Rule 497(c)
File Nos. 33-58004 and 811-7474
BOSTON 1784 FUNDS[SERVICE MARK]
FUNDS AVAILABLE THROUGH YOUR RETIREMENT PLAN
MONEY MARKET FUNDS
[BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
BOND FUNDS
[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
[BULLET] BOSTON 1784 INCOME FUND
[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-
TERM INCOME FUND
STOCK FUNDS
[BULLET] BOSTON 1784 ASSET ALLOCATION FUND
[BULLET] BOSTON 1784 GROWTH AND INCOME FUND
[BULLET] BOSTON 1784 GROWTH FUND
[BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND
Prospectus
[BOSTON 1784 FUNDS LOGO OMITTED]
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
September 15, 1998
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TABLE OF CONTENTS
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BOSTON 1784 MONEY MARKET FUNDS................................................1
BOSTON 1784 BOND FUNDS........................................................4
BOSTON 1784 STOCK FUNDS......................................................10
INVESTING THROUGH YOUR RETIREMENT PLAN ......................................17
PRICING OF FUND SHARES.......................................................18
DISTRIBUTIONS................................................................18
FEDERAL TAX CONSIDERATIONS...................................................19
MORE ABOUT BOSTON 1784 FUNDS.................................................20
MONEY MARKET FUNDS.............................................20
BOND FUNDS.....................................................21
STOCK FUNDS....................................................22
MANAGEMENT...................................................................25
DISTRIBUTION ARRANGEMENTS....................................................26
FINANCIAL HIGHLIGHTS.........................................................27
PROSPECTUS
<PAGE>
BOSTON 1784 MONEY MARKET FUNDS
================================================================================
INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES BOSTON 1784 INSTITUTIONAL U.S.
TREASURY MONEY MARKET FUND AND THE PRINCIPAL RISKS OF INVESTING IN THE FUND. FOR
FURTHER INFORMATION ON THIS FUND, PLEASE READ THE SECTION ENTITLED MORE ABOUT
BOSTON 1784 FUNDS.
[LOGO OF COMPASS OMITTED]
WHAT ARE THE FUND'S GOALS?
The Fund's goals are to preserve the principal value of a shareholder's
investment and maintain a high degree of liquidity while providing current
income.
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WHAT IS A MONEY MARKET FUND?
A MONEY MARKET FUND is a type of mutual fund that tries to maintain a share
price of $1.00 while paying income to its shareholders. A stable share price
protects your investment from loss ("PRESERVATION OF PRINCIPAL"). If you need
to sell your shares at any time, you should receive your initial investment
plus any income that you have earned (thereby providing "LIQUIDITY").
However, a money market fund does not guarantee that you will receive your
money back.
A money market fund must follow strict rules as to the investment quality,
maturity, diversification and other features of the securities it purchases
and the average remaining maturity of the securities cannot be greater than
90 days. The remaining maturity of a security is the period of time until the
principal amount must be repaid.
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[LOGO OF CHESS PIECE OMITTED]
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests primarily in short-term U.S. government obligations, including
Treasury securities, U.S. government agency securities and repurchase agreements
secured by U.S. government securities.
[LOGO OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
The principal risks of investing in the Fund and the circumstances reasonably
likely, in the opinion of the Adviser, to adversely affect your investment are
described below. Please note that there are many other factors which could
adversely affect your investment, and that could prevent the Fund from achieving
its objectives, which are not described here. The principal risks are:
[BULLET] The rate of income will vary from day to day depending on
short-term interest rates.
[BULLET] It is possible that a major change in interest rates or a default
on a security or a repurchase agreement held by the Fund could
cause the value of your investment to decline.
[BULLET] The Fund may invest up to 5% of its total assets in zero coupon
securities called STRIPS, which are the separately traded
interest and principal component parts of U.S. Treasury
securities. The interest-only component is extremely sensitive to
the rate of principal payments on the underlying obligation. The
market value of the principal-only component generally is
unusually volatile in response to changes in interest rates.
[BULLET] An investment in the Fund is not a deposit of BankBoston and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
[BULLET] Although the Fund seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in
the Fund.
PROSPECTUS
1
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BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
================================================================================
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN INVESTORS
WHO:
[BULLET] are investing for a short period of time;
[BULLET] want the added safety of U.S. government securities.
The Fund does not provide a balanced investment plan.
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[LOGO OF FLAGS OMITTED]
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the Fund's risks and
performance. The chart shows changes in the Fund's performance from year to
year. The table shows how the Fund's average annual returns for the periods
indicated compare to those of a broad measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PERFORMANCE
IN PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW THE FUND WILL DO IN THE
FUTURE.
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INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS FOLLOW:]
1994 4.04%
1995 5.69%
1996 5.14%
1997 5.30%
The total return for the six months ended June 30, 1998 was 2.62%.
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HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
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QUARTER ENDING
Highest 1.43% June 30, 1995
Lowest 0.76% March 31, 1994
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Average Annual Total Returns
(through December 31, 1997)
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1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Institutional U.S. Treasury 5.30% 4.79%
Money Market Fund
IBC/Financial Data Government- 5.21% 5.08%*
Only Institutional-Only Average
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*(since 5/30/93)
For up-to-date yield information, please call 1-800-BKB-1784.
PROSPECTUS
2
<PAGE>
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[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUND?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) None
Imposed on Reinvested Dividends
Redemption Fee None
Exchange Fee None
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ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- --------------------------------------------------------------------------------
Management Fees .20%
Distribution (12b-1) Fees None
Other Expenses .13%
Total Annual Fund Operating Expenses .33%
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EXAMPLE
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THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND TO THE COST OF INVESTING IN
OTHER MUTUAL FUNDS. THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR
THE TIME PERIODS INDICATED AND THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR
AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE
ABOVE. ALTHOUGH YOUR ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
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1 year $ 34
3 years 106
5 years 185
10 years 418
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PROSPECTUS
3
<PAGE>
BOSTON 1784 BOND FUNDS
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SHORT-TERM INCOME FUND
INCOME FUND
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 BOND FUND AND THE
PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION ON THESE
FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
SHORT-TERM INCOME FUND
The Short-Term Income Fund's goal is to provide investors with maximum current
income, and, as a secondary goal, to preserve investors' capital.
INCOME FUND
The Income Fund's goal is to provide investors with maximum current income, and,
as a secondary goal, to preserve investors' capital.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. Government Medium-Term Income Fund's goal is to provide investors with
current income consistent with preservation of capital.
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WHAT IS A BOND?
A BOND, which is also called a DEBT SECURITY or DEBT OBLIGATION, is like a
loan. The issuer of the bond, which could be the U.S. government, a
corporation, or a city or state, borrows money from investors and agrees to
pay back the loan amount (the PRINCIPAL) on a certain date (the MATURITY
DATE). Usually, the issuer also agrees to pay interest on certain dates
during the period of the loan. Some bonds, such as ZERO COUPON BONDS, do not
pay interest, but instead pay back more at maturity than the original loan.
Most bonds pay a fixed rate of interest (or income), but some bonds' interest
rates may change based on market or other factors.
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WHAT DOES IT MEAN TO "PRESERVE CAPITAL"?
CAPITAL, also called PRINCIPAL, refers to the amount of money that you invest
in a fund. If you choose to have your dividends and other distributions
reinvested in additional shares of a fund, the amount of the distributions
will be added to your initial investment to increase the amount of your
capital. If the price of the fund's shares or net asset value (NAV) increases
because of increases in the value of the securities in the fund, your capital
will also increase. If, however, the value of the fund's investments go down
and the price of the fund's shares decreases, you will lose some of your
capital. A fund that seeks to preserve capital or principal tries to maintain
a stable share price so that you do not lose money.
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[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
SHORT-TERM INCOME FUND
The Short-Term Income Fund invests primarily in investment grade debt
securities, such as corporate bonds, notes, mortgage-backed and asset-backed
securities, taxable municipal securities and U.S. Treasury and government agency
obligations.
The Fund may invest in Yankee bonds, which are dollar-denominated bonds issued
in the U.S. by foreign borrowers. Yankee bonds may offer higher income than
bonds issued by U.S. borrowers. The Fund may also invest in bonds issued by
foreign issuers and payable in foreign currencies.
PROSPECTUS
4
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Under normal conditions, at least 65% of the securities will be rated A or
better by a rating agency, or be of comparable quality as determined by the
Adviser.
In order to limit fluctuations in share price, the Fund tries to maintain an
average weighted maturity of less than three years under normal circumstances.
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WHAT ARE INVESTMENT GRADE SECURITIES?
INVESTMENT GRADE SECURITIES are securities that have been determined by a
rating agency to have a medium to high probability of being paid, although
there is always a risk of default. Investment grade securities are rated BBB,
A, AA OR AAA by Standard & Poor's Corporation or Baa, A, Aa or Aaa by Moody's
Investors Service.
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INCOME FUND
The Income Fund invests primarily in investment grade debt securities, including
U.S. government obligations, corporate bonds and mortgage-backed and
asset-backed securities.
The Fund may invest in Yankee bonds, which are dollar-denominated bonds issued
in the U.S. by foreign borrowers. Yankee bonds may offer higher income than
bonds issued by U.S. borrowers. The Fund may also invest in bonds issued by
foreign issuers and payable in foreign currencies.
Under normal conditions, at least 65% of the securities will be rated A or
better by a rating agency, or be of comparable quality as determined by the
Adviser.
The Fund's average weighted maturity is normally expected to be between 7 and 30
years.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. Government Medium-Term Income Fund invests primarily in short- to
intermediate-term U.S. Treasury and government agency securities and both
government agency and non-government agency mortgage-backed securities.
U.S. government obligations generally have less credit risk than other debt
obligations.
The Fund's average weighted maturity is normally expected to be from 3 to 10
years.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS OF INVESTING IN BOSTON 1784 BOND FUNDS?
The principal risks of investing in the Bond Funds and the circumstances
reasonably likely, in the opinion of the Adviser, to adversely affect your
investment are described below. As with any non-money market mutual fund, the
share price of each Fund and each Fund's yield will change daily because of
changes in interest rates and other market conditions and factors. You may lose
money if you invest in these Funds. Please note that there are many other
circumstances which could adversely affect your investment, and that could
prevent a Fund from achieving its objectives, which are not described here. The
principal risks of investing in the Bond Funds are:
[BULLET] INTEREST RATE RISK: In general, bond prices rise when interest rates
fall and fall when interest rates rise. Longer term bonds and zero
coupon bonds are generally more sensitive to interest rate changes
than shorter term bonds. Generally, the longer the average maturity of
the bonds in a Fund, the more the Fund's share price will fluctuate in
response to interest rate changes.
[BULLET] CREDIT RISK: It is possible that some of the issuers will not make
payments on debt securities held by a Fund, or there could be defaults
on repurchase agreements held by a Fund. Or, an issuer may suffer
adverse changes in financial condition that could lower the credit
quality of a security, leading to greater volatility in the price of
the security and in shares of a Fund. A change in the quality rating
of a bond can affect the bond's liquidity and make it more difficult
for the Fund to sell.
[BULLET] PREPAYMENT RISK: The issuers of securities held by a Fund may be able
to prepay principal due on the securities, particularly during periods
of declining interest rates. Securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise.
In addition, rising interest rates may cause prepayments to occur at a
slower than expected rate, thereby effectively lengthening the
maturity of the security and making the security more sensitive to
interest rate changes. Prepayment risk is a major risk of
mortgage-backed securities.
[BULLET] SPECIAL RISKS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES: The Fund
will receive payments on its mortgage-backed securities that are part
interest and part return of principal. These payments may vary based
on the
PROSPECTUS
5
<PAGE>
BOSTON 1784 BOND FUNDS (CONTINUED)
================================================================================
rate at which homeowners pay off their loans. When a homeowner makes a
prepayment, the Fund receives a larger portion of its principal investment
back, which means that there will be a decrease in monthly interest payments.
Some mortgage-backed securities may have structures that make their reaction
to interest rates and other factors difficult to predict, making their prices
very volatile.
[BULLET] FOREIGN SECURITIES: Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk and exposure to currency fluctuations.
[BULLET] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
SHORT-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN
INVESTORS WHO ARE:
[BULLET] seeking income;
[BULLET] seeking a higher yield than a moneymarket fund or a bank savings
account;
[BULLET] seeking more price stability than a longer-term bond fund but are
able to tolerate some fluctuations in the value of their
investment.
INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN
INVESTORS WHO ARE:
[BULLET] seeking a higher level of income than is available from shorter-
term securities;
[BULLET] able to tolerate the greater price fluctuations associated with
longer-term securities and higher levels of income.
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN
INVESTORS WHO ARE:
[BULLET] seeking higher levels of income than is available from shorter-term
securities or money market funds;
[BULLET] seeking the added measure of protection against credit risk
provided by U.S. government securities;
[BULLET] able to tolerate the fluctuations in price associated with medium-
term securities.
None of the Bond Funds alone provides a balanced investment plan.
PROSPECTUS
6
<PAGE>
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[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks and
performance. The charts show changes in the Funds' performance from year to
year. The tables show how the Funds' average annual returns for the periods
indicated compare to those of a broad measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S PERFORMANCE IN
PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW A FUND WILL DO IN THE FUTURE.
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS TO FOLLOW:]
1995 11.36%
1996 4.25%
1997 6.30%
The total return for the six months ended June 30, 1998 was 3.01%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 3.31% June 30, 1995
Lowest -0.27% March 31, 1996
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AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
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1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Short-Term Income Fund 6.30% 6.42%
Lehman Brothers Mutual Fund 7.12% 7.18%
1-5 Year Government/Corporate
Bond Index
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INCOME FUND
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TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS TO FOLLOW:]
1995 17.98%
1996 2.60%
1997 7.85%
The total return for the six months ended June 30, 1998 was 3.14%.
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HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 6.34% June 30, 1995
Lowest -2.42% March 31, 1996
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AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
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1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Income Fund 7.85% 7.94%
Lehman Brothers Aggregate 9.68% 9.16%
Bond Index
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For up-to-date yield information, please call 1-800-BKB-1784.
PROSPECTUS
7
<PAGE>
BOSTON 1784 BOND FUNDS (CONTINUED)
================================================================================
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U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
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TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS TO FOLLOW:]
1994 -3.78%
1995 15.89%
1996 1.98%
1997 8.08%
The total return for the six months ended June 30, 1998 was 3.03%.
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HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.51% June 30, 1995
Lowest -2.93% March 31, 1994
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AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
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1 YEAR LIFE OF FUND
(SINCE 6/7/93)
U.S. Government Medium-Term 8.08% 5.43%
Income Fund
Lehman Brothers Intermediate 7.72% 5.99%
U.S. Government Bond Index
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For up-to-date yield information, please call 1-800-BKB-1784.
PROSPECTUS
8
<PAGE>
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[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 BOND FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT
SHORT-TERM INCOME MEDIUM-TERM
INCOME FUND FUND INCOME FUND
<S> <C> <C> <C>
Maximum Sales Charge (Load) None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None
Maximum Sales Charge (Load) None None None
Imposed on Reinvested Dividends
Redemption Fee None None None
Exchange Fee None None None
- ------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- ------------------------------------------------------------------------------------------------------------------------
Management Fees .50% .74% .74%
Distribution (12b-1) Fees .25% .25% .25%
Other Expenses .14% .12% .13%
Total Annual Fund Operating Expenses .89%* 1.11%* 1.12%*
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because of fee waivers
by the Funds' Adviser and Distributor. The Adviser waives a portion of its
management fees in order to keep each Fund's total operating expenses at a
specified level and the Distributor waives its entire Distribution Fee. The
Adviser and the Distributor may eliminate all or a part of the fee waivers at
any time. With these fee waivers, the Funds' actual total annual operating
expenses were as follows:
SHORT-TERM INCOME FUND .64%
INCOME FUND .80%
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND .80%
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EXAMPLE
- --------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 BOND FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE
ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED AND
THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INCOME FUND U.S. GOVERNMENT
INCOME FUND MEDIUM-TERM INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 year $ 91 $ 113 $ 114
3 years 284 353 356
5 years 493 612 617
10 years 1,096 1,352 1,363
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
9
<PAGE>
BOSTON 1784 STOCK FUNDS
================================================================================
ASSET ALLOCATION FUND
GROWTH AND INCOME FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 STOCK FUND AND THE
PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION ON THESE
FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
ASSET ALLOCATION FUND
The Asset Allocation Fund's goal is to provide investors with 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.
GROWTH AND INCOME FUND
The Growth and Income Fund's primary goal is to provide investors with long-term
growth of capital with a secondary goal of income.
GROWTH FUND
The Growth Fund's primary goal is to provide investors with capital
appreciation. Dividend income, if any, is incidental to this goal.
INTERNATIONAL EQUITY FUND
The International Equity Fund's goal is to provide investors
with long-term growth of capital. Dividend income, if any, is incidental to this
goal.
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WHAT IS CAPITAL APPRECIATION?
A Fund that seeks CAPITAL APPRECIATION or GROWTH OF CAPITAL tries to increase
the value of your investment. CAPITAL, also called PRINCIPAL, refers to the
amount of money that you invest in a fund. If the price of the fund's shares
or net asset value (NAV) goes up due to an increase in the value of the
securities in the fund, your capital will also grow or appreciate. If,
however, the price of the fund's shares decreases due to a decline in the
value of securities in the fund, you will lose some of your capital. If you
choose to have your dividends and other distributions reinvested in
additional shares of a fund, the amount of the distributions will be added to
your initial investment and increase the amount of your capital.
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[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
ASSET ALLOCATION FUND
The Asset Allocation Fund invests in a carefully balanced mix of equity and debt
securities and money market instruments.
The Fund's equity securities include the stock of large U.S. companies, and from
time to time, mid-sized domestic companies and large, multi-national companies
based outside of the United States.
The Fund's debt securities include investment grade debt obligations such as
U.S. government securities, corporate bonds and mortgage-backed and asset-backed
securities.
The Fund's portfolio managers decide what percentage of the Fund's assets will
be invested in debt, equity and money market securities based on the managers'
judgment of various economic factors. The Fund expects that normally:
[BULLET] 30% to 70% of its assets will be invested in equity securities;
[BULLET] 30% to 60% of its assets will be invested in intermediate- and long-
term debt obligations;
[BULLET] up to 40% of its assets may be invested in short-term debt and money
market instruments.
GROWTH AND INCOME FUND
The Growth and Income Fund invests primarily in the common stock of established
U.S. and foreign companies where the Adviser believes there is opportunity for
growth.
When investing in U.S. companies, the Fund principally invests in companies with
a market capitalization of at least $1 billion, although the Fund also invests
in companies with smaller capitalizations. While the established companies in
which the Fund primarily invests are more likely than less established companies
to provide the Fund with dividend income, the principal focus in the selection
of securities for the Fund is growth potential, consistent with the Fund's
primary objective.
PROSPECTUS
10
<PAGE>
================================================================================
When investing in foreign companies, the Fund may also invest in smaller
companies and companies located in developing countries.
In addition to common stocks, the Fund may invest in other securities, including
convertible debt securities and preferred stock. The Fund may engage in foreign
currency hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund.
- --------------------------------------------------------------------------------
WHAT IS CAPITALIZATION?
CAPITALIZATION or MARKET CAPITALIZATION is the total value of a company's
stock in the marketplace or on a stock exchange. For example, a company that
has issued one million shares that are currently selling for $50 per share
would have a capitalization of $50,000,000.
- --------------------------------------------------------------------------------
GROWTH FUND
The Growth Fund invests primarily in the common stock of U.S. and foreign
companies which the Adviser believes have above-average growth potential.
When investing in U.S. companies, the Fund principally invests in companies with
a market capitalization of at least $250 million, although the Fund also invests
in companies with smaller capitalizations. Companies with capitalizations of
less than $1 billion are generally considered to have small capitalizations.
When investing in foreign companies, the Fund may also invest in smaller
companies and in companies located in developing countries.
In addition to common stocks, the Fund may invest in other securities, including
convertible debt securities and preferred stock. The Fund may engage in foreign
currency hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund.
INTERNATIONAL EQUITY FUND
The International Equity Fund invests primarily in stocks and other equity
interests issued by foreign companies. The Fund seeks to invest in a number of
countries with different economic characteristics and may invest in developing
countries. The Fund may also invest in other securities, including
non-convertible debt securities and money market instruments. The Fund may
engage in foreign currency hedging transactions in an attempt to minimize the
effects of currency fluctuations on the Fund.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 STOCK FUNDS?
The principal risks of investing in the Stock Funds and the circumstances
reasonably likely, in the opinion of the Adviser, to adversely affect your
investment are described below. As with any non-money market mutual fund, the
share price of each Fund will change daily based on market conditions and other
factors. You may lose money if you invest in these Funds. Please note that there
are many other circumstances which could adversely affect your investment, and
that could prevent a Fund from achieving its objectives, which are not described
here. The principal risks of investing in the Stock Funds are:
[BULLET] MARKET RISK: This is the risk that the price of a security will rise
or fall due to changing economic, political or market conditions, or
due to a company's individual situation.
[BULLET] SMALLER COMPANIES: The securities of smaller companies may have more
risks than those of larger companies--they may be more susceptible to
market downturns and their prices may be more volatile.
[BULLET] FOREIGN SECURITIES: Investments in foreign securities involve risks
relating to political, social and economic developments abroad, as
well as risks resulting from the differences between the regulations
to which U.S. and foreign issuers and markets are subject.
[BULLET] These risks may include expropriation, confiscatory taxation,
withholding taxes on dividends and interest, limitations on the use or
transfer of portfolio assets, and political or social instability.
[BULLET] Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments. In addition, foreign companies may not be subject
to accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their
operations.
PROSPECTUS
11
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[BULLET] Foreign markets may be less liquid and more volatile than U.S.
markets, and may offer less protection to investors such as the Funds.
Equity securities traded in certain foreign countries may trade at
high price-earnings multiples that are unsustainable.
[BULLET] Since foreign securities often trade in currencies other than the U.S.
dollar, changes in currency exchange rates will affect a Fund's net
asset value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the U.S.
dollar relative to these other currencies will adversely affect the
value of the Fund.
[BULLET] Each of the Stock Funds may invest in issuers located in developing
countries.
[BULLET] Developing countries are generally defined as countries in the initial
stages of their industrialization cycles with low per capita income.
[BULLET] All of the risks of investing in foreign securities are heightened by
investing in developing countries.
[BULLET] The markets of developing countries have been more volatile than the
markets of developed countries with more mature economies. These
markets often have provided higher rates of return, and greater risks,
to investors.
[BULLET] INTEREST RATE RISK: In general, the prices of debt securities rise
when interest rates fall and fall when interest rates rise. Longer
term obligations are usually more sensitive to interest rate changes.
[BULLET] CREDIT RISK: It is possible that some issuers will not make payments
on debt obligations held by a Fund. Or, an issuer may suffer adverse
changes in financial condition that could lower the credit quality of
a security, leading to greater volatility in the price of the security
and in shares of the Fund. A change in the quality rating of a bond
can also affect the bond's liquidity and make it more difficult for
the Fund to sell.
[BULLET] PREPAYMENT RISK: The issuers of securities held by a Fund may be able
to prepay principal due on the securities, particularly during periods
of declining interest rates. Securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise.
In addition, rising interest rates may cause prepayments to occur at a
slower than expected rate, thereby effectively lengthening the
maturity of the security and making the security more sensitive to
interest rate changes. Prepayment risk is a major risk of
mortgage-backed securities.
[BULLET] SPECIAL CHARACTERISTICS OF CONVERTIBLE SECURITIES: Convertible
securities are subject to the market risk of stocks, while also
subject to interest rate risk and the credit risk of the issuers. Call
provisions may allow the issuer to repay the debt before it matures.
[BULLET] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
PROSPECTUS
12
<PAGE>
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
ASSET ALLOCATION FUND
THE ASSET ALLOCATION FUND MAY BE APPROPRIATE FOR
LONG-TERM RETIREMENT PLAN INVESTORS WHO ARE:
[BULLET] seeking a balanced investment program;
[BULLET] seeking protection against inflation;
[BULLET] able to tolerate a substantial loss in the value of their
investment.
GROWTH AND INCOME FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM
RETIREMENT PLAN INVESTORS WHO ARE:
[BULLET] seeking high long-term growth;
[BULLET] able to tolerate a substantial loss in the value of their
investment.
GROWTH FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM
RETIREMENT PLAN INVESTORS WHO ARE:
[BULLET] seeking high long-term growth;
[BULLET] able to tolerate a substantial loss in the value of their
investment;
[BULLET] able to tolerate the additional risks of investing in smaller
companies;
[BULLET] not seeking income.
INTERNATIONAL EQUITY FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM
RETIREMENT PLAN INVESTORS WHO ARE:
[BULLET] seeking high long-term growth;
[BULLET] looking for exposure in the international markets and able to
tolerate the additional risks associated with these markets;
[BULLET] able to tolerate a substantial loss in the value of their
investments;
[BULLET] not seeking income.
None of the Stock Funds alone (except for the Asset
Allocation Fund) provides a balanced investment plan.
PROSPECTUS
13
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks and
performance. The charts show changes in the Funds' performance from year to
year. The tables show how the Funds' average annual returns for the periods
indicated compare to those of a broad measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S PERFORMANCE IN
PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW A FUND WILL DO IN THE FUTURE.
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS FOLLOW:]
1994 -0.65%
1995 29.55%
1996 10.48%
1997 20.74%
The total return for the six months ended June 30, 1998 was 9.40%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 10.79% June 30, 1997
Lowest -3.33% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Asset Allocation Fund 20.74% 13.07%
S&P 500 Composite Index 33.36% 21.39%*
Lehman Brothers 9.68% 6.86%
Aggregate Bond Index
- --------------------------------------------------------------------------------
*(since 6/11/93)
The table above compares the average annual return of the Fund, which holds a
mix of stocks, bonds and other debt securities, to an unmanaged stock index and
an unmanaged bond index for the periods indicated.
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS FOLLOW:]
1994 -0.18%
1995 30.56%
1996 23.63%
1997 19.66%
The total return for the six months ended June 30, 1998 was 19.93%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 13.03% June 30, 1997
Lowest -3.63% June 30, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/7/93)
Growth and Income Fund 19.66% 17.34%
S&P 500 Composite Index 33.36% 21.14%*
- --------------------------------------------------------------------------------
*(since 6/4/93)
PROSPECTUS
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS FOLLOW:]
1997 13.92%
The total return for the six months ended June 30, 1998 was 4.95%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 14.46% September 30, 1997
Lowest -7.07% December 31, 1997
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 3/28/96)
Growth Fund 13.92% 17.98%
Russell 2000 Index 22.36% 19.32%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Total Return
(per calendar year)
[BAR CHART OMITTED, PLOT POINTS FOLLOW:]
1995 13.34%
1996 13.68%
1997 -0.92%
The total return for the six months ended June 30, 1998 was 15.13%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 12.12% June 30, 1997
Lowest -9.42% December 31, 1997
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 1/2/95)
International Equity Fund -0.92% 8.47%
Morgan Stanley MSCI EAFE Index 1.78% 6.28%*
- --------------------------------------------------------------------------------
*(since 12/31/94)
PROSPECTUS
15
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 STOCK FUNDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- -----------------------------------------------------------------------------------------------------------------------------
ASSET GROWTH AND GROWTH INTERNATIONAL
ALLOCATION FUND INCOME FUND FUND EQUITY FUND
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None None
Maximum Sales Charge (Load) None None None None
Imposed on Reinvested Dividends
Redemption Fee None None None None
Exchange Fee None None None None
- ------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
Management Fees .74% .74% .74% 1.00%
Distribution (12b-1) Fees .25% .25% .25% .25%
Other Expenses .24% .16% .17% .24%
Total Annual Fund Operating Expenses 1.23%* 1.15%* 1.16%* 1.49%*
- ------------------------------------------------------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because the Funds'
Distributor waives its entire Distribution Fee. The Distributor may eliminate
all or a part of the fee waiver at any time. With the fee waiver, the Funds'
actual total annual operating expenses were as follows:
ASSET ALLOCATION FUND .98%
GROWTH AND INCOME FUND .90%
GROWTH FUND .91%
INTERNATIONAL EQUITY FUND 1.24%
- ------------------------------------------------------------------------------------------------------------------------------
EXAMPLE
- ------------------------------------------------------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 STOCK FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE
ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED AND
THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- ------------------------------------------------------------------------------------------------------------------------------
ASSET GROWTH AND GROWTH INTERNATIONAL
ALLOCATION FUND INCOME FUND FUND EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
1 year $ 125 $ 117 $ 118 $ 152
3 years 390 365 368 471
5 years 676 633 638 813
10 years 1,489 1,398 1,409 1,779
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
16
<PAGE>
INVESTING THROUGH YOUR RETIREMENT PLAN
================================================================================
You may invest in Boston 1784 Funds through your employer-sponsored defined
contribution plan. These plans are designed to help you save for retirement. You
should contact your employer for information about the features and benefits of
your plan, or if you have questions about:
[BULLET] HOW TO INVEST IN A FUND
[BULLET] HOW TO CHANGE THE AMOUNT OF MONEY THAT YOU INVEST IN A FUND ON A
REGULAR BASIS
[BULLET] HOW TO WITHDRAW YOUR MONEY FROM A FUND AND INVEST IN OTHER INVESTMENT
OPTIONS
[BULLET] WHEN YOU WILL RECEIVE STATEMENTS OF YOUR ACCOUNT
[BULLET] HOW MUCH MONEY YOU MAY CONTRIBUTE TO YOUR PLAN
[BULLET] HOW TO INCREASE OR DECREASE THE AMOUNT OF MONEY THAT YOU ARE
CONTRIBUTING TO YOUR PLAN
[BULLET] HOW TO MAKE WITHDRAWALS FROM YOUR PLAN
[BULLET] HOW TO STOP MAKING CONTRIBUTIONS TO YOUR PLAN
[BULLET] WHAT HAPPENS TO YOUR INVESTMENTS IF YOU LEAVE YOUR CURRENT EMPLOYMENT
[BULLET] WHAT ACCESS YOU MAY HAVE TO THE MONEY YOU HAVE INVESTED IN THE PLAN IN
THE EVENT OF FINANCIAL HARDSHIPS OR EMERGENCIES
[BULLET] WHETHER YOU MAY BE ABLE TO TAKE OUT A LOAN FROM YOUR INVESTMENTS IN
THE PLAN
PROSPECTUS
17
<PAGE>
PRICING OF FUND SHARES
================================================================================
Each Fund's net asset value per share or NAV is calculated on each day the New
York Stock Exchange is open, except for Columbus Day and Veteran's Day. The NAV
is the value of a single share of a Fund.
BOND FUNDS AND STOCK FUNDS
Each of these Funds' NAV is calculated at the close of business of the New York
Stock Exchange, normally 4:00 p.m. Eastern time. The NAV is generally based on
the market value of the securities held in the Fund. If market values are not
available, the fair value of securities is determined using procedures that the
Board of Trustees has approved.
Foreign securities are valued based on quotations from the primary market in
which they are traded, and are converted from the local currency into U.S.
dollars using current exchange rates. Foreign securities may trade in their
primary markets on weekends or other days when the Fund does not price its
shares. Therefore, the NAV of Funds holding foreign securities may change on
days when shareholders will not be able to buy or sell their Fund shares.
MONEY MARKET FUNDS
The Institutional U.S. Treasury Money Market Fund calculates NAV at 3:00 p.m.
Eastern time (12 noon on days when the financial markets close early). In
determining the Fund's NAV, securities are valued at amortized cost, which is
approximately equal to market value.
DISTRIBUTIONS
================================================================================
When you invest in a Fund through a defined contribution plan, your share of a
Fund's net income and gains on its investments is added to your account. Each
Fund passes substantially all of its earnings along to its investors as
distributions. When a Fund earns dividends from stocks and interest from bonds
and other debt securities and distributes these earnings to shareholders, it is
called a DIVIDEND DISTRIBUTION. A Fund realizes capital gains when it sells
securities for a higher price than it paid. When these gains are distributed to
shareholders, it is called a CAPITAL GAIN DISTRIBUTION. Dividend distributions
may be made several times a year, while capital gain distributions are generally
made annually. Your distributions from a Fund will be automatically reinvested
in additional shares of the Fund and will be added to your account shortly after
your plan receives the distributions.
MONEY MARKET FUNDS
The Fund declares dividend distributions each day, and pays distributions
monthly. You will not receive a dividend for the day on which you sell shares.
BOND FUNDS
The Fund declares dividend distributions each day, and pays distributions
monthly.
STOCK FUNDS
The Asset Allocation Fund and Growth and Income Fund pay dividend distributions,
if any, quarterly, generally on the last day of March, June, September and
December.
The Growth Fund pays dividend distributions, if any, semi-annually, generally on
the last day of June and December.
The International Equity Fund pays dividend distributions, if any, annually,
generally on the last day of December.
PROSPECTUS
18
<PAGE>
FEDERAL TAX CONSIDERATIONS
================================================================================
Your investment in a Fund will have tax consequences that you should consider.
Some of the more common federal tax consequences are described here, but you
should consult your tax adviser about your own particular situation.
So long as your employer's plan remains exempt from federal income tax, you will
not have to pay federal income tax on Fund distributions or on any gain you
realize on the sale or exchange of Fund shares until you withdraw those amounts
from your plan. You will generally have to pay federal income taxes at ordinary
income tax rates on distributions the plan makes to you, including in some
circumstances a 10% penalty tax on distributions before age 59 1/2. You should
consult your plan's administrator for further information regarding the tax
status of your plan distributions.
PROSPECTUS
19
<PAGE>
MORE ABOUT BOSTON 1784 FUNDS
================================================================================
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
[BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Fund are described below. These are
the strategies that, in the opinion of the Adviser, are most likely to be
important in trying to achieve the Fund's investment objective. Of course, there
can be no assurance that the Fund will achieve its investment objective. Please
note that the Fund may also use strategies and invest in securities that are not
described below but which are described in the Statement of Additional
Information.
- --------------------------------------------------------------------------------
WHAT ARE MONEY MARKET INSTRUMENTS?
A MONEY MARKET INSTRUMENT is a short-term IOU issued by banks or other U.S.
corporations, or the U.S. government or state or local governments. Money
market instruments have maturity dates of 13 months or less. Money market
instruments may include certificates of deposit, bankers' acceptances,
variable rate demand notes, fixed-term obligations, commercial paper,
asset-backed commercial paper and repurchase agreements.
- --------------------------------------------------------------------------------
The Fund has specific investment policies and procedures designed to maintain a
constant net asset value of $1.00 per share. The Fund complies with industry
regulations that apply to money market funds. These regulations require that the
Fund's investments mature or be deemed to mature within 397 days from the date
purchased and that the average maturity of the Fund's investments (on a
dollar-weighted basis) be 90 days or less. In addition, all of the Fund's
investments must be in U.S. dollar-denominated high quality securities which
have been determined by the Adviser to present minimal credit risks. Investments
in high quality, short-term securities such as money market instruments may, in
many circumstances, result in a lower yield than would be available from
investments in securities with a lower quality or a longer term.
The Fund may invest more than 25% of its assets in money market instruments
issued by banks, including foreign branches of U.S. banks and U.S. branches of
foreign banks, and in U.S. government obligations.
The Fund invests primarily in money market instruments issued by the U.S.
Treasury, including bills, notes and bonds, and repurchase agreements secured by
U.S. Treasury securities. Under normal circumstances, at least 65% of the Fund's
assets are invested in these securities. The Fund invests the rest of its assets
in U.S. government obligations issued by agencies or instrumentalities,
including mortgage-backed securities.
When selecting securities for the Fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.
ALTHOUGH THE FUND INVESTS IN U.S. GOVERNMENT OBLIGATIONS, AN INVESTMENT IN THE
FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
- --------------------------------------------------------------------------------
WHAT ARE U.S. GOVERNMENT OBLIGATIONS?
U.S. GOVERNMENT OBLIGATIONS or securities are bonds or other debt obligations
issued by, or whose principal and interest are guaranteed by, the U.S.
government or one of its agencies or instrumentalities. U.S. Treasury
securities and some obligations of U.S. government agencies and
instrumentalities are supported by the "full faith and credit" of the United
States. Some U.S. government obligations are backed by the right of the
issuer to borrow from the U.S. Treasury, and others only by the credit of the
issuing agency or instrumentality. U.S. government obligations generally have
less credit risk than other debt obligations.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS OF THE FUND
EMMETT M. WRIGHT, Senior Fund Manager, has been the manager of the Fund since it
began operations. Mr. Wright, who has more than six years of investment
management and research analysis experience, was an associate Fund Manager at
BankBoston from 1993 to 1994 and has been a Fund Manager at BankBoston since
1994.
LISA W. LEBOEUF, Fund Manager, has been a co-manager of the Fund since January
1997. Ms. LeBoeuf, who has seven years experience in investment management, has
been with BankBoston since 1978.
PROSPECTUS
20
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
BOND FUNDS
- --------------------------------------------------------------------------------
Boston 1784 Funds currently offer three Bond Funds:
[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
[BULLET] BOSTON 1784 INCOME FUND
[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Bond Funds are described below. These
are the strategies that, in the opinion of the Adviser, are most likely to be
important in trying to achieve each Fund's investment objective. Of course,
there can be no assurance that any Fund will achieve its investment objective.
Please note that each Fund may also use strategies and invest in securities that
are not described below, but which are described in the Statement of Additional
Information.
Investors should note that during periods of unusual economic or market
conditions or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market instruments and other short-term securities. These investments may result
in a lower yield than would be available from investments with a lower quality
or longer term and may prevent a Fund from achieving its investment objective.
Each Fund is actively managed, and the portfolio managers may trade securities
frequently, resulting, from time to time, in an annual portfolio turnover rate
of over 100%. Trading securities may produce capital gains, which are taxable to
shareholders when distributed. Active trading may also increase the amount of
mark-ups and fees that the Fund pays to broker-dealers when it buys and sells
securities. The "Financial Highlights" section of this prospectus shows each
Fund's historical portfolio turnover rate.
- --------------------------------------------------------------------------------
WHAT IS A "TOP-DOWN" APPROACH?
Managers of mutual funds use different styles when selecting securities to
purchase. When using a "TOP-DOWN" APPROACH, the portfolio manager looks first
at broad market factors, and on the basis of those market factors, chooses
certain sectors or industries within the overall market. The manager then
looks at individual companies within those sectors or industries.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WHAT ARE MORTGAGE-BACKED SECURITIES?
Home mortgage loans are typically grouped together into "POOLS" by banks and
other lending institutions, and interests in these pools are then sold to
investors, allowing the bank or other lending institution to have more money
available to loan to home buyers. When homeowners make interest and principal
payments, these payments are passed on to the investors in the pool. Most of
these pools are guaranteed by U.S. government agencies or by government
sponsored private corporations--familiarly called "GINNIE MAES", "FANNIE
MAES" and "FREDDIE MACS".
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND
AND INCOME FUND
The SHORT-TERM INCOME FUND and INCOME FUND invest primarily in debt securities,
such as U.S. government obligations, corporate bonds, notes, mortgage- and
asset-backed securities, and taxable municipal securities. Under normal
circumstances, at least 80% of each Fund's assets are invested in these
securities. Both Funds may invest up to 30% of their assets in securities of
foreign issuers, including Yankee bonds, which are dollar-denominated bonds
issued in the U.S. by foreign borrowers, and issuers in developing countries.
The SHORT-TERM INCOME FUND and INCOME FUND generally invest in investment grade
securities. Under normal circumstances, the Funds expect to invest at least 65%
of their assets in securities rated A or better by Standard & Poor's or Moody's
or of comparable quality as determined by the Adviser. The Funds' portfolios may
also include lower rated investment grade securities, securities which were
investment grade when purchased by a Fund but that have since been down-graded,
and securities that are not investment grade at the time of purchase but which
the portfolio managers believe will experience an increase in rating to
investment grade. The ratings are described in the Statement of Additional
Information. Higher quality securities tend to have lower yields than lower
quality securities.
When managing the SHORT-TERM INCOME FUND, the portfolio manager's emphasis is on
keeping fluctuations in the price of Fund shares at a minimum. For this reason,
the Fund's average weighted maturity is normally expected to be not more than
three years and the Fund generally maintains an average maturity of between 1.8
years and 2.3 years. Short-term debt securities tend to fluctuate less in price,
but also tend to have lower yields, than longer-term securities of comparable
quality. However, the Fund is not a money market fund and the price of its
shares will fluctuate.
PROSPECTUS
21
<PAGE>
MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
================================================================================
The portfolio managers of the SHORT-TERM INCOME FUND and INCOME FUND use a
"top-down" approach to select securities. They review economic outlook,
inflation expectation and interest rates to help identify sector weightings and
define maturity and duration selection before choosing individual securities.
The portfolio managers look at the diversification of the portfolios, and the
marketability and liquidity of the individual securities they select. Although
the Funds are actively managed, the portfolio managers attempt to manage the
Funds so as to minimize capital gains distributions.
The INCOME FUND'S average weighted maturity is expected to be from seven to
thirty years under normal circumstances. While longer-term securities tend to
have higher yields than short-term securities, their prices tend to fluctuate
more as a result of interest rate changes and other factors.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. GOVERNMENT MEDIUM-TERM INCOME FUND invests primarily in U.S. government
obligations and repurchase agreements secured by U.S. government obligations.
Under normal circumstances, at least 65% of the Fund's assets are invested in
these securities.
The Fund invests in both U.S. Treasury obligations and obligations such as
mortgage-backed securities issued or guaranteed by the U.S. government or its
agencies. The Fund also invests in non-government agency mortgage-backed
securities. ALTHOUGH THE FUND INVESTS PRIMARILY IN U.S. GOVERNMENT OBLIGATIONS,
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
When selecting securities for the Fund, the portfolio managers use a "top-down"
economic analysis to determine economic outlook, and the direction in which
inflation and interest rates are expected to move, before selecting individual
securities for the Fund. The portfolio managers also analyze the yield curve
under multiple market conditions to help define maturity and duration selection.
The Fund's average weighted maturity is normally expected to be from three to
ten years.
PORTFOLIO MANAGERS OF BOSTON 1784 BOND FUNDS
MARY K. WERLER, Senior Fund Manager, has been the manager of the Short-Term
Income Fund since the Fund began operations in July 1994. Ms. Werler, who has
more than eleven years of investment management experience, has been a Fund
Manager at BankBoston since 1993. From 1987 to 1993, Ms. Werler was an Associate
Portfolio Manager with Keystone Investment Co.
EMMETT M. WRIGHT, Senior Fund Manager, has been the manager of the U.S.
Government Medium-Term Income Fund and a manager of the Income Fund since
September 1995. Mr. Wright, who has more than six years of investment management
and research analysis experience, was an Associate Fund Manager at BankBoston
from 1993 to 1994 and has been a Fund Manager at BankBoston since 1994.
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
Boston 1784 Funds currently offer four Stock Funds:
[BULLET] BOSTON 1784 ASSET ALLOCATION FUND
[BULLET] BOSTON 1784 GROWTH AND INCOME FUND
[BULLET] BOSTON 1784 GROWTH FUND
[BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies used by the Stock Funds are described below.
These are the strategies that, in the opinion of the Adviser, are most likely to
be important in trying to achieve each Fund's investment objective. Of course,
there can be no assurance that any Fund will achieve its investment objective.
Please note that each Fund may also use strategies and invest in securities that
are not described below but which are described in the Statement of Additional
Information.
Investors should note that during periods of unusual economic or market
conditions, or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower yield
than would be available from investments with a lower quality or longer term and
do not have the potential for capital appreciation that equity securities have,
and may prevent a Fund from achieving its investment objective.
PROSPECTUS
22
<PAGE>
================================================================================
Each of the Stock Funds is actively managed, although the portfolio managers
attempt to minimize portfolio turnover. However, from time to time a Fund's
annual portfolio turnover rate may exceed 100%. The sale of securities may
produce capital gains, which, when distributed, are taxable to shareholders.
Active trading may also increase the amount of commissions or mark-ups the Fund
pays to broker-dealers when the Fund buys and sells securities. The "Financial
Highlights" section of this prospectus shows each Fund's historical portfolio
turnover rate.
ASSET ALLOCATION FUND
The ASSET ALLOCATION FUND allocates its assets between equity securities, debt
securities and short-term or money market instruments. Normally, 30% to 70% of
the Fund's assets are invested in equity securities, 30% to 60% are invested in
intermediate- and long-term debt securities, and 0% to 40% are invested in
short-term debt securities or money market instruments. The portfolio managers
determine the mix of investments between equity and debt securities based on
current economic and market conditions and the underlying value of the
securities.
The equity portion of the Fund is primarily invested in the stocks of large U.S.
companies that the portfolio managers believe offer the prospect for
above-average earnings growth and are available at reasonable prices. From time
to time, the Fund may also invest in mid-sized U.S. companies and in large,
multi-national companies based outside of the U.S. The Fund's equity securities
include common stock, warrants to purchase common stock, debt securities
convertible into common stock, convertible and non-convertible preferred stock
and depositary receipts.
When selecting equity securities for the Fund, the portfolio managers place
particular emphasis on industry selection, seeking stocks in industries that are
outperforming the market, and may overweight the portfolio relative to the S&P
500 in these industries. The Fund may similarly be underweighted relative to the
S&P 500 in certain industries.
When selecting debt securities for the Fund, the portfolio managers use a
"top-down" approach, first performing a broad economic analysis, then
identifying sectors believed to outperform the market over a particular holding
period, and then selecting individual securities. The Fund's debt securities
include investment grade corporate debt securities and debt obligations issued
or guaranteed as to the payment of principal and interest by the U.S. government
or by foreign governments. The Fund also invests in mortgage-backed and
asset-backed securities rated A or better by Standard & Poor's or Moody's or of
comparable quality as determined by the Adviser.
The Fund will use short-term debt and money market instruments, including
short-term U.S. government and corporate obligations, commercial paper, bank
obligations and repurchase agreements, in varying degrees as a risk management
tool.
GROWTH AND INCOME FUND
AND GROWTH FUND
The GROWTH AND INCOME FUND and the GROWTH FUND invest primarily in common stock
(including depositary receipts) of U.S. and foreign issuers. Typically, it is
expected that 80-90% or more of the Funds' assets will be invested in these
securities, although the Funds may invest up to 35% of their assets in other
securities such as convertible and non-convertible debt securities, preferred
stock, warrants, and money market instruments.
The GROWTH AND INCOME FUND emphasizes the stock of U.S. companies with market
capitalizations of at least $1 billion. The portfolio managers may also select
stocks in smaller U.S. companies, and may invest up to 25% of the Fund's assets
in securities of foreign companies, including smaller companies and companies in
developing markets. The portfolio managers look for high quality growth
companies with strong potential for revenue and earnings increases.
The GROWTH FUND emphasizes securities of U.S. companies with a market
capitalization of at least $250 million that the portfolio managers believe have
above-average growth potential. The Fund also may invest in securities of
smaller, lesser-known companies and may invest up to 25% of its assets in
securities of foreign companies, including companies in developing countries.
While some of the Fund's investments may pay dividends, current income is not a
consideration when selecting investments.
The portfolio managers of the GROWTH AND INCOME FUND and GROWTH FUND use a
"bottom-up" approach when selecting securities for the Funds. They look for
companies that they believe are in dynamic high growth sectors of the world
economy, and that are thought to have dominant or strong competitive positions
within their sectors. They also look for companies thought to have quality
management and that are expected to have strong earnings growth potential. When
looking for companies with a higher growth rate than the general market, the
Funds may invest in securities with a higher price-earnings ratio than the
general market.
PROSPECTUS
23
<PAGE>
MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
================================================================================
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM-UP" APPROACH?
When portfolio managers use a "BOTTOM-UP" APPROACH, they look primarily at
individual companies against the context of broader market factors.
- --------------------------------------------------------------------------------
Both the GROWTH AND INCOME FUND and GROWTH FUND may engage in foreign currency
hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund. The Funds' attempt to minimize the effects of currency
fluctuations through the use of hedging transactions may not be successful or
the hedging transactions may cause the Funds to be unable to take advantage of a
favorable change in the value of foreign currencies.
INTERNATIONAL EQUITY FUND
The INTERNATIONAL EQUITY FUND invests primarily in equity securities of foreign
issuers, including securities of issuers in developing countries.
The Fund's portfolio is diversified as to both country and industry exposure in
an attempt to limit the impact of an economic downturn in any particular country
or industry sector. The Fund emphasizes equity securities of issuers with market
capitalizations of at least $100 million that the portfolio managers believe are
financially sound, have a track record of growth in earnings and have
above-average growth potential.
The portfolio managers screen a large universe of securities as potential
investments and then identify companies with suitable market capitalization,
liquidity and balance sheet structure whose earnings growth rates have exceeded
national averages. The portfolio is then structured to reflect the relative
attractiveness of the economies of various countries, and to provide industry
diversification. While some of the Fund's investments may pay dividends, current
income is not a consideration when selecting investments.
The Fund may engage in foreign currency hedging transactions in an attempt to
minimize the effects of currency fluctuations on the Fund. The Fund's attempt to
minimize the effects of currency fluctuations through the use of hedging
transactions may not be successful or the hedging transactions may cause the
Fund to be unable to take advantage of a favorable change in the value of
foreign currencies. The Fund may also invest in convertible and non-convertible
bonds and other debt securities and money market instruments.
The costs of foreign investing, such as the costs of maintaining custody of
securities in foreign countries, frequently are higher than those involved in
U.S. investing. As a result, the operating expense ratios of the Fund may be
higher than those of investment companies investing only in U.S. securities.
PORTFOLIO MANAGERS OF THE
BOSTON 1784 STOCK FUNDS
EMMETT M. WRIGHT, Senior Fund Manager, and MICHAEL PELOSI, Senior Fund Manager,
have been co-managers of the Asset Allocation Fund since October 1997. Mr.
Wright, who has more than six years of investment management and research
analysis experience, was an Associate Fund Manager at BankBoston from 1993 to
1994 and has been a Fund Manager at BankBoston since 1994. Mr. Pelosi, who has
more than fifteen years experience in investment management, research analysis
and securities trading at BankBoston, has been a Portfolio Manager since 1988.
EUGENE D. TAKACH, Senior Fund Manager, and THEODORE E. OBER, Senior Fund
Manager, have been the co-managers of the Growth and Income Fund and the Growth
Fund since the Funds began operations. Mr. Takach, who has more than 30 years
experience in investment management, research analysis and securities trading,
has been a Portfolio Manager at BankBoston since 1971. Mr. Ober, who has more
than ten years experience in investment management and research analysis, has
been a Research Analyst, Fund Manager and Senior Fund Manager at BankBoston
since 1987.
KENTON J. IDE, Director of Investments for BankBoston's Private Bank, and JULIET
COHN, Senior Portfolio Manager at Kleinwort Benson Investment Management
Americas Inc., have been co-managers of the International Equity Fund since the
Fund began operations in January 1995. Mr. Ide, who has more than twenty years
experience in investment management and research analysis, has been with
BankBoston since early 1993. From 1983 to 1993, Mr. Ide was a Senior Vice
President with the Private Client Group of Boston Safe Deposit and Trust
Company. Ms. Cohn, who has more than fifteen years experience in investment
management, has been with Kleinwort since 1987.
PROSPECTUS
24
<PAGE>
MANAGEMENT
================================================================================
INVESTMENT ADVISER
BankBoston is the investment adviser of each Fund and, subject to policies set
by the Trustees, makes investment decisions. BankBoston is the successor to a
bank chartered in 1784 and offers a wide range of banking and investment
services to customers throughout the world. BankBoston has been providing asset
management services since 1890. The Private Bank Division of BankBoston is the
investment management group within BankBoston that advises the Funds. As of July
31, 1998, BankBoston's Private Bank was responsible for the investment
management of approximately $24 billion of individual, institutional, endowment
and corporate assets, including $8.9 billion in assets of the Funds, in money
market, equity, and fixed income securities. BankBoston's Private Bank has
earned national recognition and respect as an investment manager. BankBoston's
legal name is BankBoston, National Association and its address is 100 Federal
Street, Boston, Massachusetts 02110.
Kleinwort Benson Investment Management Americas Inc. ("Kleinwort") serves as
investment adviser to the International Equity Fund with BankBoston. Investment
decisions are joint. Kleinwort, 75 Wall Street, New York, New York 10005, is the
U.S.-registered investment management subsidiary of the London-based Kleinwort
Benson Group plc, a merchant banking group whose origins date back to 1792,
which in turn is an indirect wholly-owned subsidiary of Dresdner Bank AG. Since
it began operations in 1980, Kleinwort has managed investment accounts,
primarily for institutions in North America, comprised of equity, fixed income
and balanced portfolios. Kleinwort and its affiliates manage approximately $65
billion of assets.
MANAGEMENT FEES
The following chart shows the investment management fees paid by each Fund
during the last fiscal year.
- --------------------------------------------------------------------------------
MANAGEMENT FEES PAID
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Institutional U.S. Treasury Money Market Fund .20%
Short-Term Income Fund .50
Income Fund .68
U.S. Government Medium-Term Income Fund .67
Asset Allocation Fund .74
Growth and Income Fund .74
Growth Fund .74
International Equity Fund 1.00
BankBoston waives its investment management fees, if necessary, to limit the
total operating expenses of a Fund to a specified level. BankBoston also may
contribute to the Funds from time to time to help them maintain competitive
expense ratios. These arrangements are voluntary and may be terminated at any
time. The fees without waivers are shown in the fee table in the Risk/Return
Summary.
YEAR 2000
The "Year 2000" issue stems from the use of a two-digit format to define the
year in certain date-sensitive application systems rather than the use of a
four-digit format. As a result, date-sensitive software programs could recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in major systems or process failures or the generation of erroneous data, which
would lead to disruptions in the Funds' business operations.
The Funds have no application systems of their own and are entirely dependent on
their service providers' systems and software. The Funds are working with their
service providers (including their investment advisers, administrator, transfer
agent and custodian) to identify and remedy any Year 2000 issues. However, the
Funds cannot guarantee that all Year 2000 issues will be identified and
remedied, and the failure to successfully identify and remedy all Year 2000
issues could result in an adverse impact on the Funds.
PROSPECTUS
25
<PAGE>
DISTRIBUTION ARRANGEMENTS
================================================================================
Boston 1784 Funds do not charge any sales loads, deferred sales loads or other
fees in connection with the purchase of shares.
Each Fund, other than the Institutional U.S. Treasury Money Market Fund, has
adopted a plan under rule 12b-1. The plan allows a Fund to use part of the
Fund's assets (up to .25% of its average daily net assets) for the sale and
distribution of its shares, including advertising, marketing and other
promotional activities. Because these fees are paid out of Fund assets, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges. The Funds' Distributor currently
waives these fees on a voluntary basis. This fee waiver may be terminated in
whole or in part at any time.
PROSPECTUS
26
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND A FUND'S
FINANCIAL PERFORMANCE FOR THE PAST 5 YEARS [OR, IF SHORTER, THE PERIOD OF THE
FUND'S OPERATIONS]. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE
FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR
WOULD HAVE EARNED [OR LOST] ON AN INVESTMENT IN EACH FUND (ASSUMING REINVESTMENT
OF ALL DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS, WHOSE REPORT, ALONG WITH
THE FUNDS' FINANCIAL STATEMENTS, ARE INCLUDED IN THE FUNDS' ANNUAL REPORTS,
WHICH ARE AVAILABLE UPON REQUEST.
<TABLE>
<CAPTION>
====================================================================================================================================
MONEY MARKET FUNDS
====================================================================================================================================
NET NET NET RATIO
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET
VALUE NET FROM NET VALUE END OF EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
<S> > <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.36% $4,285,801 0.33% 5.24%
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 5.16% $2,591,487 0.33% 5.05%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.45% $ 644,733 0.32% 5.29%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 5.05% $ 395,585 0.30% 5.12%
For the period ended May 31, 1994 (1) $1.00 0.03 (0.03) $1.00 2.99%* $ 181,568 0.22% 3.16%
RATIO OF RATIO OF NET
EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET
ASSETS (EXCLUDING ASSETS (EXCLUDING
WAIVERS) WAIVERS)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1998 0.33% 5.24%
For the year ended May 31, 1997 0.34% 5.04%
For the year ended May 31, 1996 0.39% 5.22%
For the year ended May 31, 1995 0.41% 5.01%
For the period ended May 31, 1994 (1) 0.55% 2.83%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Institutional U.S. Treasury Money Market Fund commenced operations on
June 14, 1993. All ratios for the period have been annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
BOND FUNDS
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $ 9.98 0.57 0.11 (0.57) -- $10.09 6.98% $197,256
For the year ended May 31, 1997 $ 9.93 0.58 0.05 (0.58) -- $ 9.98 6.47% $194,033
For the year ended May 31, 1996 $10.09 0.60 (0.12) (0.60) (0.04 $ 9.93 4.87% $ 86,383
For the period ended May 31, 1995 (1) $10.00 0.56 0.09 (0.56) -- $10.09 6.74%* $ 52,581
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1998 $ 9.99 0.61 0.26 (0.61) -- $10.25 8.88% $392,556
For the year ended May 31, 1997 $ 9.90 0.63 0.17 (0.63) (0.08) $ 9.99 8.32% $334,778
For the year ended May 31, 1996 $10.39 0.65 (0.37) (0.65) (0.12) $ 9.90 2.64% $235,022
For the period ended May 31, 1995 (1) $10.00 0.62 0.39 (0.62) -- $10.39 10.69%* $196,515
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1998 $ 9.37 0.55 0.23 (0.55) -- $ 9.60 8.56% $252,719
For the year ended May 31, 1997 $ 9.31 0.59 0.06 (0.59) -- $ 9.37 7.16% $209,141
For the year ended May 31, 1996 $ 9.57 0.61 (0.26) (0.61) -- $ 9.31 3.65% $167,494
For the year ended May 31, 1995 $ 9.36 0.58 0.21 (0.58) -- $ 9.57 8.79% $130,081
For the period ended May 31, 1994 (2) $10.00 0.59 (0.64) (0.59) -- $ 9.36 (0.65)%* $ 92,387
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.64% 5.67% 0.89% 5.42% 83.84%
For the year ended May 31, 1997 0.65% 5.78% 0.93% 5.50% 128.11%
For the year ended May 31, 1996 0.63% 5.87% 1.06% 5.44% 95.06%
For the period ended May 31, 1995 (1) 0.48% 6.31% 1.27% 5.52% 84.54%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1998 0.80% 5.91% 1.11% 5.60% 79.09%
For the year ended May 31, 1997 0.80% 6.31% 1.15% 5.96% 78.63%
For the year ended May 31, 1996 0.80% 6.17% 1.20% 5.77% 100.51%
For the period ended May 31, 1995 (1) 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, 1998 0.80% 5.80% 1.12% 5.48% 73.65%
For the year ended May 31, 1997 0.79% 6.30% 1.16% 5.93% 98.22%
For the year ended May 31, 1996 0.80% 6.23% 1.24% 5.79% 158.66%
For the year ended May 31, 1995 0.80% 6.24% 1.27% 5.77% 142.14%
For the period ended May 31, 1994 (2) 0.31% 6.08% 1.35% 5.04% 144.77%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Short-Term Income and Income Funds commenced operations on July 1, 1994. All ratios for the period have been
annualized.
(2) The U.S. Government Medium-Term Income Fund commenced operations on June 7, 1993. All ratios for the period have
been annualized.
</FN>
</TABLE>
PROSPECTUS
27
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
====================================================================================================================================
STOCK FUNDS
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $13.40 0.37 2.30 (0.38) (0.53) $15.16 20.51% $ 50,283
For the year ended May 31, 1997 $12.31 0.34 1.44 (0.33) (0.36) $13.40 14.89% $ 35,522
For the year ended May 31, 1996 $10.99 0.31 1.61 (0.31) (0.29) $12.31 17.83% $ 16,831
For the period ended May 31, 1995 $ 9.84 0.28 1.15 (0.27) (0.01) $10.99 14.84% $ 8,622
For the period ended May 31, 1994 (1) $10.00 0.19 (0.20) (0.15) (0.00) $ 9.84 (0.15)%* $ 6,928
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1998 $17.54 0.07 4.55 (0.09) (0.35) $21.72 26.71% $553,997
For the year ended May 31, 1997 $15.23 0.12 2.63 (0.11) (0.33) $17.54 18.33% $457,952
For the year ended May 31, 1996 $12.16 0.10 3.08 (0.11) (0.00) $15.23 26.32% $303,463
For the period ended May 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09% $229,200
For the period ended May 31, 1994 (2) $10.00 0.12 0.56 (0.11) (0.00) $10.57 6.80%* $121,717
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1998 $12.20 (0.05) 1.59 -- (0.81) $12.93 12.64% $257,550
For the year ended May 31, 1997 $11.27 0.02 0.96 (0.05) (0.00 $12.20 8.77% $261,487
For the year ended May 31, 1996 (3) $10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%* $ 46,026
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1998 $13.20 (0.02) 0.80 (0.15) (0.14) $13.69 6.19% $469,819
For the year ended May 31, 1997 $12.05 0.07 1.23 (0.09) (0.06) $13.20 10.93% $503,048
For the year ended May 31, 1996 $10.41 0.11 1.85 (0.27) (0.05) $12.05 19.08% $362,460
For the period ended May 31, 1995 (4) $10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%* $148,439
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.98% 2.66% 1.23% 2.41% 47.83%
For the year ended May 31, 1997 1.07% 2.87% 1.37% 2.57% 23.60%
For the year ended May 31, 1996 1.25% 2.86% 1.90% 2.21% 39.56%
For the period ended May 31, 1995 1.25% 2.88% 2.51% 1.62% 67.23%
For the period ended May 31, 1994 (1) 1.25% 2.62% 3.61% 0.26% 28.19%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1998 0.90% 0.36% 1.15% 0.11% 39.03%
For the year ended May 31, 1997 0.92% 0.77% 1.19% 0.50% 15.35%
For the year ended May 31, 1996 0.94% 0.78% 1.24% 0.48% 39.50%
For the period ended May 31, 1995 0.94% 1.05% 1.23% 0.76% 38.94%
For the period ended May 31, 1994 (2) 0.35% 1.23% 1.36% 0.22% 31.55%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1998 0.91% (0.35%) 1.16% (0.60%) 48.60%
For the year ended May 31, 1997 0.77% 0.17% 1.15% (0.21%) 57.46%
For the year ended May 31, 1996 (3) 0.20% 1.75% 1.73% 0.22% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1998 1.24% 0.04% 1.49% (0.21%) 103.47%
For the year ended May 31, 1997 1.27% 0.41% 1.52% 0.16% 22.88%
For the year ended May 31, 1996 1.13% 0.76% 1.61% 0.28% 15.55%
For the period ended May 31, 1995 (4) 0.89% 2.06% 1.70% 1.25% 11.03%
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<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Asset Allocation Fund commenced operations on June 14, 1993. All ratios
for the period have been annualized.
(2) The Growth and Income Fund commenced operations on June 7, 1993. All ratios
for the period have been annualized.
(3) The Growth Fund commenced operations on March 28, 1996. All ratios for the
period have been annualized.
(4) The International Equity Fund commenced operations on January 3, 1995. All
ratios for the period have been annualized.
</FN>
</TABLE>
PROSPECTUS
28
<PAGE>
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
THE FUNDS.
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS IS AVAILABLE IN THE FUNDS'
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. IN THE FUNDS' ANNUAL REPORT, YOU
WILL FIND A DISCUSSION OF THE MARKET CONDITIONS AND INVESTMENT STRATEGIES THAT
SIGNIFICANTLY AFFECTED THE FUNDS' PERFORMANCE DURING THE LAST FISCAL YEAR.
YOU CAN OBTAIN A FREE COPY OF THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION
AND/OR FREE COPIES OF THE FUNDS' MOST RECENT ANNUAL OR SEMI-ANNUAL REPORT BY
CALLING 1-800-BKB-1784. THE MATERIAL YOU REQUEST WILL BE SENT BY FIRST-CLASS
MAIL, OR OTHER MEANS DESIGNED TO ENSURE EQUALLY PROMPT DELIVERY, WITHIN THREE
BUSINESS DAYS OF RECEIPT OF THE REQUEST.
THE STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE.
INFORMATION ABOUT THE FUNDS (INCLUDING THE STATEMENT OF ADDITIONAL INFORMATION)
CAN BE REVIEWED AND COPIED AT THE SECURITIES AND EXCHANGE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, D.C. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING THE COMMISSION AT 1-800-SEC-0330.
COPIES OF THIS INFORMATION MAY BE OBTAINED, UPON PAYMENT OF A DUPLICATING FEE,
BY WRITING THE PUBLIC REFERENCE SECTION OF THE COMMISSION, WASHINGTON, D.C.
20549-6009.
REPORTS AND OTHER INFORMATION ABOUT THE FUNDS ARE ALSO AVAILABLE ON THE
COMMISSION'S INTERNET SITE AT HTTP://WWW.SEC.GOV.
THIS PROSPECTUS IS INTENDED FOR USE BY RETIREMENT PLAN INVESTORS.
[BOSTON 1784 FUNDS OMITTED]
BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
WWW.BOSTON1784FUNDS.COM
FILE NO. 811-7474 MF-0170
