Annual
Report
[Boston 1784 Funds Logo]
to Shareholders
May 31, 1997
<PAGE>
TABLE OF CONTENTS
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LETTER TO SHAREHOLDERS 1
PERFORMANCE HIGHLIGHTS OF THE FUNDS 2
TERMS YOU NEED TO KNOW 4
FUND OBJECTIVES 5
INVESTMENT ADVISER'S REPORT 6
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE 11
FINANCIAL STATEMENTS 26
REPORT OF INDEPENDENT ACCOUNTANTS 100
NOTICE TO SHAREHOLDERS 101
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BOSTON 1784 FUNDS:
[SQUARE BULLET] ARE NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY;
[SQUARE BULLET] ARE NOT GUARANTEED BY BANKBOSTON, N.A. OR ANY OF
ITS AFFILIATES;
[SQUARE BULLET] ARE NOT DEPOSITS OR OBLIGATIONS OF BANKBOSTON, N.A.
OR ANY OF ITS AFFILIATES;
[SQUARE BULLET] INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
BANKBOSTON, N.A. SERVES AS INVESTMENT ADVISER, CUSTODIAN, AND SHAREHOLDER
SERVICING AGENT FOR BOSTON 1784 FUNDS. BOSTON 1784 FUNDS ARE DISTRIBUTED BY
SEI INVESTMENTS DISTRIBUTION CO., AN INDEPENDENT BROKER-DEALER. FINANCIAL
SERVICES COUNSELORS ARE REGISTERED REPRESENTATIVES OF BANKBOSTON INVESTOR
SERVICES,INC. (MEMBER NASD/SIPC), A WHOLLY-OWNED SUBSIDIARY OF BANKBOSTON, N.A.
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<PAGE>
BOSTON 1784 FUNDS
LETTER TO SHAREHOLDERS
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[PHOTO OF ALLEN CROESSMANN, MANAGING DIRECTOR AND ROBERT NESHER, PRESIDENT]
It is a pleasure to provide this Annual Report, which recounts a year of strong
growth and important milestones for the Funds. In particular:
[BULLET] On November 25, 1996, we completed the reorganization of BayFunds into
certain portfolios of 1784 Funds, increasing the total assets of 1784
Funds to $5.4 billion. Boston 1784 Funds had $6.5 billion in total
assets as of May 31, 1997.
[BULLET] On May 27, 1997, 1784 Funds officially became Boston 1784 Funds, a name
that better conveys the money management heritage of our home city.
With the addition of a prime money market fund in December 1996, the Boston 1784
Funds family now totals 15 funds. That number will increase again soon, as we
plan to open three new funds -- a small capitalization equity fund, a large
capitalization equity fund, and a Florida tax-exempt income fund.
Before you turn to the detailed information on each fund's performance, we want
to call your attention to important recognition received for the year ended May
31, 1997 by several individual funds, including:
[BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND, which ranked 12th out of 136
funds in the Lipper Tax-Free Money Market Funds category;
[BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND, which ranked 6th out
of 133 funds in the Lipper Intermediate Municipal Bond Funds category;
[BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND, which ranked
2nd out of 67 funds in the Lipper Other States Intermediate Municipal
Funds category;
[BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND, which ranked 1st out
of 9 funds in the Lipper Massachusetts Intermediate Municipal
Funds category; and
[BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND, which ranked 1st out
of 67 funds in the Lipper Other States Intermediate Municipal Funds
category.
Please keep in mind that past performance is no guarantee of future results.
We are also pleased to announce expanded hours for the Boston 1784 Funds
shareholder servicing center, making it even more convenient for you to work
with a representative to buy or sell funds or to get information on your
account. Simply call 1-800-BKB-1784, Monday through Friday from 8 a.m. to 8 p.m.
(Eastern time), and Saturday and Sunday from 9 a.m. to 4 p.m (Eastern time). Of
course, our automated system remains available 24 hours a day.
Thank you for your continued investment in Boston 1784 Funds.
Sincerely,
/S/ SIGNATURE
Robert Nesher
President
Boston 1784 Funds
/S/ SIGNATURE
Allen Croessmann
Managing Director, Investment Services
BankBoston, N.A.
1
<PAGE>
PERFORMANCE HIGHLIGHTS OF THE FUNDS
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FOR THE PERIOD JUNE 1, 1996 THROUGH MAY 31, 1997
<TABLE>
<CAPTION>
INCOME
TOTAL NET ASSETS TOTAL RETURN NAV SHARE PRICE YIELD DISTRIBUTIONS
-------------------------------------------------------------------------------
5-31-97 5-31-97 HIGH LOW 30-DAY 7-DAY PER
(IN MILLIONS) SHARE
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MONEY MARKET FUNDS
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Boston 1784 Tax-Free Money Market $845.6 3.22% $1.00 $1.00 $1.00 N/A 3.33% $.03
Boston 1784 U.S. Treasury Money Market 390.3 4.86 1.00 1.00 1.00 N/A 4.98 .05
Boston 1784 Prime Money Market* 123.1 5.02 1.00 1.00 1.00 N/A 5.04 .05
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BOND FUNDS
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Boston 1784 Short-Term Income $194.0 6.47% $9.98 $10.11 $9.89 5.93% N/A $.58
Boston 1784 Income 334.8 8.32 9.99 10.30 9.81 6.58 N/A .63
Boston 1784 U.S. Government
Medium-Term Income 209.1 7.16 9.37 9.59 9.24 5.94 N/A .59
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TAX-EXEMPT INCOME FUNDS
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Boston 1784 Tax-Exempt
Medium-Term Income $250.5 7.74% $10.18 $10.28 $9.89 4.78% N/A $.50
Boston 1784 Connecticut
Tax-Exempt Income 103.1 7.26 10.38 10.47 10.08 4.71 N/A .51
Boston 1784 Massachusetts
Tax-Exempt Income 147.5 7.30 10.01 10.11 9.67 4.79 N/A .47
Boston 1784 Rhode Island
Tax-Exempt Income 53.8 7.61 10.31 10.41 9.96 4.70 N/A .50
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STOCK FUNDS
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Boston 1784 Asset Allocation $ 35.5 14.89% $13.40 $13.40 $11.80 N/A N/A $.33
Boston 1784 Growth and Income 458.0 18.33 17.54 17.54 13.94 N/A N/A .11
Boston 1784 Growth 261.5 8.77 12.20 12.20 9.82 N/A N/A .05
Boston 1784 International Equity 503.0 10.93 13.20 13.40 11.55 N/A N/A .09
<FN>
*UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS BAYFUNDS MONEY MARKET PORTFOLIO.
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 THIS WILL BE SO ON A CONTINUING BASIS.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
</FN>
</TABLE>
2
<PAGE>
BOSTON 1784 FUNDS
TOTAL RETURN FOR THE FISCAL YEAR
ENDED MAY 31, 1997
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[LINE GRAPH]
BOSTON 1784 FUNDS TOTAL RETURN FOR THE FISCAL YEAR ENDED MAY 31, 1997
TAX-FREE MONEY MARKET 3.22%
U.S. TREASURY MONEY MARKET 4.66%
PRIME MONEY MARKET* 5.02%
SHORT-TERM INCOME 6.47%
INCOME 8.32%
U.S. GOVERNEMNT MEDIUM-TERM INCOME 7.16%
TAX-EXEMPT MEDIUM-TERM INCOME 7.74%
CONNECTICUT TAX-EXEMPT INCOME 7.26%
MASSACHUSETTS TAX-EXEMPT INCOME 7.30%
RHODE ISLAND TAX-EXEMPT INCOME 7.61%
ASSET ALLOCATION 14.89%
GROWTH AND INCOME 18.33%
GROWTH 8.77%
INTERNATIONAL EQUITY 10.93%
*UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS
BAYFUNDS MONEY MARKET PORTFOLIO.
3
<PAGE>
TERMS YOU NEED TO KNOW
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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.
BASIS POINT is one one-hundredth of a percentage point.
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.
COUPON RATE is the stated interest rate on a bond.
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 percentage 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 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 total 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.
YIELD is the percentage rate at which a fund's portfolio earns income, based on
a formula set by the Securities and Exchange Commission.
4
<PAGE>
BOSTON 1784 FUNDS
FUND OBJECTIVES
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MONEY MARKET FUNDS
[BULLET] BOSTON 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.
[BULLET] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
To preserve principal value and maintain a high degree of liquidity
while providing current income.
[BULLET] BOSTON 1784 PRIME MONEY MARKET FUND
To preserve principal value and maintain a high degree of liquidity
while providing current income.
BOND FUNDS
[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
To maximize current income. Preservation of capital is a
secondary objective.
[BULLET] BOSTON 1784 INCOME FUND
To maximize current income. Preservation of capital is a
secondary objective.
[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
To provide current income consistent with the preservation of capital.
TAX-EXEMPT FUNDS
[BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM
INCOME FUND
To provide current income, exempt from Federal income taxes, consistent
with the preservation of capital.
[BULLET] BOSTON 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] BOSTON 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] BOSTON 1784 RHODE ISLAND TAX-EXEMPT
INCOME FUND
To provide current income, exempt from Federal income tax,
Rhode Island personal income tax, and Rhode Island business
corporation tax. Preservation of capital is a secondary objective.
STOCK FUNDS
[BULLET] BOSTON 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] BOSTON 1784 GROWTH AND INCOME FUND
To provide long-term growth of capital with a secondary objective
of income.
[BULLET] BOSTON 1784 GROWTH FUND
To provide capital appreciation. Dividend income, if any, is
incidental to this objective.
[BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND
To provide long-term growth of capital. Dividend income, if any,
is incidental to this objective.
5
<PAGE>
INVESTMENT ADVISER'S REPORT
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[PHOTO OF EDWARD G. RILEY, JR., CHIEF INVESTMENT OFFICER]
It may seem paradoxical, but over the past 12 months, investors seem to have
benefited from a relatively lackluster economy -- indeed, the more lackluster,
the better. Whenever the economy has appeared to strengthen, the stock and bond
markets have reacted swiftly and adversely. Many investment managers, and
especially bond traders, have placed the economy under a microscope,
painstakingly searching for signs of inflation. They pore over labor statistics,
purchasing reports, capacity utilization figures -- virtually any economic data
available -- wondering if this blip or that bump will signal the beginning of a
correction and the end of the bull market.
This day-by-day (and sometimes hour-by-hour) scrutiny has resulted in
increased volatility in both the stock and long-term bond markets. For example,
during the first quarter of 1997, the economy grew at a vigorous 5 percent
annual rate. This rapid growth rate immediately raised fears that tight labor
markets would lead to inflation, which depressed stock and bond prices and
contributed to the Federal Reserve Board's "preemptive" action of raising the
Federal Funds rate.
Almost as quickly, however, the markets recovered as investors focused on the
next round of data, which showed that the economy was actually growing more
slowly. In the meantime, however, investors had endured yet another of the
roller-coaster rides that are becoming this market's hallmark.
Among the specific factors contributing to the increase in the Federal Funds
rate by the Federal Reserve Board this spring was a sharp increase in consumer
spending. A mild winter in much of the country, coupled with a wave of mortgage
refinancings, freed discretionary cash to fuel this spending. The Federal
Reserve also carefully monitors outstanding consumer debt, and particularly
credit card delinquency and bankruptcy rates -- both of which have risen
significantly. Higher interest rates should reduce refinancings in the second
half of the year and banks are showing signs of voluntarily reducing the
availability of consumer credit. Both developments should temper economic
growth.
In the meantime, many companies increased production to meet the surge of
demand in the early months of 1997, resulting in excess stock on store shelves.
The decrease in consumer demand will prompt cutbacks in production to reduce
inventories, which should reduce pressure on labor costs as well as fears of
inflation.
One easily overlooked economic factor impacting investors during the past 12
months has been the strong U.S. dollar. A strong dollar is both an asset and a
liability. Although it encourages imports (strong dollars buy more foreign
goods) and results in a competitive domestic pricing environment, which
contributes to lower inflation, a strong U.S. dollar also increases the price of
exports abroad, which reduces overall demand for goods and services originating
in the U.S.
6
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BOSTON 1784 FUNDS
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Although we may see temporary increases in inflation later in the year,
moderate labor costs and overall price competition should keep inflation under
control for the next several quarters. Inflation for the past 12 months was
2.9%, and should be comparable this year. We expect 1997 to follow the pattern
established in 1996 and 1995 -- a strong first half followed by more moderate
and sustainable growth in the last two quarters. As the economy decelerates and
producers find it increasingly difficult to pass along cost increases to retail
customers, long-term interest rates should fall later in 1997. By the end of the
year, the Federal Reserve Board may actually be prompted to reduce interest
rates as concerns over a too-strong recovery are replaced by recession worries.
STOCK MARKET REVIEW
Over the past 12 months, a clearly defined two-tier market has developed. The
larger companies that make up the Dow Jones Industrial Average generally posted
significant gains, while smaller companies, such as those traded on the NASDAQ
or making up the Russell 2000, recorded steep declines. In addition, while
market indices like the Dow Jones Industrial Average and the Standard & Poor's
500 soared, gains were far from across the board and were actually confined to a
small number of large companies. For example, just 30 companies (6%) of the
Standard & Poor's 500 were responsible for 80% of that index's performance
during the past 12 months.
The best performing stocks represented just a few industries, including
pharmaceuticals, financial companies, health care, and selected technology
stocks. Also faring well were companies that are often called "defensive" --
they can keep growing even when the economy weakens -- such as soft drink makers
and manufacturers of non-durable consumer goods like soaps.
[LINE GRAPH DEPICTING S&P 500 INDEX FROM MAY 31, 1996 TO MAY 31, 1997]
6/96 665
7/96 640
8/96 650
9/96 685
10/96 705
11/96 755
12/96 740
1/97 785
2/97 790
3/97 755
4/97 800
5/97 850
While a relatively small number of companies accounted for most market gains
as of May 31, 1997, and many small company stocks declined, the middle of the
market remained relatively steady. These stocks continued to be supported by the
four "pillars" of the stock market -- low inflation, corporate profits, low
interest rates and high liquidity.
7
<PAGE>
INVESTMENT ADVISER'S REPORT
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LOW INFLATION -- Despite periodic inflation fears, as previously discussed,
consumer and producer prices remained stable. Against this backdrop, many large
companies were able to achieve relatively high "valuation levels" -- their stock
prices were very high when measured by price-to-earnings and other ratios. At
the same time, however, these high valuations have increased volatility.
Companies and industries that failed to fulfill investors' profit expectations
saw their stock prices decline rapidly -- more so than would be expected at
lower valuation levels.
CORPORATE PROFITS -- This pillar may be the least reliable. It will prove
difficult for companies to sustain the robust profit increases of recent years
as the economy slows and competition makes it more difficult to pass along
higher labor and other costs to customers. As noted above, companies that fail
to meet expectations are dealt with harshly by investors, so any widespread
weakness in profits could have a far-reaching effect on overall stock market
performance.
LOW INTEREST RATES -- Normally, interest rate increases -- such as the March
1997 increase in the Federal Funds rate by the Federal Reserve Board -- would
have a much more adverse impact. Yet despite modest increases in both short- and
long-term interest rates during the year, market averages continued to climb,
largely because of strong corporate profits and high levels of liquidity.
LIQUIDITY -- The flow of money into stock mutual funds, particularly through
401(k) plan contributions, continues to be the strongest upward influence on
stock prices. To a large extent, the gains in large-company stocks can be
attributed to the preference of investors for well-known names and for index
funds. As indices have soared, 401(k) plan and other new investors have simply
decided to "buy the index," dramatically increasing demand for a limited supply
of stocks. Growth-and-income funds and equity-income funds benefited much more
from this trend than aggressive growth funds, which typically invest in small
companies.
[LINE GRAPH DEPICTING RUSSELL 2000 INDEX FROM MAY 31, 1996 TO MAY 31, 1997]
6/96 361
7/96 342
8/96 324
9/96 332
10/96 346
11/96 341
12/96 355
1/97 363
2/97 367
3/97 363
4/97 340
5/97 362
8
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BOSTON 1784 FUNDS
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BOND MARKET REVIEW
The bond market moves contrary to movements in interest rates since bond
prices rise as interest rates decline -- and vice versa. Investors often think
of the Federal Reserve Board as the controller of interest rates, but that's
only partially true. While the Federal Reserve Board often takes no action for
months at a time, bond investors (and therefore, interest rates) are extremely
sensitive to weekly or even daily economic news. In recent years, interest rate
movements in the bond market have usually preceded any action by the Federal
Reserve Board.
During the past year, the interest rate on the 30-year Treasury bond has
fluctuated
[LINE GRAPH DEPICTING 30-YEAR TREASURY BOND FROM MAY 31, 1996 TO MAY 31, 1997]
6/96 7.04
7/96 6.88
8/96 6.72
9/96 7.08
10/96 6.76
11/96 6.68
12/96 6.58
1/97 6.70
2/97 6.74
3/97 6.92
4/97 7.16
5/97 6.96
between 6.25% and 7.25%. While this spread may appear to represent significant
volatility, economic data that generally reflected low inflation resulted in
very stable interest rates. In fact, interest on the 30-year Treasury bond was
between 6.50% and 7.00% for most of the year.
Now, as bond investors focus on potential increases in labor costs and other
inflation-related issues, their concerns may prompt the Federal Reserve Board to
increase short-term rates still further. That said, however, the Federal Reserve
Board is aware of the risks that interest rate increases pose to the stock
market, and that sharp stock declines could significantly damage the economy
because of the "wealth effect."
The wealth effect refers to heightened consumer confidence that has resulted
from soaring stock markets. There is a direct link between consumer confidence
and economic activity. The psychological impact of a steep market decline, which
would reduce consumer confidence along with the value of 401(k) portfolios,
could send the economy into a recession. As a result, the Federal Reserve Board
may be reluctant to force interest rates upward, and the currently favorable
environment for fixed income investors may be extended. Other factors that are
helping to support bond prices are high demand on the part of foreign investors,
including central banks, and by Japanese investors in particular, who can borrow
in Japan at low interest rates and profit from yields on U.S. bonds.
In response to the slowing economy and continued low inflation of 2% to 3%,
we expect long-term interest rates to decline by
9
<PAGE>
INVESTMENT ADVISER'S REPORT
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0.5% to 1.0% by the end of the calendar year. Should the Federal Reserve follow
this trend, declines in short-term bond rates would follow.
MONEY MARKET REVIEW
The Federal Funds rate remained unchanged at 5.25% from January 31, 1996 to
March 25, 1997, when it was raised to 5.50%. This preemptive strike by the
Federal Reserve Board, which was intended to curb inflation, boosted short-term
rates in general and benefited money market investors in particular over the
past few months.
[LINE GRAPH DEPICTING FEDERAL FUNDS RATE FROM MAY 31, 1994 TO MAY 31, 1997]
5/94 4.75
11/94 5.50
5/95 6.00
11/95 5.70
5/96 5.25
11/96 5.25
5/97 5.50
As the stock market has risen, many investors have become more concerned with
safety of principal. The result has been a huge increase in money market assets
and certificates of deposit. Approximately $450 billion has been committed to
these assets in the past 21/2 years -- more than the value of all equity mutual
fund purchases during the period. These developments demonstrate a "split
personality" on the part of investors, as the craving for higher equity exposure
and returns is balanced by insecurity and a desire for safety.
We foresee interest rates declining over the next fiscal year and that money
market investors will see their returns moderate. On the other hand, bond
investors can look forward to modest gains, and the stock market's upward
momentum should be sustained in the foreseeable future. Should interest rates
decline significantly, the current two-tier stock market structure, with its
wide performance gap between larger and smaller companies, will become less of a
factor, and investors may see smaller growth companies make up some of the
ground they lost during the past twelve months.
/S/ SIGNATURE
Edward G.Riley, Jr.
Chief Investment Officer
BankBoston, N.A.
10
<PAGE>
BOSTON 1784 FUNDS
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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BOSTON 1784 TAX-FREE MONEY MARKET FUND
The objective of Boston 1784 Tax-Free Money Market Fund 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 $845.6 million in assets.
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.
For the year ended May 31, 1997, the Fund had a total return of 3.22%,
compared with 2.94% for the IBC/Donoghue Stockbroker & General Purpose Tax-Free
Average, and 2.94% for the Lipper Tax-Free Money Market Funds Average. Based on
total return, the Fund ranked among the top 10% (12 of 136) of the Lipper
Tax-Free Money Market Funds for the period from June 1, 1996 to May 31, 1997.
The 7-day yield as of May 31, 1997 was 3.33%. The Fund's return and resulting
ranking are after waiver of certain management fees and expenses (See Financial
Highlights).
The Fund grew by more than $296.0 million in assets during the year. This
rapid increase allowed the Fund to purchase new securities in a rising interest
rate environment and to maintain a high current yield. The Fund continues to
seek higher yields by purchasing securities issued in states that have either
low or no state income taxes. We expect the year ahead to be similar to the past
twelve months, but with slightly higher yields due to the March Federal Funds
rate increase.
BOSTON 1784 TAX-FREE MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 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) 3.12%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 3.22%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 TAX-FREE MONEY
MARKET FUND $10,000 $10,221 $10,557 $10,932 $11,284
IBC/DONOGHUE STOCKBROKER &
GENERAL PURPOSE TAX-FREE AVERAGE $10,000 $10,176 $10,476 $10,807 $11,124
LIPPER TAX-EXEMPT MONEY MARKET
FUNDS AVERAGE $10,000 $10,177 $10,477 $10,807 $11,124
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
11
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
The objective of Boston 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, 1997, the Fund had grown to $390.3 million in assets from
$79.0 million in assets on May 31, 1996.
For the year ended May 31, 1997, the Fund had a total return of 4.86%,
compared with 4.79% for the IBC/Donoghue U.S. Government & Agencies Average, and
4.71% for the Lipper U.S. Treasury Money Market Funds Average. Based on total
return, the Fund ranked in the top 30% (25 of 98) of the Lipper U.S. Treasury
Money Market Funds for the period from June 1, 1996 to May 31, 1997. The 7-day
yield as of May 31, 1997 was 4.98%. The Fund's return and resulting ranking are
after waiver of certain management fees and expenses (See Financial Highlights).
In April 1997, 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 year ended May 31, 1997 was a period of nearly static
short-term rates. The Federal Funds rate remained unchanged at 5.25% from
January 31, 1996 to March 25, 1997, when it was raised to 5.50%. The Fund had
anticipated this increase in rates and was well-positioned to benefit due
primarily to its large position of overnight repurchase agreements and sizeable
holdings of floating-rate U.S. Government Agency securities. The Fund remains
cautious, believing there is a possibility that the Federal Reserve Board may
raise short-term rates sometime in the next quarter. If this increase occurs,
the Fund expects to extend maturities to lock in higher yields.
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 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) 4.38%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 4.86%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784U.S. TREASURY
MONEY MARKET FUND $10,000 $10,248 $10,741 $11,295 $11,844
IBC/DONOGHUE U.S. GOVERNMENT
& AGENCIES AVERAGE $10,000 $10,250 $10,726 $11,270 $11,810
LIPPER U.S. TREASURY MONEY
MARKET FUNDS AVERAGE $10,000 $10,246 $10,717 $11,255 $11,785
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
12
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 PRIME MONEY
MARKET FUND
The objective of Boston 1784 Prime Money Market Fund is to preserve principal
value and maintain a high degree of liquidity while providing current income. As
of May 31, 1997, the Fund had $123.1 million in assets. Until December 9, 1996,
the Fund was known as BayFunds Money Market Portfolio.
For the 12 months ended May 31, 1997, the Fund had a total return of 5.02%,
compared with 4.87% for the IBC/Donoghue First Tier Money Market Average, and
4.79% for the Lipper Money Market Funds Average. Based on total return, the Fund
ranked among the top 30% (82 of 291) of the Lipper Money Market Funds Average
for the period from June 1, 1996 to May 31, 1997. The 7-day yield as of May 31,
1997 was 5.04%. The Fund's return and resulting ranking are after waiver of
certain management fees and expenses (See Financial Highlights).
The Fund invests primarily in high-quality money market instruments,
including short-term U.S. Government obligations, corporate bonds, bank
obligations (including certificates of deposit, bankers' acceptances and
fixed-time obligations), and commercial paper. In order to increase yield, the
Fund has expanded its list of approved investments by adding more asset-backed
commercial paper programs, which typically pay higher yields than other
commercial paper programs.
The 12 months ended May 31, 1997 was a period of nearly static short-term
rates. The Federal Funds rate remained unchanged at 5.25% from January 31, 1996
to March 25, 1997, when it was raised to 5.50%. The Fund anticipated this
increase in rates and was well-positioned to benefit due primarily to its large
position in overnight repurchase agreements and short average-weighted maturity.
The Fund remains cautious, believing there is a possibility that the Federal
Reserve Board may raise short-term rates sometime in the next quarter. If this
increase occurs, the Fund expects to extend maturities to lock in higher yields.
BOSTON 1784 PRIME MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
PRIME MONEY MARKET FUND VERSUS THE IBC/DONOGHUE FIRST TIER MONEY MARKET AVERAGE,
AND THE LIPPER MONEY MARKET FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/30/91) 4.28%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 5.02%
[LINE GRAPH]
<TABLE>
<CAPTION>
6/30/91 5/92 5/93 5/94 5/95 5/96 5/97
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 PRIME
MONEY MARKET FUND $10,000 $10,433 $10,745 $11,044 $11,577 $12,191 $12,803
IBC/DONOGHUE FIRST
TIER AVERAGE $10,000 $10,415 $10,711 $11,004 $11,529 $12,126 $12,716
LIPPER MONEY MARKET
FUNDS AVERAGE $10,000 $10,419 $10,717 $11,008 $11,530 $12,116 $12,696
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
*UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS BAY
FUNDS MONEY MARKET PORTFOLIO.
</FN>
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM
INCOME FUND
The objective of Boston 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 $194.0
million in assets. For the year ended May 31, 1997, the Fund had a total return
of 6.47%, compared with 6.92% for the Lehman Brothers Mutual Fund 1- 5 Year
Corporate Government Bond Index, and 6.31% for the Lipper Short Investment Grade
Debt Funds Average. Based on total return, the Fund ranked among the top third
(33 of 99) of the Lipper Short Investment Grade Debt Funds Average for the
period from June 1, 1996 to May 31, 1997. The Fund's return and resulting
ranking are after waiver of certain management fees and expenses (See Financial
Highlights).
The Fund's performance can be attributed primarily to average-weighted-
maturity and durations that were slightly longer than the Lipper average and
considerably shorter than the Lehman index. During the year, we shortened the
maturity structure of the Fund's portfolio to bring it more in line with the
Lipper average and to decrease price variability. The net result was more
consistent performance. Our underperformance compared to the Lehman index can be
attributed to the shorter average-weighted-maturity and duration of the Fund's
portfolio. A positive factor contributing to the performance of the Fund was the
increased exposure to asset-backed securities, which helped to increase yield as
well as total return.
On May 31, 1997, corporate bonds represented approximately 35% of the Fund's
portfolio, Treasury securities represented 20%, asset-backed securities
represented 15%, and taxable municipal securities and mortgage-backed securities
each represented 7%. During the coming year, we expect to continue to invest in
shorter-maturity securities to maintain price stability; to add income through
asset-backed, mortgage-backed, and taxable municipal securities; and to increase
the credit quality of the portfolio.
BOSTON 1784 SHORT-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 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) 6.17%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 6.47%
[LINE GRAPH]
7/31/94 5/95 5/96 5/97
BOSTON 1784 SHORT-TERM INCOME FUND $10,000 $10,601 $11,107 $11,826
LEHMAN MUTUAL FUND 1-5 YEAR
GOV'T./CORP. BOND INDEX $10,000 $10,700 $11,236 $12,014
LIPPER SHORT INVESTMENT-GRADE
DEBT FUNDS AVERAGE $10,000 $10,549 $11,071 $11,769
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
14
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
The objective of Boston 1784 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
$334.8 million in assets. For the year ended May 31, 1997, the Fund had a total
return of 8.32%, compared with 8.32% for the Lehman Brothers Aggregate Bond
Index and 7.60% for the Lipper Corporate Debt A-Rated Funds Average. Based on
total return, the Fund ranked among the top third (38 of 122) of the Lipper
Corporate Debt A-Rated Funds Average for the period from June 1, 1996 to May 31,
1997. The Fund's return and resulting ranking are after waiver of certain
management fees and expenses (See Financial Highlights).
The Fund's performance can be attributed to several factors, including
overweighting of capital securities and Yankee bonds (dollar-denominated bonds
issued in the U.S. by foreign borrowers) relative to the Lehman index and Lipper
average. On May 31, 1997, the average maturity of the Fund was approximately
13.1 years with a duration of approximately 6.9 years.
During the past year, the Fund took advantage of the opportunity to invest in
capital securities issued by banks. These new securities represent long-term
debt but resemble preferred stock and were very attractive on a relative-value
basis. In the year ahead, the Fund expects to continue to increase its holdings
of put bonds -- bonds that permit the investor to redeem the securities prior to
maturity. These bonds may have significant advantages in certain interest rate
settings.
If interest rates decline, we expect to increase the Fund's holdings of
Yankee bonds and foreign-pay bonds (bonds issued by non-U.S. issuers and payable
in local currency). Should interest rates rise, we expect to use that
opportunity to extend the overall maturity of the Fund.
BOSTON 1784 INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 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) 7.33%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 8.32%
[LINE GRAPH]
7/31/94 5/95 5/96 5/97
BOSTON 1784 INCOME FUND $10,000 $10,934 $11,211 $12,144
LEHMAN BROTHERS AGGREGATE BOND INDEX $10,000 $10,955 $11,435 $12,387
LIPPER CORPORATE DEBT A-RATED FUNDS AVERAGE $10,000 $10,902 $11,280 $12,137
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
15
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
The objective of Boston 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 U.S. Government Agency short- to
intermediate-term securities.
Since its inception in June 1993, the Fund has grown to a total of $209.1
million in assets. For the year ended May 31, 1997, the Fund had a total return
of 7.16% compared with 7.11% for the Lehman Brothers Intermediate Government
Bond Index and 6.94% for the Lipper Intermediate-Term U.S. Government Funds
Average. Based on total return, the Fund ranked among the top half (51 of 123)
of the Lipper Intermediate-Term U.S. Government Funds Average for the period
from June 1, 1996 to May 31, 1997. The Fund's return and resulting ranking are
after waiver of certain management fees and expenses (See Financial Highlights).
Much of the Fund's performance can be attributed to a strategic emphasis on
mortgage-backed and agency securities. Both sectors enhanced the Fund's income,
and mortgage-backed securities added to the capital appreciation portion of the
Fund's return.
The assets of the Fund are diversified among U.S. Treasury, U.S. Government
Agency and mortgage-backed securities. The Fund's securities are concentrated in
the 2-year to 10-year maturity range. On May 31, 1997, the
average-weighted-maturity of the Fund was approximately 7.7 years, and the Fund
had a duration of 5.1 years.
In March 1997, the Federal Funds rate was increased to 5.50%, and the Federal
Reserve Board may well act again. If economic growth slows and interest rates
decline, we expect to extend the Fund's average-weighted-maturity and decrease
holdings in mortgage-backed securities, which can underperform as investors
refinance mortgages, in favor of Treasury and non-callable agency securities.
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND VERSUS THE
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX, AND THE LIPPER
INTERMEDIATE-TERM U.S. GOVERNMENT FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/7/93) 4.66%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 7.16%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND $10,000 $9,787 $10,646 $11,024 $11,813
LEHMAN BROTHERS INTERMEDIATE U.S.
GOVERNMENT BOND INDEX $10,000 $9,980 $10,887 $11,380 $12,189
LIPPER INTERMEDATE-TERM U.S.
GOVERNMENT FUNDS AVERAGE $10,000 $9,837 $10,720 $11,072 $11,840
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
16
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
The objective of Boston 1784 Tax-Exempt Medium-Term Income Fund is to provide
current income exempt from Federal income tax, consistent with the preservation
of capital. On May 31, 1997, the Fund's assets totaled $250.5 million.
Total return for the year ended May 31, 1997 was 7.74%, compared with 6.23%
for the Lipper Intermediate Municipal Funds Average, ranking the Fund in the top
5% (6 of 133) of its peer group. The Fund also outperformed the Lehman Brothers
7-Year Municipal Bond Index by 88 basis points, which we attribute to the Fund's
emphasis on maximizing current income and maintaining a slightly longer relative
average-weighted-maturity and effective duration. The Fund's return and
resulting ranking are after waiver of certain management fees and expenses (See
Financial Highlights).
The Fund achieved incremental income, yield, and price stability by
emphasizing both geographical and sector diversification. During the past fiscal
year, the Fund emphasized both income and total return, an approach reflected in
a higher average-weighted-maturity and effective duration than its Lehman
benchmark and Lipper peer group. The Fund focused on bonds rated AA or higher by
Moody's or Standard & Poor's with maturities ranging from 8 to 15 years. Also
contributing to the Fund's performance were an overall upgrading of credit
quality and liquidity, achieved by increasing exposure to general obligation
state issues and purchases of bonds with modest discounts to current coupon
rates.
In the year ahead, we anticipate favorable conditions for the municipal bond
market. The limited supply of new issues, coupled with increased interest on the
part of individual investors along with sustained institutional demand, should
reduce volatility in 1997 and ultimately result in higher returns for investors.
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
TAX-EXEMPT MEDIUM-TERM INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX, AND THE LIPPER INTERMEDIATE MUNICIPAL BOND FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/14/93) 5.91%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 7.74%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND $10,000 $10,212 $10,986 $11,449 $12,336
LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX $10,000 $10,144 $10,972 $11,481 $12,267
LIPPER INTERMEDIATE MUNICIPAL
BOND FUNDS AVERAGE $10,000 $10,142 $10,855 $11,284 $11,986
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
17
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Connecticut Tax-Exempt Income Fund is current
income exempt from both Federal and Connecticut personal income tax.
Preservation of capital is a secondary objective. Since its inception in August
1994, the Fund has grown to $103.1 million in assets.
Total return for the year ended May 31, 1997 was 7.26%, compared with 6.01%
for the Lipper Other States Intermediate Municipal Funds Average, and the Fund
ranked in the top 3% (2 of 67) of the Lipper Other States Intermediate Municipal
Funds Average. The Fund also outperformed the Lehman Brothers 7-Year Municipal
Bond Index's 6.83% total return for the same period. The performance reflects
the Fund's emphasis on maximizing income, optimization of total return
strategies, and the Fund's slightly higher relative average-weighted-maturity
and effective duration. The Fund's return and resulting ranking are after waiver
of certain management fees and expenses (See Financial Highlights).
The Fund achieves incremental income, yield and price stability by
emphasizing diversification across sectors and issuers within the state. During
the past fiscal year, the Fund emphasized both income and total return, an
approach reflected in a higher average-weighted-maturity and effective duration
than its Lehman benchmark and Lipper peer group. The Fund focused on bonds rated
AA or higher by Moody's or Standard & Poor's with maturities ranging from 8 to
15 years. Also contributing to the Fund's performance were an overall upgrading
of credit quality and liquidity, achieved by increasing exposure to general
obligation issuers and purchases of bonds with modest discounts to current
coupon rates.
In the year ahead, we anticipate favorable conditions for the municipal bond
market. The limited supply of new issues, coupled with increased interest on the
part of individual investors along with sustained institutional demand, should
reduce volatility in 1997 and ultimately result in higher returns for investors.
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
CONNECTICUT TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX, AND THE LIPPER OTHER STATES INTERMEDIATE MUNICIPAL FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (8/1/94) 6.66%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 7.26%
[LINE GRAPH]
8/31/94 5/95 5/96 5/97
BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOME FUND $10,000 $10,664 $11,103 $11,909
LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX $10,000 $10,629 $11,123 $11,885
LIPPER OTHER STATES INTERMEDIATE
MUNI FUNDS AVERAGE $10,000 $10,540 $10,921 $11,578
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
18
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Massachusetts Tax-Exempt Income Fund is current
income, exempt from both Federal and Massachusetts personal income tax,
consistent with the preservation of capital. 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 $147.5
million in assets. For the year ended May 31, 1997, the Fund had a total return
of 7.30%, compared with 6.85% for the Lehman Brothers 7-Year Municipal Bond
Index and 6.01% for the Lipper Massachusetts Intermediate Municipal Funds
Average, ranking the Fund 1 out of 9 funds in its Lipper peer group. The Fund's
return and resulting ranking are after waiver of certain management fees and
expenses (See Financial Highlights).
Important factors affecting the Fund's performance included the investment in
high-credit-quality bonds with current and slight discount coupons. In addition,
the Fund had an average-weighted-maturity of 8.2 years and a duration of 6.2
years, both of which were slightly longer than the Lehman Brothers 7-Year
Municipal Bond Index.
As of May 31, 1997, approximately 62% of the bonds in the Fund were rated AA
or higher by either Moody's or Standard & Poor's. The assets of the Fund were
diversified among general obligations issued by the Commonwealth of
Massachusetts and various municipalities and revenue bonds issued to finance
hospitals, education, housing, transportation, utilities and industrial
development.
During the past year, the Fund focused on improving current dividend yield
while maintaining holdings with relatively high credit quality. The scarcity of
Massachusetts bonds continues to impede expansion of the Fund's holdings. The
Fund is structured in expectation of an eventual decline in interest rate levels
toward year-end. Current income will continue to be a priority.
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
MASSACHUSETTS TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX, THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX, AND THE
LIPPER MASSACHUSETTS INTERMEDIATE MUNICIPAL FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/14/93) 5.01%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 7.30%
[LINE GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND $10,000 $10,126 $10,734 $11,116 $11,928
LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX $10,000 $10,144 $10,972 $11,481 $12,267
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX $10,000 $10,141 $11,052 $11,575 $12,521
LIPPER MASSACHUSETTS
INTERMEDIATE MUNICIPAL FUNDS AVERAGE $10,000 $10,141 $10,765 $11,153 $11,823
</TABLE>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
GOING FORWARD, BOSTON 1784 MASSACHUSETTS 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.
19
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Rhode Island Tax-Exempt Income Fund is current
income exempt from Federal income tax, Rhode Island personal income tax and
Rhode Island business corporation tax. Preservation of capital is a secondary
objective. Since its inception in August 1994, the Fund has grown to $53.8
million in assets.
Total return for the year ended May 31, 1997 was 7.61%, compared with 6.01%
for the Lipper Other States Intermediate Municipal Funds Average, and the Fund
ranked in the top 1% (1 of 67) of the Lipper Other States Intermediate Municipal
Funds Average. The Fund also outperformed the Lehman Brothers 7-Year Municipal
Bond Index's 6.83% total return by 78 basis points. The performance of the Fund
reflects the Fund's emphasis on maximizing income, optimization of total return
strategies and the Fund's slightly higher relative average-weighted-maturity and
effective duration. The Fund's return and resulting ranking are after waiver of
certain management fees and expenses (See Financial Highlights).
The Fund achieves incremental income, yield, and price stability by
emphasizing diversification across sectors and issuers within the state. During
the past fiscal year, the Fund emphasized both income and total return, an
approach reflected in a higher average-weighted-maturity and effective duration
than its Lehman benchmark and Lipper peer group. The Fund focused on bonds rated
AA or higher by Moody's or Standard & Poor's with maturities ranging from 8 to
15 years. Also contributing to the Fund's performance were an overall upgrading
of credit quality and liquidity, achieved by increasing exposure to general
obligation issuers and purchases of bonds with modest discounts to current
coupon rates.
In the year ahead, we anticipate favorable conditions for the municipal bond
market. The limited supply of new issues, coupled with increased interest on the
part of individual investors along with sustained institutional demand, should
reduce volatility in 1997 and ultimately result in higher returns for investors.
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
RHODE-ISLAND TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX, AND THE LIPPER OTHER STATES INTERMEDIATE MUNICIPAL FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (8/1/94) 6.46%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 7.61%
[LINE GRAPH]
8/31/94 5/95 5/96 5/97
BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND $10,000 $10,552 $11,033 $11,872
LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX $10,000 $10,629 $11,123 $11,885
LIPPER OTHER STATES INTERMEDIATE
MUNICIPAL FUNDS AVERAGE $10,000 $10,540 $10,921 $11,578
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
20
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 ASSET
ALLOCATION FUND
The objective of Boston 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 $16.8
million to $35.5 million. For the year ended May 31, 1997, the Fund had a total
return of 14.89%, compared with 29.40% for the S&P 500 Composite Index, 8.32%
for the Lehman Brothers Aggregate Bond Index, and 14.88% for the Lipper Flexible
Portfolio Funds Average. The Fund's return is after waiver of certain management
fees and expenses (See Financial Highlights).
On May 31, 1997, the Fund's allocation was 53% common stocks, 40% bonds and
7% short-term money market instruments. Over the past fiscal year, new
investment funds have been directed towards the purchase of bonds and common
stocks in an approximate ratio of 60%/40%, which we believe will contribute
significantly to the Fund's near-term total return.
While new equity investment continued to be directed primarily towards
large-capitalization global companies, this year an increasing portion of new
equity investment was directed towards mid-capitalization growth stocks in the
technology, capital goods and health care sectors. This change in strategy has
thus far penalized relative equity returns as investors remain narrowly focused
on more liquid, large companies.
During the year ended May 31, 1997, the Fund increased its investment in
bonds from 36% to 40% in response to a strong stock market and relatively
attractive interest rates. The bond market has struggled with concerns that
strong economic growth and low unemployment might lead to inflation. Since we
believe economic growth may slow and interest rates decline, we expect to extend
the average-weighted-maturity of the bond portion of the Fund.
BOSTON 1784 ASSET ALLOCATION FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
ASSET ALLOCATION FUND VERSUS THE S&P 500 COMPOSITE INDEX, THE LEHMAN BROTHERS
AGGREGATE BOND INDEX, AND THE LIPPER FLEXIBLE PORTFOLIO FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/14/93) 11.74%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 14.89%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 ASSET ALLOCATION
FUND $10,000 $10,016 $11,503 $13,554 $15,572
S&P 500 COMPOSITE INDEX $10,000 $10,395 $12,489 $16,039 $20,754
LEHMAN BROTHERS AGGREGATE
BOND INDEX $10,000 $9,890 $11,028 $11,511 $12,469
LIPPER FLEXIBLE PORTFOLIO
FUNDS AVERAGE $10,000 $10,265 $11,492 $13,599 $15,622
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
21
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND
INCOME FUND
The objective of Boston 1784 Growth and Income Fund is long-term growth of
capital with a secondary objective of income. The Fund is a diversified
portfolio invested primarily in stocks of large- and mid-capitalization
companies.
During the past 12 months, the Fund's assets have increased to $458.0
million. For the year ended May 31, 1997, the Fund had an annualized total
return of 18.33%, compared with 29.40% for the S&P 500 Composite Index, and
22.81% for the Lipper Growth and Income Average. The Fund's return is after
waiver of certain management fees and expenses (See Financial Highlights).
Two factors that contributed to the Fund's underperformance compared to the
S&P 500 Composite Index were its exposure to mid-capitalization companies and
the strength of the U.S. dollar. During the last 12 months, the stocks of larger
companies outperformed mid-capitalization companies. Also, the performance of
the S&P 500 Composite Index has become increasingly narrow, with 6% of stocks
accounting for approximately 80% of the index's performance. This has been
driven primarily by index fund purchases and foreign buyers of U.S. large cap
companies. We believe that over the long term this trend will not continue, and
the Fund's holdings in companies with stronger rates of earnings growth will
achieve a deserved premium to the market.
Currency exchange rates also negatively impacted the Fund's performance.
Approximately 20% of the Fund's holdings are invested in foreign companies,
primarily located in France, Germany and the United Kingdom. During the second
half of the fiscal year, the U.S. dollar appreciated about 14% to 16% versus the
currencies of these countries. As a result, the Fund's performance was reduced
by approximately 3%. Over the near term, we believe that the U.S. dollar has
achieved maximum appreciation and anticipate a more stable currency environment
in the year ahead. We expect to maintain our foreign holdings at approximately
current levels, investing in companies with superior growth profiles.
In the coming year, we plan to continue investing primarily in stocks,
focusing on high quality growth companies with strong revenue and earnings
increases. We also expect to continue to emphasize the technology, consumer
non-durables, energy and healthcare sectors. We believe that the Fund's exposure
to foreign stocks will enhance performance as well as diversification.
BOSTON 1784 GROWTH AND INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 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) 17.02%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 18.33%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
BOSTON 1784 GROWTH & INCOME FUND $10,000 $10,854 $12,709 $16,054 $18,997
S&P 500 COMPOSITE INDEX $10,000 $10,395 $12,489 $16,039 $20,754
LIPPER GROWTH & INCOME AVERAGE $10,000 $10,483 $12,021 $15,064 $18,500
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
22
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
The objective of Boston 1784 Growth Fund is capital appreciation. Dividend
income, if any, is incidental to this objective. The Fund is a diversified
portfolio invested primarily in stocks of small- and mid-capitalization
companies.
The Fund began on March 28, 1996, and on May 31, 1996 its assets were $46.0
million. During the past 12 months, the Fund's assets have increased to $261.5
million.
For the year ended May 31, 1997, the Fund had a total return of 8.77%,
compared with 6.97% for the Russell 2000 Index and a 17.72% return for the
Lipper Growth Funds Average during the same period. The Fund's return is after
waiver of certain management fees and expenses (See Financial Highlights).
The last 12 months saw the stocks of larger companies significantly
outperform the stocks of smaller companies, as demonstrated by the 29.40% gain
for the S&P 500 Composite Index compared to the 6.97% increase in the Russell
2000 Index. The first quarter of the fiscal year saw sharp declines in
technology stocks. Small-capitalization stocks were hit hardest but improved
from August through the end of January 1997, although their performance
continued to lag large companies. February began a three-month decline in the
stock market averages-- the steepest in five years -- with small company stocks
falling the most. When the stock market began to climb in May, small company
stocks led the turnaround, with the Russell 2000 Index outperforming both the
Dow Jones Industrial Average and the S&P 500 Composite Index.
The Fund's investment in foreign securities was one reason why it
outperformed the Russell 2000 Index. As of May 31, 1997, foreign securities
represented approximately 17% of the Fund's assets. The aggregate performance of
these securities, led by two English companies, J.D. Wetherspoon and Pizza
Express, was significantly higher than the Russell 2000 Index. The Fund's
concentration in technology companies also produced good returns, bolstered by
the Fund's holdings of Intel, Microsoft, Cisco, BAAN, and Visio Corp. The
primary reason for the underperformance compared to the Lipper Growth Funds
Average was the Fund's higher exposure to small capitalization equities.
In the year ahead, we expect to continue to invest primarily in high-growth
stocks, focusing on emerging companies with strong revenue and earnings
increases. We expect to continue to emphasize the technology, consumer
non-durables, energy and healthcare sectors. We believe that the Fund's exposure
to foreign stocks will continue to enhance performance as well as
diversification.
BOSTON 1784 GROWTH FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
GROWTH FUND VERSUS THE RUSSELL 2000 INDEX AND
THE LIPPER GROWTH FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (3/28/96) 18.92%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 8.77%
[LINE GRAPH]
3/31/96 5/96 5/97
BOSTON 1784 GROWTH FUND $10,000 $11,270 $12,258
RUSSELL 2000 INDEX $10,000 $10,950 $11,713
LIPPER GROWTH FUNDS AVERAGE $10,000 $10,602 $12,480
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
23
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL
EQUITY FUND
The objective of Boston 1784 International Equity Fund is to provide long-term
growth of capital. Dividend income, if any, is incidental to this objective.
Since May 31, 1996, the Fund's assets have increased from $362.5 million to
$503.0 million. For the year ended May 31, 1997, the Fund had a total return of
10.93%, compared with 7.55% for the Morgan Stanley EAFE Index and 12.03% for the
Lipper International Funds Average. The Fund's return is after waiver of certain
fund expenses (See Financial Highlights).
During the last 12 months, the international markets have offered mixed
opportunities for the U.S. investor. The strong investment returns in many
countries, particularly in continental Europe, were eroded by weak European
currencies as the U.S. market, and therefore the dollar attracted foreign
investors. In many countries, historically low interest rates supported local
currency equity returns greater than the U.S. averages. However, these returns,
except in the United Kingdom and the Netherlands, were generally below U.S.
returns when translated into dollar terms. The position in the Netherlands
continued to make, as projected, a major contribution to the Fund's performance.
Despite a comparatively small portion of the Fund invested in Japanese equities
and a strategy that partially protected against a drop in the yen for most of
the period, the Japanese position subtracted from the otherwise competitive
returns from other markets.
The United Kingdom continues to be a favored location for businesses
establishing a European foothold. Moreover, as the second largest equity market
after Japan, it represents an important area of investment for the Fund. We
expect it to benefit from the recovery of continental Europe, provided the pound
sterling does not appreciate significantly during the next 12 months.
BOSTON 1784 INTERNATIONAL EQUITY FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON
1784 INTERNATIONAL EQUITY FUND VERSUS THE MORGAN
STANLEY EAFE INDEX AND THE LIPPER INTERNATIONAL FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (1/31/95) 14.14%
ANNUAL TOTAL RETURN (6/1/96-5/31/97) 10.93%
[LINE GRAPH]
1/31/95 5/95 5/96 5/97
BOSTON 1784 INTERNATIONAL EQUITY FUND $10,000 $11,040 $13,146 $14,583
MORGAN STANELY EAFE INDEX $10,000 $10,862 $12,021 $12,928
LIPPER INTERNATIONAL FUNDS AVERAGE $10,000 $10,767 $12,368 $13,856
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
As of May 31, 1997, the Fund was invested in 35 countries with positions in
more than 190 companies. The investment policy of the Fund stresses the
management of risk by diversification, particularly in smaller markets. The
opportunities in smaller,
24
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
fast-growing economies are significant. Individual stock prices can be very
volatile, however, necessitating a broad exposure in a number of countries with
different economic characteristics.
We continue to emphasize the longer term growth prospects for each portfolio
company and assess a "fair" price for its shares. This policy is reflected in
the relatively low turnover (less than 25%) of the Fund's portfolio. Most of the
portfolio changes have occurred in the more volatile markets of the less
developed economies. We are more opportunistic in realizing gains in the markets
of the less developed economies as these markets respond to political change. As
of May 31, 1997, 88% of the Fund was invested in more mature markets and major
companies which also have important business opportunities in the fast growing
markets of Latin America, southeast Asia and eastern Europe.
25
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND
- -------------------------------------------------------
[PIE CHART]
GENERAL OBLIGATIONS 14%
CASH EQUIVALENTS 9%
TAX-EXEMPT COMMERCIAL PAPER 2%
OTHER REVENUE BONDS 28%
HOUSING BONDS 3%
IND. DEV. & POLLUTION CONTROL BONDS 21%
HEALTH CARE BONDS 5%
EDUCATION BONDS 6%
TRANSPORTATION BONDS 2%
UTILITY BONDS 10%
% OF TOTAL PORTFOLIO INVESTMENTS
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
MUNICIPAL BONDS -- 91.0%
ALABAMA -- 0.2%
Phenix City, Industrial
Development RB, Mead
Coated Board Project, Series B
(A) (B) (C) (D)
4.150%, 06/05/97 $1,600 $ 1,600
----------
ARKANSAS -- 1.3%
Arkansas State Development
Finance Authority RB, Higher
Education Capital Asset
(A) (B) (C) (E)
3.850%, 06/05/97 5,200 5,200
Crossett, Pollution Control RB
(A) (B) (C) (D)
3.850%, 06/05/97 5,400 5,400
----------
10,600
----------
CALIFORNIA -- 3.5%
California State School Cash
Reserve Program Authority,
Series B (E)
4.500%, 12/19/97 5,000 5,024
- -------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -------------------------------------------------------
Los Angeles, American Airlines,
Series C (A) (B) (C) (D)
4.000%, 06/05/97 $ 4,200 $ 4,200
Los Angeles County GO TRAN,
Series A (D)
4.500%, 06/30/97 20,000 20,014
----------
29,238
----------
COLORADO -- 5.2%
Colorado State Health Facility
Authority RB, Sisters Charity
Health, Series B (A) (B) (C) (D)
3.850%, 06/05/97 15,000 15,000
Colorado State Health Facility
Authority RB, Sisters Charity
Health, Series C (A) (B) (C) (D)
3.850%, 06/05/97 3,900 3,900
Denver, Childrens Hospital
Association (A) (B) (C) (E)
3.950%, 06/04/97 15,100 15,100
Platte River, Platte River Power
Authority RB, Series AA (B) (C)
6.875%, 06/01/97 9,500 9,690
----------
43,690
----------
DISTRICT OF COLUMBIA -- 0.7%
District of Columbia GO,
Series B2 (A) (B) (C) (D)
4.000%, 06/05/97 5,900 5,900
----------
FLORIDA -- 2.0%
Dade County, Housing Finance
Authority, Multi-Family RB
(A) (B) (C) (E)
3.850%, 06/04/97 3,900 3,900
Florida State Housing Finance
Agency RB, Series A
(A) (B) (C) (D)
3.950%, 06/04/97 3,310 3,310
Hillsborough County, Utility Bond,
Tampa Electric Project
(A) (B) (C)
4.150%, 06/05/97 10,000 10,000
----------
17,210
----------
26
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
GEORGIA -- 1.1%
Georgia State Municipal Electric
Authority RB, Series B
(A) (B) (C) (D)
3.500%, 06/04/97 $ 7,000 $ 7,000
Georgia Tech Foundation Facility
RB, Wardlaw Project,
Series B (A) (B) (C) (D)
3.850%, 06/04/97 2,600 2,600
----------
9,600
----------
ILLINOIS -- 8.4%
Chicago GO (A) (B) (C) (D)
3.650%, 06/04/97 25,000 25,000
Chicago GO, Series C (B) (C) (E)
3.600%, 08/01/97 12,500 12,500
Chicago, Multi-Family Housing
RB, Waveland Associates
Project-C (A) (B) (C) (D)
3.950%, 06/04/97 10,000 10,000
Illinois State Educational Facility
Authority RB, National College
Educational Project
(A) (B) (C) (D)
3.900%, 06/05/97 7,600 7,600
Illinois State Educational Facility
Authority RB, Shedd Aquarium
Society Project, Series B
(B) (C) (D)
3.850%, 11/20/97 6,000 6,000
Lombard, Multi-Family Housing RB,
Clover Creek Project (B) (C) (D)
3.800%, 12/15/97 10,000 10,000
----------
71,100
----------
INDIANA -- 1.4%
Indiana State Office Building
Community RB (B) (C)
8.750%, 07/01/97 2,000 2,048
Mount Vernon, Pollution Control
RB, Southern Indiana Gas &
Electric Project (A) (B) (C) (E)
4.050%, 11/01/97 10,135 10,139
----------
12,187
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
IOWA -- 1.5%
Iowa School Corporation BAN,
Series B (E)
4.250%, 01/30/98 $12,500 $ 12,548
----------
KANSAS -- 0.6%
Kansas City, Industrial
Development Authority RB,
Resh Health Services System
Project (A) (B) (C) (E)
4.000%, 06/04/97 4,800 4,800
----------
KENTUCKY -- 0.9%
Ashland, Pollution Control RB,
Ashland Oil Project
(A) (B) (C) (D)
3.700%, 06/05/97 3,500 3,500
Boone County, Pollution Control
RB, Cincinnati Gas & Electric
Project (A) (B) (C) (D)
3.800%, 06/01/97 4,100 4,100
----------
7,600
----------
LOUISIANA -- 5.6%
Ascension Parish, Pollution
Control RB, Shell Oil
(A) (B) (C)
3.750%, 06/04/97 9,500 9,500
De Soto Parish, Pollution
Control RB, Central Louisiana
Electric Company Project,
Series A (A) (B) (C) (D)
3.750%, 06/04/97 5,110 5,110
Louisiana State BAN, Series A (E)
6.000%, 04/15/98 5,520 5,626
Louisiana State GO (E)
6.600%, 08/01/97 1,000 1,004
Louisiana State Offshore
Terminal Authority RB,
Deepwater Port Project
(A) (B) (C) (D)
4.000%, 06/05/97 15,300 15,300
Plaquemines, Port Harbor &
Terminal District RB, Chevron
Pipeline Project (A) (B) (C)
3.900%, 09/01/97 2,500 2,501
27
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
LOUISIANA (CONTINUED)
Rapides Parish, Pollution Control
RB, Central Louisiana Electric
Project (A) (B) (C) (D)
3.750%, 06/04/97 $ 8,150 $ 8,150
----------
47,191
----------
MAINE -- 1.5%
Jay, Pollution Control RB, Solid
Waste Disposal Project
AMT (A) (B) (C)
3.950%, 06/01/97 13,000 13,000
----------
MARYLAND -- 0.1%
Maryland State Water Quality
Financing Administration RB,
Revolving Land Fund, Series A
6.550%, 09/01/97 1,000 1,024
----------
MASSACHUSETTS -- 5.0%
Massachusetts State Capital
Appreciation Program GO (F)
4.070%, 06/01/97 5,000 5,000
Massachusetts State Health &
Educational Facility Authority
RB, Harvard University Issue,
Series Q-1 (A) (B) (C) (D)
3.650%, 06/05/97 8,000 8,000
Massachusetts State Industrial
Finance Agency RB
(A) (B) (C)
3.900%, 06/05/97 4,800 4,800
Massachusetts State Industrial
Finance Agency RB, Buckingham
Brown Issue (A) (B) (C) (D)
3.800%, 06/05/97 4,000 4,000
Massachusetts State Industrial
Finance Agency RB, Ocean Spray
Cranberries Inc. TECP
3.850%, 10/15/97 3,700 3,700
Springfield, BAN
4.100%, 11/21/97 2,400 2,409
Worcester, BAN, Lot A
4.000%, 08/28/97 11,837 11,843
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Worcester, BAN, Lot A
3.970%, 08/28/97 $ 2,625 $ 2,625
----------
42,377
----------
MICHIGAN -- 4.0%
Delta County, Economic
Development RB
(A) (B) (C) (D)
4.000%, 06/05/97 4,700 4,700
Detroit, Downtown
Development Authority
RB, Millender Center
Project (A) (B) (C) (D)
4.100%, 06/05/97 12,000 12,000
Grand Rapids, Economic
Development RB, Amway
Hotel Project, Series A
(A) (B) (C) (D)
4.250%, 06/04/97 9,800 9,800
Michigan State Municipal
Authority RB, Series B
4.500%, 07/25/97 7,500 7,506
----------
34,006
----------
MISSISSIPPI -- 1.3%
Jackson County, Pollution
Control Authority RB,
Chevron USA Project
(A) (B) (C) (E)
4.000%, 06/05/97 10,650 10,650
----------
MISSOURI -- 1.6%
Kansas City, Industrial
Development Authority
RB (A) (B) (C) (E)
4.000%, 06/05/97 7,200 7,200
Missouri State Health &
Educational Facilities
Authority RB, Christian
Health Services, Series B
(A) (B) (C) (D)
3.750%, 06/04/97 6,150 6,150
----------
13,350
----------
28
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
NEBRASKA -- 2.4%
Omaha, Public Power Distribution
RB, Series A
3.750%, 02/01/98 $20,000 $ 20,013
----------
NEW HAMPSHIRE -- 2.8%
New Hampshire State Health
& Higher Education Facilities
RB, Mary Hitchcock Project,
Series 85D (A) (B) (C) (E)
3.850%, 06/04/97 12,600 12,600
New Hampshire State Health &
Higher Education Facilities RB,
Mary Hitchcock Project,
Series 85H (A) (B) (C) (E)
3.850%, 06/04/97 2,700 2,700
New Hampshire State Health &
Higher Education Facilities
RB, St. Paul's School Project
(A) (B) (C) (D)
3.900%, 06/05/97 2,000 2,000
New Hampshire State Health &
Higher Education Facilities RB,
Veterans Hospital Administration
New England Project, Series C
(A) (B) (C) (E)
3.850%, 06/04/97 4,000 4,000
New Hampshire State Health &
Higher Education Facilities RB,
Veterans Hospital Administration
New England Project, Series F
(A) (B) (C) (E)
3.850%, 06/04/97 2,000 2,000
----------
23,300
----------
NEW JERSEY -- 0.3%
Essex County BAN, Series A
4.500%, 09/17/97 2,775 2,779
----------
NEW YORK -- 8.9%
Nassau County GO BAN, Series B
4.250%, 11/14/97 15,000 15,026
New York State Local Government
Assistance Corporation RB,
Series B (A) (B) (C) (D)
3.800%, 06/04/97 12,500 12,500
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
New York State Local Government
Assistance Corporation
RB (A) (B) (C) (D)
3.800%, 06/04/97 $23,770 $ 23,770
New York State Municipal Water
Finance Authority RB,
Series G (A) (B) (C) (E)
4.000%, 06/05/97 24,400 24,400
----------
75,696
----------
NORTH CAROLINA -- 2.4%
Wake County, Industrial Facilities
& Pollution Control RB, Carolina
Power & Light Project,
Series B (A) (B) (C) (D)
4.000%, 06/04/97 10,400 10,400
Wake County, Industrial Facilities
& Pollution Control RB, Carolina
Power & Light Project,
Series C (A) (B) (C) (D)
4.000%, 06/04/97 9,800 9,800
----------
20,200
----------
OHIO -- 2.0%
Columbus, Sewer Authority
RB (A) (B) (C)
3.800%, 06/05/97 11,600 11,600
Hamilton County BAN, Series A
4.250%, 07/10/97 5,000 5,002
----------
16,602
----------
OREGON -- 0.6%
Clackamas County, Hospital
Facility RB (B) (C)
3.550%, 10/01/97 2,800 2,800
Portland, Terminal Facilities RB,
Union Pacific Railroad Company
Project (B) (C)
3.900%, 12/01/97 2,300 2,300
----------
5,100
----------
PENNSYLVANIA -- 1.3%
Pennsylvania State Certificate
of Participation
4.600%, 06/01/97 4,270 4,270
29
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania State Intergovern-
mental Cooperation Authority,
Special Tax RB, Philadelphia
Funding Project (E)
5.000%, 06/15/97 $ 1,000 $ 1,000
Pennsylvania State TRAN, Temple
University Funding
Obligation (D)
4.750%, 05/18/98 5,500 5,543
----------
10,813
----------
RHODE ISLAND -- 0.4%
Rhode Island State Solid Waste
Management Corporation RB (D)
4.500%, 08/01/97 3,000 3,002
----------
SOUTH CAROLINA -- 1.3%
Berkeley County, Pollution
Control RB, Mobay Chemical
Project (A) (B) (C) (D)
3.800%, 06/01/97 4,300 4,300
Georgetown County, Pollution
Control RB, International
Paper Project (A) (B) (C)
4.000%, 09/01/97 5,000 5,000
York County, Pollution Control
RB, Series 84E (A) (B) (C) (D)
3.500%, 08/15/97 2,000 2,000
----------
11,300
----------
SOUTH DAKOTA -- 1.4%
South Dakota State Housing
Development Authority RB,
Series B
3.750%, 03/26/98 12,150 12,150
----------
TENNESSEE -- 0.6%
Nashville & Davidson Counties,
Health & Education Facility
Board RB, Vanderbilt University
Issue (A) (B) (C) (D)
3.650%, 01/15/98 5,500 5,500
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TEXAS -- 9.3%
Brazos, Industrial Development
RB, Badische Corporate Port
Authority (A) (B) (C) (D)
3.800%, 06/01/97 $ 6,300 $ 6,300
Dallas, Independent School
District GO (D) (F)
3.910%, 08/15/97 12,400 12,302
Grand Prairie, Housing Finance
Corporate Authority, Multi-Family
Housing RB, Lincoln Property
Project (A) (B) (C) (E)
3.900%, 06/04/97 5,000 5,000
Grand Prairie, Housing Finance
Corporate Authority, Multi-Family
Housing RB, Winridge Grand
Prairie Project (A) (B) (C) (E)
3.900%, 06/04/97 7,200 7,200
Grapevine, Industrial Development
RB (A) (B) (C) (D)
3.900%, 06/05/97 3,300 3,300
Harris County, Toll Road RB,
Series F (A) (B) (C) (D)
3.800%, 06/04/97 5,500 5,500
Harris County, Toll Road
RB (B) (C)
8.700%, 08/15/97 11,000 11,438
Klein, Independent School
District GO (B) (C) (D)
6.000%, 08/01/97 1,000 1,004
Northside, Independent School
District Public Property
Financial Contract GO
4.000%, 02/15/98 1,400 1,403
Sabine River, Industrial Development
Authority RB, Northeast
Texas (B) (C) (D)
3.500%, 08/15/97 4,895 4,895
Texas State TRAN
4.750%, 08/29/97 20,000 20,052
----------
78,394
----------
30
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
UTAH -- 0.5%
Utah State Board Regents Student
Loan RB, Series B (A) (B) (C) (E)
3.850%, 06/04/97 $ 4,400 $ 4,400
----------
VERMONT -- 0.7%
Vermont State Education & Health
Facilities RB, Series D
(A) (B) (C) (E)
3.850%, 06/04/97 5,900 5,900
----------
VIRGINIA -- 0.8%
Virginia Peninsula Port Authority
RB, Shell Oil Project
(A) (B) (C) (D)
4.000%, 06/05/97 7,000 7,000
----------
WASHINGTON -- 3.9%
Port Anacortes, Industrial
Development TECP, Texaco
Project (A) (B) (C)
3.800%, 06/06/97 11,000 11,000
Washington State Health Care
Facilities Authority RB, Sisters
of Providence Project,
Series C (A) (B) (C) (D)
4.000%, 06/05/97 17,600 17,600
Washington State Public Power
Supply System RB, Nuclear
Project No. 1, Series C
7.250%, 07/01/97 1,500 1,504
Washington State Public Power
Supply System RB, Nuclear
Project No. 2, Series A
3.750%, 07/01/97 1,000 998
4.800%, 07/01/97 2,000 2,001
----------
33,103
----------
WISCONSIN -- 2.1%
Germantown, School District GO
4.250%, 04/01/98 3,480 3,486
Menomonie, Area School
District TRAN
4.000%, 09/05/97 4,000 4,001
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Pleasant Prairie, Industrial
Development RB, Wisconsin
Electric Power Project
(A) (B) (C) (E)
3.900%, 06/05/97 $ 9,000 $ 9,000
Racine GO, Series B
3.700%, 12/15/97 1,165 1,165
----------
17,652
----------
WYOMING -- 3.4%
Albany County, Pollution
Control RB, Union Pacific
Railroad Project (B) (C) (D)
3.900%, 12/01/97 2,200 2,200
Uinta County, Pollution Control
RB, Chevron USA Project
(A) (B) (C)
4.000%, 06/05/97 25,050 25,050
University of Wyoming RB (E)
4.000%, 06/01/97 1,615 1,615
----------
28,865
----------
TOTAL MUNICIPAL BONDS
(Cost $769,440) 769,440
----------
TAX-EXEMPT MUNICIPAL TRUST CERTIFICATES -- 1.8%
Koch Financial Corporation,
Series 1996-1, Class A1
3.700%, 10/06/97 8,881 8,881
Koch Financial Corporation,
Series 1997A-1
4.100%, 05/06/98 6,500 6,500
----------
TOTAL TAX-EXEMPT MUNICIPAL
TRUST CERTIFICATES
(Cost $15,381) 15,381
----------
CASH EQUIVALENTS -- 2.9%
Clipper Blue Tax-Exempt Trust,
Series 1994-1, Class A (A) (B) (C)
4.510%, 06/06/97 4,307 4,307
Clipper Blue Tax-Exempt Trust,
Series 1995-1, Class A (A) (B) (C)
4.310%, 06/06/97 5,663 5,663
31
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CASH EQUIVALENTS (CONTINUED)
Clipper Blue Tax-Exempt Trust,
Series 1995-2 (A) (B) (C)
4.310%, 06/06/97 $ 7,223 $ 7,223
Clipper Connecticut Tax-Exempt Trust,
Series 1995-1 (A) (B) (C)
3.910%, 06/06/97 7,341 7,341
--------
TOTAL CASH EQUIVALENTS
(Cost $24,534) 24,534
--------
TRI-PARTY REPURCHASE AGREEMENT -- 7.2%
Paine Webber
5.54%, dated 05/30/97, matures
06/02/97, repurchase price
$61,055,181 (collateralized by
various U.S. Treasury Notes
ranging in par value $100,000-
$35,775,000, 4.75%-7.12%,
09/30/98-10/31/98: total market
value $62,248,393) 61,027 61,027
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $61,027) 61,027
--------
TOTAL INVESTMENTS -- 102.9%
(Cost $870,382) 870,382
--------
OTHER ASSETS AND LIABILITIES, NET -- (2.9%) (24,770)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 845,738,605
outstanding shares of beneficial interest 845,738
Accumulated net realized loss
on investments (126)
--------
TOTAL NET ASSETS -- 100.0% $845,612
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997. THE MATURITY DATE SHOWN IS THE RESET
DATE.
(B) PUT, DEMAND OR PRE-REFUNDED FEATURE EXISTS REQUIRING THE ISSUER TO
REPURCHASE THE INSTRUMENT PRIOR TO MATURITY.
(C) THE MATURITY DATE SHOWN IS THE LESSER OF THE PUT, DEMAND, PRE-REFUNDED 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.
(F) ZERO COUPON SECURITY -- THE RATE REPORTED IS THE EFFECTIVE YIELD
AS OF MAY 31, 1997.
AMT--ALTERNATIVE MINIMUM TAX
BAN--BOND ANTICIPATION NOTE
GO--GENERAL OBLIGATION
RB--REVENUE BOND
TECP--TAX EXEMPT COMMERCIAL PAPER
TRAN--TAX AND REVENUE ANTICIPATION NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
BOSTON 1784 FUNDS
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
- -------------------------------------------------------
[PIE CHART]
U.S. TREASURY OBLIGATIONS 19%
U.S. GOVERNMENT AGENCY OBLIGATIONS 32%
CASH EQUIVALENTS 49%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 19.4%
U.S. Treasury Bills (B)
5.790%, 08/21/97 $ 890 $ 879
5.210%, 09/18/97 2,000 1,969
5.349%, 11/13/97 6,000 5,860
5.133%, 11/13/97 2,500 2,441
5.399%, 11/28/97 5,000 4,870
5.130%, 12/11/97 8,000 7,780
5.508%, 02/05/98 500 482
5.729%, 03/05/98 5,000 4,791
5.864%, 05/28/98 8,000 7,556
U.S. Treasury Notes
5.625%, 08/31/97 5,000 4,997
5.625%, 10/31/97 14,000 14,011
7.375%, 11/15/97 5,000 5,039
5.375%, 11/30/97 15,000 14,979
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $75,654) 75,654
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 32.7%
Federal Farm Credit Bank (A)
5.530%, 06/26/97 2,000 2,000
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Federal Farm Credit Bank
Discount Notes (B)
5.574%, 08/11/97 $2,000 $ 1,979
5.788%, 09/24/97 5,000 4,911
Federal Home Loan Bank
5.740%, 06/23/97 2,000 2,000
5.725%, 02/05/98 3,000 3,003
6.020%, 04/15/98 1,500 1,498
6.185%, 04/21/98 2,500 2,501
Federal Home Loan Bank (A)
5.370%, 05/28/98 3,200 3,200
Federal Home Loan Bank
Discount Notes (B)
5.572%, 08/21/97 4,000 3,951
5.712%, 11/06/97 3,150 3,074
Federal Home Loan Mortgage
Corporation Discount Notes (B)
5.635%, 06/30/97 5,000 4,978
5.689%, 08/06/97 3,910 3,870
Federal National Mortgage
Association
8.800%, 07/25/97 1,250 1,256
6.070%, 04/23/98 3,000 2,997
Federal National Mortgage
Association (A)
5.360%, 11/14/97 1,000 1,000
5.420%, 12/14/98 1,850 1,847
Federal National Mortgage
Association Discount Notes (B)
5.427%, 06/11/97 5,100 5,093
5.571%, 06/18/97 5,000 4,987
5.645%, 07/02/97 5,000 4,976
5.665%, 07/03/97 4,000 3,980
5.666%, 07/10/97 4,000 3,976
5.645%, 07/17/97 4,000 3,972
5.632%, 07/18/97 4,000 3,971
5.635%, 07/18/97 5,000 4,964
5.652%, 07/22/97 4,000 3,969
5.586%, 08/27/97 4,000 3,948
5.839%, 10/06/97 4,000 3,921
Federal National Mortgage
Association (A)
7.650%, 06/11/97 1,600 1,602
33
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
Student Loan Marketing
Association (A)
5.510%, 06/03/97 $ 250 $ 250
5.340%, 06/03/97 1,000 1,000
5.330%, 06/03/97 1,000 1,000
5.405%, 06/03/97 2,500 2,499
5.350%, 06/03/97 8,623 8,617
5.350%, 06/03/97 5,750 5,744
5.370%, 06/03/97 1,100 1,100
5.360%, 06/03/97 11,600 11,589
Student Loan Marketing
Association Discount Note (B)
5.632%, 06/30/97 2,700 2,688
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $127,911) 127,911
----------
TRI-PARTY REPURCHASE AGREEMENTS -- 49.1%
Dean Witter
5.54%, dated 05/30/97,
matures 06/02/97, repurchase
price $38,017,543 (collateralized
by various U.S. Treasury Bills
ranging in par value $7,824,000-
$9,446,000, 07/17/97-09/11/97;
U.S. Treasury Notes ranging in
par value $612,000-$95,344,000,
5.75%-8.50%, 10/31/97-07/15/06;
U.S. Treasury Bonds ranging in
par value $157,000-$50,312,000,
7.875%-11.25%, 02/15/15-02/15/21:
total market value
$38,760,033) 38,000 38,000
Greenwich Capital
5.54%, dated 05/30/97,
matures 06/02/97, repurchase
price $38,017,543 (collateralized
by various U.S. Treasury Bonds
ranging in par value $605,000-
$82,037,000, 10.375%-14.00%,
11/15/10-02/15/15: total market
value $38,760,546) 38,000 38,000
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$38,017,512 (collateralized
by various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in
par value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$38,770,208) $38,000 $ 38,000
Lehman Brothers
5.43%, dated 05/30/97, matures
06/02/97, repurchase price
$39,559,751 (collateralized by
various U.S. Treasury Bonds
ranging in par value $936,000-
$29,379,000, 8.25%-13.75%,
08/15/03-08/15/05: total
market value $40,326,408) 39,542 39,542
Prudential Securities
5.54%, dated 05/30/97, matures
06/02/97, repurchase price
$38,017,543 (collateralized by
various U.S. Treasury Bills
ranging in par value $10,000-
$4,350,000, 06/05/97-04/30/98;
U.S. Treasury Notes ranging in
par value $2,000-$30,330,000,
4.75%-9.25%, 05/31/97-05/15/07;
U.S. Treasury Bonds ranging in
par value $2,000-$9,961,000,
6.00%-14.00%, 11/15/02-02/15/27;
U.S. Treasury Interest & Principal
STRIPS ranging in par value $1,000-
$87,249,000, 08/15/97-08/15/25;
U.S. Treasury Inflation Protected
Security par value $1,550,000, 3.375%,
01/15/07: total market value
$38,760,032) 38,000 38,000
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENTS
(Cost $191,542) 191,542
--------
34
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL INVESTMENTS -- 101.2%
(Cost $395,107) $395,107
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.2%) (4,813)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 390,283,254
outstanding shares of beneficial interest 390,283
Undistributed net investment income 11
--------
TOTAL NET ASSETS -- 100.0% $390,294
========
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
=========
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997. THE MATURITY DATE SHOWN IS THE
RESET DATE.
(B) ZERO COUPON SECURITY -- THE RATE REPORTED IS THE EFFECTIVE YIELD AS OF
MAY 31, 1997.
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<PAGE>
AS MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 PRIME MONEY MARKET FUND
- ------------------------------------------------------
[PIECHART]
U.S. GOVERNMENT AGENCY OBLIGATIONS 6%
CASH EQUIVALENTS 6%
COMMERCIAL PAPER 56%
CORPORATE BONDS 22%
MUNICIPAL BONDS 10%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
COMMERCIAL PAPER -- 58.5%
Alpine Securitization
5.527%, 06/12/97 $5,000 $ 4,992
Asset Securitization
5.647%, 08/08/97 5,000 4,947
Barton Capital
5.567%, 06/02/97 5,000 4,999
Ciesco
5.601%, 06/09/97 5,000 4,994
Clipper Receivables
5.584%, 06/30/97 5,000 4,978
Corporate Receivable
5.570%, 06/16/97 5,000 4,988
Dekalb County Georgia,
Emory University
5.700%, 06/10/97 4,200 4,200
Delaware Funding
5.588%, 06/16/97 5,000 4,988
Deutsche Bank Financial
5.470%, 06/06/97 3,800 3,797
Ford Motor Credit
5.604%, 07/23/97 5,000 4,960
Greenwich Funding
5.620%, 06/06/97 5,000 4,996
Merrill Lynch
5.617%, 07/22/97 5,000 4,961
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
New York City, New York FGIC
5.750%, 06/03/97 $1,600 $ 1,600
5.700%, 07/09/97 3,000 3,000
Receivables Capital
5.620%, 06/16/97 4,580 4,569
USAA Capital
5.630%, 06/23/97 5,000 4,983
---------
TOTAL COMMERCIAL PAPER
(Cost $71,952) 71,952
---------
CORPORATE BONDS -- 22.9%
Associates Corporation of
North America
6.625%, 11/15/97 2,020 2,024
Bank of New York
5.375%, 10/10/97 2,000 1,996
Beneficial
8.650%, 06/10/97 2,000 2,001
Caterpillar Financial Services
7.280%, 06/05/97 2,000 2,000
Chrysler Financial
7.320%, 03/30/98 1,900 1,917
Community Health System (A)
5.850%, 06/01/97 1,050 1,050
First Fidelity Bancorp
8.500%, 04/01/98 5,000 5,095
General Motors Acceptance
7.125%, 07/01/97 1,000 1,001
6.300%, 08/01/97 1,000 1,001
7.250%, 10/17/97 1,300 1,306
7.500%, 11/04/97 600 604
Sears Roebuck Acceptance
7.300%, 06/12/97 200 200
7.250%, 08/05/97 3,000 3,008
Societe Generale
5.600%, 07/22/97 5,000 5,000
---------
TOTAL CORPORATE BONDS
(Cost $28,203) 28,203
---------
MUNICIPAL BONDS -- 10.8%
Illinois State Student Assistance
Revenue Bond (A) (B)
5.690%, 06/01/97 5,000 5,000
36
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
Maryland State Health and Higher
Education Revenue Bond (A) (B)
5.750%, 06/01/97 $4,300 $ 4,300
Olathe Kansas Industrial
Revenue Bond (A) (B)
5.650%, 06/01/97 4,000 4,000
--------
TOTAL MUNICIPAL BONDS
(Cost $13,300) 13,300
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 6.5%
Federal Home Loan Bank
5.670%, 03/05/98 4,000 4,000
Student Loan Marketing
Association
5.710%, 02/19/98 4,000 4,000
--------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $8,000) 8,000
--------
TRI-PARTY REPURCHASE AGREEMENT -- 6.0%
Lehman Brothers
5.43%, dated 05/30/97, matures
06/02/97, repurchase price
$7,410,681 (collateralized by
various U.S. Treasury Bonds ranging
in par value $936,000-$29,379,000,
8.25%-13.75%, 08/15/03-08/15/05:
total market value
$7,552,389) 7,407 7,407
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $7,407) 7,407
--------
TOTAL INVESTMENTS -- 104.7%
(Cost $128,862) 128,862
--------
OTHER ASSETS AND LIABILITIES,
NET -- (4.7%) (5,763)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 123,103,823
outstanding shares of beneficial interest 123,104
Accumulated net realized loss
on investments (5)
--------
TOTAL NET ASSETS -- 100.0% $123,099
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF
NET ASSETS IS THE RATE IN EFFECT ON MAY 31, 1997. THE MATURITY DATE SHOWN
IS THE RESET DATE.
(B) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A
MAJOR COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
FGIC -- FINANCIAL GUARANTY INSURANCE CAPITAL
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
37
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
- ------------------------------------------------------
[PIE CHART]
U.S. TREASURY OBLIGATIONS 20%
CASH EQUIVALENTS 7%
MUNICIPAL BONDS 7%
ASSET-BACKED SECURITIES 15%
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 7%
U.S. GOVERNMENT AGENCY OBLIGATIONS 3%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 6%
CORPORATE BONDS 35%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 19.4%
U.S. Treasury Notes
7.125%, 10/15/98 $1,000 $ 1,014
5.875%, 01/31/99 1,000 996
6.375%, 04/30/99 1,500 1,505
6.875%, 07/31/99 2,000 2,025
6.875%, 08/31/99 9,000 9,113
7.750%, 11/30/99 4,000 4,130
7.125%, 02/29/00 6,200 6,317
6.750%, 04/30/00 3,000 3,030
6.625%, 06/30/01 2,500 2,511
6.375%, 09/30/01 3,000 2,985
6.250%, 10/31/01 4,000 3,961
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $37,750) 37,587
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 2.6%
Federal Home Loan Bank
6.200%, 09/29/99 1,000 995
Federal Home Loan Mortgage
Corporation
6.375%, 12/23/03 1,100 1,071
Federal National Mortgage
Association
9.550%, 12/10/97 1,000 1,019
6.850%, 05/26/00 1,000 1,003
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Federal National Mortgage
Association (A)
6.550%, 06/13/01 $1,000 $ 1,000
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $5,058) 5,088
----------
U.S. GOVERNMENT MORTGAGE-
BACKED BONDS -- 6.7%
Federal Deposit Insurance Corporation
REMIC Trust, Series 1996
C-1, Class 1-A
6.750%, 07/25/26 1,889 1,872
Federal Home Loan Mortgage
Corporation REMIC, Series 41,
Class B
7.250%, 04/25/24 723 732
Federal Home Loan Mortgage
Corporation, Series 1836,
Class K
6.500%, 09/15/07 3,168 3,156
Federal Home Loan Mortgage
Corporation
8.000%, 01/01/02 399 406
Federal National Mortgage
Association
8.500%, 07/01/98 664 680
Federal National Mortgage
Association REMIC,
Series 1988-10, Class B
8.950%, 05/25/03 1,180 1,217
Federal National Mortgage
Association REMIC,
Series 1993-175, Class PM
5.500%, 04/25/04 5,000 4,963
----------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED BONDS
(Cost $13,015) 13,026
----------
MUNICIPAL BONDS -- 6.9%
Jacksonville, Florida, Health
Facilities Authority, Taxable
RB, National Benevolent
Project, Series B (A)
6.510%, 10/01/98 1,565 1,565
38
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
New York State Dormitory
Authority Taxable RB
6.550%, 04/01/00 $2,500 $ 2,484
New York State Mortgage
Agency RB
5.930%, 10/01/98 2,000 2,000
Pennsylvania Housing Finance
Agency RB
7.000%, 10/01/06 2,500 2,519
San Berarndino California
Public Safety Authority
RB, Series B
7.800%, 07/01/00 4,690 4,854
----------
TOTAL MUNICIPAL BONDS
(Cost $13,396) 13,422
----------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS -- 5.9%
Advanta Home Equity Loan
Trust, Series 1993-2
6.150%, 10/25/09 200 197
Associates Manufactured
Housing Pass Thru, Series
1997-1, Class A
6.600%, 06/15/28 5,000 4,998
CoreStates Home Equity Loan
Trust, Series 1996-1
6.200%, 04/15/04 1,042 1,042
Crown Home Equity Loan
Trust, Series 1996-1
6.810%, 06/25/11 2,000 1,962
Green Tree Financial, Series 1993-3
5.200%, 10/15/18 443 443
IMC Home Equity Loan Trust,
Series 1996-1
6.030%, 09/25/10 1,500 1,467
Prudential Home Mortgage
Securities, Series 1993-31
6.000%, 08/25/00 1,350 1,330
----------
TOTAL NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $11,450) 11,439
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ASSET-BACKED SECURITIES -- 14.7%
Centrex Auto Trust, Series 1996-A
6.750%, 10/15/04 $1,647 $ 1,645
Chase Manhattan Auto Owner
Trust, Series 1996-C, Class A3
5.950%, 11/15/00 5,000 4,953
CIT RV Owners Trust,
Series 1995-A
6.250%, 01/15/11 500 497
Firstplus Home Improvement
Loan Trust, Series 1996-3
6.850%, 09/20/07 1,500 1,499
Fleetwood Credit Corporation
Grantor Trust, Series 1995-B
6.550%, 05/16/11 1,225 1,218
Ford Credit Grantor Trust,
Series 1994-A
6.350%, 05/15/99 709 712
General Motors Acceptance
Corporation Grantor Trust,
Series 1995-A
7.150%, 03/15/00 260 263
Green Tree Recreational,
Equipment & Consumer Trust,
Series 1996-A
5.550%, 02/15/18 831 821
MS Auto Grantor Trust,
Series 1995-1
6.200%, 07/01/01 595 594
Nationscredit Grantor Trust,
Series 1997-1
6.750%, 08/15/13 5,000 4,989
Premier Auto Trust
6.450%, 05/02/98 1,051 1,052
6.250%, 08/06/01 3,000 2,988
Reliance Auto Receivables
Trust, Series 1996-A
6.100%, 07/15/02 1,976 1,970
Sears Credit Account Master
Trust, Series 1996-4
6.450%, 10/15/06 1,000 986
Security Pacific Acceptance
Corporation, Series 1991-3
7.250%, 12/15/11 44 45
Standard Credit Card Master
Trust, Series 1995-6-B
6.900%, 06/07/98 4,000 4,033
39
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ASSET-BACKED SECURITIES (CONTINUED)
University Support Services,
Series 1993-A
7.980%, 08/20/08 $ 97 $ 98
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $28,424) 28,363
----------
CORPORATE OBLIGATIONS -- 35.5%
FINANCE -- 22.6%
Bankamerica Capital III
6.386%, 01/15/27 5,000 4,931
Caterpillar Financial Services (A)
5.913%, 07/09/97 450 450
Chase Manhattan
7.625%, 01/15/03 2,000 2,055
Cigna
7.900%, 12/14/98 1,000 1,026
Equitable Companies
6.750%, 12/01/00 1,320 1,325
First National Bank of Commerce
6.500%, 01/14/00 5,000 4,981
Ford Capital
10.125%, 11/15/00 4,000 4,405
General Motors Acceptance
Corporation
7.875%, 03/07/01 2,000 2,063
General Motors Acceptance
Corporation (A)
5.961%, 07/24/97 1,500 1,500
Heller Financial
6.500%, 11/01/01 2,000 1,968
Manufacturers Hanover
8.500%, 02/15/99 1,500 1,547
MBNA America Bank NA
5.945%, 09/09/99 5,000 5,004
Nationsbank Capital Trust III (A)
6.366%, 01/15/27 2,500 2,433
Smith Barney Holdings
7.500%, 05/01/02 5,000 5,100
Travelers Property Casualty
6.750%, 04/15/01 5,000 4,975
----------
43,763
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
INDUSTRIAL -- 11.5%
American General
7.700%, 10/15/99 $5,000 $ 5,125
Aristar
6.750%, 05/15/99 1,500 1,507
Celulosa Arauco
7.250%, 06/11/98 5,000 5,037
Dow Capital Guaranteed:
Dow Chemical
7.375%, 07/15/02 1,250 1,262
Exxon Capital
6.500%, 07/15/99 2,000 2,005
Mckesson
6.600%, 03/01/00 5,000 4,988
Middletown Trust
10.875%, 07/15/98 1,365 1,411
Sears Roebuck
9.500%, 06/01/99 1,000 1,056
----------
22,391
----------
UTILITY -- 1.4%
Narragansett Electric
6.630%, 08/12/99 1,000 999
New York State Electric & Gas
6.250%, 09/01/97 1,750 1,750
----------
2,749
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $68,771) 68,903
----------
40
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------
TRI-PARTY REPURCHASE AGREEMENT -- 7.2%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$14,049,570 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in
par value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$14,308,563) $14,043 $ 14,043
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $14,043) 14,043
--------
TOTAL INVESTMENTS -- 98.9%
(Cost $191,907) 191,871
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 2,162
--------
- --------------------------------------------------------
DESCRIPTION VALUE (000)
- --------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 19,439,689
outstanding shares of beneficial interest $207,341
Undistributed net investment income 2
Accumulated net realized loss
on investments (13,276)
Net unrealized depreciation
on investments (34)
--------
TOTAL NET ASSETS -- 100.0% $194,033
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $9.98
========
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997.
RB -- REVENUE BOND
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
- ------------------------------------------------------
[PIECHART]
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS 17%
U.S. TREASURY OBLIGATIONS 17%
CASH EQUIVALENTS 3%
PREFERRED STOCKS 6%
ASSET-BACKED SECURITIES 9%
YANKEE BONDS 14%
U.S. GOVERNMENT AGENCY OBLIGATIONS 2%
CORPORATE OBLIGATIONS 25%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 7%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 2.2%
Federal Home Loan Mortgage
Corporation
7.740%, 06/01/04 $2,000 $ 2,011
8.530%, 02/02/05 5,000 5,206
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $7,004) 7,217
----------
U.S. TREASURY OBLIGATIONS -- 17.0%
U.S. Treasury Bonds
6.000%, 08/15/99 5,990 5,958
7.500%, 11/15/24 500 531
6.000%, 02/15/26 2,700 2,375
6.750%, 08/15/26 2,000 1,946
6.500%, 11/15/26 6,200 5,848
U.S. Treasury Notes
7.875%, 01/15/98 2,000 2,026
9.250%, 08/15/98 1,000 1,037
5.875%, 10/31/98 3,500 3,492
5.875%, 01/31/99 6,850 6,824
5.875%, 02/28/99 5,700 5,675
6.375%, 04/30/99 1,300 1,304
5.750%, 10/31/00 4,000 3,920
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
5.625%, 11/30/00 $1,920 $ 1,872
5.500%, 12/31/00 7,175 6,960
5.625%, 02/28/01 2,500 2,432
6.250%, 02/15/07 5,000 4,858
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $57,564) 57,058
----------
U.S. AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 17.2%
Federal Home Loan Mortgage
Corporation
7.750%, 09/01/05 975 984
Federal Home Loan Mortgage
Corporation REMIC
6.500%, 07/15/20 1,510 1,450
Federal National Mortgage
Association
6.500%, 05/01/11 4,611 4,496
7.000%, 03/01/27 5,003 4,869
Federal National Mortgage
Association REMIC
7.000%, 09/18/14 5,000 4,851
6.000%, 12/25/16 3,000 2,790
7.000%, 03/25/19 292 293
7.000%, 10/25/23 4,805 4,527
Government National Mortgage
Association
7.000%, 10/15/23 1,659 1,612
8.000%, 06/15/25 464 474
8.000%, 07/15/25 444 453
8.000%, 09/15/25 356 363
8.000%, 10/15/25 450 460
8.000%, 01/15/26 195 199
8.000%, 02/15/26 649 663
7.500%, 04/15/26 4,599 4,580
8.000%, 04/15/26 374 382
8.000%, 05/15/26 305 312
7.000%, 06/15/26 6,432 6,275
8.000%, 06/15/26 1,107 1,128
7.500%, 12/15/26 2,944 2,932
7.500%, 02/15/27 1,975 1,967
8.000%, 03/15/27 6,441 6,562
7.125%, 01/15/29 5,167 5,027
----------
42
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TOTAL U.S. AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $56,820) $ 57,649
----------
ASSET-BACKED SECURITIES -- 9.1%
Asset Securitization,
Series 1997-D4, Class A1D
7.490%, 04/14/27 $10,000 10,187
Fingerhut Master Trust,
Series 1996-1, Class A
6.450%, 02/20/02 1,720 1,717
First Deposit Master Trust,
Series 1993-2, Class A
5.750%, 06/15/01 1,000 998
Fleetwood Credit Corporation
Grantor Trust,
Series 1995-B, Class A
6.550%, 05/16/11 1,837 1,827
Green Tree Financial Corporation,
Series 1995-5, Class M1
7.650%, 09/15/26 5,000 4,852
Nomura Asset Securities
Corporation, Series 1996-MD5,
Class A1B
7.120%, 04/13/36 5,000 4,992
Premier Auto Trust,
Series 1996-1, Class A3
6.000%, 10/06/99 2,020 2,014
Premier Auto Trust,
Series 1996-4, Class A3
6.200%, 11/06/00 2,020 2,011
Prime Credit Card Master Trust,
Series 1992-2, Class A2
7.450%, 11/15/02 1,430 1,461
Shawmut National Grantor Trust,
Series 1992-A, Class A (B)
5.550%, 11/15/97 0 0
Standard Credit Card Master Trust,
Series 1993-3
5.500%, 02/07/00 500 493
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $30,644) 30,552
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 7.0%
AFC Home Equity Loan Trust,
Series 1996-3, Class 1A4
7.540%, 12/25/27 $4,999 $ 5,088
Equitable Life Assurance Society
of the U.S., Series 174, Class A1
7.240%, 05/15/06 5,000 5,063
Merrill Lynch Mortgage Investors,
Series 1989-H, Class B
10.000%, 01/15/10 3,759 3,954
Merrill Lynch Mortgage Investors,
Series 1994-G, Class A3
8.350%, 05/15/14 5,000 5,301
Oakwood Mortgage Investors,
Series 1995-B, Class A3
6.900%, 01/15/21 4,040 3,897
----------
TOTAL NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $22,828) 23,303
----------
CORPORATE OBLIGATIONS -- 24.6%
FINANCE -- 15.2%
BankAmerica Capital III
6.386%, 01/15/27 5,000 4,931
BankAmerica Institutional Capital
Series A
8.070%, 12/31/26 5,000 4,956
Chase Capital I
7.670%, 12/01/26 5,000 4,794
First Union (A)
6.550%, 10/15/35 7,000 6,781
General Motors Acceptance
Corporation
8.250%, 02/28/02 5,000 5,250
HSBC Americas
7.000%, 11/01/06 2,500 2,434
Lehman Brothers Holdings
8.800%, 03/01/15 7,300 8,012
Lehman Brothers Holdings (A)
8.050%, 01/15/19 2,140 2,153
Merrill Lynch & Company
7.000%, 01/15/07 5,000 4,913
43
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
BOSTON 1784 INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
Travelers Capital II
7.750%, 12/01/36 $ 5,000 $ 4,781
Vesta Insurance Group
8.750%, 07/15/25 1,855 1,962
-------
50,967
-------
INDUSTRIAL -- 9.4%
Chrysler
10.950%, 08/01/17 1,840 1,950
Diamond Shamrock (A)
7.650%, 07/01/26 8,000 8,220
Ford Motor
8.875%, 01/15/22 5,000 5,581
General Motors
9.125%, 07/15/01 5,000 5,388
J.C. Penney
7.400%, 04/01/37 10,000 10,138
-------
31,277
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $82,645) 82,244
-------
YANKEE BONDS -- 13.7%
Alcoa Aluminio S.A.
7.500%, 12/16/08 5,000 4,912
Endesa - Chile Empresa
Nacional Electric
7.325%, 02/01/37 5,000 4,950
Endesa - Chile Overseas
7.200%, 04/01/06 5,000 4,875
Guangdong International Trust
8.750%, 10/24/16 5,000 5,181
Hyundai Semiconductor,
Tranche B
8.250%, 05/15/04 1,500 1,491
Mayne Nickless Limited
6.250%, 02/01/06 4,715 4,373
Midland Bank
7.650%, 05/01/25 5,000 5,162
Sociedad Quimica y Minera
7.700%, 09/15/06 5,000 5,016
- ------------------------------------------------------
DESCRIPTION PAR (000)/SHARES VALUE (000)
- ------------------------------------------------------
Wharf International
Finance Limited
7.625%, 03/13/07 $ 10,000 $ 9,850
-------
TOTAL YANKEE BONDS
(Cost $46,684) $45,810
-------
PREFERRED STOCKS -- 5.9%
American Re Capital 368,343 9,485
Hartford Capital II 200,000 5,150
MCI Capital I 200,000 5,050
-------
TOTAL PREFERRED STOCKS
(Cost $19,660) 19,685
-------
TRI-PARTY REPURCHASE AGREEMENT -- 2.6%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$8,796,041 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$8,953,562) 8,792 8,792
-------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $8,792) 8,792
-------
TOTAL INVESTMENTS -- 99.3%
(Cost $332,641) 332,310
-------
OTHER ASSETS AND LIABILITIES,
NET-- 0.7% 2,468
-------
44
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 33,511,602
outstanding shares of beneficial interest $337,856
Undistributed net investment income 107
Accumulated net realized loss
on investments (2,854)
Net unrealized depreciation
on investments (331)
--------
TOTAL NET ASSETS-- 100.0% $334,778
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.99
========
(A) PUT OR DEMAND FEATURES EXISTS REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY.
(B) PAR VALUE AND MARKET VALUE ROUND TO ZERO.
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
45
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GOVERNMENT MEDIUM-TERM INCOME FUND
- ------------------------------------------------------
[PIE CHART]
CASH EQUIVALENTS 9%
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 42%
U.S. GOVERNMENT AGENCY OBLIGATIONS 16%
U.S. GOVERNMENT GUARANTEED SECURITIES 9%
U.S. TREASURY OBLIGATIONS 24%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 23.7%
U.S. Treasury Bonds
11.250%, 02/15/15 $ 700 $ 1,006
7.250%, 05/15/16 4,500 4,628
6.000%, 02/15/26 1,140 1,003
U.S. Treasury Notes
6.000%, 08/31/97 3,700 3,706
6.250%, 03/31/99 2,812 2,816
8.000%, 08/15/99 4,000 4,140
8.000%, 05/15/01 2,000 2,104
6.625%, 07/31/01 7,163 7,195
7.500%, 11/15/01 1,600 1,660
6.250%, 01/31/02 2,000 1,979
5.875%, 02/15/04 2,500 2,404
7.875%, 11/15/04 3,000 3,217
6.500%, 10/15/06 3,000 2,961
3.375%, 01/15/07 10,097 9,924
6.625%, 05/15/07 500 494
U.S. Treasury STRIPS (B)
10.390%, 08/15/10 1,000 405
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $49,913) 49,642
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 15.9%
Costa Rica Aid
7.360%, 08/01/01 $1,980 $ 2,012
Federal Farm Credit Bank
5.420%, 08/04/98 3,000 2,983
8.650%, 10/01/99 1,900 1,999
7.350%, 03/24/05 350 357
Federal Home Loan Bank
7.660%, 07/20/04 350 367
Federal Home Loan Mortgage
Corporation
8.530%, 02/02/05 1,000 1,041
Federal National Mortgage
Association
7.550%, 06/10/04 1,500 1,503
6.580%, 03/01/06 1,000 963
8.000%, 07/01/07 390 400
6.500%, 05/01/11 2,305 2,248
8.000%, 02/06/12 2,500 2,486
Federal National Mortgage
Association (A)
5.360%, 08/22/97 1,000 1,001
Housing Urban Development
8.240%, 08/01/02 2,000 2,131
International Bank for
Reconstruction & Development
9.150%, 08/05/97 1,000 1,006
Student Loan Marketing
Association
6.277%, 02/25/00 2,500 2,482
Student Loan Marketing
Association (A)
5.405%, 04/21/98 5,000 5,001
5.350%, 08/20/98 2,500 2,495
5.350%, 11/10/98 2,000 1,996
Tennessee Valley Authority
Principal STRIPS (B)
7.813%, 04/15/42 2,500 879
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $33,684) 33,350
----------
46
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED BONDS -- 42.4%
Federal Deposit Insurance
Corporation REMIC Trust,
Series 1996 C-1, Class 1-A
6.750%, 07/25/26 $ 4,724 $ 4,681
Federal Home Loan Mortgage
Corporation
7.000%, 07/15/03 1,400 1,368
7.000%, 10/01/03 198 199
7.340%, 11/03/06 1,000 990
Federal Home Loan Mortgage
Corporation Gold
7.000%, 12/01/10 2,219 2,207
Federal Home Loan Mortgage
Corporation REMIC
7.000%, 06/15/22 4,000 3,782
Federal Home Loan Mortgage
Corporation, Series 1836,
Class K
6.500%, 09/15/07 2,899 2,888
Federal National Mortgage
Association
7.785%, 02/01/19 4,995 5,163
10.000%, 10/01/20 3,225 3,518
10.000%, 12/01/20 5,623 6,133
Federal National Mortgage
Association REMIC,
Series 1993-175, Class PM
5.500%, 04/25/04 5,000 4,963
Goldman Sachs Trust
8.500%, 02/20/21 10,000 10,282
Government National Mortgage
Association
8.500%, 10/15/04 123 128
8.500%, 01/15/06 97 101
9.000%, 11/15/17 1,585 1,692
7.000%, 10/15/23 872 848
8.000%, 05/15/25 419 427
8.000%, 08/15/25 364 371
8.000%, 11/15/25 350 357
8.000%, 12/15/25 583 595
8.000%, 01/15/26 418 427
8.000%, 02/15/26 339 346
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
7.500%, 04/15/26 $ 7,151 $ 7,121
8.000%, 04/15/26 282 288
8.000%, 05/15/26 1,805 1,841
8.000%, 06/15/26 771 786
7.500%, 02/15/27 6,918 6,889
7.125%, 01/15/29 6,346 6,174
Government National Mortgage
Association REMIC
6.500%, 04/16/22 2,392 2,377
Merrill Lynch Trust
9.450%, 06/01/18 10,000 10,544
Ryland Acceptance Four,
Series 32, Class B
8.600%, 05/01/16 850 870
----------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED BONDS
(Cost $88,688) 88,356
----------
U.S. GOVERNMENT GUARANTEED BONDS -- 8.8%
Global Industries
7.250%, 07/15/22 12,328 12,313
Private Export Funding Corporation
5.500%, 03/15/01 2,500 2,400
Rochester New York US
Government Note, Series 1991-A
5.930%, 08/01/99 100 99
6.620%, 10/01/05 1,740 1,694
Sulphur Carriers
8.300%, 10/15/09 1,872 1,973
----------
TOTAL U.S. GOVERNMENT GUARANTEED BONDS
(Cost $18,204) 18,479
----------
47
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GOVERNMENT MEDIUM-TERM INCOME FUND (CONTINUED)
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
TRI-PARTY REPURCHASE AGREEMENT -- 8.7%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$18,238,315 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$18,592,564) $18,230 $ 18,230
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $18,230) 18,230
--------
TOTAL INVESTMENTS -- 99.5%
(Cost $208,719) 208,057
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.5% 1,084
--------
- ----------------------------------------------------------
DESCRIPTION VALUE (000)
- ----------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 22,329,068
outstanding shares of beneficial interest $216,595
Distributions in excess of
net investment income (548)
Accumulated net realized loss
on investments (6,244)
Net unrealized depreciation
on investments (662)
--------
TOTAL NET ASSETS -- 100.0% $209,141
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.37
========
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997.
(B) ZERO COUPON SECURITY -- THE RATE REPORTED IS THE EFFECTIVE YIELD AS OF
MAY 31, 1997.
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.
48
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
- ------------------------------------------------------
[PIE CHART]
HEALTH CARE BONDS 9%
CASH EQUIVALENTS 6%
TRANSPORTATION BONDS 5%
WATER AND SEWER BONDS 5%
GENERAL OBLIGATION BONDS 25%
ALTERNATE MINIMUM TAX BOND 3%
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL BONDS 3%
OTHER REVENUE BONDS 18%
RESOURCE RECOVERY BONDS 2%
EDUCATION BONDS 2%
HOUSING BONDS 9%
UTILITY BONDS 13%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 92.5%
ALABAMA -- 0.4%
Alabama State Housing Finance
Authority RB,
Series D-1 (B)
6.000%, 10/01/16 $1,000 $ 1,012
----------
ALASKA -- 0.4%
Alaska State Industrial
Development & Export
Authority RB,
Series B (A)
5.850%, 04/01/05 1,000 1,034
----------
CALIFORNIA -- 8.0%
Burbank Wastewater Treatment
RB, Series A (B)
5.500%, 06/01/15 1,500 1,483
California Health Facilities
RB, Downey
Community Hospital
5.750%, 05/15/15 3,150 3,071
California State GO
5.750%, 03/01/08 3,000 3,146
5.250%, 06/01/11 1,000 994
California State Home Mortgages
RB, Series A (B)
5.850%, 08/01/16 2,000 2,007
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
California State Housing
Finance Agency Home
Mortgage RB (B)
5.950%, 08/01/10 $1,830 $ 1,862
California State Unlimited
Tax GO (B)
5.250%, 10/01/10 3,000 3,000
Los Angeles, Metropolitan
Transportation Authority
Sales Tax RB (B)
5.700%, 07/01/12 1,135 1,161
Los Angeles, Series A (B)
5.800%, 09/01/09 1,250 1,302
San Francisco, City & County
Sewer RB,
Series A (B)
5.700%, 10/01/11 1,000 1,026
Tri City California Hospital
RB, Series A (B)
5.625%, 02/15/17 1,085 1,077
----------
20,129
----------
COLORADO -- 0.4%
Goldsmith, Metropolitan
District GO (B)
6.125%, 12/01/12 1,000 1,040
----------
CONNECTICUT -- 5.4%
Connecticut State GO, Series A
5.250%, 03/01/14 1,690 1,675
Connecticut State Health &
Educational Facilities RB
University of Hartford,
Series D (A)
6.750%, 07/01/12 1,000 1,007
Connecticut State Housing
Finance Authority RB (A)
5.900%, 05/15/15 1,000 1,005
Connecticut State Housing
Finance Authority RB
Housing Mortgage Finance
Program, Series B-4,
Sub B-4 (A)
7.300%, 11/15/03 3,435 3,602
49
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
CONNECTICUT (CONTINUED)
Connecticut State Resource
Recovery Authority RB
Mid-Connecticut System
Project, Series A (B) (C)
5.500%, 11/15/11 $3,000 $ 3,007
Connecticut State Resource
Recovery Authority RB
Wallingford Resources
Project, Series 1, AMT
6.625%, 11/15/01 1,990 2,112
South Central Connecticut
Regional Water Authority
RB, Water Systems
Revenue 11th, Series (B)
5.750%, 08/01/12 1,000 1,022
----------
13,430
----------
DISTRICT OF COLUMBIA -- 1.4%
District of Columbia Georgetown
University RB, Series A (B) (C)
5.950%, 04/01/14 1,000 1,010
District of Columbia GO,
Series B (B)
6.000%, 06/01/08 2,305 2,412
----------
3,422
----------
FLORIDA -- 2.4%
Dade County, Series EE (B)
5.625%, 10/01/14 2,560 2,595
Dade County, Special Obligation
RB, Courthouse
Center Project
5.900%, 04/01/10 1,500 1,536
Florida State GO
5.700%, 06/01/14 2,000 2,025
----------
6,156
----------
GEORGIA -- 0.5%
Municipal Electric Authority of
Georgia RB, 6th Crossover
Project, Series 1 (B)
7.000%, 01/01/08 1,000 1,151
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ILLINOIS -- 3.7%
Chicago, O'Hare International
Airport RB (B)
5.625%, 01/01/12 $2,000 $ 2,007
Illinois State GO (B)
5.700%, 04/01/11 2,000 2,042
Illinois State, Dedicated Tax
Civic Center RB,
Series A (B)
6.000%, 12/15/15 1,000 1,009
Illinois State, Health Facilities
Authority RB,
OSF Healthcare System Project
6.000%, 11/15/13 2,250 2,258
Illinois State GO
5.700%, 04/01/11 2,000 2,027
----------
9,343
----------
INDIANA -- 1.1%
Marion County, Indiana Methodist
Hospital of Indiana RB
6.500%, 09/01/13 2,450 2,695
----------
LOUISIANA -- 1.7%
Orleans, Levee District
RB, Series A (B)
5.950%, 11/01/14 4,080 4,167
----------
MAINE -- 0.4%
Maine Municipal Bond Bank (A)
RB, Series A
5.700%, 11/01/13 1,090 1,102
----------
MARYLAND -- 2.4%
Maryland State GO
5.600%, 03/15/08 4,275 4,462
Maryland State, State and Local
Facilities GO, First Series
5.000%, 03/01/10 1,500 1,470
----------
5,932
----------
MASSACHUSETTS -- 14.5%
Boston, Water & Sewer Commission
RB, Series A (A)
6.100%, 11/01/06 3,950 4,222
50
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Boston City Hospital Project
RB, Series B (B)
5.750%, 02/15/13 $2,800 $ 2,807
Holyoke GO Series A (B)
5.600%, 06/15/10 1,365 1,387
Massachusetts Bay Transportation
RB, Series B (A)
5.800%, 03/01/11 1,800 1,858
Massachusetts Municipal
Wholesale Electric RB
Series D (B)
6.000%, 07/01/05 1,625 1,718
6.000%, 07/01/11 2,650 2,766
Massachusetts State Cons
Ln GO, Series B (B)
5.500%, 06/01/11 2,000 2,017
Massachusetts State GO, Series D
5.750%, 05/01/12 2,000 2,040
Massachusetts State Health &
Educational Facilities Authority
RB, Dana Farber Cancer
Project, Series G-1
6.250%, 12/01/08 1,000 1,069
Massachusetts State Health &
Educational Facilities Authority
RB, Medical, Academic &
Scientific Project, Series A
6.200%, 01/01/03 1,140 1,204
6.250%, 01/01/05 1,060 1,138
Massachusetts State Health &
Educational Facilities Authority
RB, New England Deaconess
Hospital Project, Series D (A)
6.625%, 04/01/12 1,000 1,057
Massachusetts State Health &
Educational Facilities Authority
RB, New England Medical
Center Project, Series F (B)
6.500%, 07/01/12 1,000 1,068
Massachusetts State Health &
Educational Facilities Authority
RB, Suffolk University
Project, Series C (B)
5.850%, 07/01/16 1,000 999
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State Housing
Finance Agency RB
Series A (B)
5.600%, 07/01/07 $ 600 $ 617
Massachusetts State Housing
Finance Agency RB
Series 44
5.900%, 12/01/13 1,000 1,005
Massachusetts State Housing
Finance Agency RB
Series A (B)
5.700%, 07/01/08 600 617
Massachusetts State Housing
Finance Agency RB
Series E (B)
6.250%, 11/15/12 2,600 2,685
Massachusetts State Industrial
Finance Agency Resource
Recovery RB,
Refusetech Project, Series A
6.150%, 07/01/02 1,595 1,659
6.300%, 07/01/05 3,220 3,365
Massachusetts State Industrial
Finance Agency Revenue
Assumption Bond, College Issue (B)
5.875%, 07/01/11 1,090 1,119
----------
36,417
----------
MICHIGAN -- 0.6%
Michigan State Hospital Finance
Authority RB,
Oakwood Hospital Obligation
Group Project, Series A
5.400%, 11/01/07 1,500 1,532
----------
MISSOURI -- 1.2%
St. Charles County, Public Water
Supply District #2 Certificate of
Participation, Series A (B)
5.500%, 12/01/14 3,000 3,008
----------
51
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
NEW HAMPSHIRE -- 0.6%
New Hampshire State Higher
Education and Health Facilities RB
5.800%, 10/01/12 $1,000 $ 975
New Hampshire State Housing
Finance Authority RB,
Series B (A)
5.850%, 07/01/10 500 506
----------
1,481
----------
NEW YORK -- 8.7%
Metropolitan Transit Authority,
Commuter Facilities Revenue
Bond, Series A (A)
5.750%, 07/01/11 1,000 1,033
New York City GO, Series A
6.250%, 08/01/08 2,000 2,110
7.500%, 03/15/09 65 69
New York City GO, Series B
6.200%, 08/15/06 1,250 1,314
New York City GO, Series C
6.500%, 08/01/05 2,500 2,647
New York City GO, Series D
6.000%, 02/15/09 1,000 1,026
New York City GO, Series F
6.500%, 02/15/07 2,865 3,058
New York City GO, Series G
5.750%, 02/01/06 2,000 2,038
5.750%, 02/01/07 2,000 2,035
New York State GO, Series B (A)
5.625%, 08/15/08 3,000 3,101
New York State Housing Finance
Agency RB, Housing Project
Mortgage, Series A (B)
5.800%, 11/01/09 1,750 1,785
New York State Urban
Development RB, Youth
Facilities Project (A)
5.700%, 04/01/14 1,505 1,518
----------
21,734
----------
NORTH CAROLINA -- 2.0%
North Carolina State Eastern
Municipal Power Agency
RB
6.000%, 01/01/14 4,000 3,980
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
North Carolina State Eastern
Municipal Power Agency RB,
Series D
5.875%, 01/01/14 $1,035 $ 1,016
----------
4,996
----------
OHIO -- 3.3%
Cleveland, Water Works RB
Series F-92 A (B)
6.500%, 01/01/21 2,000 2,193
Franklin County, Hospital
RB (B)
5.750%, 05/15/12 2,100 2,132
Ohio State Building Authority
RB, Adult Correctional
Facilities Project (B)
5.700%, 10/01/06 1,000 1,054
Ohio State Public Facilities
Commission Higher Education
Series II-A RB
5.000%, 05/01/08 2,900 2,867
----------
8,246
----------
PENNSYLVANIA -- 5.8%
Pennsylvania Higher Education
Health Services RB,
Series A
5.750%, 01/01/12 1,300 1,320
Pennsylvania Housing Finance
Agency Single Family Mortgage
RB, Series 50A
6.000%, 10/01/13 2,000 2,028
Pennsylvania State GO, First
Series (B)
5.125%, 03/15/12 2,000 1,953
Pennsylvania State Higher
Educational Facilities RB
College & Universities,
Series A
5.900%, 09/01/14 1,750 1,787
Pennsylvania State Intergovern-
mental Cooperative Authority
Special Tax RB, City
of Philadelphia Funding
Project (A) (B)
5.600%, 06/15/15 1,000 989
52
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania State Turnpike
Commission Oil Franchise
RB, Series A (B)
5.500%, 12/01/12 $1,450 $ 1,459
Philadelphia Water and Waste
RB (B)
5.650%, 06/15/12 5,000 4,950
----------
14,486
----------
PUERTO RICO -- 3.4%
Puerto Rico Commonwealth GO
5.750%, 07/01/17 2,000 2,010
Puerto Rico Commonwealth
Highway & Transportation
Authority RB,
Series V (B)
6.375%, 07/01/07 2,210 2,392
Puerto Rico Industrial, Medical
& Environmental RB
PepsiCo Project
6.250%, 11/15/13 1,000 1,068
Puerto Rico Municipal Finance
Agency RB,
Series A (B)
5.600%, 07/01/05 2,000 2,093
Puerto Rico Public Buildings
Authority Public Education
and Health Facilities RB
Series M (A)
5.750%, 07/01/15 1,000 1,000
----------
8,563
----------
RHODE ISLAND -- 6.1%
Bristol County, Water Authority
RB, Series A (B)
5.200%, 12/01/13 1,080 1,031
Pawtucket GO (B)
5.625%, 04/15/07 1,600 1,670
Rhode Island Depositors
Economic Protection
RF, Series B (B)
5.800%, 08/01/09 1,000 1,056
Rhode Island Depositors
Economic RB (B)
6.625%, 08/01/19 2,000 2,213
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Rhode Island Housing & Mortgage
Finance RB, Series 7B AMT
6.700%, 10/01/12 $1,750 $ 1,831
Rhode Island Housing & Mortgage
Finance RB, Series 15B (C)
6.200%, 10/01/06 1,110 1,149
Rhode Island Housing & Mortgage
Finance RB, Series 15B
6.100%, 10/01/05 500 521
Rhode Island Housing & Mortgage
Finance RB, Series 19A
5.700%, 04/01/15 2,500 2,497
Rhode Island Housing & Mortgage
Finance RB, Series A (B)
5.700%, 07/01/07 1,000 1,030
Rhode Island State Health &
Educational Building Corporation
RB (B)
5.600%, 10/01/12 1,000 1,001
Rhode Island State Student Loan
Authority RB, Series B AMT (A)
6.900%, 12/01/03 1,300 1,393
----------
15,392
----------
SOUTH CAROLINA -- 0.5%
South Carolina State Public Service
Authority RB, Series B (A)
5.875%, 01/01/14 1,150 1,177
----------
TEXAS -- 4.3%
Dallas-Fort Worth, Regional
Airport RB, Series A (B)
5.800%, 11/01/07 2,000 2,098
Tarrant County, Health Facilities
RB, Harris Methodist
Health System Project,
Series A (B)
5.125%, 09/01/12 2,700 2,589
Texas State GO, Series A
5.700%, 10/01/07 1,500 1,543
5.750%, 10/01/08 1,280 1,325
University of Texas RB
Perm Series A
6.250%, 07/01/13 3,100 3,236
----------
10,791
----------
53
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
UTAH -- 1.1%
Intermountain Power Agency,
Power Supply RB,
Series A (B)
6.500%, 07/01/08 $2,500 $ 2,797
----------
VERMONT -- 0.7%
Vermont Educational & Health
Buildings RB, Medical
Center Hospital of Vermont
Project (B)
5.750%, 09/01/07 1,800 1,847
----------
VIRGINIA -- 2.0%
Norfolk, Industrial Development
Authority RB, Daughters
Charity-DePaul Project
6.500%, 12/01/07 3,000 3,240
Virginia State Housing
Development Authority
RB, Series H
5.700%, 11/01/07 1,655 1,698
----------
4,938
----------
WASHINGTON -- 7.7%
Washington State Public
Power RB (B)
6.300%, 07/01/09 2,000 2,105
Washington State Public Power
Supply Systems Nuclear Power
Project No. 1 RB (B)
5.400%, 07/01/12 7,800 7,478
Washington State Public Power
Supply Systems Nuclear Power
Project No. 2 RB, (B)
5.550%, 07/01/10 2,500 2,456
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Washington State Public Power
Supply Systems Nuclear Power
Project No. 2 RB Series A
6.100%, 07/01/06 $1,030 $ 1,087
6.000%, 07/01/12 1,000 1,004
Washington State Public Power
Supply Systems Nuclear Power
Project No. 2 RB,
Series A (A) (B)
5.500%, 07/01/04 3,000 3,086
Washington State Public
Power Supply RB (B)
6.250%, 07/01/12 2,000 2,068
----------
19,284
----------
WISCONSIN -- 1.8%
Wisconsin Housing & Economic
Development Home Ownership
RB, Series E (A)
5.900%, 09/01/16 1,000 999
Wisconsin State GO, Series A
5.800%, 05/01/07 1,355 1,424
Wisconsin State Housing &
Economic Development
RB, Series C (A)
5.800%, 11/01/13 2,125 2,122
----------
4,545
----------
TOTAL MUNICIPAL BONDS
(Cost $224,939) 231,847
----------
54
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CASH EQUIVALENTS -- 0.5%
Federated Tax-Free Money
Market Fund $ 592 $ 592
Fidelity Tax-Exempt Money
Market Fund 592 592
--------
TOTAL CASH EQUIVALENTS
(Cost $1,184) 1,184
--------
TRI-PARTY REPURCHASE AGREEMENT -- 5.6%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$13,951,007 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$14,222,883) 13,945 13,945
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $13,945) 13,945
--------
TOTAL INVESTMENTS -- 98.6%
(Cost $240,068) 246,976
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.4% 3,550
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 24,606,751
outstanding shares of beneficial interest $242,171
Accumulated net realized gain
on investments 1,447
Net unrealized appreciation
on investments 6,908
--------
TOTAL NET ASSETS -- 100.0% $250,526
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.18
========
(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.
(C) WHEN ISSUED SECURITY.
AMT--ALTERNATIVE MINIMUM TAX
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
55
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
- ------------------------------------------------------
[PIE CHART]
HOUSING BONDS 10%
UTILITY BONDS 3%
EDUCATION BONDS 3%
WATER AND SEWER BONDS 3%
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL BONDS 27%
HEALTH CARE BONDS 14%
OTHER REVENUE BONDS 7%
RESOURCE RECOVERY BONDS 5%
CASH EQUIVALENTS 8%
GENERAL OBLIGATION BONDS 13%
TRANSPORTATION BONDS 2%
ALTERNATIVE MINIMUM TAX BONDS 5%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 90.7%
CONNECTICUT -- 76.0%
Bridgeport GO (B)
5.450%, 03/01/11 $1,550 $ 1,552
Bridgeport GO (B)
8.750%, 08/15/05 500 625
Bridgeport GO, Series A
6.125%, 03/01/05 2,000 2,120
Bristol Resource Recovery Bond,
Ogden Martin System Project
6.500%, 07/01/14 3,000 3,157
Connecticut State Airport
Revenue Bond, Bradley
International Airport (B)
7.650%, 10/01/12 2,000 2,292
Connecticut State Clean Water
Funding Revenue Bond
5.600%, 06/01/09 750 772
7.000%, 01/01/11 300 330
Connecticut State Development
Bond (B)
6.550%, 06/15/09 500 547
Connecticut State Development
Bond, Duncaster Project
6.700%, 09/01/07 3,350 3,593
Connecticut State Development
Bond, Pfizer Project
6.550%, 02/15/13 250 270
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Connecticut State Development
Bond, Series A (B)
6.000%, 11/15/08 $ 500 $ 521
Connecticut State Health &
Educational Facilities Bond,
Bridgeport Hospital, Series A (B)
6.500%, 07/01/05 250 272
6.550%, 07/01/06 400 436
6.500%, 07/01/12 500 534
Connecticut State Health &
Educational Facilities Bond,
Bridgeport Hospital, Series C (B)
5.250%, 07/01/15 1,000 956
Connecticut State Health &
Educational Facilities Bond,
Choate Rosemary Hall, Series A (B)
6.800%, 07/01/15 750 822
Connecticut State Health &
Educational Facilities Bond,
Connecticut State University
System, Series A (B)
5.125%, 11/01/12 500 487
Connecticut State Health &
Educational Facilities Bond,
Danbury Hospital, Series E (B)
6.500%, 07/01/05 500 538
Connecticut State Health &
Educational Facilities Bond,
Greenwich Hospital, Series A (B)
5.750%, 07/01/16 2,000 2,007
Connecticut State Health &
Educational Facilities Bond,
New Britian Hospital, Series B (B)
6.000%, 07/01/09 500 526
Connecticut State Health &
Educational Facilities Bond,
New Haven Hospital, Series H (B)
5.625%, 07/01/16 1,000 992
Connecticut State Health &
Educational Facilities Bond,
New Horizons Village Project (B)
7.050%, 11/01/09 1,000 1,146
Connecticut State Health &
Educational Facilities Bond,
Newington Children's Hospital,
Series A (B)
5.850%, 07/01/07 1,110 1,172
56
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CONNECTICUT (CONTINUED)
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 1,055
Connecticut State Health &
Educational Facilities Bond,
St. Raphael Hospital, Series F (B)
6.200%, 07/01/14 500 518
Connecticut State Health &
Educational Facilities Bond,
Stamford Hospital (B)
5.400%, 07/01/09 2,000 2,013
Connecticut State Health &
Educational Facilities Bond,
University of Hartford, Series D (A)
6.750%, 07/01/12 2,750 2,771
Connecticut State Health &
Educational Facilities Bond,
Wadsworth Nursing Home (B)
7.125%, 11/01/14 500 566
Connecticut State Higher
Education Revenue Bond,
Family Education Loan Program,
Series A AMT
7.000%, 11/15/05 625 660
Connecticut State Higher
Education Revenue Bond,
Series A
6.500%, 11/15/00 255 268
Connecticut State Housing Finance
Authority Revenue Bond,
SubSeries A-3 (A)
5.950%, 05/15/17 1,000 1,001
Connecticut State Housing
Finance Authority Revenue
Bond, SubSeries E-1 (A)
5.900%, 05/15/15 3,200 3,216
Connecticut State Housing
Finance Bond, Housing Mortgage
Finance Program, Series A (A)
5.950%, 05/15/11 3,215 3,303
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
6.200%, 05/15/14 $ 650 $ 661
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series B
6.050%, 11/15/03 500 526
6.350%, 11/15/06 400 422
Connecticut State Housing Finance
Bond, Housing Mortgage
Finance Program, Series B (B)
7.200%, 11/15/01 500 509
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series B1 (B)
7.550%, 11/15/08 155 161
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
SubSeries B1 (A)
6.000%, 05/15/08 300 314
6.000%, 11/15/15 2,000 2,013
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
SubSeries B4 (A)
7.300%, 11/15/03 1,000 1,049
Connecticut State Housing
Finance Bond, Housing
Mortgage Finance Program,
Series C-1 (A)
6.000%, 11/15/10 1,010 1,031
Connecticut State Resource
Recovery Bond, Bridgeport
Resources, Series A
7.625%, 01/01/09 600 619
Connecticut State Resource
Recovery Bond, Mid-Connecticut
System Project, Series A (B)
5.375%, 11/15/10 2,000 1,990
Connecticut State Resource
Recovery Bond, Mid-Connecticut
System Project, Series A (B)
5.500%, 11/15/11 1,500 1,504
Connecticut State Resource
Recovery Bond, Series A AMT
8.000%, 11/15/08 1,500 1,601
57
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND (CONTINUED)
- ----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ----------------------------------------------------------
CONNECTICUT (CONTINUED)
Connecticut State Resource
Recovery Bond, Wallingford
Project, Series A AMT (A)
7.125%, 11/15/08 $ 250 $ 256
Connecticut State Resource
Recovery Bond, Wallingford
Resources Project, Series 1-
Sub AMT
6.700%, 11/15/02 800 859
Connecticut State Special
Tax Bond (B)
5.250%, 01/01/11 500 492
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series A
5.400%, 09/01/09 500 505
5.700%, 06/01/12 1,160 1,179
Connecticut State Special
Tax Bond, Transportation
Infrastructure, Series A (B)
5.600%, 06/01/13 1,000 1,004
Connecticut State Special Tax
Bond, Transportation
Infrastructure, Series B (B)
6.100%, 09/01/08 500 542
5.500%, 10/01/11 4,920 4,920
5.600%, 10/01/12 1,000 1,008
5.600%, 10/01/13 1,000 1,004
Connecticut State, Certificates
of Participation, Middletown
Courthouse Facilities Project (B)
6.250%, 12/15/08 1,500 1,598
Connecticut State, Series A GO
6.500%, 03/15/07 750 814
Connecticut State, Series C GO
5.800%, 08/15/08 1,500 1,568
Eastern Connecticut, Resource
Recovery Bond, Wheelabrator
Libson Project, Series A
5.500%, 01/01/14 2,775 2,615
Hartford GO (B)
5.700%, 10/01/12 500 505
5.750%, 10/01/13 1,000 1,010
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
New Haven Revenue Bond,
Air Right Packaging Facility (B)
6.500%, 12/01/15 $2,000 $ 2,128
South Central Connecticut
Regional Water Authority
Revenue Bond, Series A (B)
6.000%, 08/01/09 985 1,037
6.000%, 08/01/10 1,045 1,095
Stratford GO (B)
5.600%, 04/15/12 440 437
----------
78,344
----------
GUAM -- 1.8%
Guam Government Limited
Obligation Highway, Series A (B)
6.250%, 05/01/07 750 805
Guam Power Authority Revenue
Bond, Series A (B)
5.900%, 10/01/08 1,000 1,060
----------
1,865
----------
PUERTO RICO -- 11.1%
Puerto Rico Commonwealth,
Aqueduct & Sewer
Revenue Bond (A)
6.000%, 07/01/09 250 268
Puerto Rico Commonwealth,
Unlimited Tax GO
5.750%, 07/01/17 2,700 2,714
Puerto Rico Commonwealth,
Highway & Transportation
Revenue Bond, Series X (A)
5.300%, 07/01/04 700 709
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 2,938
Puerto Rico Municipal Finance
Agency Revenue Bond,
Series A (B)
6.000%, 07/01/09 2,650 2,802
58
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PUERTO RICO (CONTINUED)
Puerto Rico Telephone Revenue
Bond, Series L
5.750%, 01/01/08 $1,000 $ 1,024
6.000%, 01/01/12 500 512
--------
11,468
--------
RHODE ISLAND -- 1.8%
Providence Rhode Island
Series A (B)
5.700%, 07/15/12 1,825 1,846
--------
TOTAL MUNICIPAL BONDS
(Cost $90,775) 93,523
--------
CASH EQUIVALENTS -- 4.4%
Federated Tax-Free Money
Market 2,252 2,252
Fidelity Tax-Exempt Money
Market Fund 2,251 2,251
--------
TOTAL CASH EQUIVALENTS
(Cost $4,503) 4,503
--------
TRI-PARTY REPURCHASE AGREEMENT -- 3.7%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$3,843,598 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$3,898,441) 3,842 3,842
--------
TOTAL REPURCHASE AGREEMENT
(Cost $3,842) 3,842
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL TRI-PARTY INVESTMENTS-- 98.8%
(Cost $99,120) $101,868
--------
OTHER ASSETS AND LIABILITIES,
NET-- 1.2% 1,236
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 9,933,161
outstanding shares of beneficial interest 100,326
Accumulated net realized gain
on investments 30
Net unrealized appreciation
on investments 2,748
--------
TOTAL NET ASSETS -- 100.0% $103,104
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.38
========
(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.
AMT -- ALTERNATIVE MINIMUM TAX
GO -- GENERAL OBLIGATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
59
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
- ------------------------------------------------------
[PIE CHART]
RESOURCE RECOVERY BONDS 1%
CASH EQUIVALENTS 5%
ALT. MIN. TAX BONDS 2%
WATER & SEWER BONDS 14%
GENERAL OBLIGATION BONDS 31%
HEALTH CARE BONDS 11%
HOUSING BONDS 9%
TRANSPORTATION BONDS 13%
EDUCATION BONDS 11%
UTILITY BONDS 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 93.3%
MASSACHUSETTS -- 91.9%
Boston, Massachusetts GO,
Series A (B)
5.650%, 02/01/09 $1,500 $ 1,539
Chelsea, GO,
School Loan Project (B)
6.000%, 06/15/02 1,000 1,057
6.000%, 06/15/04 650 692
5.700%, 06/15/06 1,000 1,047
Holyoke, GO,
Series A (B)
5.600%, 06/15/11 1,000 1,012
5.500%, 06/15/16 815 810
Lawrence, GO
5.375%, 09/15/05 410 415
Lawrence, GO (B)
6.250%, 02/15/09 1,475 1,586
Lowell, GO (B)
5.500%, 01/15/10 1,140 1,149
5.500%, 08/01/11 2,740 2,754
5.500%, 08/01/12 1,720 1,716
6.625%, 04/01/15 1,000 1,070
Lynn, Water &
Sewer Commission RB (B)
5.250%, 12/01/05 475 485
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts Bay Transportation
Authority Revenue Bond,
Series A
5.500%, 03/01/07 $1,500 $ 1,552
5.800%, 03/01/10 (A) 2,640 2,732
Massachusetts Bay Transportation
Authority Revenue Bond,
Series A (B)
5.750%, 03/01/18 3,325 3,362
Massachusetts Bay Transportation
Authority Revenue Bond,
Series B (A)
6.000%, 03/01/12 4,000 4,155
Massachusetts Bay Transportation
Authority Revenue Bond,
Series D (A)
5.600%, 03/01/08 1,885 1,965
Massachusetts Municipal Wholesale
Electric Power Supply System
Revenue Bond, Series B (B)
6.750%, 07/01/05 1,000 1,102
Massachusetts State Educational
Loan Authority Revenue Bond,
Issue E, Series B (B)
6.000%, 01/01/12 450 454
6.300%, 07/01/12 1,000 1,027
Massachusetts State GO,
Series A
5.500%, 02/01/11 3,500 3,535
Massachusetts State GO,
Series B
5.500%, 11/01/07 1,000 1,041
6.500%, 08/01/08 5,315 5,953
6.000%, 08/01/13 3,000 3,120
Massachusetts State GO,
Series B (B)
5.875%, 08/01/10 2,000 2,067
Massachusetts State GO
5.750%, 06/01/16 3,000 3,052
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Baystate Medical
Center Project, Series D
6.000%, 07/01/15 2,000 2,040
60
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Brigham &
Women's Hospital Project,
Issue D (A)
6.750%, 07/01/13 $1,500 $ 1,586
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Dana Farber
Cancer Project, Series E
6.250%, 10/01/09 1,000 1,050
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Dana Farber
Cancer Project, Series F (B)
6.000%, 12/01/15 1,445 1,478
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Dana Farber
Cancer Project, Series G-1
6.250%, 12/01/09 1,175 1,248
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Emerson
Hospital Project, Series D (B)
5.800%, 08/15/18 3,000 2,974
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Harvard University
Project, Series M (A)
5.750%, 12/01/11 1,000 1,027
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Massachusetts
General Hospital, Series G (B)
5.375%, 07/01/11 2,000 1,995
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, New England
Deaconess Hospital Project,
Series C (A)
7.200%, 04/01/11 830 875
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Newton-Wellesley
Hospital Project, Issue E (B)
5.875%, 07/01/15 3,000 3,037
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Northeastern
University Project, Series E (B)
6.500%, 10/01/12 $1,000 $ 1,070
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Smith College
Project, Series D
5.750%, 07/01/16 2,600 2,613
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Tufts University
Project, Series F (B)
5.950%, 08/15/18 3,000 3,041
Massachusetts State Health &
Educational Facilities Authority
Revenue Bond, Williams
College, Series F (A)
5.750%, 07/01/19 1,000 1,006
Massachusetts State Housing
Finance Agency Revenue
Bond, Housing Project, Series A
6.300%, 10/01/13 4,950 5,142
Massachusetts State Housing
Finance Agency Revenue
Bond, Residential Development
Project, Series A (B)
6.875%, 11/15/11 1,750 1,873
Massachusetts State Housing
Finance Agency Revenue Bond,
Series A (B)
5.850%, 12/01/08 1,245 1,281
Massachusetts State Housing
Finance Agency Revenue Bond,
Single Family Housing Project,
Series 14 (B)
7.700%, 12/01/14 1,895 1,971
Massachusetts State Housing
Finance Authority, Series A (B)
6.100%, 07/01/15 2,000 2,020
Massachusetts State Industrial
Finance Agency Revenue Bond,
Babson College Project,
Series A (B)
6.375%, 10/01/09 1,000 1,073
5.750%, 10/01/15 1,000 1,014
61
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND (CONTINUED)
- ------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Industrial
Finance Agency Revenue Bond,
College of Holy Cross (B)
5.500%, 03/01/16 $1,500 $ 1,481
Massachusetts State Municipal
Wholesale Electric Revenue
Bond, Series D (B)
6.000%, 07/01/05 1,000 1,058
Massachusetts State Municipal
Wholesale Electric Revenue
Bond, Series E (B)
6.000%, 07/01/11 2,500 2,588
Massachusetts State Port Authority
Revenue Bond, Series A
6.000%, 07/01/13 1,050 1,068
Massachusetts State Resource
Recovery Revenue Bond,
Refusetech Project, Series A
6.150%, 07/01/02 900 936
6.300%, 07/01/05 1,000 1,045
Massachusetts State Special
Obligation Revenue Bond,
Series A
5.500%, 06/01/07 2,000 2,035
5.750%, 06/01/11 2,780 2,818
5.750%, 06/01/12 700 708
Massachusetts State Water
Authority Revenue Bond,
Series B (B)
5.500%, 03/01/17 3,500 3,408
Massachusetts State Water
Pollution Abatement Trust
Revenue Bond, New Bedford
Project, Series A
5.700%, 02/01/12 1,450 1,477
5.700%, 02/01/15 3,000 3,019
Massachusetts State Water
Pollution Abatement Trust
Revenue Bond, Pooled Loan
Program, Series 1
5.600%, 08/01/13 2,090 2,103
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State Water
Pollution Abatement Trust
Revenue Bond, Pooled Loan
Program, Series 2
6.125%, 02/01/07 $ 730 $ 797
Massachusetts State Water
Pollution Abatement Trust
Revenue Bond, Series A
5.450%, 02/01/13 1,000 996
Massachusetts State Water
Resource Authority Revenue
Bond, Series B (A)
5.875%, 11/01/04 1,000 1,059
6.250%, 11/01/10 3,175 3,350
Massachusetts State Water
Resource Authority Revenue
Bond, Series C (A)
6.000%, 11/01/05 2,000 2,128
6.000%, 12/01/11 2,000 2,118
Massachusetts State GO,
Series B (B)
5.400%, 11/01/07 2,000 2,058
Nantucket Islands Land Bank,
GO, Series E
7.000%, 07/01/05 1,505 1,622
Nantucket, GO
6.800%, 12/01/11 1,425 1,557
Rockport, GO (B)
6.800%, 12/15/99 1,100 1,195
Southbridge, GO (B)
6.375%, 01/01/12 500 528
Springfield, GO (B)
5.300%, 08/01/11 1,000 983
University of Lowell Building
Authority Revenue Bond,
Fifth Series A (B)
5.625%, 11/01/14 3,000 3,060
Worcester, GO (B)
6.250%, 10/01/08 430 465
----------
135,523
----------
62
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PUERTO RICO -- 1.4%
Commonwealth of Puerto
Rico GO (B)
5.500%, 07/01/13 $1,000 $ 1,008
Commonwealth of Puerto
Rico GO, Series A
6.000%, 07/01/06 1,000 1,050
--------
2,058
--------
TOTAL MUNICIPAL BONDS
(Cost $135,629) 137,581
--------
TRI-PARTY REPURCHASE AGREEMENT -- 5.1%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$7,590,519 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$7,754,042) 7,587 7,587
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $7,587) 7,587
--------
TOTAL INVESTMENTS -- 98.4%
(Cost $143,216) 145,168
--------
OTHER ASSETS AND LIABILITIES,
NET-- 1.6% 2,291
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 14,736,305
outstanding shares of
beneficial interest $146,849
Accumulated net realized loss
on investments (1,342)
Net unrealized appreciation
on investments 1,952
--------
TOTAL NET ASSETS -- 100.0% $147,459
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.01
========
(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.
AMT--ALTERNATIVE MINIMUM TAX
GO--GENERAL OBLIGATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
63
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
- ------------------------------------------------------
[PIE CHART]
HEALTH CARE BONDS 9%
CASH EQUIVALENTS 4%
TRANSPORTATION BONDS 2%
WATER AND SEWER BONDS 8%
GENERAL OBLIGATION BONDS 22%
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL BONDS 7%
EDUCATION BONDS 8%
ALTERNATIVE MINIMUM TAX BONDS 8%
HOUSING BONDS 12%
OTHER REVENUE BONDS 20%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 93.4%
RHODE ISLAND -- 84.6%
Bristol County, Water
Authority RB (B)
5.200%, 12/01/14 $1,000 $ 955
Cranston GO (B)
6.100%, 06/15/10 1,000 1,066
6.100%, 06/15/15 1,000 1,046
Cumberland GO (B)
5.900%, 10/01/06 500 525
Exeter West Greenwich
Regional School District GO (B)
5.400%, 11/15/10 1,000 1,010
Kent County, Water
Authority RB (B)
6.000%, 07/15/08 500 529
North Providence GO,
Series A (B)
6.000%, 07/01/12 1,100 1,156
6.050%, 07/01/13 500 527
Pawtucket GO (B)
5.625%, 04/15/07 750 783
5.750%, 04/15/08 500 522
Providence GO (B)
4.950%, 01/15/03 500 502
5.050%, 01/15/05 1,090 1,089
5.100%, 01/15/06 1,085 1,084
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Providence, Housing Development
RB, Barbara Jordan Apartments
Project, Series A (B)
6.500%, 07/01/09 $ 450 $ 472
Providence, Public Building
Authority GO, Series A (B)
5.400%, 12/15/11 500 498
Rhode Island Clean Water
Agency RB, Safe Drinking
Water Project, Series A (B)
6.500%, 01/01/09 500 544
Rhode Island Clean Water
Agency RB, Series A (B)
6.600%, 10/01/08 500 544
6.750%, 10/01/13 500 543
Rhode Island Clean Water
Protection RB (B)
5.875%, 10/01/15 865 875
Rhode Island Convention Center
Authority RB, Series A (B)
5.500%, 05/15/13 1,000 989
Rhode Island Depositor's
Economic Protection Agency
RB, Series A (B)
6.625%, 08/01/19 4,300 4,757
6.500%, 08/01/07 500 556
Rhode Island Depositor's
Economic Protection Agency
RB, Series B (B)
5.800%, 08/01/12 1,000 1,040
Rhode Island Health &
Educational Building RB,
Kent Hospital Project (B)
7.000%, 07/01/10 500 545
Rhode Island Health &
Educational Building RB,
Landmark Medical Project (B)
5.600%, 10/01/12 1,000 1,001
Rhode Island Health &
Educational Building RB,
New England Institutional
Project (B)
5.900%, 03/01/10 400 405
Rhode Island Health &
Educational Building RB,
Rhode Island School Design (B)
5.625%, 06/01/16 2,000 1,985
64
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
RHODE ISLAND (CONTINUED)
Rhode Island Health &
Educational Building RB,
Roger Williams Hospital
Project
7.750%, 07/01/16 $1,000 $1,042
Rhode Island Health &
Educational Building RB,
Roger Williams Hospital
Project (B)
6.500%, 11/15/08 500 533
7.200%, 11/15/14 1,500 1,742
Rhode Island Health &
Educational Building RB,
Salve Regina Project (B)
6.200%, 03/15/08 1,000 1,054
Rhode Island Housing &
Mortgage Financing RB,
Series 2
7.700%, 10/01/10 500 523
Rhode Island Housing &
Mortgage Financing RB,
Series 7-B
6.700%, 10/01/12 750 785
Rhode Island Housing &
Mortgage Financing RB,
Series 13
6.700%, 10/01/15 2,000 2,088
Rhode Island Housing &
Mortgage Financing RB,
Series 19-A
5.700%, 04/01/15 1,500 1,498
Rhode Island Housing &
Mortgage Financing RB,
Series A (A)
5.650%, 10/01/07 1,000 1,003
Rhode Island Housing &
Mortgage Financing RB,
Series E-1 (B)
7.500%, 10/01/11 965 1,019
Rhode Island Industrial
Development RB, Cre
Corporation Project, AMT (A)
6.500%, 03/01/14 500 514
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Rhode Island Industrial
Facilities RB
6.000%, 11/01/14 $2,850 $ 2,943
Rhode Island Port Authority
& Economic Development
RB, Shepard Building Project,
Series B (B)
6.500%, 06/01/08 500 548
6.750%, 06/01/15 515 559
Rhode Island Student Loan
Authority RB, Series A (A)
6.550%, 12/01/00 500 531
Rhode Island Student Loan
Authority RB, AMT, Series B (A)
6.850%, 12/01/02 500 534
7.000%, 12/01/04 1,390 1,487
Villa Excelsior, Housing
Development Mortgage RB (B)
6.650%, 07/01/12 480 504
Warwick GO, Series A (B)
6.600%, 11/15/06 500 542
Westerly GO (B)
5.850%, 09/15/08 450 472
--------
45,469
--------
PUERTO RICO -- 8.8%
Puerto Rico Commonwealth GO
5.750%, 07/01/17 1,000 1,005
Puerto Rico Highway &
Transportation Authority
RB, Series V
6.375%, 07/01/07 1,135 1,206
Puerto Rico Industrial, Medical
& Environmental Pollution
Control RB, PepsiCo Project,
Series A
6.250%, 11/15/13 500 534
Puerto Rico Public Education &
Health Facilities RB, Series M (A)
5.750%, 07/01/15 2,000 2,000
--------
4,745
--------
TOTAL MUNICIPAL BONDS
(Cost $48,783) 50,214
--------
65
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND (CONTINUED)
- -----------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- -----------------------------------------------------------
CASH EQUIVALENTS -- 3.6%
Federated Tax-Free Money
Market Fund $967 $ 967
Fidelity Tax-Exempt Money
Market Fund 967 967
-------
TOTAL CASH EQUIVALENTS
(Cost $1,934) 1,934
-------
TRI-PARTY REPURCHASE AGREEMENT -- 0.0%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$10,966 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$11,138) 11 11
-------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $11) 11
-------
TOTAL INVESTMENTS -- 97.0%
(Cost $50,728) 52,159
-------
OTHER ASSETS AND LIABILITIES,
NET -- 3.0% 1,593
-------
- -----------------------------------------------------------
DESCRIPTION VALUE (000)
- -----------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 5,211,092
outstanding shares of beneficial interest $52,145
Accumulated net realized gain
on investments 176
Net unrealized appreciation
on investments 1,431
-------
TOTAL NET ASSETS -- 100.0% $53,752
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.31
=======
(A) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK, OTHER FINANCIAL INSTITUTION, OR GOVERNMENT AGENCY.
(B) SECURITIES ARE HELD IN CONNECTION WITH BOND INSURANCE.
AMT--ALTERNATIVE MINIMUM TAX
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
66
<PAGE>
BOSTON 1784 FUNDS
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
- ------------------------------------------------------
[PIE CHART]
COMMON STOCK 54%
PREFERRED STOCK 1%
ASSET-BACKED SECURITIES 2%
CORPORATE OBLIGATIONS 4%
MEDIUM-TERM NOTES 3%
U.S. GOVERNMENT MORTGAGE-BACKED BONDS 2%
U.S. TREASURY OBLIGATIONS 27%
CASH EQUIVALENTS 7%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 53.2%
AEROSPACE & DEFENSE -- 1.6%
Raytheon 12,000 $ 573
----------
AIR TRANSPORTATION -- 1.7%
AMR (A) 6,000 596
----------
BANKS -- 2.3%
Norwest 15,000 802
----------
BASIC INDUSTRIES -- 2.2%
E.I. du Pont de Nemours 2,500 272
Willamette Industries 7,000 521
----------
793
----------
CAPITAL GOODS/MACHINERY
CONSTRUCTION -- 5.8%
Dover 12,000 687
General Electric 12,000 724
W.W. Grainger 8,000 642
----------
2,053
----------
CONSUMER NON-DURABLES/
WHOLESALE TRADE -- 4.0%
Nestle ADR 12,000 735
Procter & Gamble 5,000 689
----------
1,424
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
ENERGY -- 7.4%
Exxon 10,000 $ 592
Mobil 5,000 699
Noble Affiliates 11,000 463
Schlumberger 7,400 882
--------
2,636
--------
FINANCIAL SERVICES -- 6.3%
Allstate 10,000 736
American International Group 6,000 812
Federal National Mortgage
Association 16,000 698
--------
2,246
--------
HEALTH CARE -- 7.2%
Bristol-Myers Squibb 9,000 660
Genzyme (A) 20,000 477
Johnson & Johnson 12,000 719
Merck 8,000 719
--------
2,575
--------
MEDICAL PRODUCTS & SERVICES-- 1.4%
Boston Scientific (A) 9,000 480
--------
METALS & MINING -- 1.6%
Phelps Dodge 7,000 585
--------
RAILROADS -- 1.4%
Burlington Northern Santa Fe 6,000 498
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.2%
AMP 10,000 411
--------
TECHNOLOGY -- 7.1%
Computer Associates
International 10,000 548
Ericsson Telephone ADR (A) 20,000 713
Hewlett Packard 12,000 618
Lucent Technologies 10,014 637
--------
2,516
--------
WHOLESALE -- 2.0%
Sysco 20,000 698
--------
TOTAL COMMON STOCKS
(Cost $14,846) 18,886
--------
67
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000)/SHARES VALUE (000)
- ------------------------------------------------------
PREFERRED STOCKS -- 0.6%
INSURANCE -- 0.6%
Hartford Capital II Preferred 8,000 $ 206
----------
TOTAL PREFERRED STOCKS
(Cost $200) 206
----------
U.S. TREASURY OBLIGATIONS -- 27.3%
U.S. Treasury Bonds
8.125%, 08/15/19 $ 100 113
7.250%, 08/15/22 500 514
7.125%, 02/15/23 300 304
U.S. Treasury Notes
5.875%, 10/31/98 1,000 998
5.000%, 01/31/99 100 98
5.500%, 04/15/00 200 196
6.250%, 05/31/00 500 498
6.125%, 07/31/00 1,100 1,092
6.125%, 09/30/00 1,000 991
5.625%, 11/30/00 250 244
6.500%, 08/15/05 1,500 1,485
5.625%, 02/15/06 200 186
6.500%, 10/15/06 2,000 1,974
3.375%, 01/15/07 1,009 992
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $9,793) 9,685
----------
U.S. GOVERNMENT MORTGAGE-
BACKED BONDS -- 2.1%
Federal National Mortgage
Association
6.500%, 03/01/11 580 566
Government National Mortgage
Association
7.500%, 06/15/23 167 167
----------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED BONDS
(Cost $737) 733
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MEDIUM TERM NOTES -- 2.8%
Federal National Mortgage
Association
7.070%, 06/25/01 $500 $ 502
7.240%, 01/04/07 500 491
----------
TOTAL MEDIUM TERM NOTES
(Cost $999) 993
----------
CORPORATE OBLIGATIONS -- 4.3%
FINANCE -- 2.0%
Allstate
5.875%, 06/15/98 100 100
Chase Manhattan
8.000%, 06/15/99 200 206
Ford Motor Credit
6.750%, 05/15/05 100 97
General Motors Acceptance
6.625%, 04/24/00 75 75
6.625%, 10/01/02 200 197
Private Export Funding
8.400%, 07/31/01 25 26
----------
701
----------
INDUSTRIAL -- 2.3%
AT&T
7.000%, 05/15/05 200 199
Ford Motor
7.250%, 10/01/08 250 248
General Motors
7.100%, 03/15/06 75 75
Walt Disney
6.750%, 03/30/06 300 293
----------
815
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $1,538) 1,516
----------
ASSET-BACKED SECURITIES -- 2.2%
Asset Securitization, Series
1996-Md6, Class A1b
6.880%, 11/13/26 250 248
68
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ASSET BACKED SECURITIES (CONTINUED)
Ford Credit Grantor, Series
1994-B, Class A
7.300%, 10/15/99 $ 26 $ 27
Premier Auto Trust, Series
1993-4, Class A2
4.650%, 02/02/99 24 25
Sears Credit Account Master
Trust, Series 1996-4, Class A
6.450%, 10/15/06 500 493
-------
TOTAL ASSET-BACKED SECURITIES
(Cost $804) 793
-------
NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 0.3%
Associates Manufactured Housing
Pass Thru, Series 1997-1 Class A-3
6.600%, 06/15/28 115 115
-------
TOTAL NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $115) 115
-------
TRI-PARTY REPURCHASE AGREEMENT -- 6.6%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$2,365,971 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$2,399,040) 2,365 2,365
-------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $2,365) 2,365
-------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TOTAL INVESTMENTS -- 99.4%
(Cost $31,397) $35,292
-------
OTHER ASSETS AND LIABILITIES,
NET -- 0.6% 230
-------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 2,650,583
outstanding shares of beneficial interest 31,083
Undistributed net investment income 191
Accumulated net realized gain
on investments 353
Net unrealized appreciation on investments 3,895
-------
TOTAL NET ASSETS -- 100.0% $35,522
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $13.40
=======
(A) NON-INCOME PRODUCING SECURITY.
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
69
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
- ------------------------------------------------------
[PIE CHART]
TECHNOLOGY 19%
TELEPHONES & TELECOMMUNICATIONS 2%
CASH EQUIVALENTS 6%
BASIC INDUSTRIES 4%
CAPITAL GOODS/MACHINERY 4%
CONSUMER DURABLES 3%
CONSUMER NON-DURABLES 5%
ENERGY 12%
ENTERTAINMENT 2%
FINANCIAL SERVICES 3%
HEALTH CARE 9%
INSURANCE 5%
MERCHANDISE STORES 7%
REAL ESTATE INVESTMENT TRUSTS 7%
RESTAURANTS 12%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 94.6%
BASIC INDUSTRIES -- 4.1%
AK Steel Holding 120,000 $ 4,665
E.I. duPont de Nemours 50,000 5,444
Nucor 150,000 8,850
----------
18,959
----------
CAPITAL GOODS/MACHINERY
CONSTRUCTION -- 4.4%
Crown Cork & Seal 75,000 4,369
General Electric 80,000 4,830
Hardinge 109,375 2,844
NN Ball and Roller 100,000 1,162
Owens-Illinois (A) 66,200 2,044
UCAR International (A) 102,500 4,920
----------
20,169
----------
CONSUMER DURABLES -- 2.6%
Cintas 30,000 1,860
Newell 125,000 4,781
Rentokil Group 1,300,000 5,007
----------
11,648
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER NON-DURABLES -- 4.8%
Coca Cola 158,112 $ 10,791
Gillette 60,000 5,332
Northland Cranberries 116,000 1,508
Wolford AG 40,000 4,193
----------
21,824
----------
ENERGY -- 12.0%
Amoco 45,000 4,022
Arakis Energy (A) 600,000 2,287
Chesapeake Energy (A) 150,000 2,119
El Paso Natural Gas 50,000 2,962
Enron 150,000 6,112
Exxon 150,000 8,887
Mobil 50,000 6,994
Nuevo Energy (A) 75,000 3,272
Occidental Petroleum 250,000 5,812
Schlumberger 75,000 8,934
Tejas Gas (A) 80,000 3,750
----------
55,151
----------
ENTERTAINMENT -- 2.3%
Walt Disney 90,000 7,369
ITT (A) 50,000 2,981
----------
10,350
----------
FINANCIAL SERVICES -- 3.2%
BankAmerica 40,000 4,675
Household International 50,000 4,912
Litchfield Financial (A) 178,500 2,901
National Investment Fund 50,000 2,279
----------
14,767
----------
HEALTH CARE -- 8.9%
Abbott Laboratories 84,633 5,332
Bausch & Lomb 100,000 4,025
Cardinal Health 100,000 5,825
Eli Lilly 50,000 4,650
Johnson & Johnson 100,000 5,987
Medtronic 60,000 4,440
Merck 60,000 5,393
Sangstat Medical (A) 25,000 625
Sofamor/Danek Group (A) 100,000 4,600
----------
40,877
----------
70
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
INSURANCE -- 5.0%
Allstate 100,000 $ 7,363
American International Group 40,000 5,415
Chubb 50,000 3,050
St. Paul 100,000 7,163
----------
22,991
----------
MERCHANDISE STORES -- 6.6%
Bed Bath and Beyond (A) 300,000 8,513
Grand Optical Photoservice 50,000 7,468
Home Depot 142,300 8,965
Moebel Walther 100,000 5,354
----------
30,300
----------
REAL ESTATE INVESTMENT TRUSTS -- 6.8%
Felcor Suite Hotels 200,000 7,450
Golf Trust of America 100,000 2,725
Health & Retirement
Property Trust 100,000 1,850
Health Care 100,000 2,400
Hospitality Properties Trust 120,000 3,810
Redwood Trust 35,000 1,999
RFS Hotel Investors 381,000 7,096
Storage USA 50,000 1,906
Winston Hotels 150,000 1,969
----------
31,205
----------
RESTAURANTS -- 12.5%
Lone Star Steakhouse &
Saloon (A) 400,000 9,200
Outback Steakhouse (A) 70,000 1,628
Papa John's International (A) 228,000 7,268
Pizza Express 1,381,000 15,413
Rainforest Cafe (A) 350,000 8,575
Wetherspoon J.D. 700,000 15,082
----------
57,166
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
TECHNOLOGY -- 19.3%
Cambridge Technology
Partners (A) 249,000 $ 7,595
Cisco Systems (A) 75,000 5,081
Donnelly Enterprise
Solutions (A) 147,500 1,420
Intel 105,000 15,908
Micron Electronics (A) 200,000 3,037
Microsoft (A) 110,000 13,640
Motorola 75,000 4,978
Oracle (A) 150,000 6,994
Robotic Vision Systems (A) 500,000 5,813
SAP AG (A) 100,000 18,198
Security Dynamics Tech (A) 150,000 5,531
----------
88,195
----------
TELEPHONES & TELECOMMUNICATIONS -- 2.1%
AT&T 100,000 3,688
Ascend Communications (A) 50,000 2,787
U.S. West Media Group (A) 150,000 2,981
----------
9,456
----------
TOTAL COMMON STOCKS
(Cost $290,665) 433,058
----------
71
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TRI-PARTY REPURCHASE AGREEMENT -- 6.5%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$29,932,493 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$30,502,087) $29,919 29,919
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $29,919) 29,919
--------
TOTAL INVESTMENTS -- 101.1%
(Cost $320,584) 462,977
--------
OTHER ASSETS AND LIABILITIES,
NET-- (1.1%) (5,025)
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 26,112,042
outstanding shares of beneficial interest $306,942
Undistributed net investment income 657
Accumulated net realized gain on
investments 7,960
Net unrealized appreciation on
investments 142,393
--------
TOTAL NET ASSETS-- 100.0% $457,952
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $17.54
========
(A) NON-INCOME PRODUCING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
72
<PAGE>
BOSTON 1784 FUNDS
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
- ------------------------------------------------------
[PIE CHART]
TECHNOLOGY 16%
TELEPHONES & TELECOMMUNICATIONS 5%
TRANSPORTATION 1%
UTILITIES 1%
CASH EQUIVALENTS 5%
BASIC INDUSTRIES 5%
CAPITAL GOODS/CONSTRUCTION 5%
CONSUMER DURABLES 6%
CONSUMER NON-DURABLES 7%
ENERGY 11%
FINANCIAL SERVICES 5%
HEALTH CARE 15%
INSURANCE 2%
MERCHANDISE STORES 3%
RESTAURANTS 13%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 94.9%
BASIC INDUSTRIES -- 4.5%
AK Steel Holding 75,000 $ 2,916
Nucor 75,000 4,425
Willamette Industries 60,000 4,470
----------
11,811
----------
CAPITAL GOODS/CONSTRUCTION-- 6.5%
Elbit Vision Systems Ltd (A) 45,000 517
Gildmeister Italiana Itl 500,000 1,528
Hardinge 50,000 1,300
Ionics Incorporated (A) 15,650 747
Manitowoc 41,000 1,835
NN Ball and Roller 100,000 1,162
Praxair 50,000 2,631
Sealed Air (A) 28,050 1,287
UCAR International (A) 75,000 3,600
United Waste Systems (A) 24,600 944
Vivid Technologies (A) 75,000 1,406
----------
16,957
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER DURABLES -- 5.5%
Applied Graphics
Technologies (A) 75,000 $ 2,475
Bolder Technologies (A) 35,000 437
Cintas 25,000 1,550
Danaher 25,000 1,212
Dekalb Genetics, Class B 13,050 928
GTS Duratek (A) 15,000 129
Kaydon 50,000 2,481
Miller Herman 73,800 2,638
Rentokil Group 680,000 2,618
----------
14,468
----------
CONSUMER NON-DURABLES -- 6.7%
Coca Cola 26,675 1,821
DSI Toys (A) 100,000 806
Gillette 23,275 2,069
Jones Apparel Group (A) 25,100 1,177
Liz Claiborne 33,075 1,509
Nautica Enterprises (A) 62,450 1,468
Northland Cranberries 250,000 3,250
Q-Zar (A) 400,000 1,175
Robert Half International (A) 56,450 2,420
Wolford AG 16,000 1,677
----------
17,372
----------
ENERGY -- 11.2%
American Oilfield Divers (A) 100,000 1,137
Arakis Energy (A) 400,000 1,525
Baker Hughes 18,050 677
Chesapeake Energy (A) 75,000 1,059
Clayton Williams Energy (A) 57,500 776
GeoScience (A) 80,000 740
Global Marine (A) 112,000 2,520
Halliburton 25,825 1,998
Helmerich & Payne 16,200 909
KCS Energy 75,000 3,122
Maverick Tube (A) 60,000 1,815
Noble Affiliates 27,900 1,175
Nuevo Energy (A) 53,100 2,316
Offshore Energy
Development (A) 200,000 962
St. Mary Land & Exploration 100,000 3,175
73
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
Stone Energy (A) 75,000 $ 2,100
Tejas Gas (A) 20,000 937
Tosco 21,900 714
Williams Companies 34,425 1,519
----------
29,176
----------
FINANCIAL SERVICES -- 5.8%
BankAmerica 9,425 1,102
Euronet Services (A) 127,200 1,399
Fifth Third Bancorp 9,112 704
Finova Group 10,775 803
Green Tree Financial 45,650 1,598
Household International 20,000 1,965
MBNA 23,812 807
Polish National Investment
Fund (A) 50,000 2,279
Redwood Trust 50,000 2,856
Star Banc 42,600 1,757
----------
15,270
----------
HEALTH CARE -- 14.8%
Accumed International (A) 100,000 400
Arterial Vascular (A) 60,000 1,253
Aviron (A) 50,000 563
Bausch & Lomb 25,000 1,006
Biosite Diagnostics (A) 70,000 621
Boston Biomedica (A) 62,500 523
Cardinal Health 39,642 2,309
Columbia Laboratories (A) 325,000 6,338
Darya Varia Laboratoria (A) 500,000 648
Dentsply International 47,500 2,387
Enamelon (A) 120,000 2,115
Healthcare Compare (A) 75,000 3,703
Healthsouth Rehabilitation (A) 21,800 499
Johnson & Johnson 30,000 1,796
Medtronic 23,725 1,756
Merck 20,000 1,798
Omnicare 100,000 2,863
Sabratek Corp (A) 100,000 2,663
Sangstat Medical (A) 125,000 3,125
Sonus Pharmaceuticals (A) 32,500 869
Ventana Medical Systems (A) 50,000 656
World Heart (A) 100,000 313
Zoll Medical Corp (A) 50,000 444
----------
38,648
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
INSURANCE -- 1.7%
American International Group 10,175 $ 1,377
MGIC Investment 21,825 1,942
Preferred Employers
Holdings (A) 60,000 420
Travelers 14,500 796
----------
4,535
----------
MERCHANDISE STORES -- 3.8%
Bed Bath and Beyond (A) 207,500 5,888
Grand Optical Photoservice 12,000 1,792
Moebel Walther AG 40,000 2,142
----------
9,822
----------
RESTAURANTS -- 13.1%
Lone Star Steakhouse &
Saloon (A) 250,000 5,750
Papa John's International (A) 75,000 2,391
Pizza Express 779,000 8,694
Rainforest Cafe (A) 275,000 6,738
Wetherspoon J.D. 500,000 10,773
----------
34,346
----------
TECHNOLOGY -- 15.9%
Andrew (A) 40,837 1,113
Baan ADR (A) 40,000 2,410
Barringer Technologies (A) 25,000 370
Barringer Technologies
Warrant (A) 25,000 38
Cambridge Technology
Partners (A) 45,000 1,373
Cisco Systems (A) 55,950 3,791
Dell Computer (A) 37,400 4,208
I2 Technologies (A) 95,000 4,061
Intel 31,850 4,825
Iona Technologies PLC 75,000 1,294
Microsoft (A) 17,850 2,213
Robotic Vision Systems (A) 249,000 2,895
SAP AG 10,000 1,820
Security Dynamics
Technologies (A) 75,000 2,766
Sterling Software (A) 10,900 362
Thermo Electron (A) 30,262 1,044
Viisage Technology (A) 107,500 1,263
Visio (A) 100,000 5,750
----------
41,596
----------
74
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION PAR (000)/SHARES VALUE (000)
- ------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS-- 4.3%
Asia Pacific Wire & Cable (A) 100,000 $ 1,013
Ciena (A) 2,000 94
Cincinnati Bell 28,075 1,727
Geotek Communications (A) 200,000 894
Teleport Communications
Group (A) 50,000 1,513
Transcrypt International (A) 200,000 2,475
Worldcom (A) 120,000 3,555
--------
11,271
--------
TRANSPORTATION -- 0.5%
Wisconsin Central
Transportation (A) 36,500 1,319
--------
UTILITIES -- 0.6%
AES (A) 13,700 983
Calpine (A) 30,000 615
--------
1,598
--------
TOTAL COMMON STOCKS
(Cost $200,983) 248,189
--------
TRI-PARTY REPURCHASE AGREEMENT -- 5.2%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$13,624,642 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$13,880,163) $13,618 13,618
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $13,618) 13,618
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL INVESTMENTS -- 100.1%
(Cost $214,601) $261,807
--------
OTHER ASSETS AND LIABILITIES,
NET -- (0.1%) (320)
--------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 21,425,370
outstanding shares of beneficial interest 200,067
Distributions in excess of net
investment income (353)
Accumulated net realized gain on
investments 14,567
Net unrealized appreciation on
investments 47,206
--------
TOTAL NET ASSETS -- 100.0% $261,487
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $12.20
========
(A) NON-INCOME PRODUCING SECURITY.
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
75
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
- ------------------------------------------------------
[PIE CHART]
SWITZERLAND 6%
UNITED KINGDOM 14%
CANADA 2%
EMERGING MARKETS 12%
FRANCE 8%
GERMANY 6%
HONG KONG 5%
JAPAN 23%
NETHERLANDS 9%
OTHER EUROPE 8%
OTHER PACIFIC RIM 7%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
FOREIGN COMMON STOCKS -- 94.6%
ARGENTINA -- 0.8%
Banco Frances Rio Plata ADR 30,000 $ 986
Cia Naviera Perez, Series B 130,478 997
Transportadora de Gas del
Sur ADR 84,000 1,060
YPF SA ADR 37,000 1,110
----------
4,153
----------
AUSTRALIA -- 2.7%
Brambles Industries 124,000 2,233
Broken Hill Proprietary 143,680 2,063
M.I.M. Holdings 1,900,000 2,836
News Corporation 460,000 2,042
Sydney Harbour Casino
Holdings (A) 1,600,000 2,606
Woolworths 540,000 1,678
----------
13,458
----------
BRAZIL -- 0.2%
Light Servicos de Electric 1,863,000 936
----------
CANADA -- 1.8%
Northern Telecom 19,000 1,589
Northern Telecom ADR 20,000 1,680
Philip Environmental (A) 210,000 3,071
Renaissance Energy (A) 44,000 1,381
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
United Dominion Industries 53,000 $ 1,370
----------
9,091
----------
CHILE -- 1.1%
Banco de Santiago ADR 38,000 936
Chilectra ADR 42,000 1,136
CIA Telecom Chile ADR 35,000 1,199
Embotelladora Andina.
Series A ADR 29,000 616
Embotelladora Andina,
Series B ADR 29,000 620
Empresa Nacional de
Electricidad ADR 48,400 1,089
----------
5,596
----------
CHINA -- 0.6%
Cheung Kong Infrastructure 270,000 855
China Resources Enterprise 248,000 871
Guangdong Investment 842,000 1,114
----------
2,840
----------
FRANCE -- 8.1%
Accor 31,146 4,312
Alcatel Aslthom 48,900 5,289
AXA-UAP 40,000 2,392
BIC 15,000 2,207
Castorama Dubois Investisse 22,671 3,119
Cie Generale des Eaux 17,000 2,089
Groupe Danone 5,753 865
L'Oreal 15,364 5,571
LVMH 18,070 4,372
Promodes 20,900 7,072
Synthelabo 20,000 2,336
Television Francaise 11,800 1,127
----------
40,751
----------
GERMANY -- 4.9%
Degussa 95,000 4,617
Deutsche Pfandbrief &
Hypobank 38,060 2,272
Fresenius National Medical
Care ADR 135,000 3,898
GEA AG 1,000 417
Gehe AG 66,750 4,769
Hoechst 145,000 5,651
Sap AG 17,000 3,032
----------
24,656
----------
76
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
GREECE -- 0.2%
Ergo Bank 12,000 $ 846
----------
HONG KONG -- 5.2%
HSBC Holdings 214,800 6,515
Hutchison Whampoa 486,000 4,046
New World Development 490,000 3,111
Sun Hung Kai Properties 320,080 3,935
Swire Pacific, Series A 519,500 4,358
Television Broadcasts 500 2
Wharf Holdings 940,000 4,210
----------
26,177
----------
HUNGARY -- 0.5%
Gedeon Richter 27,000 1,895
OTP Bank GDR 19,000 446
----------
2,341
----------
INDIA -- 0.8%
Hindalco Industries GDR 26,000 858
Indus Credit and Invest GDR (A) 103,000 1,197
State Bank of India GDR 45,000 1,131
Videsh Sanchar GDR (A) 40,000 824
----------
4,010
----------
INDONESIA -- 0.7%
Indofood (F) 540,000 1,216
PT Gudang Garam (F) 320,000 1,382
Telekom Indonesia (F) 545,000 919
----------
3,517
----------
IRELAND -- 0.3%
CRH (UK) 25,436 251
CRH 132,259 1,301
----------
1,552
----------
ITALY -- 2.5%
Edison SPA 808,500 3,833
Luxottica Group ADR 56,500 3,630
Seat SPA (A) 986,000 293
Stet Societa' Finanziara
Telefonica SPA 986,000 4,977
----------
12,733
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
JAPAN -- 21.9%
Asahi Chemical Industries 450,000 $ 2,505
Bank of Tokyo -
Mitsubishi Bank 79,500 1,379
Canon Sales 209,000 4,794
Citizen Watch 360,000 2,731
Daiichi Pharmaceutical 220,000 3,780
Dainippon Ink & Chemical 600,000 2,216
Fuji Bank 140,000 1,804
Fujitsu 320,000 3,903
Hitachi 450,000 4,793
House Food 200,000 3,385
Inax 85,000 592
Ito Yokado 77,000 4,392
Kao 310,000 4,208
Keyence 140 20
Marui 200,000 3,728
Matsushita Electric 190,000 3,574
Mitsubishi Heavy Industries 509,000 3,664
Mori Seiki 280,000 4,354
NGK Spark Plug 360,000 3,897
Nippon Comsys 56,700 774
Nippon Express 405,000 3,149
Nippon Steel 1,000,000 2,929
Ricoh 400,000 5,257
Sanwa Bank 150,000 1,920
Sanyo Electric 781,000 3,294
Secom 65,000 4,679
Sharp 269,000 3,466
Shimano 120,000 2,299
Shin-Etsu Chemical 210,000 5,268
TDK 50,000 3,840
Tokio Marine & Fire Insurance 310,000 3,648
Toppan Printing 320,000 4,398
Toyota Motor 150,000 4,304
York Benimaru 44,000 1,395
----------
110,339
----------
MALAYSIA -- 0.7%
Public Bank 385,000 604
Renong Berhad 870,000 1,247
Sime Darby Berhad 450,000 1,469
----------
3,320
----------
77
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
MEXICO -- 1.2%
Cemex ADR 120,000 $ 978
Desc de C.V. ADR 37,370 995
Grupo Industrial Maseca ADR 70,500 1,057
Grupo Televisa ADR (A) 40,500 1,159
Industrial Penoles 171,000 800
Panamerican Beverage, Series A 32,300 937
----------
5,926
----------
NETHERLANDS -- 9.0%
Getronics 204,904 6,983
Hunter Douglas 58,520 5,161
Koninklijke Ahold 112,542 8,543
Nutricia Vereenigde Bedrijven 46,541 7,250
Philips Electronics 87,600 4,790
Randstad Holdings 75,000 7,531
Wolters Kluwer 42,162 5,070
----------
45,328
----------
NORWAY -- 0.2%
Norsk Hydro 23,300 1,164
----------
PAKISTAN -- 0.2%
Hub Power Company GDR (A) 50,000 1,169
----------
PERU -- 0.7%
Banco Wiese ADR 160,000 1,120
CPT Telefoncia del Peru 43,800 1,111
Credicorp 50,400 1,140
----------
3,371
----------
PHILIPPINES -- 0.6%
Ayala Land, Series B 625,000 498
Manila Electric, Series B 178,778 1,004
Philippine Long Distance
Telephone ADR 10,000 579
Philippine National Bank 45,250 299
SM Prime Holdings 1,500,000 427
----------
2,807
----------
POLAND -- 0.4%
Elektrim 155,000 1,384
Mostostal Export 137,000 458
Mostostal Export Rights (A) 2,740 1
----------
1,843
----------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
PORTUGAL -- 0.7%
Banco Comercial Portugues 35,000 $ 612
Inparsa-Industria e Participacoe 14,000 119
Jeronimo Martins 24,399 1,657
Sonae Investimentos 28,000 1,050
----------
3,438
----------
SINGAPORE -- 2.6%
City Developments 261,100 2,429
Development Bank of
Singapore 263,837 3,303
Fraser & Neave 206,720 1,648
Keppel 343,000 1,583
Keppel, Series A 85,750 384
Singapore Press Holdings 180,000 3,588
----------
12,935
----------
SOUTH KOREA -- 0.6%
Cho Hung Bank GDS 163,000 958
Korea Fund 159,903 2,199
----------
3,157
----------
SPAIN -- 2.4%
Empresa Nacional de
Electricidad 67,000 5,119
Gas Natural, Series E 30,400 5,798
Repsol SA 28,000 1,172
----------
12,089
----------
SWEDEN -- 2.7%
Atlas Copco, Series A 238,000 6,387
Atlas Copco, Series B 15,000 396
Ericsson LM, Series B 200,000 7,019
----------
13,802
----------
SWITZERLAND -- 5.4%
ABB 4,830 6,629
Adecco SA 10,000 3,760
Nestle SA 1,560 1,940
Novartis 5,400 7,327
Roche Holding Genusscheine 850 7,557
Roche Holding Warrants (A) 740 52
----------
27,265
----------
78
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
TAIWAN -- 0.4%
Taipei Fund (A) 140 $ 1,553
Taipei Fund Units (A) 36 403
--------
1,956
--------
THAILAND -- 0.6%
Bangkok Bank 64,000 568
BEC World 94,000 819
Electricity Generating Public 300,000 653
PTT Exploration 62,000 860
--------
2,900
--------
TURKEY -- 0.2%
Aksa 3,600,000 287
Aksa Rights (A) 1,500,000 109
Arcelik AS 3,652,197 408
Eczacibasi 660,000 31
Tat Konserve Sanayii 2,099,998 164
Tat Konserve
Sanayii Rights (A) 1,399,999 99
Turk Garanti Bankasi 1,999,930 81
--------
1,179
--------
UNITED KINGDOM -- 13.5%
Astec 1,198,000 2,870
Azlan Group 350,400 3,452
Bank of Scotland 650,000 4,087
BOC Group 215,000 3,607
British-Borneo Petrol Syndicate 125,000 2,596
British Aerospace 140,000 2,845
Granada Group 229,645 3,254
Inchcape 743,000 3,530
Invesco 681,000 3,714
Morgan Crucible 409,005 3,047
Premier Farnell 108,969 839
Rank Group 500,000 3,508
Reckitt & Colman 209,000 2,939
Reuters Holdings 261,000 2,928
Securicor 584,978 2,746
Shell Transportation & Trading 225,000 4,432
Smithkline Beecham 262,389 4,512
- ------------------------------------------------------
DESCRIPTION PAR (000)/SHARES VALUE (000)
- ------------------------------------------------------
Standard Chartered 288,318 $ 4,562
WPP Group 985,000 3,866
Zeneca Group 152,000 4,607
--------
67,941
--------
VENEZUELA -- 0.2%
Corimon SA ADR (A) 66,410 0
Sivensa ADR 310,000 1,125
-------
1,125
--------
TOTAL FOREIGN STOCKS
(Cost $396,974) 475,711
--------
FOREIGN PREFERRED STOCKS -- 1.5%
AUSTRALIA -- 0.0%
News Corporation 41,200 155
--------
BRAZIL -- 0.8%
Brahma 1,200,000 874
Brasmotor SA 3,610,000 806
Petroleo Brasilerios 4,700,000 1,120
Telefonos de Sao Paulo 2,960,000 1,031
--------
3,831
--------
GERMANY -- 0.7%
GEA AG 8,000 3,300
--------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $6,069) 7,286
--------
CONVERTIBLE BOND -- 0.1%
JAPAN -- 0.1%
Fuji International
0.250%, 02/01/02 JY 81,000 675
--------
TOTAL CONVERTIBLE BOND
(Cost $718) 675
--------
79
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TRI-PARTY REPURCHASE AGREEMENT -- 0.3%
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$1,564,721 (collateralized by
various U.S. Treasury Bills
ranging in par value $23,399,000-
$29,035,000, 06/19/97-10/23/97;
U.S. Treasury Notes ranging in par
value $20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$1,585,080) $1,564 $ 1,564
--------
TOTAL TRI-PARTY REPURCHASE AGREEMENT
(Cost $1,564) $ 1,564
--------
TOTAL INVESTMENTS -- 96.5%
(Cost $405,325) 485,236
--------
OTHER ASSETS AND LIABILITIES,
NET -- 3.5% 17,812
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 38,121,872
outstanding shares of beneficial interest $413,294
Undistributed net investment income 4,625
Accumulated net realized gain
on investments 5,184
Net unrealized appreciation on
foreign currency and translation
of other assets and liabilities in
foreign currency 34
Net unrealized appreciation
on investments 79,911
--------
TOTAL NET ASSETS -- 100.0% $503,048
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $13.20
========
(A) NON-INCOME PRODUCING SECURITY.
ADR -- AMERICAN DEPOSITORY RECEIPT.
GDR -- GLOBAL DEPOSITORY RECEIPT
GDS -- GLOBAL DEPOSITORY SHARE
JY -- JAPANESE YEN
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
80
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
THIS PAGE IS LEFT INTENTIONALLY BLANK.
81
<PAGE>
STATEMENTS OF OPERATIONS (000) BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED MAY 31, 1997 (EXCEPT WHERE NOTED)
<TABLE>
<CAPTION>
BOSTON BOSTON
BOSTON BOSTON 1784 1784 BOSTON
1784 1784 PRIME PRIME 1784 BOSTON
TAX-FREE U.S. TREASURY MONEY MONEY SHORT-TERM 1784
MONEY MARKET MONEY MARKET MARKET MARKET INCOME INCOME
FUND FUND FUND (1) FUND (2) FUND FUND
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
INCOME:
DIVIDEND INCOME $ -- $ -- $ -- $ -- $ -- $ 1,409
INTEREST INCOME 26,051 13,763 2,688 11,531 9,064 19,026
LESS: FOREIGN TAXES WITHHELD -- -- -- -- -- --
------- ------- ------ ------- ------ -------
TOTAL INCOME 26,051 13,763 2,688 11,531 9,064 20,435
------- ------- ------ ------- ------ -------
EXPENSES:
INVESTMENT ADVISORY FEES 2,808 1,020 191 837 708 2,130
LESS: WAIVER OF INVESTMENT ADVISORY FEES (145) (141) (49) -- -- (301)
LESS: REIMBURSEMENT OF EXPENSES BY ADVISER -- -- -- -- -- --
ADMINISTRATOR FEES 632 212 37 205 123 259
LESS: WAIVER OF ADMINISTRATOR FEES -- (51) -- -- (49) --
SHAREHOLDER SERVICING FEES -- 207 48 107 -- --
12B-1 FEES -- -- -- -- 353 720
LESS: WAIVER OF 12B-1 FEES -- -- -- -- (353) (720)
TRANSFER AGENT FEES & EXPENSES 113 234 39 61 63 58
FUND ACCOUNTING FEES 10 10 -- 66 8 11
REGISTRATION FEES 95 6 6 27 22 24
TRUSTEE FEES 27 14 1 8 4 10
PRINTING 53 19 20 8 4 24
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS 13 13 -- -- 3 3
PROFESSIONAL FEES 77 27 13 17 9 28
CUSTODIAN FEES 50 44 4 22 19 33
OTHER EXPENSES 33 9 -- 27 1 13
------- ------- ------ ------- ------ -------
TOTAL EXPENSES, NET OF WAIVERS 3,766 1,623 310 1,385 915 2,292
------- ------- ------ ------- ------ -------
NET INVESTMENT INCOME 22,285 12,140 2,378 10,146 8,149 18,143
------- ------- ------ ------- ------ -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS (94) 20 -- 4 (896) (2,487)
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- --
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS -- -- -- -- 506 4,925
NET CHANGE IN UNREALIZED
DEPRECIATION 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 (94) 20 -- 4 (390) 2,438
------- ------- ------ ------- ------ -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $22,191 $12,160 $2,378 $10,150 $7,759 $20,581
======= ======= ====== ======= ====== =======
BOSTON BOSTON BOSTON BOSTON BOSTON
1784 1784 1784 1784 1784
U.S. GOVERNMENT TAX-EXEMPT CONNECTICUT MASSACHUSETTS RHODE ISLAND
MEDIUM-TERM MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
INCOME:
DIVIDEND INCOME $ -- $ -- $ -- $ -- $ --
INTEREST INCOME 13,645 12,853 5,216 7,068 2,619
LESS: FOREIGN TAXES WITHHELD -- -- -- -- --
------- ------- ------ ------ ------
TOTAL INCOME 13,645 12,853 5,216 7,068 2,619
------- ------- ------ ------ ------
EXPENSES:
INVESTMENT ADVISORY FEES 1,423 1,662 676 946 341
LESS: WAIVER OF INVESTMENT ADVISORY FEES (212) (269) (103) (154) (59)
LESS: REIMBURSEMENT OF EXPENSES BY ADVISER (12) (6) -- (24) (2)
ADMINISTRATOR FEES 176 205 83 116 42
LESS: WAIVER OF ADMINISTRATOR FEES -- -- (46) -- (22)
SHAREHOLDER SERVICING FEES -- -- -- -- --
12B-1 FEES 481 562 228 320 115
LESS: WAIVER OF 12B-1 FEES (481) (562) (228) (320) (115)
TRANSFER AGENT FEES & EXPENSES 37 43 37 37 21
FUND ACCOUNTING FEES 10 10 10 10 10
REGISTRATION FEES 23 34 10 18 6
TRUSTEE FEES 7 8 3 3 1
PRINTING 11 16 2 9 2
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS 13 13 3 13 2
PROFESSIONAL FEES 16 21 -- 10 2
CUSTODIAN FEES 25 24 13 18 13
OTHER EXPENSES 10 26 10 9 6
------- ------- ------ ------ ------
TOTAL EXPENSES, NET OF WAIVERS 1,527 1,787 698 1,011 363
------- ------- ------ ------ ------
NET INVESTMENT INCOME 12,118 11,066 4,518 6,057 2,256
------- ------- ------ ------ ------
NET REALIZED GAIN (LOSS) ON INVESTMENTS (2,236) 1,674 31 (447) 197
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN -- -- -- --
CURRENCY TRANSACTIONS --
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS 3,128 3,983 1,816 3,226 912
NET CHANGE IN UNREALIZED
DEPRECIATION 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 892 5,657 1,847 2,779 1,109
------- ------- ------ ------ ------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $13,010 $16,723 $6,365 $8,836 $3,365
======= ======= ====== ====== ======
BOSTON BOSTON BOSTON
1784 1784 BOSTON 1784
ASSET GROWTH AND 1784 INTERNATIONAL
ALLOCATION INCOME GROWTH EQUITY
FUND FUND FUND FUND
====================================================================================================
<S> <C> <C> <C> <C>
INCOME:
DIVIDEND INCOME $ 224 $ 4,988 $ 851 $ 6,732
INTEREST INCOME 730 1,313 720 1,012
LESS: FOREIGN TAXES WITHHELD -- (53) (15) (676
------ ------- ------- -------
TOTAL INCOME 954 6,248 1,556 7,068
------ ------- ------- -------
EXPENSES:
INVESTMENT ADVISORY FEES 179 2,725 1,226 4,222
LESS: WAIVER OF INVESTMENT ADVISORY FEES -- (10) (176) --
LESS: REIMBURSEMENT OF EXPENSES BY ADVISER (2) (65) -- --
ADMINISTRATOR FEES 21 332 140 384
LESS: WAIVER OF ADMINISTRATOR FEES (10) -- (44) --
SHAREHOLDER SERVICING FEES -- -- -- --
12B-1 FEES 60 921 414 1,055
LESS: WAIVER OF 12B-1 FEES (60) (921) (414) (1,055
TRANSFER AGENT FEES & EXPENSES 25 160 55 70
FUND ACCOUNTING FEES 10 8 5 24
REGISTRATION FEES 6 45 8 48
TRUSTEE FEES 1 21 4 16
PRINTING 2 29 15 22
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS 13 13 3 5
PROFESSIONAL FEES 3 37 18 38
CUSTODIAN FEES 10 73 11 481
OTHER EXPENSES 1 19 2 31
------ ------- ------- -------
TOTAL EXPENSES, NET OF WAIVERS 259 3,387 1,267 5,341
------ ------- ------- -------
NET INVESTMENT INCOME 695 2,861 289 1,727
------ ------- ------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS 474 9,803 14,567 5,936
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN -- -- -- 4,430
CURRENCY TRANSACTIONS
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS 2,426 51,083 463 38,228
NET CHANGE IN UNREALIZED
DEPRECIATION ON FORWARD FOREIGN
CURRENCY CONTRACTS, FOREIGN CURRENCIES
AND TRANSLATION OF OTHER ASSETS
AND LIABILITIES IN FOREIGN CURRENCY -- -- -- (1,264)
------ ------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY 2,900 60,886 15,030 47,330
------ ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,595 $63,747 $15,319 $49,057
====== ======= ======= =======
<FN>
(1) UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS BAYFUNDS MONEY MARKET PORTFOLIO.
THE FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MAY 31. REFLECTS OPERATIONS FOR THE PERIOD
JANUARY 1, 1997 TO MAY 31, 1997.
(2) REFLECTS OPERATIONS FOR THE PERIOD JANUARY 1, 1996 TO DECEMBER 31, 1996.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
82 & 83
<PAGE>
BOSTON 1784 FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOSTON BOSTON BOSTON
1784 1784 1784
TAX-FREE U.S. TREASURY PRIME
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
====================================================================================================================================
6/1/96 6/1/95 6/1/96 6/1/95 1/1/97 1/1/96 1/1/95
TO TO TO TO TO TO TO
5/31/97 5/31/96 5/31/97 5/31/96 5/31/97(1) 12/31/96 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 22,285 $ 20,313 $ 12,140 $ 3,465 $ 2,378 $ 10,146 $11,579
NET REALIZED GAIN (LOSS) ON INVESTMENTS (94) (26) 20 3 -- 4 --
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- --
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS -- -- -- -- -- -- --
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 22,191 20,287 12,160 3,468 2,378 10,150 11,579
--------- -------- -------- ------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (22,285) (20,313) (12,143) (3,465) (2,378) (10,146) (11,579)
REALIZED CAPITAL GAINS -- -- -- -- -- -- --
--------- -------- -------- ------- -------- -------- --------
TOTAL DISTRIBUTIONS (22,285) (20,313) (12,143) (3,465) (2,378) (10,146) (11,579)
--------- -------- -------- ------- -------- -------- --------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- -- -- -- 124 --
VALUE FROM SHARES ISSUED
IN REORGANIZATION (3) -- -- 320,110 -- -- -- --
PROCEEDS FROM SHARES ISSUED 1,353,963 975,978 402,271 168,949 184,607 326,422 336,562
REINVESTMENT OF CASH DISTRIBUTIONS 3,660 3,201 11,681 3,581 1,497 2,371 2,973
COST OF SHARES REDEEMED (1,061,545) (968,937) (422,784) (148,602) (156,234) (445,825) (323,673)
--------- -------- -------- ------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 296,078 10,242 311,278 23,928 29,870 (116,908) 15,862
--------- -------- -------- ------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 295,984 10,216 311,295 23,931 29,870 (116,904) 15,682
NET ASSETS:
BEGINNING OF PERIOD 549,628 539,412 78,999 55,068 93,229 210,133 194,271
--------- -------- -------- ------- -------- -------- --------
NETASSETS:
END OF PERIOD $ 845,612 $549,628 $390,294 $78,999 $123,099 $ 93,229 $210,133
========= ======== ======== ======= ======== ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (3) -- -- 320,110 -- -- -- --
SHARES ISSUED 1,353,963 975,978 402,271 168,949 184,607 326,422 336,562
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 3,660 3,201 11,681 3,581 1,497 2,371 2,973
SHARES REDEEMED (1,061,545) (968,937) (422,784) (148,602) (156,234) (445,825) (323,673)
--------- -------- -------- ------- -------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 296,078 10,242 311,278 23,928 29,870 (117,032) 15,862
========= ======== ======== ======= ======== ======== ========
UNDISTRIBUTED/OVERDISTRIBUTION
NET INVESTMENT INCOME $ -- $ -- $ 11 $ -- $ -- $ -- $ --
========= ======== ======== ======= ======== ======== ========
BOSTON
BOSTON 1784
1784 BOSTON U.S. GOVERNMENT
SHORT-TERM 1784 MEDIUM-TERM
INCOME INCOME INCOME
FUND FUND FUND
=========================================================================================================================
6/1/96 6/1/95 6/1/96 6/1/95 6/1/96 6/1/95
TO TO TO TO TO TO
5/31/97 5/31/96 5/31/97 5/31/96 5/31/97 5/31/96
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 8,149 $ 4,308 $ 18,143 $ 12,927 $ 12,118 $ 9,416
NET REALIZED GAIN (LOSS) ON INVESTMENTS (896) 101 (2,487) 6,246 (2,236) 1,423
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- --
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS 506 (1,448) 4,925 (14,855) 3,128 (6,162)
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 7,759 2,961 20,581 4,318 13,010 4,677
-------- ------- -------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (8,167) (4,308) (18,013) (12,927) (12,118) (9,416)
REALIZED CAPITAL GAINS -- (279) (2,124) (2,452) -- --
-------- ------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (8,167) (4,587) (20,137) (15,379) (12,118) (9,416)
-------- ------- -------- -------- -------- --------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- -- -- -- --
VALUE FROM SHARES ISSUED
IN REORGANIZATION (3) 43,620 -- 51,241 -- -- --
PROCEEDS FROM SHARES ISSUED 117,953 55,768 84,395 71,632 68,956 75,943
REINVESTMENT OF CASH DISTRIBUTIONS 4,503 1,984 4,890 1,648 1,552 1,592
COST OF SHARES REDEEMED (58,018) (22,324) (41,214) (23,712) (29,753) (35,383)
-------- ------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 108,058 35,428 99,312 49,568 40,755 42,152
-------- ------- -------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 107,650 33,802 99,756 38,507 41,647 37,413
NET ASSETS:
BEGINNING OF PERIOD 86,383 52,581 235,022 196,515 167,494 130,081
-------- ------- -------- -------- -------- --------
NETASSETS:
END OF PERIOD $194,033 $86,383 $334,778 $235,022 $209,141 $167,494
======== ======= ======== ======== ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (3) 4,325 -- 5,014 -- -- --
SHARES ISSUED 11,771 5,508 8,371 6,986 7,349 7,927
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 451 196 484 159 166 165
SHARES REDEEMED (5,809) (2,212) (4,100) (2,310) (3,167) (3,710)
-------- ------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 10,738 3,492 9,769 4,835 4,348 4,382
======== ======= ======== ======== ======== ========
UNDISTRIBUTED/OVERDISTRIBUTION
NET INVESTMENT INCOME $ 2 $ -- $ 127 $ -- $ (548) $ --
======== ======= ======== ======== ======== ========
BOSTON BOSTON BOSTON BOSTON
1784 1784 1784 1784
TAX-EXEMPT CONNECTICUT MASSACHUSETTS RHODE ISLAND
MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
INCOME INCOME INCOME INCOME
FUND FUND FUND FUND
=================================================================================================================================
6/1/96 6/1/95 6/1/96 6/1/95 6/1/96 6/1/95 6/1/96 6/1/95
TO TO TO TO TO TO TO TO
5/31/97 5/31/96 5/31/97 5/31/96 5/31/97 5/31/96 5/31/97 5/31/96
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 11,066 $ 9,127 $ 4,518 $ 3,506 $ 6,057 $ 4,322 $ 2,256 $ 1,788
NET REALIZED GAIN (LOSS) ON INVESTMENTS 1,674 2,268 31 311 (447) 932 197 167
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- -- --
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS 3,983 (4,081) 1,816 (1,223) 3,226 (2,444) 912 (451)
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 16,723 7,314 6,365 2,594 8,836 2,810 3,365 1,504
-------- -------- -------- ------- -------- -------- ------- -------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (11,066) (9,127) (4,518) (3,506) (6,057) (4,322) (2,256) (1,788)
REALIZED CAPITAL GAINS (1,723) (1,195) (41) -- -- -- -- --
-------- -------- -------- ------- -------- -------- ------- -------
TOTAL DISTRIBUTIONS (12,789) (10,322) (4,559) (3,506) (6,057) (4,322) (2,256) (1,788)
-------- -------- -------- ------- -------- -------- ------- -------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- -- -- -- -- -- --
VALUE FROM SHARES ISSUED
IN REORGANIZATION (3) -- -- -- -- -- -- -- --
PROCEEDS FROM SHARES ISSUED 70,317 55,578 31,723 27,716 64,278 41,705 19,042 9,493
REINVESTMENT OF CASH DISTRIBUTIONS 1,730 542 683 611 1,602 1,164 250 116
COST OF SHARES REDEEMED (22,242) (32,670) (12,549) (7,343) (27,819) (16,796) (4,553) (3,916)
-------- -------- -------- ------- -------- -------- ------- -------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 49,805 23,450 19,857 20,984 38,061 26,073 14,739 5,693
-------- -------- -------- ------- -------- -------- ------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 53,739 20,442 21,663 20,072 40,840 24,561 15,848 5,409
NET ASSETS:
BEGINNING OF PERIOD 196,787 176,345 81,441 61,369 106,619 82,058 37,904 32,495
-------- -------- -------- ------- -------- -------- ------- -------
NETASSETS:
END OF PERIOD $250,526 $196,787 $103,104 $81,441 $147,459 $106,619 $53,752 $37,904
======== ======== ======== ======= ======== ======== ======= =======
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (3) -- -- -- -- -- -- -- --
SHARES ISSUED 6,949 5,455 3,076 2,687 6,482 4,183 1,864 935
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 170 53 66 57 161 117 24 11
SHARES REDEEMED (2,201) (3,212) (1,217) (711) (2,807) (1,688) (445) (386)
-------- -------- -------- ------- -------- -------- ------- -------
NET INCREASE (DECREASE) IN CAPITAL SHARES 4,918 2,296 1,925 2,033 3,836 2,612 1,443 560
======== ======== ======== ======= ======== ======== ======= =======
UNDISTRIBUTED/OVERDISTRIBUTION
NET INVESTMENT INCOME $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======= ======== ======== ======= =======
BOSTON BOSTON BOSTON
1784 1784 BOSTON 1784
ASSET GROWTH AND 1784 INTERNATIONAL
ALLOCATION INCOME GROWTH EQUITY
FUND FUND FUND FUND
============================================================================================================================
6/1/96 6/1/95 6/1/96 6/1/95 6/1/96 3/28/96(2) 6/1/96 6/1/95
TO TO TO TO TO TO TO TO
5/31/97 5/31/96 5/31/97 5/31/96 5/31/97 5/31/96 5/31/97 5/31/96
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 695 $ 349 $ 2,861 $ 2,098 $ 289 $ 90 $ 1,727 $ 1,866
NET REALIZED GAIN (LOSS) ON INVESTMENTS 474 662 9,803 6,904 14,567 -- 5,936 2,378
NET REALIZED GAIN FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- 4,430 4,638
NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS 2,426 850 51,083 54,488 463 3,390 38,228 33,464
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON FOREIGN FORWARD CURRENCY CONTRACTS,
FOREIGN CURRENCIES AND TRANSLATION OF
OTHER ASSETS AND LIABILITIES IN
FOREIGN CURRENCY -- -- -- -- -- -- (1,264) 1,633
------- ------- -------- -------- -------- ------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 3,595 1,861 63,747 63,490 15,319 3,480 49,057 43,979
------- ------- -------- -------- -------- ------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (592) (310) (2,434) (2,206) (732) -- (3,270) (5,737)
REALIZED CAPITAL GAINS (577) (295) (7,027) (32) -- -- (2,145) (1,052)
------- ------- -------- -------- -------- ------- -------- --------
TOTAL DISTRIBUTIONS (1,169) (605) (9,461) (2,238) (732) -- (5,415) (6,789)
------- ------- -------- -------- -------- ------- -------- --------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- -- -- -- -- -- --
VALUE FROM SHARES ISSUED
IN REORGANIZATION (3) -- -- -- -- 129,676 -- -- --
PROCEEDS FROM SHARES ISSUED 20,840 8,701 185,731 171,958 123,890 43,993 338,092 204,535
REINVESTMENT OF CASH DISTRIBUTIONS 1,089 541 6,509 675 186 -- 2,095 20
COST OF SHARES REDEEMED (5,664) (2,289) (92,037) (159,622) (52,878) (1,447)(243,241) (27,724)
------- ------- -------- -------- -------- ------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 16,265 6,953 100,203 13,011 200,874 42,546 96,946 176,831
------- ------- -------- -------- -------- ------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 18,691 8,209 154,489 74,263 215,461 46,026 140,588 214,021
NET ASSETS:
BEGINNING OF PERIOD 16,831 8,622 303,463 229,200 46,026 -- 362,460 148,439
------- ------- -------- -------- -------- ------- -------- --------
NETASSETS:
END OF PERIOD $35,522 $16,831 $457,952 $303,463 $261,487 $46,026 $503,048 $362,460
======= ======= ======== ======== ======== ======= ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (3) -- -- -- -- 11,053 -- -- --
SHARES ISSUED 1,644 728 11,485 12,666 10,882 4,219 27,383 18,260
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 86 45 403 51 16 -- 170 2
SHARES REDEEMED (446) (190) (5,699) (11,641) (4,611) (134) (19,517) (2,441)
------- ------- -------- -------- -------- ------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 1,284 583 6,189 1,076 17,340 4,085 8,036 15,821
======= ======= ======== ======== ======== ======= ======== ========
UNDISTRIBUTED/OVERDISTRIBUTION
NET INVESTMENT INCOME $ 191 $ 90 $ 657 $ 381 $ (353)$ 90 $ 4,625 $ 1,635
======= ======= ======== ======== ======== ======= ======== ========
<FN>
(1) UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS
BAYFUNDS MONEY MARKET PORTFOLIO. THE FUND CHANGED ITS FISCAL YEAR END FROM
DECEMBER 31 TO MAY 31.
(2) BOSTON 1784 GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996.
(3) ON NOVEMBER 25, 1996, THE ASSETS OF FOUR PORTFOLIOS OF BAYFUNDS WERE
REORGANIZED WITH CERTAIN BOSTON 1784 FUNDS. PLEASE SEE THE NOTES TO THE
FINANCIAL STATEMENTS FOR FURTHER INFORMATION REGARDING THESE TRANSACTIONS.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
84 & 85
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BOSTON 1784 MONEY MARKET FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
NET NET NET
ASSET DISTRIBUTIONS ASSET ASSETS RATIO
VALUE NET FROM NET VALUE END OF EXPENSES
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-FREE
MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1997 $1.00 0.03 (0.03) $1.00 3.22% $845,612 0.54%
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $549,628 0.54%
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $539,412 0.50%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) $1.00 0.02 (0.02) $1.00 2.31%* $407,448 0.27%
- ----------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY
MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $390,294 0.64%
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64%
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60%
FOR THE PERIOD ENDED
MAY 31, 1994 (2) $1.00 0.03 (0.03) $1.00 2.64%* $ 5,593 0.65%
- ----------------------------------------------------------------------------------------------------------------
BOSTON 1784 PRIME
MONEY MARKET FUND
FOR THE PERIOD ENDED
MAY 31, 1997 (3) $1.00 0.02 (0.02) $1.00 2.07%* $123,099 0.65%
FOR THE YEAR ENDED
DECEMBER 31, 1996 $1.00 0.05 (0.05) $1.00 5.02% $ 93,229 0.66%
FOR THE YEAR ENDED
DECEMBER 31, 1995 $1.00 0.05 (0.05) $1.00 5.49% $156,532 0.62%
FOR THE YEAR ENDED
DECEMBER 31, 1994 $1.00 0.04 (0.04) $1.00 3.75% $136,923 0.65%
FOR THE YEAR ENDED
DECEMBER 31, 1993 $1.00 0.03 (0.03) $1.00 2.72% $168,909 0.59%
FOR THE PERIOD ENDED
DECEMBER 31, 1992 (4) $1.00 0.02 (0.02) $1.00 2.13%* $242,935 0.59%
- ----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------
RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
OF NET TO AVERAGE TO AVERAGE
INCOME NET ASSETS NET ASSETS
TO AVERAGE (EXCLUDING (EXCLUDING
NET ASSETS WAIVERS) WAIVERS)
- --------------------------------------------------------------------------
<S> <C> <C> <C>
BOSTON 1784 TAX-FREE
MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1997 3.17% 0.56% 3.15%
FOR THE YEAR ENDED
MAY 31, 1996 3.49% 0.60% 3.43%
FOR THE YEAR ENDED
MAY 31, 1995 3.28% 0.61% 3.17%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) 2.39% 0.71% 1.95%
- --------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY
MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1997 4.76% 0.72% 4.68%
FOR THE YEAR ENDED
MAY 31, 1996 5.02% 0.75% 4.91%
FOR THE YEAR ENDED
MAY 31, 1995 5.13% 0.92% 4.81%
FOR THE PERIOD ENDED
MAY 31, 1994 (2) 2.91% 6.42% (2.86)%
- --------------------------------------------------------------------------
BOSTON 1784 PRIME
MONEY MARKET FUND
FOR THE PERIOD ENDED
MAY 31, 1997 (3) 4.98% 0.75% 4.88%
FOR THE YEAR ENDED
DECEMBER 31, 1996 4.85% 0.66% 4.85%
FOR THE YEAR ENDED
DECEMBER 31, 1995 5.40% 0.62% 5.40%
FOR THE YEAR ENDED
DECEMBER 31, 1994 3.64% 0.69% 3.60%
FOR THE YEAR ENDED
DECEMBER 31, 1993 2.68% 0.70% 2.57%
FOR THE PERIOD ENDED
DECEMBER 31, 1992 (4) 3.13% 0.64% 3.08%
- --------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 TAX-FREE MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 14, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 U.S. TREASURY MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(3) BOSTON 1784 PRIME MONEY MARKET FUND CHANGED ITS FISCAL YEAR END FROM
DECEMBER 31 TO MAY 31. REFLECTS OPERATIONS FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 31, 1997.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(4) BOSTON 1784 PRIME MONEY MARKET FUND CHANGED ITS FISCAL YEAR FROM APRIL 30 TO DECEMBER 31.
REFLECTS OPERATIONS FOR THE PERIOD FROM MAY 1, 1992 TO DECEMBER 31, 1992.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
86
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 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
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM
INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.93 0.58 0.05 (0.58) -- $ 9.98 6.47%
FOR THE YEAR ENDED
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.90 0.63 0.17 (0.63) (0.08) $ 9.99 8.32%
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.31 0.59 0.06 (0.59) -- $ 9.37 7.16%
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)%*
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
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>
BOSTON 1784 SHORT-TERM
INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $194,033 0.65% 5.78% 0.93% 5.50% 128.11%
FOR THE YEAR ENDED
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%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $334,778 0.80% 6.31% 1.15% 5.96% 78.63%
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%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $209,141 0.79% 6.30% 1.16% 5.93% 98.22%
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%
- -----------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 SHORT-TERM INCOME FUND AND BOSTON 1784 INCOME FUND COMMENCED OPERATIONS ON JULY 1, 1994.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
87
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT INCOME 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
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.99 0.50 0.19 (0.50) -- $10.18 7.74%
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(1) $10.00 0.49 (0.10) (0.49) -- $ 9.90 3.93%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $10.17 0.51 0.21 (0.51) -- $10.38 7.26%
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(2) $10.00 0.45 0.27 (0.45) -- $10.27 7.45%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.78 0.47 0.23 (0.47) -- $10.01 7.30%
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $10.06 0.50 0.25 (0.50) -- $10.31 7.61%
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
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>
BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $250,526 0.80% 4.92% 1.17% 4.55% 33.24%
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(1) $ 36,365 0.32% 5.06% 1.61% 3.77% 98.83%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $103,104 0.76% 4.94% 1.17% 4.53% 4.28%
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(2) $ 61,369 0.52% 5.44% 1.40% 4.56% 35.56%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $147,459 0.79% 4.74% 1.18% 4.35% 9.47%
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%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 53,752 0.79% 4.88% 1.21% 4.46% 8.18%
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) BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND AND BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME
FUND COMMENCED OPERATIONS ON JUNE 14, 1993. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND AND BOSTON 1784 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.
88
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
BOSTON 1784 STOCK 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
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 ASSET ALLOCATION FUND
FOR THE YEAR ENDED
MAY 31, 1997 $12.31 0.34 1.44 (0.33) (0.36) $13.40 14.89%
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)%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH
AND INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $15.23 0.12 2.63 (0.11) (0.33) $17.54 18.33%
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
FOR THE YEAR ENDED
MAY 31, 1997 $11.27 0.02 0.96 (0.05) (0.00) $12.20 8.77%
FOR THE PERIOD ENDED
MAY 31, 1996(3) $10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%*
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL
EQUITY FUND
FOR THE YEAR ENDED
MAY 31, 1997 $12.05 0.07 1.23 (0.09) (0.06) $13.20 10.93%
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%*
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
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 AVG.
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMM.
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE(5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 ASSET ALLOCATION FUND
FOR THE YEAR ENDED
MAY 31, 1997 $ 35,522 1.07% 2.87% 1.37% 2.57% 23.60% $0.0717
FOR THE YEAR ENDED
MAY 31, 1996 $ 16,831 1.25% 2.86% 1.90% 2.21% 39.56% N/A
FOR THE YEAR ENDED
MAY 31, 1995 $ 8,622 1.25% 2.88% 2.51% 1.62% 67.23% N/A
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 6,928 1.25% 2.62% 3.61% 0.26% 28.19% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH
AND INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1997 $457,952 0.92% 0.77% 1.19% 0.50% 15.35% $0.0556
FOR THE YEAR ENDED
MAY 31, 1996 $303,463 0.94% 0.78% 1.24% 0.48% 39.50% N/A
FOR THE YEAR ENDED
MAY 31, 1995 $229,200 0.94% 1.05% 1.23% 0.76% 38.94% N/A
FOR THE PERIOD ENDED
MAY 31, 1994(2) $121,717 0.35% 1.23% 1.36% 0.22% 31.55% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
FOR THE YEAR ENDED
MAY 31, 1997 $261,487 0.77% 0.17% 1.15% (0.21%) 57.46% $0.0548
FOR THE PERIOD ENDED
MAY 31, 1996(3) $ 46,026 0.20% 1.75% 1.73% 0.22% 0.00% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL
EQUITY FUND
FOR THE YEAR ENDED
MAY 31, 1997 $503,048 1.27% 0.41% 1.52% 0.16% 22.88% $0.0037
FOR THE YEAR ENDED
MAY 31, 1996 $362,460 1.13% 0.76% 1.61% 0.28% 15.55% N/A
FOR THE PERIOD ENDED
MAY 31, 1995(4) $148,439 0.89% 2.06% 1.70% 1.25% 11.03% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 ASSET ALLOCATION FUND COMMENCED OPERATIONS ON JUNE 14, 1993. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 GROWTH AND INCOME FUND COMMENCED OPERATIONS ON JUNE 7, 1993. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(3) BOSTON 1784 GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(4) BOSTON 1784 INTERNATIONAL EQUITY FUND COMMENCED OPERATIONS ON JANUARY 3, 1995. ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(5) AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED
FOR FISCAL YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
89
<PAGE>
MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
Boston 1784 Tax-Free Money Market, Boston 1784 U.S. Treasury Money Market,
Boston 1784 Prime Money Market, (the "Money Market Funds"), Boston 1784
Short-Term Income, Boston 1784 Income, Boston 1784 U.S. Government Medium-Term
Income, (the "Bond Funds"), Boston 1784 Tax-Exempt Medium-Term Income, Boston
1784 Connecticut Tax-Exempt Income, Boston 1784 Massachusetts Tax-Exempt Income,
Boston 1784 Rhode Island Tax-Exempt Income (the "Tax-Exempt Income Funds"),
Boston 1784 Asset Allocation, Boston 1784 Growth and Income, Boston 1784 Growth
and Boston 1784 International Equity Funds (the "Stock Funds") are portfolios
offered by Boston 1784 Funds (the "Trust"), each an open-end investment company
registered under the Investment Company Act of 1940, as amended. Prior to May
27, 1997, Boston 1784 Funds were known as 1784 Funds. On that date the Trust and
each Fund added "Boston" to their names. The Trust is offering shares in 15
separate portfolios (the "Funds") as of May 31, 1997:
MONEY MARKET FUNDS:
BOSTON 1784 TAX-FREE MONEY MARKET FUND
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
BOSTON 1784 PRIME MONEY MARKET FUND
BOND FUNDS:
BOSTON 1784 SHORT-TERM INCOME FUND
BOSTON 1784 INCOME FUND
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
TAX-EXEMPT INCOME FUNDS:
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS:
BOSTON 1784 ASSET ALLOCATION FUND
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
BOSTON 1784 INTERNATIONAL EQUITY FUND
The Funds' prospectuses provide a description of each Fund's investment
objectives, policies and strategies. The financial statements of Boston 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 require the use of management's estimates. Actual
results could differ from these estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds.
SECURITY VALUATION --
In valuing each of the Bond, Tax-Exempt Income and Stock Funds' assets, bonds
and other fixed income securities are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the Board of
Trustees of the Trust. Valuations supplied by the pricing service are subject to
90
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
review by the Adviser and, if adjusted pursuant to Adviser review, by the Board
of Trustees. An equity security listed on an exchange will be valued at its last
sale price on that exchange using quotations on the exchange on which the
security is traded most extensively. Lacking any sales, the security will be
valued at the mean between the closing asking price and the closing bid price.
Securities that are listed on the National Association of Securities Dealers'
National Market System, for which there have been sales, shall be valued at the
last sale price reported on such system. If there are no such sales, the value
shall be the high, or "inside" bid, which is the bid supplied by the NASD on its
NASDAQ Screen for such securities in the over-the-counter market. Securities
quoted on the NASDAQ System, but not listed on the National Market System, shall
be valued at the high or "inside" bid. Unlisted equity securities that are not
quoted on the NASDAQ System and for which over-the-counter market quotations are
readily available will be valued at the highest quoted current bid price for
such securities in the over-the-counter market. Securities for which market
quotations are not readily available, whether or not listed, will be valued at
their fair value as determined in good faith by the Board of Trustees of the
Trust, or pursuant to procedures adopted by the Board subject to review by the
Board of the resulting valuations. At May 31, 1997, there was one such security
in Boston 1784 International Equity Fund that has been assigned a zero market
value.
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 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 Funds do not isolate that portion of gains and losses on investment
securities that is due to changes in the foreign exchange rates from that which
is due to changes in market prices of such securities.
The 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 --
Boston 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
91
<PAGE>
MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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. During the year ended May 31,
1997, Boston 1784 International Equity Fund entered into long and short forward
currency contracts initially valued at $217,971,443 and $163,558,004,
respectively. These contracts were entered into with an affiliate of the Trust.
At May 31, 1997, there were no forward foreign currency contracts outstanding.
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 with the exception of Boston 1784
U.S. Government Medium Term Income Fund which does not accrete or amortize
purchase discounts and premiums. Interest income is recorded on the accrual
basis. Dividend income is recorded on ex-date.
REPURCHASE AGREEMENTS --
The Funds invest in Tri-Party Repurchase Agreements. Securities pledged as
collateral for Tri-Party Repurchase Agreements are maintained in a segregated
account by the broker's custodian bank until maturity of the Repurchase
Agreements. Provisions of the Agreements and procedures adopted by the Adviser
ensure that the market value 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 on 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, Bond and Tax-Exempt Income Funds' distributions from net
investment income are declared on a daily basis and are payable on the first
business day of the following month. Boston 1784 Asset Allocation and Boston
1784 Growth and Income Funds declare and pay dividends on a quarterly basis.
Boston 1784 Growth Fund declares and pays dividends on a semi-annual basis.
Boston 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
92
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
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 that 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 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 --
Organization 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 holders thereof by
the Funds will be reduced by the unamortized organizational costs in the same
ratio as the number of shares redeemed bears to the initial shares outstanding
at the time of redemption.
OTHER --
Some countries in which the Portfolios invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, for various reasons, including if
there is a deterioration in a country's balance of payments, a country may
impose temporary restrictions on foreign capital remittances abroad.
The security exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the
Portfolios may be inhibited.
3. INVESTMENT ADVISORY, CUSTODIAL AND ACCOUNTING SERVICES
Pursuant to an investment advisory agreement dated June 1, 1993, investment
advisory services are provided to the Trust by BankBoston, N.A. (the
"Adviser"). The Adviser is entitled to receive a fee of 0.40% of the average
daily net assets of Boston 1784 Tax-Free Money Market, Boston 1784 U.S. Treasury
Money Market and Boston 1784 Prime Money Market Funds, 0.50% of the average
daily net assets of Boston 1784 Short-Term Income Fund, 0.74% of the average
daily net assets of Boston 1784 Income, Boston 1784 U.S.
93
<PAGE>
MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Government Medium-Term Income, Boston 1784 Tax-Exempt Medium-Term Income, Boston
1784 Connecticut Tax-Exempt Income, Boston 1784 Massachusetts Tax-Exempt Income,
Boston 1784 Rhode Island Tax-Exempt Income, Boston 1784 Asset Allocation, Boston
1784 Growth and Income and Boston 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. Boston 1784 International
Equity Fund has entered into separate investment advisory agreements (each an
"Advisory Agreement") with BankBoston, N.A. ("BankBoston") and with Kleinwort
Benson Investment Management Americas Inc. ("Kleinwort Benson" and together with
Bank-Boston the "International Advisers"). The Advisory Agreement with
BankBoston 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
Boston 1784 International Equity Fund. Such fee is computed daily and paid
monthly. BankBoston has voluntarily agreed to waive a portion of its fee and
reimburse the Fund for other expenses as necessary to assist Boston 1784
International Equity Fund in maintaining a competitive expense ratio.
The Trust and BankBoston, N.A. (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,
as amended. The Custodian is entitled to receive an annual fee, to be paid
monthly, of 0.01% for the first $100 million in average daily net assets,
0.0075% for the next $100 million in average daily net assets and 0.0050% for
the average daily net assets for the next $800 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, BankBoston, N.A. provided certain accounting
services for the Trust for the period of June 1, 1996 through September 15,
1996. For such services during this period, BankBoston, N.A. received a fee of
$10,000 per Fund for Boston 1784 Tax-Free Money Market Fund, Boston 1784 U.S.
Treasury Money Market Fund, the Bond Funds, the Tax-Exempt Income Funds and for
Boston 1784 Asset Allocation Fund, Boston 1784 Growth and Income Fund and Boston
1784 Growth Fund and $16,666 for Boston 1784 International Equity Fund.
Effective September 16, 1996, SEI Fund Resources ("SEI") began providing
accounting services for the Trust as a part of the administration agreement (see
Footnote 4).
4. ADMINISTRATIVE AND DISTRIBUTION SERVICES
For the period June 1, 1996 through November 30, 1996 and pursuant to an
administration agreement dated June 7, 1993, as amended November 17, 1995, SEI
acted as
94
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
the Trust's Administrator. Under the terms of such agreement, SEI was 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 was computed daily and paid monthly. The Administrator agreed to waive a
portion of its fee for Boston 1784 U.S. Treasury Money Market, Boston 1784
Short-Term Income, Boston 1784 Connecticut Tax-Exempt Income, Boston 1784 Rhode
Island Tax-Exempt Income, Boston 1784 Asset Allocation and Boston 1784 Growth
Funds in order to help those funds maintain a competitive expense ratio.
Pursuant to an administration agreement dated December 1, 1996, SEI acts as the
Trust's Administrator, and is entitled to receive an annual fee of 0.085% of the
Trust's first $5 billion of average daily net assets and 0.045% of the Trust's
average daily net assets over $5 billion. Such fee is computed daily and paid
monthly.
SEI Investments Distribution Co. ("SEI Investments"), a wholly owned
subsidiary of SEI Investments Company, became the Trust's Distributor pursuant
to a distribution agreement dated June 1, 1993 as amended and restated October
27, 1995. The Trust has adopted a distribution plan with respect to each of the
Stock, Bond and Tax-Exempt Income Funds pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (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 Bond, Tax-Exempt Income and Stock
Funds. The Distributor agreed to waive all of its 12b-1 distribution fee for the
fiscal year ended May 31, 1997.
Pursuant to a Shareholder Services Agreement dated as of December 1, 1996,
BankBoston, N.A., provides certain shareholder services to Boston 1784 U.S.
Treasury Money Market Fund and Boston 1784 Prime Money Market Fund and receives
compensation, computed daily and paid monthly, at an annual rate of 0.10% of the
average daily net assets of each Fund.
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.
95
<PAGE>
MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, 1997, are as
presented below for the Bond, Tax-Exempt Income and Stock Funds.
<TABLE>
<CAPTION>
FUND INVESTMENT TRANSACTIONS (000):
PURCHASES SALES
=============================================================
U.S. GOVERNMENT U.S. GOVERNMENT
FOR THE YEAR ENDED MAY 31, 1997 SECURITIES OTHER SECURITIES OTHER
=============================================================
<S> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND $ 51,489 $154,932 $ 33,113 $114,941
BOSTON 1784 INCOME FUND 123,632 157,615 69,598 143,469
BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND 153,630 29,040 138,300 23,369
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND -- 107,945 -- 70,905
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND -- 20,910 -- 3,519
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND -- 46,802 -- 11,412
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND -- 18,748 -- 3,369
BOSTON 1784 ASSET ALLOCATION FUND 7,477 12,575 614 4,515
BOSTON 1784 GROWTH AND INCOME FUND -- 134,572 -- 52,981
BOSTON 1784 GROWTH FUND -- 169,755 -- 89,862
BOSTON 1784 INTERNATIONAL EQUITY FUND -- 197,986 -- 92,522
</TABLE>
96
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
At May 31, 1997 the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial purposes.
The aggregate gross unrealized gain or loss on securities at May 31, 1997
for the Bond, Tax-Exempt Income and Stock Funds is as follows (000):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES GAINS/LOSSES
==============================================
<S> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND $ 413 $ (447) $ (34)
BOSTON 1784 INCOME FUND 2,954 (3,285) (331)
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 984 (1,646) (662)
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND 7,003 (95) 6,908
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND 2,852 (104) 2,748
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 2,281 (329) 1,952
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND 1,449 (18) 1,431
BOSTON 1784 ASSET ALLOCATION FUND 4,214 (319) 3,895
BOSTON 1784 GROWTH AND INCOME FUND 156,243 (13,850) 142,393
BOSTON 1784 GROWTH FUND 60,632 (13,426) 47,206
BOSTON 1784 INTERNATIONAL EQUITY FUND 96,238 (16,327) 79,911
<FN>
At May 31, 1997 the following Funds have capital loss carryforwards (000):
</FN>
EXPIRATION
AMOUNT DATE
==============================================
<S> <C> <C> <C>
BOSTON 1784 TAX-FREE MONEY MARKET FUND $ 126 2004-2005
BOSTON 1784 PRIME MONEY MARKET FUND 24 2002
BOSTON 1784 SHORT-TERM INCOME FUND 13,276 2001-2005
BOSTON 1784 INCOME FUND 2,199 2002-2005
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 6,217 2003-2005
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 1,342 2003-2005
</TABLE>
97
<PAGE>
MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. CONCENTRATION OF CREDIT RISK
Boston 1784 Tax-Free Money Market, Boston 1784 Tax-Exempt Medium-Term Income,
Boston 1784 Connecticut Tax-Exempt Income, Boston 1784 Massachusetts Tax-Exempt
Income and Boston 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. Boston
1784 Connecticut Tax-Exempt Income, Boston 1784 Massachusetts Tax-Exempt Income
and Boston 1784 Rhode Island Tax-Exempt Income Funds invest primarily in
obligations located in Connecticut, Massachusetts and Rhode Island,
respectively.
7. LINE OF CREDIT
The Funds have a bank line of credit, under which borrowings are secured by
investment securities of the borrowing Fund. Borrowings may not exceed 10% of
the Fund's total assets for the Money Market Funds, Boston 1784 U.S. Government
Income, Boston 1784 Tax-Exempt Medium-Term Income, Boston 1784 Massachusetts
Tax-Exempt Income, Boston 1784 Asset Allocation, Boston 1784 Growth and Income
and Boston 1784 Growth Fund and 15% of the Fund's total assets for Boston 1784
Short-Term Income, Boston 1784 Income, Boston 1784 Connecticut Tax-Exempt
Income, Boston 1784 Rhode Island Tax-Exempt Income and Boston 1784 International
Equity Funds. Borrowings under the line are charged interest at the current
overnight federal funds rate plus a variable rate determined at the date of
borrowing. Each Fund is individually, and not jointly liable for its particular
advances under the line. There is no commitment fee on the unused portion of
the line of credit. There were no borrowings under the line of credit during
the year ended May 31, 1997.
8. REORGANIZATION WITH BAYFUNDS
On July 31, 1996, the Board of Trustees of the Trust and on July 31, 1996 and
August 15, 1996 the Board of Trustees of BayFunds approved an Agreement and Plan
of Reorganization (the "Reorganization Agreement") providing for the transfer of
all assets and liabilities of the portfolios of BayFunds in exchange for the
issuance of shares in certain Funds in tax-free reorganizations (except in the
case of the reorganization of BayFunds U.S. Treasury Money Market Portfolio with
Boston 1784 U.S. Treasury Money Market Fund and Boston 1784 Institutional U.S.
Treasury Money Market Fund which did not qualify for tax-free treatment). At a
special meeting of the shareholders held on November 6, 1996, the shareholders
of BayFunds voted to approve the Reorganization Agreement. Pursuant to the
Reorganization Agreement, on November 25, 1996 substantially all of the assets
and liabilities of BayFunds U.S. Treasury Money Market Portfolio, BayFunds
Equity Portfolio, BayFunds Short Term Yield
98
<PAGE>
BOSTON 1784 FUNDS
- --------------------------------------------------------------------------------
Portfolio and BayFunds Bond Portfolio were transferred to corresponding Boston
1784 Funds in exchange for shares of such Fund. In addition, on December 9, 1996
all of the assets and liabilities of the BayFunds Money Market Portfolio were
transferred to the newly-organized Boston 1784 Prime Money Market Fund. The
details of these reorganizations as they relate to the Funds are described
below.
The following table summarizes certain relevant information of the Funds
prior to and immediately after the reorganizations on November 25, 1996 and
December 9, 1996.
<TABLE>
<CAPTION>
SHARES
SHARES NET ASSETS ISSUED IN
BAYFUNDS AT 11/25/96 AT 11/25/96 BOSTON 1784 FUNDS REORGANIZATION
================================================================================================================================
<S> <C> <C> <C>
U.S. TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES 1,047,875,735 1,047,875,735 INSTITUTIONAL U.S. TREASURY MONEY MARKET 1,047,875,735
INVESTMENT SHARES 320,109,970 320,109,970 U.S. TREASURY MONEY MARKET 320,109,970
EQUITY PORTFOLIO
INSTITUTIONAL SHARES 6,084,433 90,308,716 GROWTH 7,697,195
INVESTMENT SHARES 2,652,009 39,367,199 GROWTH 3,355,364
SHORT TERM YIELD PORTFOLIO
INSTITUTIONAL SHARES 3,061,193 28,076,910 SHORT-TERM INCOME 2,783,999
INVESTMENT SHARES 1,694,530 15,543,024 SHORT-TERM INCOME 1,541,097
BOND PORTFOLIO
INSTITUTIONAL SHARES 4,543,688 45,727,982 INCOME 4,474,157
INVESTMENT SHARES 547,758 5,512,661 INCOME 539,376
SHARES
SHARES NET ASSETS ISSUED IN
BAYFUNDS AT 12/9/96 AT 12/9/96 BOSTON 1784 FUNDS REORGANIZATION
================================================================================================================================
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO
TRUST SHARES 94,945,689 94,945,452 PRIME MONEY MARKET 94,945,452
INVESTMENT SHARES 44,590,608 44,590,496 PRIME MONEY MARKET 44,590,608
COMBINED NAV
NET ASSETS PER SHARE
AFTER ON DAY OF
BAYFUNDS REORGANIZATION REORGANIZATION
================================================================
U.S. TREASURY MONEY MARKET POFOLIO
<S> <C> <C>
INSTITUTIONAL SHARES 2,061,477,418 1.00
INVESTMENT SHARES 424,383,927 1.00
EQUITY PORTFOLIO
INSTITUTIONAL SHARES 232,770,598 11.73
INVESTMENT SHARES 232,770,598 11.73
SHORT TERM YIELD PORTFOLIO
INSTITUTIONAL SHARES 142,633,338 10.09
INVESTMENT SHARES 142,633,338 10.09
BOND PORTFOLIO
INSTITUTIONAL SHARES 306,880,031 10.22
INVESTMENT SHARES 306,880,031 10.22
COMBINED NAV
NET ASSETS PER SHARE
AFTER ON DAY OF
BAYFUNDS REORGANIZATION REORGANIZATION
===============================================================
<S> <C> <C>
MONEY MARKET PORTFOLIO
TRUST SHARES 139,536,060 1.00
INVESTMENT SHARES 139,536,060 1.00
</TABLE>
The acquired unrealized appreciation at November 25, 1996 of BayFunds Equity,
Short Term Yield and Bond Portfolios was $43,352,830, $81,551 and $311,988,
respectively.
99
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF BOSTON 1784 FUNDS
WE HAVE AUDITED THE ACCOMPANYING STATEMENTS OF NET ASSETS OF BOSTON 1784
FUNDS (COMPRISING, RESPECTIVELY, BOSTON 1784 TAX-FREE MONEY MARKET FUND,
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND, BOSTON 1784 PRIME MONEY MARKET
FUND, BOSTON 1784 SHORT-TERM INCOME FUND, BOSTON 1784 INCOME FUND, BOSTON
1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND, BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND, BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND,
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND, BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND, BOSTON 1784 ASSET ALLOCATION FUND, BOSTON 1784
GROWTH AND INCOME FUND, BOSTON 1784 GROWTH FUND AND BOSTON 1784
INTERNATIONAL EQUITY FUND REFERRED TO COLLECTIVELY HEREIN AS THE "FUNDS"),
AS OF MAY 31, 1997, AND THE RELATED STATEMENTS OF OPERATIONS, CHANGES IN
NET ASSETS AND FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS PRESENTED
(EXCEPT FOR THOSE STATEMENTS WHICH HAVE BEEN AUDITED BY OTHER AUDITORS AS
DISCUSSED BELOW). 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. THE STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR
ENDED DECEMBER 31, 1995 AND FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
DECEMBER 31, 1995 AND EACH OF THE PRIOR PERIODS PRESENTED OF BOSTON 1784
PRIME MONEY MARKET FUND WERE AUDITED BY OTHER AUDITORS, WHOSE REPORT DATED
FEBRUARY 9, 1996 EXPRESSED AN UNQUALIFIED OPINION THEREON.
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, 1997 BY CORRESPONDENCE WITH THE CUSTODIANS
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, 1997 AND THE RESULTS OF THEIR OPERATIONS CHANGES
IN THEIR NET ASSETS (EXCEPT FOR THE YEAR ENDED DECEMBER 31, 1995 FOR BOSTON
1784 PRIME MONEY MARKET FUND WHICH HAS BEEN AUDITED BY OTHER AUDITORS), AND
THE FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS PRESENTED (EXCEPT FOR THE
YEAR ENDED DECEMBER 31, 1995 AND PRIOR PERIODS FOR BOSTON 1784 PRIME MONEY
MARKET WHICH HAVE BEEN AUDITED BY OTHER AUDITORS), IN CONFORMITY WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 11, 1997
100
<PAGE>
MAY 31, 1997 BOSTON 1784 FUNDS
NOTICE TO SHAREHOLDERS OF
BOSTON 1784 FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS,
THIS NOTICE IS FOR INFORMATIONAL PURPOSES ONLY.
<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>
TAX-FREE
MONEY MARKET 0% 100% 100% 0% 84% 0%
U.S. TREASURY
MONEY MARKET 0% 100% 100% 0% 0% 0%
PRIME
MONEY MARKET 0% 100% 100% 0% 0% 0%
SHORT-TERM INCOME 0% 100% 100% 0% 0% 0%
INCOME 11% 89% 100% 0% 0% 0%
U.S. GOVERNMENT
MEDIUM-TERM INCOME 0% 100% 100% 0% 0% 0%
TAX-EXEMPT
MEDIUM-TERM INCOME 11% 89% 100% 0% 91% 0%
CONNECTICUT
TAX-EXEMPT INCOME 1% 99% 100% 0% 93% 0%
MASSACHUSETTS
TAX-EXEMPT INCOME 0% 100% 100% 0% 95% 0%
RHODE ISLAND
TAX-EXEMPT INCOME 0% 100% 100% 0% 94% 0%
ASSET ALLOCATION 38% 62% 100% 34% 0% 0%
GROWTH AND INCOME 52% 48% 100% 100% 0% 0%
GROWTH 49% 51% 100% 79% 0% 0%
INTERNATIONAL EQUITY 39% 61% 100% 0% 0% 15%
<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.
</FN>
</TABLE>
PLEASE CONSULT YOUR TAX ADVISER FOR PROPER TREATMENT OF THIS INFORMATION.
101
<PAGE>
NOTICE TO SHAREHOLDERS OF
BOSTON 1784 FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Boston 1784 International Equity Fund has made an election under Section
853 of the International Revenue Code to provide a foreign tax deduction or
credit to its shareholders for the fiscal year ended May 31, 1997. The
information provided below is pertinent to tax-payers 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, 1997, and 2) held shares of Boston
1784 International Equity Fund on the dividend record date of the December
30, 1996.
The per share income and foreign taxes paid to each country is
listed in the following schedule.
GROSS FOREIGN
COUNTRY DIVIDEND TAXES PAID
======= ======== ==========
Argentina 0.0004 0.0000
Australia 0.0046 0.0003
Austria 0.0009 0.0002
Brazil 0.0013 0.0001
France 0.0070 0.0018
Germany 0.0035 0.0004
Hong Kong 0.0067 0.0000
Indonesia 0.0009 0.0002
Ireland 0.0003 0.0000
Italy 0.0021 0.0004
Japan 0.0146 0.0032
Malaysia 0.0009 0.0003
Netherlands 0.0074 0.0017
Norway 0.0004 0.0001
Philippines 0.0004 0.0001
Poland 0.0003 0.0001
Portugal 0.0015 0.0002
Singapore 0.0021 0.0007
Spain 0.0032 0.0007
Sweden 0.0019 0.0004
Switzerland 0.0038 0.0012
Taiwan 0.0002 0.0002
Thailand 0.0007 0.0001
United Kingdom 0.0219 0.0044
United States 0.0230 0.0000
-------- ----------
0.1100 0.0168
======== ==========
102
<PAGE>
BOSTON 1784 FUNDS
NOTES
- --------------------------------------------------------------------------------
103
<PAGE>
NOTES
- --------------------------------------------------------------------------------
104
<PAGE>
<PAGE>
MONEY MARKET FUNDS
[SQUARE BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND*
[SQUARE BULLET] BOSTON 1784 PRIME MONEY MARKET FUND
BOND FUNDS
[SQUARE BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
[SQUARE BULLET] BOSTON 1784 INCOME FUND
[SQUARE BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-
TERM INCOME FUND
TAX-EXEMPT INCOME FUNDS
[SQUARE BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
[SQUARE BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
[SQUARE BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
[SQUARE BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS
[SQUARE BULLET] BOSTON 1784 ASSET ALLOCATION FUND
[SQUARE BULLET] BOSTON 1784 GROWTH AND INCOME FUND
[SQUARE BULLET] BOSTON 1784 GROWTH FUND
[SQUARE BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND
* COVERED BY BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND ANNUAL REPORT
[BOSTON 1784 FUNDS LOGO]
BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
BOARD OF TRUSTEES
DAVID H. CARTER
TARRANT CUTLER
KENNETH A. FROOT
SARA L. JOHNSON
KATHRYN FLACKE MUNCIL
ROBERT A. NESHER
ALVIN J. SILK
INVESTMENT ADVISER
BANKBOSTON, N.A.
BOSTON, MA 02110
CO-ADVISER FOR
BOSTON 1784 INTERNATIONAL EQUITY FUND
KLEINWORT BENSON INVESTMENT
MANAGEMENT AMERICAS INC.
NEW YORK, NY 10166
ADMINISTRATOR
SEI FUND RESOURCES
OAKS, PA 19456
DISTRIBUTOR
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PA 19456
LEGAL COUNSEL
BINGHAM, DANA & GOULD LLP
BOSTON, MA 02110
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
PHILADELPHIA, PA 19103
CUSTODIAN
BANKBOSTON, N.A.
BOSTON, MA 02110
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.
<PAGE>
Boston 1784 Institutional
U.S. Treasury Money
Market Fund
[BOSTON 1784 FUNDS LOGO]
Annual Report to Shareholders
May 31, 1997
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER'S REPORT 2
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE 4
FINANCIAL STATEMENTS 5
REPORT OF INDEPENDENT ACCOUNTANTS 15
NOTICE TO SHAREHOLDERS 16
BOSTON 1784 FUNDS:
[BULLET] ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY;
[BULLET] ARE NOT GUARANTEED BY BANKBOSTON, N.A. OR ANY OF ITS AFFILIATES;
[BULLET] ARE NOT DEPOSITS OR OBLIGATIONS OF BANKBOSTON, N.A. OR ANY OF ITS
AFFILIATES;
[BULLET] INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
BANKBOSTON, N.A. SERVES AS INVESTMENT ADVISER, CUSTODIAN, AND SHAREHOLDER
SERVICING AGENT FOR BOSTON 1784 FUNDS. BOSTON 1784 FUNDS ARE DISTRIBUTED
BY SEI INVESTMENTS DISTRIBUTION CO., AN INDEPENDENT BROKER-DEALER.
FINANCIAL SERVICES COUNSELORS ARE REGISTERED REPRESENTATIVES OF BANKBOSTON
INVESTOR SERVICES, INC. (MEMBER NASD/SIPC), A WHOLLY-OWNED SUBSIDIARY
OF BANKBOSTON, N.A.
<PAGE>
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
[PHOTO OF ALLEN CROESSMAN AND ROBERT NESHER]
Allen Croessmann Robert Nesher
Managing Director President
It is a pleasure to provide this Annual Report for Boston 1784 Institutional
U.S. Treasury Money Market Fund. It recounts a fiscal year of strong performance
for the Fund, and one in which the Fund attained important milestones:
[BULLET] On November 25, 1996, we completed the reorganization of the Fund
with BayFunds U.S. Treasury Money Market Portfolio, more than doubling
the size of the Fund to over $2 billion.
[BULLET] As of May 31, 1997, the Fund had grown to over $2.5 billion in assets.
For the year ended May 31, 1997, the Fund produced a total return of 5.16%,
outperforming both the IBC/Donoghue and Lipper benchmarks, and ranking it in the
top 30% (28 of 106) of the Lipper Institutional U.S. Treasury Money Market
Funds. Please keep in mind that past performance is no guarantee of future
results. You'll find more complete information on Boston 1784 Institutional U.S.
Treasury Money Market Fund in the Management's Discussion and Analysis Section
of this report.
Moreover, the Fund achieved these results while maintaining stringent credit
standards and sustaining an `AAAm' rating from Standard & Poor's, which is based
on the Fund's credit quality, market price exposure and management.
Thank you for selecting Boston 1784 Funds. Please contact your Investment
Counselor or call 1-800-BKB-1784 with any questions about your account. We look
forward to helping you manage your cash reserves.
/S/ SIGNATURE
Robert Nesher
President
Boston 1784 Funds
/S/ SIGNATURE
Allen Croessmann
Managing Director,
Investment Services
BankBoston, N.A.
1
<PAGE>
INVESTMENT ADVISER'S REPORT
- --------------------------------------------------------------------------------
[PHOTO OF EDWARD G. RILEY, JR.]
Edward G. Riley, Jr.
Chief Investment Officer
It may seem paradoxical, but over the past 12 months, investors seem to have
benefited from a relatively lackluster economy -- indeed, the more lackluster,
the better. Whenever the economy has appeared to strengthen, the stock and
bond markets have reacted swiftly and adversely. Many investment managers,
and especially bond traders, have placed the economy under a microscope,
painstakingly searching for signs of inflation. They pore over labor statistics,
purchasing reports, capacity utilization figures -- virtually any economic data
available -- wondering if this blip or that bump will signal the beginning of a
correction and the end of the bull market.
During the first quarter of 1997, the economy grew at a vigorous 5% annual
rate. This rapid growth rate immediately raised fears that tight labor markets
would lead to inflation, which depressed stock and bond prices and contributed
to the Federal Reserve Board's "preemptive" action of raising the Federal Funds
rate.
Among the specific factors contributing to the increase in the Federal Funds
rate by the Federal Reserve Board this spring was a sharp increase in consumer
spending. A mild winter in much of the country, coupled with a wave of mortgage
refinancings, freed discretionary cash to fuel this spending. The Federal
Reserve Board also carefully monitors outstanding consumer debt, and
particularly credit card delinquency and bankruptcy rates - both of which have
risen significantly. Higher interest rates should reduce refinancings in the
second half of the year, and banks show signs of voluntarily reducing the
availability of consumer credit. Both developments should temper economic
growth.
In the meantime, many companies increased production to meet the surge of
demand in the early months of 1997, resulting in excess stock on store shelves.
The decrease in consumer demand will prompt cutbacks in production to reduce
inventories, which should reduce pressure on labor costs as well as fears of
inflation.
One easily overlooked economic factor impacting investors during the past 12
months has been the strong U.S. dollar. A strong dollar is both an asset and a
liability. Although it encourages imports (strong dollars buy more foreign
goods) and results in a competitive pricing environment, which contributes to
lower inflation, a strong U.S. dollar also increases the price of exports
abroad, which reduces overall demand for goods and services originating in
the U.S.
MONEY MARKET REVIEW
The Federal Funds rate remained unchanged at 5.25% from January 31, 1996 to
March 25, 1997, when it was raised to 5.50%. This preemptive strike by the
Federal Reserve Board, which was intended to curb inflation, boosted short-term
rates in general and benefited money market investors in particular over the
past few months.
As the stock market has risen, many investors have become more concerned with
safety of principal. The result has been a huge increase in money market assets
and certificates of deposit. Approximately $450 billion has been committed
2
<PAGE>
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
to these assets in the past 21/2 years -- more than the value of all equity
mutual fund purchases during the period. These developments demonstrate a "split
personality" on the part of investors, as the craving for higher equity exposure
and returns is balanced by insecurity and a desire for safety.
We foresee interest rates declining over the next fiscal year and that money
market investors will see their returns moderate. Although we may see temporary
increases in inflation later in the year, moderating labor costs and overall
price competition should keep inflation under control for the next several
quarters. Inflation for the past 12 months was 2.9%, and should be comparable
this year. We expect 1997 to follow the pattern established in 1996 and 1995 --
a strong first half followed by more moderate and sustainable growth in the last
two quarters. As the economy decelerates and producers find it increasingly
difficult to pass along cost increases to retail customers, long-term interest
rates should fall later in 1997. By the end of the year, the Federal Reserve
Board may actually be prompted to reduce interest rates as concerns over a
too-strong recovery are replaced by recession worries.
/S/ SIGNATURE
Edward G. Riley, Jr.
Chief Investment Officer
BankBoston, N.A.
[LINE GRAPH DEPICTING FEDERAL FUNDS RATE FROM MAY 31, 1994 TO MAY 31, 1997]
5/94 4.75
11/94 5.50
5/95 6.00
11/95 5.70
5/96 5.25
11/96 5.25
5/97 5.50
3
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
The objective of Boston 1784 Institutional U.S. Treasury Money Market Fund is to
preserve principal value and maintain a high degree of liquidity while providing
current income. The Fund's assets reached $1.0 billion in November 1996, and as
of May 31, 1997, the Fund had grown to $2.59 billion in assets.
For the year ended May 31, 1997, the Fund had a total return of 5.16%,
compared with 5.08% for the IBC/Donoghue Government-only Institutional-only
Average and 5.00% for the Lipper Institutional U.S. Treasury Money Market Funds
Average. Based on total return, the Fund ranked among the top 30% (28 of 106) of
the Lipper Institutional U.S. Treasury Money Market Funds for the period from
June 1, 1996 to May 31, 1997. The 7-day yield as of May 31, 1997 was 5.20%. The
Fund's return and resulting ranking are after waiver of certain management fees
and expenses (See Financial Highlights).
In April 1997, 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 year ended May 31, 1997 was a period of nearly static
short-term rates. The Federal Funds rate remained unchanged at 5.25% from
January 31, 1996 to March 25, 1997, when it was raised to 5.50%. The Fund
anticipated this increase in rates and was well-positioned to benefit due
primarily to its large position of overnight repurchase agreements and sizeable
holdings of floating-rate U.S. Government Agency securities. The Fund remains
cautious, believing there is a possibility that the Federal Reserve Board may
raise short-term rates sometime in the next quarter. If this increase occurs,
the Fund expects to extend maturities to lock in higher yields.
BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND,
VERSUS THE IBC/DONOGHUE GOVERNMENT-ONLY INSTITUTIONAL-ONLY AVERAGE
AND THE LIPPER INSTITUTIONAL U.S. TREASURY MONEY MARKET FUNDS AVERAGE
ANNUALIZED TOTAL RETURN FROM INCEPTION (6/30/93) 4.71%
ANNUAL TOTAL RETURN (6/1/96 5/31/97) 5.16%
[LINE GRAPH]
6/30/93 5/94 5/95 5/96 5/97
<TABLE>
<CAPTION>
6/30/93 5/94 5/95 5/96 5/97
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND $10,000 $10,286 $10,805 $11,394 $11,982
IBC/DONOGHUE GOVERNMENT-ONLY INSTITUTIONAL-ONLY AVERAGE $10,000 $10,275 $10,784 $11,363 $11,940
LIPPER INSTITUTIONAL U.S. TREASURY MONEY MARKET FUNDS AVERAGE $10,000 $10,270 $10,770 $11,340 $11,907
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>
4
<PAGE>
AS OF MAY 31, 1997
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 16.4%
U.S. Treasury Bills (B)
5.790%, 08/21/97 $11,610 $ 11,468
5.210%, 09/18/97 23,000 22,637
5.349%, 11/13/97 29,000 28,323
5.133%, 11/13/97 22,500 21,971
5.399%, 11/28/97 35,000 34,093
5.130%, 12/11/97 32,000 31,120
5.729%, 03/05/98 25,000 23,957
5.864%, 05/28/98 42,000 39,667
U.S. Treasury Notes
8.750%, 10/15/97 10,000 10,118
7.375%, 11/15/97 45,000 45,350
5.375%, 11/30/97 95,000 94,877
6.000%, 11/30/97 25,000 25,032
5.125%, 02/28/98 27,000 26,857
U.S. Treasury STRIPS (B)
5.490%, 08/15/97 10,000 9,890
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $425,360) 425,360
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 33.4%
Federal Farm Credit Bank (A)
5.530%, 06/26/97 8,000 8,000
Federal Farm Credit Bank
Discount Notes (B)
5.574%, 08/11/97 10,470 10,358
5.788%, 09/24/97 20,000 19,645
Federal Home Loan Bank
5.890%, 06/16/97 1,000 1,000
5.250%, 06/18/97 2,050 2,049
5.370%, 06/19/97 25,000 24,933
5.725%, 02/05/98 8,800 8,810
5.875%, 02/05/98 7,000 6,999
6.020%, 04/15/98 8,500 8,489
6.185%, 04/21/98 13,000 13,003
Federal Home Loan Bank (A)
5.370%, 08/28/97 16,800 16,800
Federal Home Loan Bank
Discount Notes (B)
5.580%, 06/02/97 3,570 3,569
5.572%, 08/21/97 21,000 20,744
5.712%, 11/06/97 16,415 16,019
- --------------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation Discount Notes
5.630%, 06/02/97 $20,000 $ 19,997
5.635%, 06/30/97 20,000 19,912
5.690%, 08/06/97 20,000 19,797
5.598%, 08/22/97 35,475 35,035
Federal National Mortgage
Association
8.950%, 07/10/97 3,460 3,471
8.800%, 07/25/97 9,465 9,507
6.070%, 04/23/98 17,000 16,985
Federal National Mortgage
Association (A)
5.360%, 06/03/97 2,000 2,000
5.360%, 06/03/97 9,000 8,998
5.405%, 06/03/97 10,000 9,998
7.650%, 06/11/97 8,435 8,447
5.420%, 06/14/97 2,000 1,997
Federal National Mortgage
Association Discount Notes
5.427%, 06/11/97 24,900 24,863
5.571%, 06/18/97 20,000 19,948
5.645%, 07/02/97 20,000 19,905
5.665%, 07/03/97 16,000 15,922
5.666%, 07/10/97 16,000 15,905
5.645%, 07/17/97 21,000 20,853
5.632%, 07/18/97 21,000 20,850
5.635%, 07/18/97 25,000 24,821
5.652%, 07/22/97 21,000 20,836
5.689%, 08/11/97 25,860 25,578
5.586%, 08/27/97 21,000 20,724
5.603%, 08/28/97 30,000 29,600
5.839%, 10/06/97 36,000 35,288
5.840%, 10/20/97 45,000 44,013
Student Loan Marketing
Association (A)
5.350%, 06/03/97 4,260 4,257
5.350%, 06/03/97 5,000 5,000
5.340%, 06/03/97 24,000 23,995
5.330%, 06/03/97 17,500 17,499
5.510%, 06/03/97 3,000 3,003
5.460%, 06/03/97 2,500 2,500
5.405%, 06/03/97 5,000 4,998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
AS OF MAY 31, 1997
STATEMENT OF NET ASSETS (CONCLUDED)
- --------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND (CONCLUDED)
- --------------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
5.350%, 06/03/97 $ 7,166 $ 7,162
5.350%, 06/03/97 46,550 46,508
5.370%, 06/03/97 20,675 20,664
5.360%, 06/03/97 58,900 58,845
Student Loan Marketing
Association Discount Note (B)
5.632%, 06/30/97 14,215 14,152
---------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $864,251) 864,251
---------
TRI-PARTY REPURCHASE AGREEMENTS -- 49.9%
Dean Witter
5.54%, dated 05/30/97, matures
06/02/97, repurchase price
$162,074,790 (collateralized by
various U.S. Treasury Bills ranging
in par value $7,824,000-$9,446,000,
07/17/97-09/11/97; U.S. Treasury
Notes ranging in par value $612,000-
$95,344,000, 5.75%-8.50%,
10/31/97-07/15/06; U.S.Treasury
Bonds ranging in par value
$157,000-$50,312,000, 7.875%-
11.25%, 02/15/15-02/15/21:
total market value
$165,240,140) 162,000 162,000
Greenwich Capital
5.54%, dated 05/30/97, matures
06/02/97, repurchase price
$462,213,290 (collateralized by
various U.S. Treasury Bonds ranging
in par value $605,000-$82,037,000,
10.375%-14.00%, 11/15/10-02/15/15:
total market value
$471,246,641) 462,000 462,000
- --------------------------------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- --------------------------------------------------------------------------------
TRI-PARTY REPURCHASE AGREEMENTS (CONTINUED)
J.P. Morgan
5.53%, dated 05/30/97, matures
06/02/97, repurchase price
$268,208,581 (collateralized by
various U.S. Treasury Bills ranging
in par value $23,399,000-$29,035,000,
06/19/97-10/23/97; U.S. Treasury
Notes ranging in par value
$20,716,000-$111,671,000,
5.625%-7.75%, 06/30/97-07/15/06:
total market value
$273,522,320) $268,085 $ 268,085
Lehman Brothers
5.43%, dated 05/30/97, matures
06/02/97, repurchase price
$39,489,554 (collateralized by
various U.S. Treasury Bonds
ranging in par value $936,000-
$29,379,000, 8.25%-13.75%,
08/15/03-08/15/05:
total market value
$40,247,095) 39,472 39,472
Prudential Securities
5.54%, dated 05/30/97, matures
06/02/97, repurchase price
$362,167,123 (collateralized by
various U.S. Treasury Bills ranging
in par value $10,000-$4,350,000,
06/05/97-04/30/98; U.S. Treasury
Notes ranging in par value $2,000-
$30,330,000, 4.75%-9.25%, 05/31/97-
05/15/07; U.S. Treasury Bonds
ranging in par value $2,000-
$9,961,000, 6.00%-14.00%,
11/15/02-02/15/27; U.S.
Treasury Interest & Principal
STRIPS ranging in par value
$1,000- $87,249,000,
08/15/97-08/15/25; U.S.
Treasury Inflation
Protected Security par value
$1,550,000, 3.375%, 01/15/07:
total market value
$369,240,302) 362,000 362,000
-----------
TOTAL TRI-PARTY REPURCHASE AGREEMENTS
(Cost $1,293,557) 1,293,557
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<PAGE>
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION VALUE (000)
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(Cost $2,583,168) $2,583,168
----------
OTHER ASSETS AND LIABILITIES,
NET-- 0.3% 8,319
----------
NET ASSETS:
Capital Shares (unlimited authorization --
no par value) based on 2,591,393,010
outstanding shares of beneficial
interest 2,591,393
Distributions in excess of net
investment income (2)
Accumulated net realized gain
on investments 96
----------
TOTAL NET ASSETS-- 100.0% $2,591,487
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
==========
(A) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1997.THE MATURITY DATE SHOWN IS THE RESET
DATE.
(B) ZERO COUPON SECURITY -- THE RATE REPORTED IS THE EFFECTIVE YIELD AS OF
MAY 31, 1997.
STRIPS--SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED MAY 31, 1997
BOSTON
1784 INSTITUTIONAL
U.S. TREASURY
MONEY MARKET FUND
==================
INTEREST INCOME: $88,199
-------
EXPENSES:
INVESTMENT ADVISORY FEES 3,272
LESS: WAIVER OF INVESTMENT ADVISORY FEES (220)
ADMINISTRATOR FEES 1,394
REGISTRATION FEES 300
TRANSFER AGENT FEES & EXPENSES 202
PROFESSIONAL FEES 175
FUND ACCOUNTING FEES 10
PRINTING 82
CUSTODIAN FEES 59
AMORTIZATION OF DEFERRED ORGANIZATIONAL COSTS 13
TRUSTEE FEES 52
OTHER EXPENSES 85
-------
TOTAL EXPENSES, NET OF WAIVERS 5,424
-------
NET INVESTMENT INCOME 82,775
-------
NET REALIZED LOSS ON INVESTMENTS (19)
-------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $82,756
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE>
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOSTON
1784 INSTITUTIONAL
U.S. TREASURY
MONEY MARKET FUND
=========================
6/1/96 6/1/95
to to
5/31/97 5/31/96
<S> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 82,775 $ 27,365
NET REALIZED GAIN (LOSS) ON INVESTMENTS (19) 130
---------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 82,756 27,495
---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
NET INVESTMENT INCOME (82,777) (27,365)
REALIZED CAPITAL GAINS -- --
---------- -----------
TOTAL DISTRIBUTIONS (82,777) (27,365)
---------- -----------
SHARE TRANSACTIONS:
VALUE FROM SHARES ISSUED IN REORGANIZATION (SEE NOTE 6) 1,047,876 --
PROCEEDS FROM SHARES ISSUED 5,295,692 3,313,925
REINVESTMENT OF CASH DISTRIBUTIONS 40,208 14,121
COST OF SHARES REDEEMED (4,437,001) (3,079,028)
---------- -----------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 1,946,775 249,018
---------- -----------
TOTAL INCREASE IN NET ASSETS 1,946,754 249,148
========== ===========
NET ASSETS:
BEGINNING OF PERIOD 644,733 395,585
---------- -----------
NET ASSETS:
END OF PERIOD $2,591,487 $ 644,733
========== ===========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (SEE NOTE 6) 1,047,876 --
SHARES ISSUED 5,295,692 3,313,925
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 40,208 14,121
SHARES REDEEMED (4,437,001) (3,079,028)
---------- -----------
NET INCREASE IN CAPITAL SHARE TRANSACTIONS 1,946,775 249,018
========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<PAGE>
FINANCIAL HIGHLIGHTS
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
RATIO RATIO RATIO OF
OF OF NET
NET EXPENSES INCOME
NET DISTRI- NET NET INCOME TO TO
ASSET BUTIONS ASSET ASSETS RATIO OF TO AVERAGE AVERAGE
VALUE NET FROM NET VALUE END EXPENSES AVERAGE NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT END OF TOTAL OF PERIOD TO AVERAGE NET (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME PERIOD RETURN (000) NET ASSETS ASSETS WAIVERS) WAIVERS)
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL
U.S. TREASURY
MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED
MAY 31, 1997 $1.00 0.05 (0.05) $1.00 5.16% $2,591,487 0.33% 5.05% 0.34% 5.04%
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.05 (0.05) $1.00 5.45% $644,733 0.32% 5.29% 0.39% 5.22%
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.05 (0.05) $1.00 5.05% $395,585 0.30% 5.12% 0.41% 5.01%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) $1.00 0.03 (0.03) $1.00 2.99%* $181,568 0.22% 3.16% 0.55% 2.83%
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 INSTITUTIONAL U.S. TREASURY 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.
10
<PAGE>
AS OF MAY 31, 1997
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Organization
Boston 1784 Institutional U.S. Treasury Money Market Fund is a portfolio of
Boston 1784 Funds (the "Trust"), an open-end investment company registered under
the Investment Company Act of 1940, as amended. Prior to May 27, 1997, Boston
1784 Funds was known as 1784 Funds. On that date the Trust and each Fund added
"Boston" to their names. The Trust is offering shares in 15 separate portfolios
(the "Funds") as of May 31, 1997:
MONEY MARKET FUNDS:
BOSTON 1784 TAX-FREE MONEY MARKET FUND
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 PRIME MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
BOND FUNDS:
BOSTON 1784 SHORT-TERM INCOME FUND
BOSTON 1784 INCOME FUND
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
TAX-EXEMPT INCOME FUNDS:
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS:
BOSTON 1784 ASSET ALLOCATION FUND
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
BOSTON 1784 INTERNATIONAL EQUITY FUND
The Funds' prospectuses provide a description of each Fund's investment
objectives, policies and strategies.
The financial statements of Boston 1784 Institutional U.S. Treasury Money Market
Fund are included herein. The financial statements of the remaining Funds 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 Boston
1784 Institutional U.S. Treasury Money Market Fund (the "Fund").
SECURITY VALUATION --
Investment securities of the Fund 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.
11
<PAGE>
as of may 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
REPURCHASE AGREEMENTS --
The Fund invests in Tri-Party Repurchase Agreements. Securities pledged as
collateral for Tri-Party Repurchase Agreements are maintained in a segregated
account by the broker's custodian bank until maturity of the Repurchase
Agreements. Provisions of the Repurchase Agreements and procedures adopted by
the Adviser are intended to ensure that the market value 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
on the collateral by the Fund may be delayed or limited.
EXPENSES --
Expenses that are directly related to the Fund are charged directly to the Fund.
Other operating expenses of the Trust are prorated to the Funds on the basis of
relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income are declared on a daily basis and are
payable on the first business day of the following month. Any net realized
capital gains on sales of securities for the Fund are distributed to its
shareholders at least annually.
FEDERAL INCOME TAXES --
The Trust's policy is to comply with the require-ments 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. At May 31, 1997, the total cost
of securities for Federal income tax purposes was not materially different from
amounts reported for financial reporting purposes.
ORGANIZATION COSTS --
These costs have been deferred in the account of the Fund and are being
amortized on a straight line basis over a period of sixty months commencing with
operations. If any or all of the shares representing initial capital of the Fund
are redeemed by any holder thereof prior to the end of the amortization period,
the proceeds will be reduced by the unamortized organization cost balance in the
same proportion as the number of shares redeemed bears to the initial shares
outstanding immediately preceding the redemption.
3. INVESTMENT ADVISORY, CUSTODIAL AND ACCOUNTING SERVICES
Pursuant to an investment advisory agreement dated June 1, 1993, investment
advisory services
12
<PAGE>
BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
are provided to the Trust by BankBoston, N.A. (the "Adviser"). The Adviser is
entitled to receive an annual fee of 0.20% of the average daily net assets of
the Fund. Such fee is computed daily and paid monthly. BankBoston, N.A. has
agreed to waive a portion of its investment advisory fee in order to maintain a
competitive expense ratio.
The Fund and BankBoston, N.A. (the "Custodian") are parties to a custodial
agreement dated June 1, 1993 under which the Custodian holds cash, securities
and other assets of the Fund as required by the Investment Company Act of 1940,
as amended. The Custodian is entitled to receive an annual fee, to be paid
monthly, of 0.01% for the first $100 million in average daily net assets,
0.0075% for the next $100 million and 0.005% for the next $800 million in
average daily net assets. In its capacity as custodian to the Fund, the
Custodian plays no role in determining the investment policies of the Fund or
which securities are to be purchased or sold by the Fund.
Under a separate agreement, BankBoston, N.A. provided certain accounting
services for the Fund for the period June 1, 1996 through September 15, 1996.
For such services during this period, BankBoston, N.A. received a fee of
$10,000. Effective September 16, 1996, SEI Fund Resources ("SEI") began
providing accounting services for the Fund as a part of the administration
agreement (see Footnote 4).
4. ADMINISTRATIVE AND DISTRIBUTION SERVICES
For the period of June 1, 1996 through November 30, 1996 and pursuant to an
administration agreement dated June 7, 1993, SEI acted as the Trust's
Administrator. Under the terms of such agreement, SEI received 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 was computed daily
and paid monthly. Pursuant to an administration agreement dated December 1,
1996, SEI acts as the Trust's Administrator, and is entitled to receive an
annual fee of 0.085% of the Trust's first $5 billion of average daily net assets
and 0.045% of the Trust's average daily net assets over $5 billion. Such fee is
computed daily and paid monthly.
SEI Investments Distribution Co. ("SEI Investments"), a wholly owned
subsidiary of SEI Investments Company, acts as the Fund's Distributor pursuant
to a distribution agreement dated June 1, 1993, as amended and restated October
27, 1995. SEI Investments is paid no fees by the Fund.
Certain officers of the Fund are also officers of the Administrator. Such
officers are paid no fees by the Fund.
The Fund has paid legal fees to a law firm of which the Secretary of the
Trust is member.
13
<PAGE>
AS OF MAY 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
5. LINE OF CREDIT
The Fund has a bank line of credit, under which borrowings are secured by
investment securities of the Fund. Borrowings may not exceed 10% of the Fund's
total assets. Borrowings under the line are charged interest at the current
overnight federal funds rate plus a variable rate determined at the date of
borrowing. There is no commitment fee on the unused portion of the line of
credit. There were no borrowings under the line of credit during the year ended
May 31, 1997.
6. REORGANIZATION WITH BAYFUNDS
On July 31, 1996, the Board of Trustees of the Trust and on July 31, 1996 and
August 15, 1996 the Board of Trustees of BayFunds approved an Agreement and Plan
of Reorganization (the "Reorganization Agreement") providing for the transfer of
all assets and liabilities of the portfolios of BayFunds in exchange for the
issuance of shares in certain Funds in tax-free reorganizations (except in the
case of the Reorganization of BayFunds U.S. Treasury Money Market Portfolio with
Boston 1784 U.S. Treasury Money Market Fund and Boston 1784 Institutional U.S.
Treasury Money Market Fund which did not qualify for tax-free treatment). At a
special meeting of the shareholders held on November 6, 1996, the shareholders
of BayFunds voted to approve the Reorganization Agreement. Pursuant to the
Reorganization Agreement, on November 25, 1996 substantially all of the assets
and liabilities attributable to the Institutional Shares of BayFunds U.S.
Treasury Money Market Portfolio were transferred to the Fund in exchange for
shares of the Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
COMBINED NAV
SHARES NET ASSETS PER SHARE
SHARES NET ASSETS BOSTON ISSUED IN AFTER ON DAY OF
BAYFUNDS AT 11/25/96 AT 11/25/96 1784 FUNDS REORGANIZATION REORGANIZATION REORGANIZATION
===================================================================================================================================
U.S. TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES 1,047,875,735 1,047,875,735 INSTITUTIONAL U.S. TREASURY 1,047,875,735 2,061,477,418 1.00
MONEY MARKET
</TABLE>
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF BOSTON 1784 INSTITUTIONAL
U.S. TREASURY MONEY MARKET FUND
WE HAVE AUDITED THE ACCOMPANYING STATEMENT OF NET ASSETS OF BOSTON 1784
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND (THE "FUND"), AS OF MAY 31,
1997, AND THE RELATED STATEMENT OF OPERATIONS FOR THE YEAR THEN ENDED, THE
STATEMENT OF CHANGES IN NET ASSETS FOR EACH OF THE TWO YEARS IN THE PERIOD
THEN ENDED, AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS PRESENTED.
THESE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS ARE THE RESPONSIBILITY
OF THE FUND'S 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, 1997 BY CORRESPONDENCE WITH THE CUSTODIAN AND
BROKERS. AN AUDIT ALSO INCLUDES ASSESSING THE ACCOUNTING PRINCIPLES USED AND
SIGNIFICANT ESTIMATES MADE BY MANAGEMENT, AS WELL AS EVALUATING THE OVERALL
FINANCIAL STATEMENT PRESENTATION. WE BELIEVE THAT OUR AUDITS PROVIDE A
REASONABLE BASIS FOR OUR OPINION.
IN OUR OPINION, THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS REFERRED
TO ABOVE PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND AS OF MAY 31, 1997
AND THE RESULTS OF ITS OPERATIONS FOR THE YEAR THEN ENDED, THE CHANGES IN
ITS NET ASSETS FOR EACH OF THE TWO YEARS IN THE PERIOD THEN ENDED, AND THE
FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS PRESENTED, IN CONFORMITY WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 11, 1997
15
MAY 31, 1997
NOTICE TO SHAREHOLDERS (UNAUDITED)
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Dear Boston 1784 Funds Shareholders:
For the fiscal year ended May 31, 1997, Boston 1784 Institutional U.S.
Treasury Money Market 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
(TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST TAX CREDIT
================================================================================================
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL
U.S. TREASURY
MONEY MARKET 0% 100% 100% 0% 0% 0%
<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
DISTRIBUTION.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME
DISTRIBUTIONS OF THE FUND.
</FN>
</TABLE>
PLEASE CONSULT YOUR TAX ADVISER FOR PROPER TREATMENT OF THIS INFORMATION.
16
<PAGE>
BOARD OF TRUSTEES
David H. Carter
Tarrant Cutler
Kenneth A. Froot
Sara L. Johnson
Kathryn Flacke Muncil
Robert A. Nesher
Alvin J. Silk
INVESTMENT ADVISER
BankBoston, N.A.
Boston, MA 02110
- --------------------------------------------------------------------------------
ADMINISTRATOR
SEI Fund Resources
Oaks, PA 19456
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, PA 19456
LEGAL COUNSEL
Bingham, Dana & Gould LLP
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Philadelphia, PA 19103
CUSTODIAN
BankBoston, N.A.
Boston, MA 02110
[Boston 1784 Funds Logo]
Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524
1-800-BKB-1784
This report and the financial statements contained herein are for the general
information of the shareholders of Boston 1784 Institutional U.S. Treasury
Money Market Fund. This report is not authorized for distribution to
prospective investors in a Fund unless preceded or accompanied by a currently
effective prospectus.
MF-0150
