advisory ervices are provided to the Trust by The First National Bank of Boston
(the "Adviser"). The Adviser is entitled to receive a fee of 0.40% of the
average daily net assets of the 1784 U.S. Treasury Money Market and 1784
Tax-Free Money Market Funds, 0.50% of the average daily net assets of the 1784
Short-Term Income Fund, 0.74% of the average daily net assets of the 1784 U.S.
Government Medium-Term Income, 1784 Income, 1784 Tax-Exempt Medium-Term Income,
1784 Connecticut Tax-Exempt Income, 1784 Massachusetts Tax-Exempt Income, 1784
Rhode Island Tax-Exempt Income, 1784 Asset Allocation, 1784 Growth and Income
and 1784 Growth Funds. Such fees are computed daily and paid monthly. The
Adviser has voluntarily agreed to waive a portion of its fee and reimburse
the Funds for other expenses as necessary to assist the Funds in maintaining
competitive expense ratios. The 1784 International Equity Fund has entered into
separate investment advisory agreements (each an "Advisory Agreement") with The
First National Bank of Boston ("Bank of Boston") and with Kleinwort Benson
Investment Management Americas Inc. ("Kleinwort Benson" and together with Bank
of Boston the "International Advisers"). The Advisory Agreement with Bank of
Boston is dated as of November 28, 1994; the Advisory Agreement with
Kleinwort Benson is dated as of October 27, 1995. The International Advisers are
entitled to receive an aggregate fee of 1.00% of the average daily net assets of
the 1784 International Equity Fund. Such fee is computed daily and paid monthly.
Bank of Boston has voluntarily agreed to waive a portion of its fee and
reimburse the Fund for other expenses as necessary to assist the 1784
International Equity Fund in maintaining a competitive expense ratio.
The Trust and The First National Bank of Boston (the "Custodian") are
parties to a custodial agreement dated June 1,
1993 under which the Custodian holds cash, securities and other assets of the
Trust as required by the Investment Company Act of 1940. The Custodian is
entitled to receive an annual fee, to be paid monthly, of 0.0100% for the first
$100 million in average daily net assets, 0.0075% for the next $100 million and
0.0050% for the average daily net assets over $200 million. In its capacity as
custodian to the Trust, the Custodian plays no role in determining the
investment policies of the Trust or which securities are to be purchased or
sold by the Funds.
Under a separate agreement, The First National Bank of Boston also provides
certain accounting services for the Trust and is entitled to receive an annual
fee of $30,000 per Fund for the Money Market Funds, the
83
<PAGE>
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Bond Funds and for the 1784 Asset Allocation Fund, 1784 Growth and Income Fund
and the 1784 Growth Fund and $50,000 for the 1784 International Equity Fund.
4. ADMINISTRATIVE, DISTRIBUTION AND
TRANSFER AGENT SERVICES
Pursuant to an administrative agreement
dated June 7, 1993, as amended November 17, 1995, SEI Financial Management
Corporation ("SEI") acts as the Trust's Administrator. Under the terms of such
agreement, SEI is entitled to receive an annual fee of 0.15% of the Trust's
first $300 million of average daily net assets, 0.12% of the Trust's second $300
million of average daily net assets and 0.10% of the Trust's average daily net
assets over $600 million. Such fee is computed daily and paid monthly. The
Administrator has agreed to waive a portion of its fee in the 1784 U.S. Treasury
Money Market, 1784 Short-Term Income, 1784 Connecticut Tax-Exempt Income, 1784
Rhode Island Tax-Exempt Income, 1784 Asset Allocation and 1784 Growth Funds in
order to help those funds maintain a competitive expense ratio.
For the period June 1, 1995 to November 17, 1995, SEI Financial Management
Corporation acted as the Transfer Agent of the Trust. SEI Financial Management
Corporation waived its transfer agent fees for the 1784 Short-Term Income, 1784
Connecticut Tax-Exempt and 1784 Rhode Island Tax-Exempt Funds in order to help
those funds maintain a competitive expense ratio. Pursuant to an agreement dated
November 17, 1995, State Street Bank and Trust Company acts as the Transfer
Agent of the Trust. As such, State Street Bank and Trust Company provides
transfer agency, dividend disbursing, shareholder servicing and administrative
services for the Trust.
SEI Financial Services Company ("SFS"), a wholly owned subsidiary of SEI,
became the Trust's Distributor pursuant to a distribution agreement dated June
1, 1993 as amended October 27, 1995. The Trust has adopted a distribution plan
dated as of June 1, 1993 with respect to each of the Stock and Bond Funds
pursuant to Rule 12b-1 under the 1940 Act (collectively, the "Plan"). The
Distribution Agreement and the Plan provide that the Trust will pay the
Distributor a fee, calculated daily and paid monthly, at an annual rate of 0.25%
of the average daily net assets of each of the Stock and Bond Funds. The
Distributor has agreed to waive the 12b-1 distribution fee until at least
October 1, 1996.
Certain officers of the Trust are also officers of the Administrator.
Such officers are paid no fees by the Trust.
The Funds have paid legal fees to a law firm with which the Secretary of
the Trust is associated.
84
<PAGE>
1784 FUNDS
================================================================================
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments for the year ended May 31, 1996, are as
presented below for the Bond and Stock Funds.
<TABLE>
<CAPTION>
FUND INVESTMENT TRANSACTIONS (000):
PURCHASES SALES
===========================================================================================================================
U.S. GOVERNMENT U.S. GOVERNMENT
FOR THE YEAR ENDED MAY 31, 1996 SECURITIES OTHER SECURITIES OTHER
===========================================================================================================================
<C> <C> <C> <C> <C>
1784 SHORT-TERM INCOME FUND $ 25,427 $ 72,530 $ 16,996 $ 43,446
1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 207,414 47,983 189,902 25,084
1784 INCOME FUND 69,788 156,780 77,469 113,832
1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND -- 89,433 -- 66,504
1784 CONNECTICUT TAX-EXEMPT INCOME FUND -- 30,596 -- 13,266
1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND -- 64,375 -- 40,931
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND -- 9,600 -- 6,122
1784 ASSET ALLOCATION FUND 4,599 6,195 2,047 2,304
1784 GROWTH AND INCOME FUND -- 109,831 -- 102,046
1784 GROWTH FUND -- 30,234 -- --
1784 INTERNATIONAL EQUITY FUND -- 197,592 -- 35,873
</TABLE>
85
================================================================================
<PAGE>
================================================================================
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The aggregate gross unrealized gain or loss on securities at May 31, 1996 and
cost of securities for Federal income tax purposes for the Funds is as follows
(000):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE COST FOR
GROSS GROSS NET FEDERAL
UNREALIZED UNREALIZED UNREALIZED INCOME
GAINS LOSSES GAINS/LOSSES TAXES
===========================================================================================================================
<C> <C> <C> <C> <C>
1784 U.S. TREASURY MONEY MARKET FUND $ -- $ -- $ -- $ 79,002
1784 SHORT-TERM INCOME FUND -- -- -- 556,282
1784 SHORT-TERM INCOME FUND 164 (786) (622) 88,028
1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 434 (4,224) (3,790) 170,215
1784 INCOME FUND 1,781 (7,349) (5,568) 239,192
1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND 4,413 (1,488) 2,925 197,845
1784 CONNECTICUT TAX-EXEMPT INCOME FUND 1,521 (589) 932 82,718
1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 531 (1,805) (1,274) 106,124
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND 686 (167) 519 36,968
1784 ASSET ALLOCATION FUND 1,685 (216) 1,469 15,204
1784 GROWTH AND INCOME FUND 94,668 (3,358) 91,310 211,644
1784 GROWTH FUND 4,177 (787) 3,390 42,473
1784 INTERNATIONAL EQUITY FUND 47,409 (5,726) 41,683 322,691
</TABLE>
At May 31, 1996 the following funds have capital loss carryforwards (000):
EXPIRATION
AMOUNT DATE
================================================================================
1784 U.S. TREASURY MONEYMARKET FUND $ 6 2003-2004
1784 TAX-FREE MONEYMARKET FUND 12 2004
1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 4,136 2003
1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 895 2003
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND 21 2003
86
<PAGE>
1784 FUNDS
================================================================================
In addition, from November 1, 1995 through May 31, 1996, the following Funds
incurred net realized capital losses, as follows (000):
AMOUNT
===================================================================
1784 TAX-FREE MONEYMARKET FUND $ 21
1784 SHORT-TERM INCOME FUND 168
As permitted by tax regulations, the Funds intend to elect to defer and treat
these losses as arising in the fiscal year ended May 31, 1997.
6. FORWARD FOREIGN CURRENCY CONTRACTS
The 1784 International Equity Fund entered into forward foreign currency
exchange contracts as hedges against portfolio positions. Such contracts, which
protect the value of the Fund's investment securities against decline in value
of the hedged currency, do not eliminate fluctuations in the underlying prices
of the securities. They simply establish an exchange rate at a future date.
Although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase.
The following forward foreign currency contracts were outstanding at May 31,
1996:
- --------------------------------------------------------------------------------
1784 INTERNATIONAL EQUITY FUND
FOREIGN CURRENCY SALES:
CONTRACT TO IN EXCHANGE UNREALIZED
MATURITY DELIVER FOR APPRECIATION
DATE (000) (000) (000)
========== ================ =========== ============
6/21/96 DEM 15,000 $10,224 $ 373
6/21/96 JPY 2,500,000 23,769 556
6/21/96 NLG 16,900 10,298 379
----------- ------------
$44,291 $1,308
----------- ------------
- --------------------------------------------------------------------------------
CURRENCY LEGEND
DEM--German Deutsche Mark
JPY--Japanese Yen
NLG--Netherlands Guilder
87
<PAGE>
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
7. CONCENTRATION OF CREDIT RISK
The 1784 Tax-Free Money Market, 1784 Tax-Exempt Medium-Term Income, 1784
Connecticut Tax-Exempt Income, 1784 Massachusetts Tax-Exempt Income and 1784
Rhode Island Tax-Exempt Income Funds invest in debt instruments of municipal
issuers. The issuers' ability to meet their obligations may be affected by
economic developments in a specific state or region. The 1784 Connecticut
Tax-Exempt Income, 1784 Massachusetts Tax-Exempt Income and 1784 Rhode Island
Tax-Exempt Income Funds invest primarily in obligations located in Connecticut,
Massachusetts and Rhode Island, respectively.
The 1784 Tax-Free Money Market, 1784 Tax-Exempt Medium-Term Income, 1784
Connecticut Tax-Exempt Income, 1784 Massachusetts Tax-Exempt Income and 1784
Rhode Island Tax-Exempt Income Funds invest in securities which include revenue
bonds, tax-exempt commercial paper, tax and revenue anticipation notes and
general obligation bonds. At May 31, 1996, the percentage of portfolio
investments by each revenue source was as follows:
<TABLE>
<CAPTION>
1784 1784 1784 1784 1784
TAX-FREE TAX-EXEMPT CONNECTICUT MASSACHUSETTS RHODE ISLAND
MONEY MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
MARKET INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND
================================================================================================================
<S> <C> <C> <C> <C> <C>
GENERAL OBLIGATIONS BONDS 9% 24% 10% 30% 18%
REVENUE BONDS:
EDUCATION BONDS 4% 4% 1% 11% 13%
HEALTH CARE BONDS 5% 9% 18% 15% 6%
HOUSING BONDS 3% 9% 10% 10% 13%
INDUSTRIAL DEVELOPMENT &
POLLUTION CONTROL BONDS 6% 1% 4% -- 12%
OTHER REVENUE BONDS 12% 14% 22% 2% 8%
TRANSPORTATION BONDS 2% 4% 12% 10% 3%
UTILITY BONDS 2% 14% 2% 2% 1%
WATER AND SEWER BONDS 1% 7% 3% 9% 4%
ALTERNATIVE MINIMUM TAX BONDS 4% 8% 7% 6% 12%
VARIABLE RATE NOTES 39% -- -- -- --
TAX-EXEMPT COMMERCIAL PAPER 3% -- -- -- --
CASH EQUIVALENTS 10% 6% 11% 5% 10%
- ----------------------------------------------------------------------------------------------------------------
TOTAL 100% 100% 100% 100% 100%
</TABLE>
88
<PAGE>
1784 FUNDS
================================================================================
Many municipalities insure their obligations with insurance underwritten by
insurance companies which undertake to pay a holder, when due, the interest and
principal amount on an obligation if the issuer defaults on its obligations.
Although bond insurance reduces the risk of loss due to default by the issuer,
there is no assurance that the insurance company will meet its obligations.
Also, some of the securities have credit enhancements (letters of credit or
guarantees issued by third party domestic or foreign banks or other
institutions). At May 31, 1996, the percentage of securities with credit
enhancement are as follows:
LETTERS
OF BOND
CREDIT INSURANCE
================================================================================
1784 TAX-FREE MONEY MARKET FUND 29.6% 18.2%
1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND -- 31.9
1784 CONNECTICUT TAX-EXEMPT INCOME FUND 2.5 40.7
1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND -- 33.3
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND 2.7 48.7
The ratings of long-term debt holdings as a percentage of total value of
investments at May 31, 1996 is as follows:
<TABLE>
<CAPTION>
1784 1784 1784 1784 1784
STANDARD & 1784 U.S. GOVERNMENT TAX-EXEMPT CONNECTICUT MASSACHUSETTS RHODE ISLAND
POOR'S SHORT-TERM MEDIUM-TERM 1784 MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
RATINGS INCOME INCOME INCOME INCOME INCOME INCOME INCOME
(UNAUDITED) FUND FUND FUND FUND FUND FUND FUND
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
AAA 36% 75% 40% 40% 53% 44% 55%
AA+-- -- -- --% 3% 1% -- 12%
AA -- -- 5% 17% 11% 1% 7%
AA- 5% -- 2% 4% 10% 4% 3%
A+ 7% -- 7% 3% 2% 28% --
A 20% -- 12% 8% 7% 11% 6%
A- 13% -- 17% 7% 4% 4% --
BBB+ 2% -- -- 10% -- 2% --
BBB 5% -- 5% 2% -- 2% 3%
B -- -- -- -- -- -- --
NOT RATED 12% 25% 12% 6% 12% 4% 14%
- ----------------------------------------------------------------------------------------------------------------------
100% 100% 100% 100% 100% 100% 100%
</TABLE>
89
<PAGE>
MAY 31, 1996
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
================================================================================
8. LINE OF CREDIT
The Funds have a bank line of credit. Borrowings under the line of credit are
secured by investment securities of the borrowing Fund, which may not exceed 10%
of the Fund's total assets for the Money Market Funds, 1784 U.S. Government
Income, 1784 Tax-Exempt Medium-Term Income, 1784 Massachusetts Tax-Exempt
Income, 1784 Asset Allocation and 1784 Growth and Income Funds and 15% of the
Fund's total assets for the 1784 Short-Term Income, 1784 Income, 1784
Connecticut Tax-Exempt Income, 1784 Rhode Island Tax-Exempt Income and 1784
International Equity Funds. No borrowings were outstanding at May 31, 1996.
9. ORANGE COUNTY
On July 19, 1995, the Orange County, California Notes held by the 1784 Tax-Free
Money Market Fund, which originally provided for an interest rate of 4.50%
payable at maturity on July 19, 1995, were modified to provide for an effective
interest rate of 5.45%, a portion of which shall be paid monthly in cash and the
remainder of which shall accrue until maturity, and a maturity date of June 30,
1996. In addition, the Adviser agreed that, if necessary to prevent the
deviation of the 1784 Tax-Free Money Market Fund's per share net asset value
calculation from the amortized cost price per share from exceeding 0.5%, it will
purchase (or cause an affiliate to purchase) all or a portion of the Notes at a
price equal to the amortized cost of the Notes, including all accrued and unpaid
interest other than penalty interest. On June 12, 1996, the entire position held
by the 1784 Tax-Free Money Market Fund was called for redemption and the Fund
received full principal and interest.
90
<PAGE>
1784 FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF 1784 FUNDS
WE HAVE AUDITED THE ACCOMPANYING STATEMENTS OF NET ASSETS OF THE 1784 FUNDS
(COMPRISING, RESPECTIVELY, 1784 U.S. TREASURY MONEY MARKET FUND, 1784 TAX-FREE
MONEY MARKET FUND, 1784 SHORT-TERM INCOME FUND, 1784 U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND, 1784 INCOME FUND, 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND, 1784
CONNECTICUT TAX-EXEMPT INCOME FUND, 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND,
1784 RHODE ISLAND TAX-EXEMPT INCOME FUND, 1784 ASSET ALLOCATION FUND, 1784
GROWTH AND INCOME FUND, 1784 GROWTH FUND AND 1784 INTERNATIONAL EQUITY FUND
REFERRED TO COLLECTIVELY HEREIN AS THE "FUNDS"), AS OF MAY 31, 1996, AND THE
RELATED STATEMENTS OF OPERATIONS, CHANGES IN NET ASSETS, AND FINANCIAL
HIGHLIGHTS FOR EACH OF THE RESPECTIVE PERIODS PRESENTED THEREIN. THESE FINANCIAL
STATEMENTS AND FINANCIAL HIGHLIGHTS ARE THE RESPONSIBILITY OF THE FUNDS'
MANAGEMENT. OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL
STATEMENTS AND FINANCIAL HIGHLIGHTS BASED ON OUR AUDITS.
WE CONDUCTED OUR AUDITS IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS. THOSE STANDARDS REQUIRE THAT WE PLAN AND PERFORM THE AUDIT TO OBTAIN
REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS AND FINANCIAL
HIGHLIGHTS ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A
TEST BASIS, EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL
STATEMENTS. OUR PROCEDURES INCLUDED CONFIRMATION OF SECURITIES OWNED AS OF MAY
31, 1996 BY CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS. AN AUDIT ALSO
INCLUDES ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE
BY MANAGEMENT, AS WELL AS EVALUATING THE OVERALL FINANCIAL STATEMENT
PRESENTATION. WE BELIEVE THAT OUR AUDITS PROVIDE A REASONABLE BASIS FOR OUR
OPINION.
IN OUR OPINION, THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS REFERRED
TO ABOVE PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF THE
FUNDS AS OF MAY 31, 1996, THE RESULTS OF THEIR OPERATIONS, THE CHANGES IN THEIR
NET ASSETS, AND THEIR FINANCIAL HIGHLIGHTS FOR EACH OF THE RESPECTIVE PERIODS
PRESENTED THEREIN, IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 19, 1996
91
<PAGE>
MAY 31, 1996 1784 FUNDS
NOTICE TO SHAREHOLDERS OF THE
1784 FUNDS (UNAUDITED)
================================================================================
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Dear 1784 Funds Shareholders:
For the fiscal year ended May 31, 1996, each Fund is designating long term
capital gains, qualifying dividends and exempt income with regard to
distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A)* (B)*
LONG TERM ORDINARY (C) (E)**
CAPITAL GAINS INCOME TOTAL (D)** TAX- (F)**
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST TAX CREDIT
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY
MONEY MARKET 0% 100% 100% 0% 0% 0%
TAX-FREE
MONEY MARKET 0% 100% 100% 0% 89% 0%
SHORT-TERM INCOME 0% 100% 100% 0% 0% 0%
U.S. GOVERNMENT
MEDIUM-TERM
INCOME 0% 100% 100% 0% 0% 0%
INCOME 4% 96% 100% 0% 0% 0%
TAX-EXEMPT
MEDIUM-TERM
INCOME 0% 100% 100% 0% 85% 0%
CONNECTICUT
TAX-EXEMPT
INCOME 0% 100% 100% 0% 95% 0%
MASSACHUSETTS
TAX-EXEMPT
INCOME 0% 100% 100% 0% 95% 0%
RHODE ISLAND
TAX-EXEMPT
INCOME 0% 100% 100% 0% 96% 0%
ASSET ALLOCATION 35% 65% 100% 34% 0% 0%
GROWTH AND INCOME 1% 99% 100% 100% 0% 0%
GROWTH 0% 0% 0% 0% 0% 0%
INTERNATIONAL
EQUITY 0% 100% 100% 0% 0% 6%
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE DIVIDENDS
RECEIVED DEDUCTION.
* ITEMS (A) AND (B) ARE BASED ON A PERCENTAGE OF THE FUND'S TOTAL
DISTRIBUTIONS.
** ITEMS (D) AND (E) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS
OF THE FUND. PLEASE CONSULT YOUR TAX ADVISER FOR PROPER TREATMENT OF THIS
INFORMATION.
</FN>
</TABLE>
92
<PAGE>
MAY 31, 1996 1784 FUNDS
NOTICE TO SHAREHOLDERS OF THE
1784 FUNDS (UNAUDITED) (CONCLUDED)
================================================================================
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
The 1784 International Equity Fund has made an election under Section 853
of the Internal Revenue Code to provide a foreign tax deduction or credit to its
shareholders for the fiscal year ended May 31, 1996. The information provided
below is pertinent to taxpayers who meet the following two criteria: 1) file a
U.S. Federal Income Tax Return on the basis of the fiscal year ended May 31,
1996, and 2) held shares of the 1784 International Equity Fund on the dividend
record date of December 28, 1995.
The per share income and foreign taxes paid to each country is listed in
the following schedule:
GROSS FOREIGN
COUNTRY DIVIDEND TAXES PAID
========== ========== ==========
Argentina 0.0016 0.0000
Australia 0.0145 0.0002
Brazil 0.0018 0.0001
Denmark 0.0037 0.0002
France 0.0194 0.0000
Germany 0.0162 0.0006
Hong Kong 0.0184 0.0000
Hungary 0.0005 0.0000
Indonesia 0.0016 0.0001
Ireland 0.0010 0.0000
Italy 0.0089 0.0005
Japan 0.0218 0.0013
Malaysia 0.0008 0.0001
Mexico 0.0005 0.0000
Netherlands 0.0102 0.0004
New Zealand 0.0016 0.0001
Norway 0.0005 0.0000
Philippines 0.0003 0.0000
Poland 0.0007 0.0001
Portugal 0.0004 0.0000
Singapore 0.0041 0.0004
Spain 0.0034 0.0002
Sweden 0.0020 0.0001
Switzerland 0.0064 0.0004
Thailand 0.0014 0.0001
United Kingdom 0.0339 0.0018
United States 0.0701 0.0000
-------- --------
0.2457 0.0067
93
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
1784 FUNDS
ANNUAL REPORT
MAY 31, 1996
================================================================================
MONEY MARKET FUNDS
1784 U.S. Treasury Money Market Fund
1784 Tax-Free Money Market Fund
BOND FUNDS
1784 Short-Term Income Fund
1784 U.S. Government Medium-Term Income Fund
1784 Income Fund
1784 Tax-Exempt Medium-Term Income Fund
1784 Connecticut Tax-Exempt Income Fund
1784 Massachusetts Tax-Exempt Income Fund
1784 Rhode Island Tax-Exempt Income Fund
STOCK FUNDS
1784 Asset Allocation Fund
1784 Growth and Income Fund
1784 Growth Fund
1784 International Equity Fund
FOR MORE INFORMATION, INCLUDING A PROSPECTUS,
CALL 1-800-252-1784.
BOARD OF TRUSTEES
David H. Carter
Tarrant Cutler
Kenneth A. Froot
Kathryn Flacke Muncil
Robert A. Nesher
INVESTMENT ADVISER
The First National Bank of Boston
Boston, MA 02110
CO-ADVISER FOR 1784 INTERNATIONAL EQUITY FUND
Kleinwort Benson Investment
Management Americas Inc.
New York, NY 10166
ADMINISTRATOR
SEIFinancial Management Corporation
Wayne, PA 19087
DISTRIBUTOR
SEI Financial Services Company
Wayne, PA 19087
LEGAL COUNSEL
Bingham, Dana & Gould LLP
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers &Lybrand L.L.P.
Boston, MA 02109
CUSTODIAN
The First National Bank of Boston
Boston, MA 02110
1784 FUNDS (LOGO)
[GRAPHIC OMITTED)
SOUND CHOICES. STRAIGHT TALK.
INVESTMENT MANAGEMENT STRENGTH.
THIS REPORT AND THE FINANCIAL
STATEMENTS CONTAINED HEREIN
ARE FOR THE GENERAL
INFORMATION OF THE
SHAREHOLDERS OF THE FUNDS
NAMED ABOVE.
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN A FUND UNLESS PRECEDED
OR ACCOMPANIED BY A CURRENTLY EFFECTIVE
PROSPECTUS.
BKB-F-012-03
