ANNUAL
REPORT
[Logo omitted]
Boston
1784
Funds
to Shareholders
May 31, 1998
<PAGE>
TABLE OF CONTENTS
================================================================================
LETTER TO SHAREHOLDERS 1
PERFORMANCE HIGHLIGHTS 2
TERMS YOU NEED TO KNOW 4
FUND OBJECTIVES 5
INVESTMENT ADVISER'S REPORT 6
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE 11
FINANCIAL STATEMENTS 26
REPORT OF INDEPENDENT ACCOUNTANTS 100
NOTICE TO SHAREHOLDERS 101
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BOSTON 1784 FUNDS:
[BULLET] ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY;
[BULLET] ARE NOT GUARANTEED BY BANKBOSTON, N.A. OR ANY OF ITS AFFILIATES;
[BULLET] ARE NOT DEPOSITS OR OBLIGATIONS OF BANKBOSTON, N.A. OR ANY
OF ITS AFFILIATES;
[BULLET] INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
BANKBOSTON, N.A. SERVES AS INVESTMENT ADVISER, CUSTODIAN AND SHAREHOLDER
SERVICING AGENT FOR BOSTON 1784 FUNDS. BOSTON 1784 FUNDS ARE DISTRIBUTED BY
SEI INVESTMENTS DISTRIBUTION CO., A PARTY INDEPENDENT OF BANKBOSTON, N.A.
OR ANY OF ITS AFFILIATES. FINANCIAL SERVICES COUNSELORS ARE REGISTERED
REPRESENTATIVES OF BANKBOSTON INVESTOR SERVICES, INC. (MEMBER NASD/SIPC), A
WHOLLY-OWNED SUBSIDIARY OF BANKBOSTON, N.A.
- --------------------------------------------------------------------------------
<PAGE>
BOSTON 1784 FUNDS
LETTER TO SHAREHOLDERS
================================================================================
[PHOTO OF ALLEN CROESSMANN OMITTED]
ALLEN CROESSMANN
MANAGING DIRECTOR
[PHOTO OF ROBERT NESHER OMITTED]
ROBERT NESHER
PRESIDENT
We are pleased to provide this Annual Report, which discusses our investment
approach and results, including the sustained strength of many of our tax-exempt
funds.
In February 1998, total assets of the Boston 1784 Funds family surpassed
$8 billion. During the past year, we also introduced two new Funds to the Boston
1784 Funds family:
[BULLET] BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND, in June 1997; and
[BULLET] BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND, in November 1997.
These additions bring the number of Boston 1784 Funds to 17, with total assets
of $9.0 billion as of May 31, 1998.
We want to call your attention to important recognition received by several
individual Funds for the year ended May 31, 1998, including:
[BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND, which ranked 1st out
of 10 funds in the Lipper Massachusetts Intermediate Municipal Funds
category;
[BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND, which ranked 1st out of
78 funds in the Lipper Other States Intermediate Municipal Debt Mutual
Funds category;
[BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND, which ranked 3rd out of
143 funds in the Lipper Intermediate Municipal Bonds Funds category;
[BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND, which ranked 3rd out
of 78 funds in the Lipper Other States Intermediate Municipal Debt
Mutual Funds category; and
[BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND, which ranked 12th out of 134
funds in the Lipper Tax-Exempt Money Market Funds category.
You'll find detailed information on the performance of these and other Boston
1784 Funds in this report. Please keep in mind that past performance is no
guarantee of future results. The Funds' total returns and resulting rankings
reflect advisory fee and expense waivers.
Please contact your Investment Counselor with any questions about the Funds or
your investment plan. We also remind you that you can work with a representative
to buy Boston 1784 Funds or to get information on your account by calling
1-800-BKB-1784, Monday through Friday from 8 a.m. to 8 p.m. and Saturday and
Sunday from 9 a.m. to 4 p.m (Eastern time). Of course, our automated system is
available 24 hours a day.
Thank you for your continued investment in Boston 1784 Funds.
Sincerely,
/S/Signature
Robert Nesher
President
Boston 1784 Funds
/S/Signature
Allen Croessmann
Managing Director, Investment Services
BankBoston, N.A.
1
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<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS OF THE FUNDS
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FOR THE PERIOD JUNE 1, 1997 THROUGH MAY 31, 1998
-------------------------------------------------------------------------------------------
INCOME
TOTAL NET ASSETS TOTAL RETURN NAV SHARE PRICE YIELD DISTRIBUTIONS
-------------------------------------------------------------------------------------------
5-31-98 5-31-98 HIGH LOW 30-DAY 7-DAY PER
(IN MILLIONS) SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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MONEY MARKET FUNDS
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Boston 1784 Tax-Free Money Market $1,007.7 3.33% $ 1.00 $ 1.00 $ 1.00 N/A 3.35% $0.03
Boston 1784 U.S. Treasury Money Market 372.7 5.02 1.00 1.00 1.00 N/A 4.90 0.05
Boston 1784 Prime Money Market 127.6 5.16 1.00 1.00 1.00 N/A 5.01 0.05
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BOND FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
Boston 1784 Short-Term Income $197.3 6.98% $10.09 $10.17 $ 9.98 5.44% N/A $0.57
Boston 1784 Income 392.6 8.88 10.25 10.40 9.99 5.56 N/A 0.61
Boston 1784 U.S. Government
Medium-Term Income 252.7 8.56 9.60 9.73 9.36 5.41 N/A 0.55
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TAX-EXEMPT INCOME FUNDS
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Boston 1784 Tax-Exempt
Medium-Term Income $303.6 9.24% $10.52 $10.61 $10.18 4.30% N/A $0.48
Boston 1784 Connecticut
Tax-Exempt Income 142.1 9.29 10.81 10.84 10.38 4.16 N/A 0.50
Boston 1784 Florida
Tax-Exempt Income (1) 51.8 7.63 10.30 10.40 10.00 4.21 N/A 0.43
Boston 1784 Massachusetts
Tax-Exempt Income 206.1 8.91 10.42 10.51 10.01 4.19 N/A 0.47
Boston 1784 Rhode Island
Tax-Exempt Income 76.8 8.28 10.62 10.70 10.31 4.23 N/A 0.49
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STOCK FUNDS
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Boston 1784 Asset Allocation $ 50.3 20.51% $15.16 $15.45 $13.40 N/A N/A $0.38
Boston 1784 Growth and Income 554.0 26.71 21.72 22.22 17.43 N/A N/A 0.09
Boston 1784 Growth 257.5 12.64 12.93 14.75 11.60 N/A N/A --
Boston 1784 International Equity 469.8 6.19 13.69 14.10 11.40 N/A N/A 0.15
<FN>
PERFORMANCE DATA REPRESENT PAST RESULTS AND ARE NO GUARANTEE OF FUTURE RESULTS.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. YIELD
FLUCTUATES. YIELD REFLECTS THE PORTFOLIO'S EARNING POWER, NET OF FUND EXPENSES.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH MONEY
MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN A MONEY MARKET FUND.
(1) BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 30, 1997.
TOTAL RETURN IS FOR THE PERIOD JUNE 30, 1997 THROUGH MAY 31, 1998, AND HAS NOT
BEEN ANNUALIZED.
</FN>
</TABLE>
2
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BOSTON 1784 FUNDS
TOTAL RETURN FOR THE FISCAL YEAR
ENDED MAY 31, 1998
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[BAR GRAPH OMITTED]
BOSTON TOTAL RETURN FOR THE FISCAL YEAR ENDED MAY 31, 1998
1784 FUNDS
- --------------------------------------------------------------------------------
TAX-FREE MONEY MARKET 3.33%
U.S. TREASURY MONEY MARKET 5.02%
PRIME MONEY MARKET 5.16%
SHORT-TERM INCOME 6.98%
INCOME 8.88%
U.S. GOVERNMENT MEDIUM-TERM INCOME 8.56%
TAX-EXEMPT MEDIUM-TERM INCOME 9.24%
CONNECTICUT TAX-EXEMPT INCOME 9.29%
FLORIDA TAX-EXEMPT INCOME(1) 7.63%
MASSACHUSETTS TAX-EXEMPT INCOME 8.91%
RHODE ISLAND TAX-EXEMPT INCOME 8.28%
ASSET ALLOCATION 20.51%
GROWTH AND INCOME 26.71%
GROWTH 12.64%
INTERNATIONAL EQUITY 6.19%
- --------------------------------------------------------------------------------
(1) FLORIDA TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 30, 1997. TOTAL
RETURN IS FOR THE PERIOD JUNE 30, 1997 THROUGH MAY 31, 1998, AND HAS NOT
BEEN ANNUALIZED.
3
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TERMS YOU NEED TO KNOW
================================================================================
ADVISER is an organization employed by a mutual fund to give professional advice
on the fund's investments and asset management practices (also called the
investment adviser).
ASSETS are the investment holdings and cash owned by a mutual fund.
AVERAGE-WEIGHTED-MATURITY is an average of the maturity dates of the various
securities in a mutual fund based on the dollar value of those securities. It is
calculated by multiplying the market value of each portfolio security by the
time remaining to its maturity, adding these calculations and then dividing the
total by the market value of the portfolio.
BASIS POINT is one one-hundredth of a percentage point.
CAPITAL APPRECIATION is the increase in the market value of a mutual fund's
securities, as reflected in the net asset value of the fund's shares. Capital
appreciation (or growth) is a specific long-term objective of many mutual funds.
COUPON RATE is the stated interest rate on a bond.
DIVERSIFICATION is the practice of investing broadly across a number of
securities to reduce risk; a hallmark of mutual fund investing.
DURATION is a weighted average term-to-maturity of a mutual fund security's cash
flow.
EXPENSE RATIO is a fund's cost of doing business -- disclosed in the prospectus
- -- as a percent of its assets.
INCOME is the dividends, interest, and/or short-term capital gains paid to a
mutual fund's shareholders. Income is earned on a fund's investment portfolio
after deducting operating expenses.
INVESTMENT OBJECTIVE is the goal -- long-term capital growth or current income,
for example -- that an investor and mutual fund pursue together.
LIQUIDITY is the ability to redeem (sell back) all or part of your mutual fund
shares on any business day and receive the current value (which may be more or
less than the original cost).
MANAGEMENT FEE is the amount paid by a mutual fund to the investment adviser for
its services.
NET ASSET VALUE PER SHARE (NAV) is the market worth of one share of a mutual
fund. This figure is derived by taking a fund's total assets -- securities, cash
and any accrued earnings -- deducting liabilities, and dividing by the number of
shares outstanding.
PRINCIPAL is the basic amount of money you invest, not to be confused with
reinvested dividends or capital gains.
TOTAL RETURN is the change in value of an investment from the beginning to the
end of a period, assuming the reinvestment of all distributions. This is based
on a formula set by the Securities and Exchange Commission.
YIELD is the percentage rate at which a fund's portfolio earns income, based on
a formula set by the Securities and Exchange Commission.
4
<PAGE>
BOSTON 1784 FUNDS
FUND OBJECTIVES
================================================================================
MONEY MARKET FUNDS
[BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND To preserve the principal value
of a shareholder's investment and maintain a high degree of liquidity
while providing current income that is exempt from federal income tax.
[BULLET] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND To preserve the principal
value of a shareholder's investment and maintain a high degree of
liquidity while providing current income.
[BULLET] BOSTON 1784 PRIME MONEY MARKET FUND To preserve the principal value of
a shareholder's investment and maintain a high degree of liquidity
while providing current income.
BOND FUNDS
[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND To provide investors with maximum
current income, and, as a secondary goal, to preserve investors'
capital.
[BULLET] BOSTON 1784 INCOME FUND To provide investors with maximum current
income, and, as a secondary goal, to preserve investors' capital.
[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND To provide
investors with current income consistent with preservation of capital.
TAX-EXEMPT FUNDS
[BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND To provide investors
with current income, exempt from federal income tax, consistent with
preservation of capital.
[BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND To provide investors
with current income exempt from both federal and Connecticut personal
income tax. Preservation of capital is a secondary goal.
[BULLET] BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND To provide investors with
current income exempt from federal income tax through Fund shares which
are exempt from Florida intangible personal property tax. Preservation
of capital is a secondary goal.
[BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND To provide investors
with current income exempt from both federal and Massachusetts personal
income tax, consistent with preservation of capital.
[BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND To provide investors
with current income exempt from federal income tax and Rhode Island
personal income and business corporation taxes. Preservation of capital
is a secondary goal.
STOCK FUNDS
[BULLET] BOSTON 1784 ASSET ALLOCATION FUND 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.
[BULLET] BOSTON 1784 GROWTH AND INCOME FUND To provide investors with long-term
growth of capital with a secondary goal of income.
[BULLET] BOSTON 1784 GROWTH FUND To provide investors with capital appreciation.
Dividend income, if any, is incidental to this goal.
[BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND To provide investors with
long-term growth of capital. Dividend income, if any, is incidental to
this goal.
5
<PAGE>
INVESTMENT ADVISER'S REPORT
================================================================================
[PHOTO OF EDWARD G. RILEY, JR. OMITTED]
EDWARD G. RILEY, JR.
CHIEF INVESTMENT OFFICER
If the past year had a theme song, it might well be, "The Beat Goes On." Despite
occasional ups and downs in the financial markets, investors were the
beneficiaries of the 8th year of a bull market in stocks, and the 7th year of
economic expansion. While both the bull and the economy could be described as
mature, neither shows definitive signs of old age--although a close look reveals
definite signs of gray at the temples.
There's no doubt that this is a robust economy. In 1997, we saw solid growth
in the Gross Domestic Product (GDP), while the first quarter of 1998 saw an
annualized 5.4% increase in GDP. Auto sales are firm and dealers report
improving floor traffic. Retail sales are up. Banks point to solid loan
demand. And all this with barely a hint of inflation, which hovers around a
negligible 1%.
But are the bull and the economy tiring? Profit growth showed real signs of
slowing during the first quarter of 1998. While sales figures for
large-capitalization companies increased by 3.5% and the economy grew at a 5.4%
pace, earnings-per-share were up only 3.5%.
There are several important reasons for profits to lag--not the least of
which is consumer intolerance for price increases. Despite increasing upward
pressure on labor costs--which account for 65% of the cost of production--
companies dare not raise prices for fear of losing market share. Of course, the
Asian crisis hasn't helped either. With the dollar reaching new heights against
several Asian currencies, low-priced imports are flooding into the U.S. market.
At the same time, the Asian market for American goods has dried up, severely
impacted by economic troubles across the region and the strong dollar, which
makes U.S. products prohibitively expensive for the mass market. Just how weak
is Asia? Consider Hong Kong, one of the less troubled markets. Retail sales
decreased 12% in January and 19% in February--and as of the end of May the stock
market had dropped (in U.S. dollar terms) 20% since the beginning of the year.
So as we enter the second half of 1998, there are clear hints that things
won't go as smoothly as in the first half. The pace of manufacturing and
employment growth are slowing--yet the pressure to increase prices to maintain
profits continues to rise. Unfortunately, the other antidote to profit declines
is layoffs. With slowing revenue growth in the second half, companies will be
particularly hard pressed to sustain earnings, avoid price increases, and
maintain employment levels--much less raises--all at the same time.
In a troubling sense, what we have here is a bubble economy that simply can't
keep expanding without limit--but ironically, a bubble without inflation.
Merger/consolidation "mania" is sweeping a host of industries as companies try
to buy their way to market share dominance and efficiency. And consumers, their
morale buoyed by a "wealth effect" engendered by soaring 401(k) and mutual fund
wealth, continue to assume ever increasing levels of credit card and personal
debt. Predictably, however, more consumers than ever are also declaring
bankruptcy. How relatively young and inexperienced
6
<PAGE>
BOSTON 1784 FUNDS
================================================================================
investors will react if the stock market corrects--or worse--is a wild card
for the economy.
STOCK MARKET REVIEW
Until now, all the pillars supporting the stock market--low inflation, low
interest rates, high earnings and excellent liquidity--have remained solid.
[BULLET] Inflation, at 11/2%--the lowest since 1964--is almost invisible.
[BULLET] The yield on the 30-year U.S. Treasury Bond oscillates between 51/2%
and 6%--and lately on the low side of that range.
[BULLET] Until recently, corporate earnings had trended steadily upward,
increasing 8% in the fourth quarter of 1997 compared to the same
period in 1996.
[BULLET] Money has been flowing into the stock market at a record pace.
Even the Asian crisis has been good for many U.S. stocks, creating a flight
to quality from abroad that has helped to support share prices.
The result was a 31% gain for the Standard & Poor's 500 Composite Index (the
"S&P 500") in the 12 months covered by this Report. Indeed, investors have
benefited from three years of double-digit gains--all of them over 20%--in the
S&P 500. Because the large-capitalization end of the stock market, as
represented by the S&P 500, continued to perform so well, our Growth and Income
Fund and Growth Fund, which focus more on mid- to large-cap and small cap
stocks, respectively, underperformed the S&P 500. Nonetheless, the Growth and
Income Fund still generated an excellent total return of 26.71%.
As noted above, however, good things come to an end, and we may well be
nearing a turning point in the stock market. Interest rates and inflation appear
steady, but corporate earnings
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
S&P 500 INDEX
MAY 31, 1997 - MAY 31, 1998
- ---------------------------
MONTH INDEX LEVEL
- ---------------------------
5/97 848
6/97 885
7/97 954
8/97 899
9/97 947
10/97 914
11/97 955
12/97 970
1/98 980
2/98 1,049
3/98 1,101
4/98 1,111
5/98 1,097
appear to be softening and the tide of liquidity may be turning. While a
great deal of money continues to flow into mutual funds, less of it is being
directed toward stock funds. It's true that in March 1998, equity mutual funds
attracted $26 billion. But it's also true that 44% of total flows went into
money market funds, while just 36% went toward equities.
One of the tried-and-true indicators of stock market peaks is speculation,
which would seem to be saying that the market has not only reached its peak but
gone over the top.
7
<PAGE>
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We have seen some truly fantastic--meaning fantasy-like--moves in some stocks.
One hot entertainment/communications stock soared from 5-5/8 to 68 in a month,
while a leading internet service has been trading at 68 times sales, 48 times
book value, and more than 400 times annualized earnings.
Lest you think that stratospheric valuations are confined merely to trendy
stocks, consider the S&P 500 as a whole. Its price-to-earning ratio is 26.6, an
all-time high. Its price-to-book value ratio is 4.5. And the price-to-dividend
level has soared 66.7, pushing stock yields to an all-time low.
With stock market returns averaging 18% over the past 16 years, investors
might be excused a little ebullience. In the past 12 months, the market has
posted capital gains of $297 billion, effectively doubling the personal savings
rate of $236 billion without investors actually saving another dime. Hence, the
already mentioned "wealth effect" that has bolstered consumer morale.
Long-term investing in stocks still makes sense for many investors. As
contrarian as it may sound, though, we believe a note of caution is in order.
Confidence is at an extreme. More than one novice investor has called his or her
broker to ask for an index fund by saying, "You know, the one that I can't lose
money in and only goes up." These investors are simply unaware that the 50-year
average return on stocks is 10.5%, and that stocks, like temperature and
snowfall statistics, tend to revert to the mean. In other words, there are
likely to be some dreary years to balance the spectacular `80s and `90s.
What will bring about this long-awaited but not-much-feared correction? We
think Asia still has mischief to make with the world economy. The problems in
Japan, the world's second-
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
DOW JONES INDUSTRIAL AVERAGE
MAY 31, 1997 - MAY 31, 1998
- ---------------------------
MONTH INDEX LEVEL
- ---------------------------
5/97 7,331
6/97 7,672
7/97 8,222
8/97 7,622
9/97 7,945
10/97 7,442
11/97 7,823
12/97 7,908
1/98 7,906
2/98 8,545
3/98 8,799
4/98 9,063
5/98 8,899
largest economy and the epicenter of the crisis, are more intractable than
first thought. Or it could be the Millennium/Y2K problem, should computers, and
therefore the global economy, cease to function on January 1, 2000. Or it could
simply be the natural forces of attrition within a stock market that cannot
indefinitely outstrip profit and growth expectations.
8
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BOSTON 1784 FUNDS
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BOND MARKET REVIEW
The bond market is one of the most intriguing and least understood forces in
our economy. For one thing, when interest rates rise, the value of bonds
fall--and vice versa. For another, there's a widespread perception that the
Federal Reserve Board controls interest rates. Actually, a few thousand bond
traders riveted to video monitors and telephones have an even greater impact on
interest rates around the world. Certainly, the Federal Reserve Board has an
impact with its ability to raise or lower short-term rates. But long-term rates,
the cost of capital most important to corporations and governments, are set by
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
30-YEAR TREASURY BOND
MAY 31, 1997 - MAY 31, 1998
- ---------------------------
MONTH YIELD
- ---------------------------
5/97 6.94%
7/97 6.51%
9/97 6.50%
11/97 6.11%
1/98 5.81%
3/98 5.95%
5/98 5.93%
traders who bid up interest rates at the first hint of inflation--whether real
or imagined.
In the past year, long-term interest rates have remained remarkably
favorable, trending generally downward to 5.93% as of May 31, 1998, about 100
basis points (1%) below the level 12 months ago. One key reason: inflation has
been virtually non-existent. Indeed, because of the Asian crisis, the U.S. is
now importing deflation in the form of bargain-priced goods that are forcing
down the prices charged by domestic producers. The Asian crisis has also lowered
demand for crude oil, and with it oil prices. By lengthening their average
maturities, our fixed income funds--particularly the tax-exempt funds--were
well-positioned to capitalize on the downward trend in interest rates.
We should not underestimate the impact of a deficit-free budget on interest
rates, which dramatically reduces the government's demand for capital. With the
supply of (theoretically) risk-free U.S. securities declining, investors are
paying more to get them--and interest rates decline further.
But here, too, there may be storm clouds massing. For example, the housing
component of the Consumer Price Index (CPI) is rising, medical inflation is
accelerating, and prices in the service sector of the economy are going up.
Although productivity is strong, wages and salaries are increasing at a 4.4%
rate, not far behind the economy's robust 5.4% growth. As a result, the most
recent CPI increase was the largest in six months and the Producer Price Index
increased for the first time in six months.
9
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The bottom line is that bonds, like stocks, may be facing a rougher road
ahead in the medium-term. For the near term, however, we see the Asian crisis
and the slowing domestic economy in control of inflation and bond psychology. As
a result, we look for stability or further declines in long-term interest rates
in the months ahead.
MONEY MARKET REVIEW
Short-term interest rates are influenced almost solely by the actions of the
Federal Reserve Board, which controls the interest rates that banks pay to
borrow from the government and from each other. During the past twelve
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
FEDERAL FUNDS RATE
MAY 31, 1995 - MAY 31, 1998
- ---------------------------
MONTH RATE
- ---------------------------
5/95 6.01%
11/95 5.80%
5/96 5.24%
11/96 5.31%
5/97 5.50%
11/97 5.50%
5/98 5.50%
months, and despite much discussion to the contrary, the Federal Reserve
Board has left the Federal Funds rate unchanged at 5.50%, following a 0.25%
increase in March 1997.
We do not expect short-term interest rates to increase in the near
future--and, in fact, we could argue that they should come down further.
Historically, the real Federal Funds rate--the difference between the stated
interest rate and inflation--has ranged between 2.5% and 3.0%. Simple arithmetic
leads to the conclusion that rates should drop by another 100 basis points (1%)
or more.
On the other hand, the Federal Reserve Board is walking a tightrope. It is
concerned about economic inflation and Chairman Greenspan periodically buffets
the markets by voicing his thoughts on asset inflation. The natural inclination
of an inflation-fighter is to raise rather than lower rates, but the Federal
Reserve Board cannot afford to do that with economic growth slowing and the
Asian crisis threatening a regional, or even global, recession. The result:
short-term interest rates are unlikely to rise and investors will experience
investment performance below what they've come to expect.
/S/Signature
Edward G. Riley, Jr.
Chief Investment Officer
BankBoston, N.A.
10
<PAGE>
BOSTON 1784 FUNDS
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
================================================================================
BOSTON 1784 TAX-FREE
MONEY MARKET FUND
The objective of Boston 1784 Tax-Free Money Market Fund is to preserve the
principal value of a shareholder's investment and maintain a high degree of
liquidity while providing current income that is exempt from federal income tax.
As of May 31, 1998, the Fund grew to a total of $1 billion in net assets from
$845.6 million in net assets on May 31, 1997.
The Fund is an actively managed, nationally diversified portfolio of
investment grade money market securities. The assets of the Fund are diversified
among general obligation securities and those issued to finance hospitals,
transportation, housing, student loans, utilities, industrial development and
other municipal purposes.
For the year ended May 31, 1998, the Fund had a total return of 3.33%,
compared with returns of 3.09% by the IBC/Financial Data Stockbroker & General
Purpose Tax-Free Average and 3.09% by the Lipper Tax-Exempt Money Market Funds
Average for the same period. Based on total return, the Fund rated among the top
10% (12 of 134) of the Lipper Tax-Exempt Money Market Funds Average for the
period from June 1, 1997 through May 31, 1998. The 7-day yield as of May 31,
1998 was 3.35%.
The $150 million increase in the Fund's assets during the year allowed for
the purchase of longer term (397 days) securities, which permitted the Fund to
lock in attractive yields without impacting significantly the
average-weighted-maturity. The Fund continues to seek higher yields by
purchasing securities issued in states that have either low or no state income
taxes. Looking ahead, we expect money market rates to remain relatively stable
given the apparent low inflation in the economy.
BOSTON 1784 TAX-FREE MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
TAX-FREE MONEY MARKET FUND VERSUS THE IBC/FINANCIAL DATA STOCKBROKER & GENERAL
PURPOSE TAX-FREE AVERAGE AND THE LIPPER TAX-EXEMPT MONEY MARKET FUNDS AVERAGE
ONE YEAR RETURN 3.33%
ANNUALIZED 3-YEAR RETURN 3.37%
ANNUALIZED INCEPTION TO DATE 3.16%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-FREE
MONEY MARKET FUND $10,000 $10,221 $10,557 $10,932 $11,284 $11,660
IBC/FINANCIAL DATA
STOCKBROKER & GENERAL
PURPOSE AVERAGE 10,000 10,176 10,476 10,807 11,124 11,468
LIPPER TAX-EXEMPT
MONEY MARKET
FUNDS AVERAGE 10,000 10,177 10,478 10,811 11,131 11,475
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
11
<PAGE>
================================================================================
BOSTON 1784 U.S. TREASURY
MONEY MARKET FUND
The objective of Boston 1784 U.S. Treasury Money Market Fund is to preserve the
principal value of a shareholder's investment and maintain a high degree of
liquidity while providing current income. As of May 31, 1998, the Fund declined
to $372.7 million in net assets from $390.3 million in net assets as of May 31,
1997.
For the year ended May 31, 1998, the Fund had a total return of 5.02%,
compared with returns of 5.01% for the IBC/Financial Data U.S. Government &
Agencies Average and 4.85% for the Lipper U.S. Treasury Money Market Funds
Average for the same period. The 7-day yield as of May 31, 1998 was 4.90%. The
Fund's return and resulting rankings reflect a waiver of certain management fees
and expenses (see Financial Highlights).
In July 1997, the Fund's "AAAm" rating was again confirmed by Standard and
Poor's. The rating is based on an analysis of the Fund's credit quality, market
price exposure and management. The rating signifies that, in the opinion of
Standard & Poor's, the Fund offers excellent safety of investment principal and
superior capacity to maintain a $1.00 per share net asset value at all times.
The Fund attempts to maintain these characteristics through conservative
investment practices and strict internal controls. The Fund is reviewed on a
weekly basis by Standard & Poor's.
The Fund invests primarily in U.S. Government agency securities, U.S.
Treasury obligations and repurchase agreements fully collateralized by U.S.
Treasury obligations.
In the coming year, we expect short-term interest rates to remain fairly
stable as a result of the low rate of inflation in the economy.
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 U.S.
TREASURY MONEY MARKET FUND VERSUS THE IBC/FINANCIAL DATA U.S. GOVERNMENT &
AGENCIES AVERAGE AND THE LIPPER U.S. TREASURY MONEY MARKET FUNDS AVERAGE
ONE YEAR RETURN 5.02%
ANNUALIZED 3-YEAR RETURN 5.01%
ANNUALIZED INCEPTION TO DATE 4.51%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784
U.S. TREASURY
MONEY MARKET FUND $10,000 $10,248 $10,741 $11,295 $11,844 $12,438
IBC/FINANCIAL DATA U.S.
GOVERNMENT &
AGENCIES AVERAGE 10,000 10,250 10,726 11,270 11,810 12,402
LIPPER U.S. TREASURY
MONEY MARKET
FUNDS AVERAGE 10,000 10,246 10,716 11,253 11,783 12,354
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
12
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 PRIME MONEY
MARKET FUND
The objective of Boston 1784 Prime Money Market Fund is to preserve the
principal value of a shareholder's investment and maintain a high degree of
liquidity while providing current income. As of May 31, 1998, the Fund grew to
$127.6 million in net assets from $123.1 million in net assets on June 1, 1997.
For the year ended May 31, 1998, the Fund had a total return of 5.16%,
compared with returns of 5.06% for the IBC/Financial Data First Tier Money
Market Average and 4.97% for the Lipper Money Market Funds Average for the same
period. The 7-day yield as of May 31, 1998 was 5.01%. The Fund's return and
resulting rankings reflect a waiver of certain management fees and expenses (see
Financial Highlights).
The Fund invests primarily in high quality money market instruments,
including short-term U.S. government obligations, corporate bonds, bank
obligations (including certificates of deposit, bankers' acceptances and fixed
time obligations), commercial paper, variable rate demand notes, taxable
municipal securities and repurchase agreements.
Since inflation remains at a relatively low 11/2%, we expect short-term
interest rates to remain fairly stable in the near future.
BOSTON 1784 PRIME MONEY MARKET FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 PRIME
MONEY MARKET FUND VERSUS THE IBC/FINANCIAL DATA FIRST TIER MONEY MARKET AVERAGE
AND THE LIPPER MONEY MARKET FUNDS AVERAGE
ONE YEAR RETURN 5.16%
ANNUALIZED 3 YEAR RETURN 5.16%
ANNUALIZED 5 YEAR RETURN 4.62%
ANNUALIZED INCEPTION TO DATE 4.40%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
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<CAPTION>
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784
PRIME MONEY
MARKET FUND $10,000 $10,433 $10,745 $11,044 $11,577 $12,191 $12,803 $13,464
IBC/FINANCIAL DATA
FIRST TIER MONEY
MARKET AVERAGE 10,000 10,415 10,711 11,004 11,529 12,126 12,716 13,360
LIPPER MONEY
MARKET FUNDS
AVERAGE 10,000 10,417 10,715 11,006 11,528 12,112 12,691 13,322
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
13
<PAGE>
================================================================================
BOSTON 1784 SHORT-TERM
INCOME FUND
The objective of Boston 1784 Short-Term Income Fund is to provide investors with
maximum current income, and, as a secondary goal, to preserve investors'
capital. The Fund is designed for investors seeking a higher yield than that
available from a money market fund and more price stability than that of a
longer-term bond fund. Unlike a money market fund, the Fund's net asset value
will fluctuate.
The Fund's net assets as of May 31, 1998 were $197.3 million. The Fund's
total return for the year ended May 31, 1998 was 6.98%, compared to returns of
6.54% for the Lipper Short Investment Grade Debt Funds Average and 7.74% for the
Lehman Brothers Mutual Fund 1-5 Year Government/Corporate Bond Index for the
same period. Based on total return, the Fund placed in the top third (29 of 101)
of the Lipper Short Investment Grade Debt Funds Average for the period from June
1, 1997 to May 31, 1998. The Fund's return and resulting ranking reflect a
waiver of certain fees and expenses (see Financial Highlights).
During the past year, sector selection was the most important factor in the
Fund's performance. Particularly important was the Fund's increased allocation
of investments to asset-backed securities. On May 31, 1998, the Fund's portfolio
was invested 40% in corporate bonds, 20% in U.S. Treasury and government agency
securities, 21% in asset-backed securities, 6% in mortgage-backed securities and
8% in taxable municipal securities. Throughout the year, the Fund maintained a
relatively high exposure to the asset-backed and corporate single "A" sectors,
which resulted in increased yield and price stability.
During the coming year, we expect the market to continue to trade in a narrow
range of yields. We do not foresee the Federal Reserve Board making any major
change in its monetary policy in the near future. Therefore, we do not expect
interest rates to move dramatically in either direction. The Fund will maintain
its current maturity structure in an effort to avoid price volatility.
BOSTON 1784 SHORT-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 SHORT
TERM INCOME FUND VERSUS THE LEHMAN BROTHERS MUTUAL FUND 1-5 YEAR GOV'T./CORP.
INDEX AND THE LIPPER SHORT INVESTMENT GRADE DEBT FUNDS AVERAGE
ONE YEAR RETURN 6.98%
ANNUALIZED 3 YEAR RETURN 6.07%
ANNUALIZED INCEPTION TO DATE 6.37%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
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BOSTON 1784
SHORT-TERM
INCOME FUND $10,000 $10,601 $11,107 $11,826 $12,651
LEHMAN MUTUAL
FUND 1-5 YEAR
GOV'T./CORP. INDEX 10,000 10,700 11,236 12,014 12,944
LIPPER SHORT
INVESTMENT-GRADE
DEBT AVERAGE 10,000 10,544 11,066 11,775 12,544
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
14
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 INCOME FUND
The objective of Boston 1784 Income Fund is to provide investors with maximum
current income, and, as a secondary goal, to preserve investors' capital.
The Fund grew from $334.8 million in net assets on June 1, 1997 to $392.6
million in net assets on May 31, 1998. For the year ended May 31, 1998, the Fund
had a total return of 8.88%, compared with returns of 10.92% for the Lehman
Brothers Aggregate Bond Index and 10.86% for the Lipper Corporate Debt A-Rated
Average for the same period. The Fund's return reflects a waiver of certain
management fees and expenses (see Financial Highlights).
The Fund's performance was impacted at the end of 1997 and in early 1998 by
its exposure to foreign corporate bonds, particularly bonds issued in Latin
America and Asia. The Fund's exposure to Korean and Chinese corporate bonds had
the largest negative impact on returns. During the fourth fiscal quarter, the
Fund's average credit quality improved significantly by the addition of U.S.
Treasury securities to its portfolio.
The Fund is an actively managed portfolio of investment grade, intermediate-
to long-term securities. The assets of the Fund are diversified among government
obligations, corporate securities, mortgage-backed securities, asset-backed
securities and Yankee bonds (U.S. dollar-denominated bonds issued in the U.S. by
foreign borrowers). On May 31, 1998, the average-weighted-maturity of the Fund
was approximately 11 years with a duration of about 5.85 years.
During the past year, the bond market reacted periodically to concerns that
strong economic growth and low unemployment might lead to inflation. The Federal
Reserve Board has left short-term interest rates unchanged since March 1997,
when the Federal Funds rate was increased by 0.25% to 5.50%. Although we foresee
little or no inflation in the immediate future, it is possible that the Federal
Reserve Board may again raise interest rates as concern about the Asian crisis
subsides. We expect interest rates to remain within a narrow range over the
course of the year, and the 30-year U.S. Treasury Bond to yield between 5.50%
and 6.25%. We will continue to focus on U.S. Treasury securities and
high-quality, domestic corporate debt, since we believe that foreign corporate
debt does not provide sufficient incremental yield to justify the additional
risk.
BOSTON 1784 INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 INCOME
FUND VERSUS THE LEHMAN BROTHERS AGGREGATE BOND INDEX AND THE LIPPER CORPORATE
DEBT A-RATED AVERAGE
ONE YEAR RETURN 8.88%
ANNUALIZED 3 YEAR RETURN 6.54%
ANNUALIZED INCEPTION TO DATE 7.72%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
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BOSTON 1784
INCOME FUND $10,000 $10,934 $11,211 $12,144 $13,323
LEHMAN AGGREGATE
BOND INDEX 10,000 10,955 11,435 12,387 13,739
LIPPER CORPORATE
DEBT A-RATED AVERAGE 10,000 10,912 11,297 12,164 13,484
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
15
<PAGE>
================================================================================
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
The objective of Boston 1784 U.S. Government Medium-Term Income Fund is to
provide investors with current income consistent with preservation of capital.
The Fund is an actively managed portfolio of U.S. Treasury and U.S. government
agency short- to medium-term securities.
The Fund grew in net assets from $209.1 million on June 1, 1997 to $252.7
million on May 31, 1998. For the year ended May 31, 1998, the Fund had a total
return of 8.56%, compared with returns of 8.59% for the Lehman Brothers
Intermediate Government Bond Index and 9.32% for the Lipper Intermediate-Term
U.S. Government Funds Average for the same period. The Fund's return reflects a
waiver of certain management fees and expenses (see Financial Highlights).
Several sectors influenced the Fund's performance. Through most of the year,
the Fund was slightly overweighted compared to the Lehman Brothers Intermediate
Government Bond Index in both mortgage-backed securities and U.S. government
agency securities. Both sectors added to the income return of the Fund. Yet,
some of the mortgaged-backed securities held by the Fund were adversely impacted
by the historic high mortgage refinancing activity in early 1998. Mortgages with
relatively high yields were prepaid, which caused the Fund to purchase
securities in the market with lower yields.
The assets of the Fund were diversified on a sector basis among U.S.
Treasury, U.S. government agency and mortgaged-backed securities. The Fund's
securities were concentrated in the 2-year to 10-year maturity range. On May 31,
1998, the average-weighted-maturity of the Fund was approximately 7.7 years and
the Fund had a duration of 4.3 years.
Concerns that strong economic growth and low unemployment might lead to
inflation caused the bond market to react periodically during the past year.
Short-term interest rates have remained unchanged since March 1997, when the
Federal Reserve Board increased the Federal Funds rate by 0.25% to 5.50%. While
we anticipate little or no inflation in the near future, the Federal Reserve
Board may raise interest rates as concern lessens about the impact of the Asian
crisis. We anticipate that interest rates will remain within a narrow range over
the coming year, and that the 30-year U.S. Treasury Bond will yield between
5.50% and 6.25%. We will continue to concentrate on U.S. Treasury securities and
high-quality, domestic corporate securities.
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 U.S.
GOVERNMENT MEDIUM-TERM INCOME FUND VERSUS THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT BOND INDEX AND THE LIPPER INTERMEDIATE-TERM U.S. GOVERNMENT FUNDS
AVERAGE
ONE YEAR RETURN 8.56%
ANNUALIZED 3 YEAR RETURN 6.40%
ANNUALIZED INCEPTION TO DATE 5.43%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
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BOSTON 1784
U.S. GOV'T. MEDIUM-TERM
INCOME FUND $10,000 $9,787 $10,646 $11,024 $11,813 $12,824
LEHMAN INTERMEDIATE
GOVERNMENT BOND INDEX 10,000 9,980 10,887 11,380 12,189 13,235
LIPPER INTERMEDIATE
U.S. GOVERNMENT FUNDS
AVERAGE 10,000 9,842 10,735 11,090 11,865 12,971
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
16
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
The objective of Boston 1784 Tax-Exempt Medium-Term Income Fund is to provide
investors with current income, exempt from federal income tax, consistent with
preservation of capital. On May 31, 1998, the Fund's net assets totaled $303.6
million compared with $250.5 million on June 1, 1997.
Total return for the year ended May 31, 1998 was 9.24%, compared with a
return of 7.35% for the Lipper Intermediate Municipal Bond Funds Average for the
same period, ranking the Fund in the top 3% (3 of 143) of its Lipper peer group.
The Fund also outperformed the Lehman Brothers 7-Year Municipal Bond Index by
1.17% for the period ended May 31, 1998. For the three year period ended May 31,
1998, the Fund generated a total return of 22.67%. The Fund's return and
resulting rankings reflect a waiver of certain management fees and expenses (see
Financial Highlights).
The Fund is an actively managed, diversified portfolio of high-quality,
intermediate-term securities selected for their potential to achieve a
competitive rate of return, tax-free income and preservation of capital. Of the
Fund's total assets, 54.6% were rated AAA, 19.3% were rated AA and 13.8% were
rated A by Standard & Poor's or Moody's.
The Fund achieves incremental income, yield and price stability by
emphasizing both geographical and sector diversification, and by constantly
trying to maximize income, credit quality and liquidity. A portion of this
year's return can be attributed to the Fund's longer duration and
average-weighted-maturity. The Fund's average-weighted-maturity is currently
8.99 years compared to 6.90 years for the Lehman Brothers 7-Year Municipal Bond
Index. Since early December, the Fund has actively extended the maturities of
its holdings to increase yield. In early 1998, the Fund also took advantage of
the excess supply and relatively low prices of AAA-rated insured bonds to
diversify further its holdings of general obligation securities and to improve
the Fund's credit quality.
We believe that the Fund is well positioned to take full advantage of
anticipated declines in interest rates and a scarcity of new issues,
particularly high-quality bonds, during the second half of 1998 as a result of
its longer maturities. We expect domestic economic growth to moderate, inflation
to remain at present levels and the Federal Reserve Board to leave short-term
interest rates unchanged until early fall.
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 TAX
EXEMPT MEDIUM-TERM INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER INTERMEDIATE MUNICIPAL BOND FUNDS AVERAGE
ONE YEAR RETURN 9.24%
ANNUALIZED 3 YEAR RETURN 7.05%
ANNUALIZED INCEPTION TO DATE 6.57%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND $10,000 $10,212 $10,986 $11,449 $12,336 $13,475
LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX 10,000 10,144 10,972 11,481 12,267 13,257
LIPPER INTERMEDIATE
MUNICIPAL DEBT
FUNDS AVERAGE 10,000 10,144 10,858 11,288 11,994 12,875
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
17
<PAGE>
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BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Connecticut Tax-Exempt Income Fund is to provide
investors with current income exempt from both federal and Connecticut personal
income tax. Preservation of capital is a secondary goal.
The Fund's net assets increased from $103.1 million on June 1, 1997 to $142.1
million on May 31, 1998. Total return for the year ended May 31, 1998 was 9.29%,
compared with a return of 7.04% for the Lipper Other States Intermediate
Municipal Debt Mutual Funds Average, in which the Fund ranked in the top 1% (1
of 78). The Fund also outperformed the Lehman Brothers 7-Year Municipal Bond
Index's 8.07% total return for the same period. For the three year period ended
May 31, 1998, the Fund generated a total return of 22.05%, ranking the Fund
second in its Lipper peer group. The Fund's return and resulting ranking reflect
a waiver of certain management fees and expenses (see Financial Highlights).
The Fund is an actively managed, state-specific portfolio of high-quality,
intermediate- to long-term securities selected for their potential to achieve a
competitive rate of return, tax-free income and preservation of capital. Of the
Fund's total assets, 50.5% were rated AAA, 26.1% were rated AA, and 18.2% were
rated A by Standard & Poor's or Moody's.
The Fund achieves incremental income, yield and price stability by
emphasizing diversification across sectors and issuers in the state. A portion
of this year's return can be attributed to the Fund's longer duration and
average-weighted-maturity. The Fund's average-weighted-maturity is currently
8.63 years compared to 6.90 years for the Lehman Brothers 7-Year Municipal Bond
Index. Since early December, the Fund has actively extended the maturities of
its holdings to increase yield. In early 1998, the Fund also took advantage of
the excess supply and relatively low prices of AAA-rated insured bonds to
further diversify the Fund's holdings of general obligation securities and to
improve the Fund's credit quality.
We expect a downward move in interest rates and a scarcity of new issues,
particularly high-quality bonds, during the second half of 1998. The Fund will
be able to take advantage of these conditions as a result of its extended
maturities. In addition, we expect economic growth to moderate, inflation to
remain at present levels and the Federal Reserve Board to leave short-term
interest rates unchanged until early fall.
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
CONNECTICUT TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX AND THE LIPPER OTHER STATES INTERMEDIATE MUNI DEBT MUTUAL FUNDS
AVERAGE
ONE YEAR RETURN 9.29%
ANNUALIZED 3 YEAR RETURN 6.87%
ANNUALIZED INCEPTION TO DATE 7.34%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C>
BOSTON 1784
CONNECTICUT TAX-EXEMPT
INCOME FUND $10,000 $10,664 $11,103 $11,909 $13,015
LEHMAN 7-YEAR MUNICIPAL
BOND INDEX 10,000 10,629 11,123 11,885 12,844
LIPPER STATES INTERMEDIATE
MUNI DEBT FUNDS AVERAGE 10,000 10,547 10,935 11,592 12,408
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
18
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 FLORIDA
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Florida Tax-Exempt Income Fund is to provide
investors with current income exempt from federal income tax through Fund shares
which are exempt from Florida intangible personal property tax. Preservation of
capital is a secondary goal. The Fund is an actively managed portfolio of
primarily investment grade, intermediate- to long-term securities. Since its
inception in June 1997, the Fund has grown to $51.8 million in net assets.
For the period June 30, 1997 through May 31, 1998, the Fund had a total
annualized return of 8.26%, compared with returns of 7.67% for the Lehman
Brothers 7-Year Municipal Bond Index and 6.99% for the Lipper Florida
Intermediate Municipal Funds Average for the same period. The Fund's return and
resulting rankings reflect a waiver of certain management fees and expenses (see
Financial Highlights).
Important factors that affected the Fund's performance included the
investment in high credit quality bonds. In addition, the Fund had an
average-weighted-maturity of 7.8 years and a duration of 6.2 years, both of
which were longer than the Lehman Brothers 7-Year Municipal Bond Index.
As of May 31, 1998, approximately 95% of the bonds in the Fund were rated AA
or higher by Standard & Poor's or Moody's. A large portion of these assets were
enhanced with bond insurance. The assets of the Fund were invested in general
obligation bonds issued by the State of Florida and various municipalities, and
revenue bonds issued to finance hospitals, education, housing, transportation
and utilities.
During the period ended May 31, 1998, the Fund focused on improving current
dividend yield while maintaining holdings with relatively high credit quality.
Current income will continue to be a priority. In the months ahead, we expect to
see moderating growth in the domestic economy, a reduced supply of new municipal
issues and an increase in demand from both individual investors and
institutions, resulting in favorable returns for investors.
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 FLORIDA
TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX
AND THE LIPPER FLORIDA INTERMEDIATE MUNI FUNDS AVERAGE
ONE YEAR RETURN 8.26%
CUMULATIVE INCEPTION TO DATE 7.63%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
6/30/97 5/98
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BOSTON 1784 FLORIDA
TAX-EXEMPT INCOME FUND $10,000 $10,759
LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX 10,000 10,704
LIPPER FLORIDA
INTERMEDIATE MUNI
FUNDS AVERAGE 10,000 10,642
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
19
<PAGE>
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BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Massachusetts Tax-Exempt Income Fund is to provide
investors with current income, exempt from both federal and Massachusetts
personal income tax, consistent with preservation of capital. The Fund is an
actively managed, state-specific portfolio of primarily investment grade,
intermediate- to long-term securities. On May 31, 1998, the Fund's net assets
totaled $206.1 compared with $147.5 million on June 1, 1997.
For the year ended May 31, 1998, the Fund had a total return of 8.91%,
compared with returns of 8.07% for the Lehman Brothers 7-Year Municipal Bond
Index and 7.12% for the Lipper Massachusetts Intermediate Municipal Funds
Average for the same period, ranking the Fund 1 of 10 in its Lipper peer group.
The Fund's return and resulting rankings reflect a waiver of certain management
fees and expenses (see Financial Highlights).
Important factors affecting the Fund's performance included investment in
high credit quality bonds. In addition, the Fund had an average weighted-
maturity of 9.1 years and a duration of 6.7 years, both of which were longer
than the Lehman Brothers 7-Year Municipal Bond Index. The Fund's performance was
enhanced by the recent credit rating upgrade for the Commonwealth of
Massachusetts from A1/A+ to Aa3/AA.
As of May 31, 1998, approximately 79% of the bonds in the Fund were rated AA
or higher by either Standard & Poor's or Moody's. The assets of the Fund were
invested in general obligations issued by the Commonwealth of Massachusetts and
various municipalities, and revenue bonds issued to finance hospitals,
education, housing, transportation, utilities and industrial development.
During the past year, the Fund focused on current dividend yield while
maintaining holdings with relatively high credit quality. The Fund also expanded
the diversification of its holdings by adding bonds of several new issuers.
Current income will continue to be a priority. In the months ahead, we expect
favorable returns for investors due to moderating growth in the domestic
economy, a reduced supply of new municipal issues, and an increase in demand
from both individual investors and institutions.
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
MASSACHUSETTS TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL
BOND INDEX AND THE LIPPER MASSACHUSETTS INTERMEDIATE MUNICIPAL FUNDS AVERAGE
ONE YEAR RETURN 8.91%
ANNUALIZED 3 YEAR RETURN 6.57%
ANNUALIZED INCEPTION TO DATE 5.78%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
6/30/93 5/94 5/95 5/96 5/97 5/98
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784
MASSACHUSETTS
TAX-EXEMPT INCOME FUND $10,000 $10,126 $10,734 $11,116 $11,928 $12,990
LEHMAN BROTHERS
7-YEAR MUNICIPAL
BOND INDEX 10,000 10,144 10,972 11,481 12,267 13,257
LIPPER MASSACHUSETTS
INTERMEDIATE MUNICIPAL
FUNDS AVERAGE 10,000 10,141 10,765 11,153 11,823 12,665
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
20
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND
The objective of Boston 1784 Rhode Island Tax-Exempt Income Fund is to provide
investors with current income exempt from federal income tax and Rhode Island
personal income and business corporation taxes. Preservation of capital is a
secondary goal.
The Fund's net assets increased from $53.8 million on June 1, 1997 to $76.8
million on May 31, 1998. Total return for the year ended May 31, 1998 was 8.28%,
compared with a return of 7.04% for the Lipper Other States Intermediate
Municipal Debt Mutual Funds Average, in which the Fund ranked in the top 4% (3
of 78) for the same period. The Fund also outperformed the Lehman Brothers
7-Year Municipal Bond Index's 8.07% total return for the same period. For the
three year period ended May 31, 1998, the Fund generated a total return of
21.83%, ranking the Fund first in its Lipper peer group. The Fund's return and
resulting ranking reflect a waiver of certain management fees and expenses (see
Financial Highlights).
The Fund is an actively managed, state- specific portfolio of high-quality,
intermediate- to long-term securities selected for their potential to achieve a
competitive rate of return, tax-free income and preservation of capital. Of the
Fund's total assets, 56.2% were rated AAA, 17.7% were rated AA and 17.7% were
rated A by Standard & Poor's or Moody's.
The Fund achieves incremental income, yield and price stability by
emphasizing diversification across sectors and issuers in the State of Rhode
Island. The Fund actively sought to extend maturities since December to increase
yield. A portion of this year's return resulted from the Fund's longer duration
and average-weighted-maturity. The Fund's average-weighted-maturity is currently
8.09 years compared to 6.90 years for the Lehman Brothers 7-Year Municipal Bond
Index. In early 1998, the Fund also took advantage of the excess supply and
relatively low prices of AAA-rated insured bonds to diversify further the Fund's
holdings of general obligation securities and to improve the Fund's credit
quality.
As a result of extending the maturities of the Fund's holdings, we believe
that the Fund is well positioned to take advantage of anticipated declines in
interest rates and a scarcity of new issues, particularly high-quality bonds,
late in 1998. We expect domestic economic growth to moderate, inflation to
remain at present levels, and the Federal Reserve Board to leave short-term
interest rates unchanged until early fall.
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 RHODE
ISLAND TAX-EXEMPT INCOME FUND VERSUS THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER OTHER STATES INTERMEDIATE MUNI DEBT MUTUAL FUNDS AVERAGE
ONE YEAR RETURN 8.28%
ANNUALIZED 3 YEAR RETURN 6.80%
ANNUALIZED INCEPTION TO DATE 6.93%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
8/31/94 5/95 5/96 5/97 5/98
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOSTON 1784
RHODE ISLAND
TAX-EXEMPT INCOME FUND $10,000 $10,552 $11,033 $11,872 $12,855
LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX 10,000 10,629 11,123 11,885 12,844
LIPPER OTHER STATES
INTERMEDIATE MUNI DEBT
MUTUAL FUNDS AVERAGE 10,000 10,547 10,935 11,592 12,408
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
21
<PAGE>
================================================================================
BOSTON 1784 ASSET
ALLOCATION FUND
The objective of Boston 1784 Asset Allocation Fund 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.
During the year ended May 31, 1998, the Fund's net assets increased from
$35.5 million to $50.3 million. For the year ended May 31, 1998, the Fund had a
total return of 20.51%, compared with returns of 30.68% for the Standard &
Poor's 500 Composite Index, 10.92% for the Lehman Brothers Aggregate Bond Index
and 20.12% for the Lipper Balanced Funds Average for the same period. The Fund's
return reflects a waiver of certain fees and expenses (see Financial
Highlights).
On May 31, 1998, the Fund's portfolio was allocated approximately 52% to
common stocks, 42% to bonds and 6% to money market instruments. Over the past
fiscal year, new investments have been directed toward the purchase of bonds and
common stocks in an approximate ratio of 42%/52%.
The equity portfolio was underweighted in industries and companies whose
earnings patterns were more closely tied to the economy, which enhanced results
during the year ended May 31, 1998. The Fund emphasized companies capable of
growing earnings and revenue without the benefit of an accelerating economy.
Positions in Citicorp, NationsBank and BankAmerica strengthened the Fund's
results early in 1998. Our focus remains on large capitalization stocks, which
typically fare better than small- and mid-capitalization stocks late in an
extended period of stock market appreciation. Foreign exposure is also in the
developed markets of Europe, with positions in Nestle, Novartis, and Ericsson,
and accounted for 7% of the Fund's portfolio at May 31, 1998.
The fixed income portion of the Fund is an actively managed portfolio of
investment grade, intermediate- to long-term securities. The Fund's fixed income
performance can be attributed in part to a slightly longer duration than its
Lehman benchmark -- an advantage in a period of declining interest rates. The
Fund also benefited from an underweighting in mortgage-backed securities, many
of which were prepaid in the past year. The Fund's average credit quality
improved recently by additions of U.S. Treasury securities to its holdings.
The Fund also holds government obligations, corporate securities, mortgage-
and asset-backed securities, and Yankee bonds. On May 31, 1998, the
average-weighted- maturity of the fixed income portion of the Fund was
approximately 7.58 years with a duration of approximately 4.86 years.
BOSTON 1784 ASSET ALLOCATION FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 ASSET
ALLOCATION FUND VERSUS THE S&P 500 COMPOSITE INDEX, THE LEHMAN BROTHERS
AGGREGATE BOND INDEX AND THE LIPPER BALANCED FUNDS AVERAGE
ONE YEAR RETURN 20.51%
ANNUALIZED 3 YEAR RETURN 17.72%
ANNUALIZED INCEPTION TO DATE 13.45%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
6/30/93 5/94 5/95 5/96 5/97 5/98
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 ASSET
ALLOCATION FUND $10,000 $10,016 $11,503 $13,554 $15,572 $18,765
S&P 500 COMPOSITE INDEX 10,000 10,395 12,489 16,039 20,754 27,121
LEHMAN AGGREGATE BOND INDEX 10,000 9,890 11,028 11,511 12,469 13,830
LIPPER BALANCED FUNDS AVERAGE 10,000 10,229 11,465 13,513 15,712 18,736
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
22
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 GROWTH
AND INCOME FUND
The objective of Boston 1784 Growth and Income Fund is to provide investors with
long-term growth of capital with a secondary goal of income. The Fund is a
diversified portfolio invested primarily in stocks of large- and
mid-capitalization companies.
During the year ended May 31,1998, the Fund's net assets increased to $554.0
million from $458.0 million on June 1, 1997. For the year ended May 31, 1998,
the Fund had an annualized total return of 26.71%, compared with returns of
30.68% for the Standard & Poor's 500 Composite Index (the "S&P 500") and 25.48%
for the Lipper Growth and Income Average for the same period. The Fund's return
reflects a waiver of certain fees and expenses (see Financial Highlights).
The Fund's overweighted positions in the technology and energy sectors, as
well as its exposure to mid-capitalization companies, contributed to its
underperformance compared to the S&P 500. Strong inflows into index mutual funds
by investors seeking to replicate the performance of the S&P 500 and an influx
of foreign investment into U.S. blue chip companies favored large- over
mid-capitalization companies during the past year. Technology stocks were
affected by the Asian slowdown and the energy sector was impacted by the sharp
decline in the price of oil. The Fund's performance benefited from portfolio
holdings of several large-capitalization U.S. companies, including Pfizer, Home
Depot, Coca Cola and General Electric.
The Fund's outperformance of the Lipper Growth and Income Average can be
attributed in part to its high level of foreign holdings -- approximately 25% of
the portfolio.The German software company SAP, which more than doubled the
performance of the Lipper index during the past 12 months, was the Fund's
largest holding and strongest performer.
We believe that the Fund's exposure to foreign stocks will continue to
enhance performance and help to maintain a diversified portfolio in the coming
year. We expect to preserve the current level of foreign holdings and to invest
in foreign companies with superior growth profiles. The Fund will continue to
focus on U.S. companies in the health care and technology sectors. While the
technology sector may be impacted in the near term by the slow-down in Asia, we
believe that this sector will remain among the key growth areas in the world
economy and provide strong returns over the next two to three years.
BOSTON 1784 GROWTH AND INCOME FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 GROWTH
AND INCOME FUND VERSUS THE S&P 500 COMPOSITE INDEX AND THE LIPPER GROWTH AND
INCOME AVERAGE
ONE YEAR RETURN 26.71%
ANNUALIZED 3 YEAR RETURN 23.73%
ANNUALIZED INCEPTION TO DATE 18.90%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
6/30/93 5/94 5/95 5/96 5/97 5/98
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 GROWTH
AND INCOME FUND $10,000 $10,854 $12,709 $16,054 $18,997 $24,070
S&P 500 COMPOSITE INDEX 10,000 10,395 12,489 16,039 20,754 27,121
LEHMAN GROWTH &
INCOME AVERAGE 10,000 10,476 12,010 15,098 18,603 23,342
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
23
<PAGE>
================================================================================
BOSTON 1784 GROWTH FUND
The objective of Boston 1784 Growth Fund is to provide investors with capital
appreciation. Dividend income, if any, is incidental to this goal. The Fund is
a diversified portfolio invested primarily in stocks of small- and mid-
capitalization companies.
During the past 12 months, the Fund's net assets decreased to $257.5 million
from $261.5 million on June 1, 1997.
For the year ended May 31, 1998, the Fund had a total return of 12.64%,
compared with returns of 21.25% for the Russell 2000 Index (the "Index") and
25.86% for the Lipper Growth Funds Average for the same period. In the next
fiscal year, the Fund will change its category from the Lipper Growth Funds
Average, which is weighted heavily toward large-capitalization companies, to the
Lipper Mid-Cap Average, which more closely mirrors the composition of Boston
1784 Growth Fund. The Lipper Mid-Cap Average produced a 23.16% return for the
twelve months ended May 31, 1998. The Fund's return reflects a waiver of certain
fees and expenses (see Financial Highlights).
The last 12 months saw the stocks of larger capitalization companies
significantly outperform the stocks of small capitalization companies, as
demonstrated by the 30.68% return for the Standard & Poor's 500 Composite Index
compared with the 21.25% return for the Index for the twelve months ended May
31, 1998. The Fund's underperformance of the Index was primarily due to the
Fund's underweighting in the financial sector compared to the Index, and its
overweighting in the technology and energy sectors.
While domestic investments underperformed the Index, the Fund's investments
in foreign securities generally helped to bolster returns. As of May 31, 1998,
foreign securities represented approximately 25% of the Fund's assets. Returns
were higher due to the aggregate performance of these securities, led by SAP in
Germany, Rentokil in the United Kingdom, and Telepizza in Spain.
As a result of the decline in oil prices, we have lessened the Fund's
exposure to the energy sector and, in the year ahead, expect to maintain this
position until prices stabilize. In addition, while technology companies may
feel some residual effect from the Asian crisis, we continue to believe that the
technology industry will remain one of the key growth engines in the world
economy. Therefore, we intend to maintain the Fund's overweighted position in
technology stocks, as well as the health care sector. We also expect that the
Fund will maintain a significant exposure to European markets. Many European
growth companies sell for more attractive valuations than similar U.S.
companies. Many of these companies also operate in economies that are emerging
from four years of recession. They are generally generating stronger earnings
than U.S. companies, which have already benefited from an exceptional period of
economic expansion.
BOSTON 1784 GROWTH FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784 GROWTH
FUND VERSUS THE RUSSELL 2000 INDEX AND THE LIPPER GROWTH FUNDS AVERAGE
ONE YEAR RETURN 12.64%
ANNUALIZED 3 YEAR RETURN 15.99%
ANNUALIZED INCEPTION TO DATE 38.08%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
3/31/96 5/96 5/97 5/98
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BOSTON 1784 GROWTH FUND $10,000 $11,270 $12,258 $13,807
RUSSELL 2000 INDEX 10,000 10,950 11,713 14,201
LIPPER GROWTH FUNDS AVERAGE 10,000 10,596 12,545 15,789
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
24
<PAGE>
BOSTON 1784 FUNDS
================================================================================
BOSTON 1784 INTERNATIONAL
EQUITY FUND
The objective of Boston 1784 International Equity Fund is to provide investors
with long-term growth of capital. Dividend income, if any, is incidental to this
goal.
Since June 1, 1997, the Fund's net assets have declined from $503 million to
$469.8 million. For the year ended May 31, 1998, the Fund had a total return of
6.19%, compared to returns of 11.12% for the Morgan Stanley MSCI EAFE Index and
14.17% for the Lipper International Funds Average for the same period. The
Fund's return reflects a waiver of certain fees and expenses (see Financial
Highlights).
During the last 12 months, the international markets have provided volatile
returns for U.S. investors. Following a relatively strong start in June 1997,
investors became increasingly focused on the developing financial difficulties
of some Asian economies. A currency crisis in Thailand triggered an investor
retreat from the Pacific region, followed by a more general concern about the
prospects for continued global economic growth. The U.S. market was favored in
the "flight to safety," placing additional pressure on international equity
prices. As 1998 began, these concerns were eventually pushed aside by the impact
of declining European interest rates as monetary union approached. The returns
from the European markets generally exceeded the U.S. averages for this period.
Positions in the Netherlands, Italy and Portugal made a major contribution to
the Fund's performance. Although the Fund maintained a lower-than-average
position in Japan, investments in that country reduced overall performance.
As projected, the United Kingdom market moved ahead strongly during the year.
However, rising interest rates and a strong currency have hampered exports in
recent months, causing the market to lag its more ebullient European neighbors.
U.K. share prices have responded to declining interest rates, as European
Community economic policies converge, and should now be supported by corporate
restructuring and earnings growth.
As of May 31, 1998, the Fund was invested in 22 countries with positions in
about 100 companies. A number of smaller emerging market positions were
eliminated during the year and somewhat larger positions were taken in
established European markets. However, a high level of diversification, both by
industry and country, has been maintained.
We continue to emphasize the longer-term growth prospects for each portfolio
company and establish our own estimate of the real value of the company's
shares. As noted, most portfolio changes occurred in the more volatile markets
of less developed economies. As of May 31, 1998, 92% of the Fund was invested in
established markets and major companies that have opportunities in the growing
economies of Latin America.
BOSTON 1784 INTERNATIONAL EQUITY FUND
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN BOSTON 1784
INTERNATIONAL EQUITY FUND VERSUS THE MORGAN STANLEY MSCI EAFE INDEX AND THE
LIPPER INTERNATIONAL FUNDS AVERAGE
ONE YEAR RETURN 6.19%
ANNUALIZED 3 YEAR RETURN 11.94%
ANNUALIZED INCEPTION TO DATE 11.75%
[LINE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
<TABLE>
<CAPTION>
1/31/95 5/95 5/96 5/97 5/98
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOSTON 1784 INTERNATIONAL
EQUITY FUND $10,000 $11,040 $13,146 $14,583 $15,486
MORGAN STANLEY EAFE INDEX 10,000 10,842 12,021 12,928 14,365
LIPPER INTERNATIONAL
FUNDS AVERAGE 10,000 10,769 12,375 13,866 15,831
<FN>
PAST PERFORMANCE OF THE FUND IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
</FN>
</TABLE>
25
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
GENERAL OBLIGATION BONDS 9%
CASH EQUIVALENTS 10%
BOND ANTICIPATION NOTES 7%
TAX-EXEMPT COMMERCIAL PAPER 3%
OTHER REVENUE BONDS 12%
HOUSING BONDS 3%
INDUSTRIAL DEVELOPEMENT
& POLLUTION CONTROL BONDS 20%
HEALTH CARE BONDS 13%
EDUCATION BONDS 5%
PUBLIC FACILITY BONDS 2%
TRANSPORTATION BONDS 1%
WATER & SEWER BONDS 3%
UTILITY BONDS 12%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 90.3%
ARIZONA -- 1.9%
Pima County, Industrial
Development Authority RB (A)
3.850%, 06/03/98 $19,000 $ 19,000
----------
CALIFORNIA -- 1.2%
Orange County Apartment
Development RB, LOC (B)
4.350%, 08/15/98 12,090 12,110
----------
COLORADO -- 2.7%
Colorado State Health Facility
Authority RB, LOC (A)
3.900%, 06/03/98 27,550 27,550
----------
CONNECTICUT -- 0.7%
Clipper Connecticut Tax-Exempt
Trust, Series 1995-1 (A) (B)
3.870%, 06/05/98 7,340 7,341
----------
DELAWARE -- 2.1%
Delaware State Health Facility
Authority RB, LOC (A)
3.900%, 06/03/98 21,600 21,600
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
DISTRICT OF COLUMBIA -- 2.1%
District of Columbia TRAN, LOC
4.500%, 09/30/98 $14,000 $ 14,028
District of Columbia TRAN,
Series C, LOC
5.000%, 09/30/98 7,000 7,026
----------
21,054
----------
FLORIDA -- 4.6%
Hillsborough County, Utility RB,
Tampa Electric Project,
LOC (A) (B)
4.000%, 06/01/98 10,000 10,000
Tampa, Capital Import
Program RB, LOC (A)
8.375%, 10/02/98 35,910 36,463
----------
46,463
----------
GEORGIA -- 2.9%
Georgia State Municipal Electric
Authority RB, LOC (A)
3.850%, 06/03/98 21,800 21,800
Georgia State Municipal Electric
Authority RB, Series B, LOC (A) (B)
3.850%, 06/03/98 7,000 7,000
----------
28,800
----------
HAWAII -- 0.7%
Hawaii State GO, FGIC
4.250%, 10/01/98 6,750 6,760
----------
ILLINOIS -- 9.6%
Chicago GO, LOC (A) (B)
3.550%, 01/31/99 24,800 24,800
3.550%, 02/04/99 30,000 30,000
Chicago, Multi-Family Housing
RB, Waveland Associates
Project C, LOC (A) (B)
3.800%, 06/03/98 10,000 10,000
Illinois State Development
Finance Authority RB,
Chicago Symphony
Project, GOA (A)
3.800%, 06/03/98 26,000 26,000
26
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ILLINOIS (CONTINUED)
Illinois State Educational Facility
Authority RB, Shedd Aquarium
Society Project, Series B,
LOC (A) (B)
3.850%, 07/23/98 $ 6,000 $ 6,000
----------
96,800
----------
INDIANA -- 1.0%
Indiana State, GO
4.000%, 06/03/98 10,000 10,025
----------
IOWA -- 2.1%
Iowa State School Cash
Anticipation Warrants,
Series B, FSA
4.250%, 01/28/99 5,200 5,223
Polk County, Iowa Catholic
Health Center RB, Series B (A)
3.900%, 06/03/98 16,000 16,000
----------
21,223
----------
KENTUCKY -- 0.4%
Boone County, Pollution Control
RB, Cincinnati Gas & Electric
Project, LOC (A) (B)
3.900%, 06/01/98 4,100 4,100
----------
LOUISIANA -- 8.0%
Ascension Parish, Pollution
Control RB, Shell Oil Project,
LOC (A) (B)
3.800%, 06/03/98 9,500 9,500
De Soto Parish, Pollution
Control RB, Central Louisiana
Electric Company Project,
Series B, LOC (A)
3.850%, 06/03/98 10,000 10,000
Louisiana State Offshore
Terminal Authority RB,
Deepwater Port Project,
LOC (A) (B)
3.950%, 06/01/98 15,300 15,300
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Louisiana State Public Facilities
Authority RB, Willis Knighton
Medical Center, LOC (A) (B)
3.900%, 06/03/98 $27,000 $ 27,000
Plaquemines, Port Facilities RB,
International Marine Terminal
Project, Series B (A) (B)
3.600%, 03/15/99 10,900 10,900
Rapides Parish, Pollution Control
RB, Central Louisiana Electric
Company Project, LOC (A) (B)
3.850%, 06/03/98 8,150 8,150
----------
80,850
----------
MAINE -- 1.8%
Jay, Pollution Control RB, Solid
Waste Disposal Project,
AMT (A) (B)
4.200%, 06/01/98 18,000 18,000
----------
MASSACHUSETTS -- 7.4%
Massachusetts State Health &
Educational Facilities
Authority RB, FSA (A)
3.750%, 06/03/98 10,000 10,000
Massachusetts State Health &
Educational Facilities Authority
RB, Harvard University Issue,
Series Q-1, LOC (A) (B)
3.600%, 06/04/98 8,000 8,000
Massachusetts State Health &
Educational Facilities Authority
RB, MBIA (A)
3.750%, 06/03/98 8,000 8,000
Massachusetts State Housing
Finance Authority RB, Family
Housing Project A, FNMA (A)
3.650%, 06/03/98 3,700 3,700
Massachusetts State Industrial
Finance Agency RB
3.850%, 10/01/98 2,500 2,500
Massachusetts State Industrial
Finance Agency RB, Buckingham
Brown Issue, LOC (A) (B)
3.700%, 06/04/98 6,000 6,000
27
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-FREE MONEY MARKET FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Industrial
Finance Agency RB, Eastern
Nazarene College (A)
3.600%, 06/04/98 $ 1,735 $ 1,735
Massachusetts State Water
Resource Authority RB,
Series A, AMBAC (A)
3.750%, 06/03/98 19,100 19,100
Springfield BAN
4.250%, 11/20/98 13,000 13,024
Springfield GO, FSA
4.500%, 09/01/98 2,440 2,444
----------
74,503
----------
MICHIGAN -- 1.0%
Grand Rapids, Economic
Development RB, Amway
Hotel Project, Series A,
LOC (A) (B)
3.800%, 06/03/98 9,800 9,800
----------
MINNESOTA -- 0.5%
Minnesota State School
District COP, Series B
3.850%, 09/03/98 5,000 5,000
----------
MISSISSIPPI -- 2.2%
Jackson County, Pollution
Control Authority RB,
Chevron USA Project,
LOC (A) (B)
3.950%, 06/01/98 21,950 21,950
----------
MISSOURI -- 3.6%
Kansas City, Industrial
Development Authority
RB, MBIA (A) (B)
3.950%, 06/01/98 7,200 7,200
Kansas City, Industrial
Development Authority
RB, Resh Health Services
System Project, MBIA (A) (B)
3.950%, 06/01/98 4,800 4,800
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Missouri State Health &
Educational Facilities
Authority RB, Christian
Health Services, Series B,
LOC (A) (B)
3.850%, 06/03/98 $ 6,150 $ 6,150
Missouri State Import & Energy
Resources Authority RB,
Pollution Control Resources,
LOC (A)
3.792%, 06/01/98 18,000 18,000
----------
36,150
----------
NEW HAMPSHIRE -- 3.1%
New Hampshire State Health
& Higher Education Facilities
Authority RB, Mary Hitchcock
Project, Series 85D,
FGIC (A) (B)
3.850%, 06/03/98 12,600 12,600
New Hampshire State Health
& Higher Education Facilities
Authority RB, Mary Hitchcock
Project, Series 85H,
FGIC (A) (B)
3.850%, 06/03/98 9,600 9,600
New Hampshire State Health
& Higher Education Facilities
Authority RB, St. Paul's School
Project, LOC (A) (B)
3.850%, 06/04/98 3,200 3,200
New Hampshire State Health &
Higher Education Facilities
Authority RB, Veterans Hospital
Administration, New England
Project, Series C, AMBAC (A) (B)
3.800%, 06/03/98 4,000 4,000
New Hampshire State Health &
Higher Education Facilities
Authority RB, Veterans Hospital
Administration, New England
Project, Series F, AMBAC (A) (B)
3.800%, 06/03/98 2,000 2,000
----------
31,400
----------
28
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
NEW JERSEY -- 3.0%
Essex County BAN, Series A
4.250%, 08/07/98 $ 8,120 $ 8,124
Pleasantville, School District GO
4.250%, 08/28/98 22,500 22,520
----------
30,644
----------
NEW YORK -- 12.4%
Erie County RAN, LOC
4.500%, 10/29/98 9,000 9,024
Long Island Power Authority RB,
Sub-Series 5, LOC (A)
3.950%, 06/01/98 20,000 20,000
New York State Local Government
Assistance Corporation RB,
LOC (A) (B)
3.850%, 06/03/98 23,370 23,370
New York State Local Government
Assistance Corporation RB,
Series B, LOC (A) (B)
3.850%, 06/03/98 22,900 22,900
New York State Municipal Water
Finance Authority RB, Series G,
FGIC (A) (B)
3.950%, 06/01/98 24,400 24,400
New York State Power
Authority TECP
3.700%, 09/09/98 25,000 25,000
----------
124,694
----------
OHIO -- 1.1%
Columbus, Sewer Authority
RB (A) (B)
3.750%, 06/04/98 11,600 11,600
----------
OKLAHOMA -- 1.0%
Oklahoma State Water
Resources RB, Saint Loan
Program, LOC (A) (B)
3.550%, 09/01/98 10,000 10,000
----------
PUERTO RICO -- 1.1%
Puerto Rico Commonwealth
Highway & Transportation RB,
Series A, LOC (A) (B)
3.750%, 06/03/98 11,000 11,000
----------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
RHODE ISLAND -- 0.5%
Rhode Island State Resource
Recovery RB, Series A
4.250%, 07/31/98 $ 5,000 $ 5,002
----------
TEXAS -- 3.2%
Brazos, Industrial Development
RB, Badische Corporate Port
Authority, LOC (A) (B)
3.800%, 06/01/98 6,300 6,300
Harris County, Toll Road RB,
Series F, LOC (A) (B)
3.750%, 06/03/98 5,500 5,500
Texas State TRAN, Series A
4.750%, 08/31/98 20,000 20,044
----------
31,844
----------
VERMONT -- 0.6%
Vermont State Health &
Educational Facilities Authority
RB, Series D, AMBAC (A) (B)
3.800%, 06/03/98 5,900 5,900
----------
WASHINGTON -- 4.1%
Port Anacortes, Industrial
Development Authority RB,
Texaco Project
3.650%, 06/11/98 25,000 25,000
Washington State Health Care
Facilities Authority RB, Sisters
of Providence Project,
Series C, LOC (A) (B)
3.950%, 06/01/98 16,700 16,700
----------
41,700
----------
WISCONSIN -- 1.2%
Milwaukee, Technical College
District GO, Series A
4.700%, 06/01/98 3,255 3,255
Pleasant Prairie, Industrial
Development Authority RB,
Wisconsin Electric Power
Project, LOC (A) (B)
3.950%, 06/04/98 9,000 9,000
----------
12,255
----------
29
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-FREE MONEY MARKET FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
WYOMING -- 2.5%
Uinta County, Pollution Control
RB, Chevron USA Project,
LOC (A) (B)
3.950%, 06/01/98 $25,050 $ 25,050
----------
TOTAL MUNICIPAL BONDS
(Cost $910,168) 910,168
----------
TAX-EXEMPT MUNICIPAL TRUST
CERTIFICATES -- 2.2%
Koch Financial Corporation,
Series 1997-2, Class A-1
3.900%, 10/06/98 5,691 5,691
Koch Financial Corporation,
Series 1998-1, Class A-1
3.700%, 05/06/03 16,862 16,862
----------
TOTAL TAX-EXEMPT MUNICIPAL
TRUST CERTIFICATES
(Cost $22,553) 22,553
----------
CASH EQUIVALENTS -- 2.9%
Clipper Blue Tax-Exempt Trust,
Series 1995-1, Class A (A) (B)
4.270%, 06/05/98 2,227 2,227
Clipper Blue Tax-Exempt Trust,
Series 1995-2 (A) (B)
4.270%, 06/05/98 3,334 3,334
Clipper Tax-Exempt Trust,
Series A (A) (B)
3.970%, 06/05/98 23,698 23,698
----------
TOTAL CASH EQUIVALENTS
(Cost $29,259) 29,259
----------
REPURCHASE AGREEMENT -- 6.9%
Paine Webber
5.550%, dated 05/29/98, matures
06/01/98, repurchase price
$69,303,880 (collateralized by
U.S. Treasury Instruments:
total market value
$70,664,248) 69,272 69,272
----------
TOTAL REPURCHASE AGREEMENT
(Cost $69,272) 69,272
----------
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
TOTAL INVESTMENTS -- 102.3%
(Cost $1,031,252) $1,031,252
----------
OTHER ASSETS AND LIABILITIES,
NET -- (2.3%) (23,528)
----------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 1,007,860,867
outstanding shares of
beneficial interest 1,007,861
Accumulated net realized loss
on investments (137)
----------
TOTAL NET ASSETS -- 100.0% $1,007,724
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
==========
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON MAY 31, 1998. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(B) PUT, DEMAND OR PRE-REFUND FEATURE EXISTS REQUIRING THE ISSUER TO REPURCHASE
THE INSTRUMENT PRIOR TO MATURITY. THE DATE SHOWN IS THE PUT, DEMAND OR
PRE-REFUND DATE.
AMT--ALTERNATIVE MINIMUM TAX
BAN--BOND ANTICIPATION NOTE
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
LOC--SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
RAN--REVENUE ANTICIPATION NOTE
RB--REVENUE BOND
TECP--TAX EXEMPT COMMERCIAL PAPER
TRAN--TAX AND REVENUE ANTICIPATION NOTE THE FOLLOWING ORGANIZATIONS HAVE
PROVIDED UNDERLYING CREDIT SUPPORT FOR THE SECURITIES AS SET FORTH IN THE
STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA--FINANCIAL SECURITY ASSURANCE
GOA--GENERAL OBLIGATION OF AUTHORITY
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
U.S. GOVERNMENT AGENCY OBLIGATIONS 32%
CASH EQUIVALENTS 51%
U.S. TREASURY OBLIGATIONS 17%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 16.1%
U.S. Treasury Bills (A)
5.146%, 09/17/98 $ 5,000 $ 4,924
5.198%, 10/15/98 5,000 4,904
5.267%, 11/27/98 8,000 7,796
U.S. Treasury Notes
5.250%, 07/31/98 2,500 2,499
6.250%, 07/31/98 12,150 12,163
6.125%, 08/31/98 9,000 9,010
5.625%, 11/30/98 5,000 5,005
5.875%, 01/31/99 5,000 5,014
6.250%, 03/31/99 8,500 8,548
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $59,863) 59,863
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 30.6%
Federal Home Loan Bank
5.835%, 12/17/98 2,350 2,349
Federal Home Loan Bank (B)
5.590%, 06/02/98 3,000 2,999
Federal Home Loan Mortgage
Corporation (A)
5.482%, 06/12/98 5,000 4,992
5.452%, 06/18/98 2,500 2,494
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
5.432%, 06/19/98 $ 1,500 $ 1,496
5.436%, 06/23/98 5,000 4,983
5.461%, 06/26/98 5,000 4,981
5.466%, 07/30/98 2,500 2,478
Federal National Mortgage
Association
5.350%, 07/16/98 1,000 1,000
Federal National Mortgage
Association (A)
5.461%, 06/10/98 5,000 4,993
5.470%, 06/10/98 5,000 4,993
5.493%, 06/11/98 5,000 4,993
5.460%, 06/30/98 3,000 2,987
5.481%, 07/17/98 5,000 4,965
5.479%, 07/23/98 3,000 2,977
5.476%, 07/24/98 5,000 4,960
5.483%, 07/27/98 3,403 3,374
5.485%, 07/30/98 3,000 2,973
5.496%, 09/24/98 5,000 4,914
5.501%, 09/24/98 2,500 2,457
5.482%, 10/13/98 2,498 2,448
5.483%, 10/13/98 7,000 6,861
5.498%, 12/30/98 3,700 3,585
Federal National Mortgage
Association (B)
5.322%, 06/14/98 1,850 1,849
Student Loan Marketing
Association (B)
5.345%, 06/02/98 14,373 14,370
5.355%, 06/02/98 11,600 11,595
5.427%, 06/02/98 1,100 1,100
----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $114,166) 114,166
----------
REPURCHASE AGREEMENTS -- 50.5%
Dean Witter
5.530%, dated 05/29/98, matures
06/01/98, repurchase price
$40,018,433 (collateralized by
U.S. Treasury Instruments:
total market value
$40,800,064) (C) 40,000 40,000
31
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
======================================================
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
First Boston
5.500%, dated 05/29/98, matures
06/01/98, repurchase price
$14,006,417 (collateralized
by U.S. Treasury Bonds:
total market value
$14,088,245) (C) $14,000 $ 14,000
Greenwich Capital
5.550%, dated 05/29/98, matures
06/01/98, repurchase price
$40,018,500 (collateralized
by U.S. Treasury Instruments:
total market value
$40,774,550) (C) 40,000 40,000
Hong Kong Shanghai Bank
5.520%, dated 05/29/98, matures
06/01/98, repurchase price
$14,006,440 (collateralized by
a U.S. Treasury Bond: total
market value $14,247,608) (C) 14,000 14,000
J. P. Morgan
5.570%, dated 05/29/98, matures
06/01/98, repurchase price
$40,365,936 (collateralized by
U.S. Treasury Instruments:
total market value
$41,165,309) (C) 40,347 40,347
Prudential Securities
5.570%, dated 05/29/98, matures
06/01/98, repurchase price
$40,018,567 (collateralized by
U.S. Treasury Instruments:
total market value
$40,799,006) (C) 40,000 40,000
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $188,347) 188,347
--------
TOTAL INVESTMENTS -- 97.2%
(Cost $362,376) 362,376
--------
OTHER ASSETS AND LIABILITIES,
NET -- 2.8% 10,281
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par
value) based on 372,641,460
outstanding shares of
beneficial interest $372,641
Accumulated net realized
gain on investments 5
Undistributed net investment income 11
--------
TOTAL NET ASSETS -- 100.0% $372,657
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
(A) THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE EFFECTIVE YIELD AS
OF MAY 31, 1998.
(B) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON MAY 31, 1998. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(C) TRI-PARTY REPURCHASE AGREEMENT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
CASH EQUIVALENTS 23%
CERTIFICATES OF DEPOSIT 3%
COMMERCIAL PAPER 52%
CORPORATE BONDS 2%
TAXABLE MUNICIPAL BONDS 16%
U.S. GOVERNMENT AGENCY OBLIGATIONS 4%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
COMMERCIAL PAPER -- 51.5%
BANKS -- 6.2%
Abbey National Bank (A)
5.613%, 10/20/98 $4,000 $ 3,914
Credit Suisse First Boston (A)
5.617%, 07/15/98 4,000 3,973
--------
7,887
--------
FINANCIAL SERVICES -- 36.4%
Alpine Securitization (A)
5.541%, 06/05/98 1,244 1,243
5.581%, 07/15/98 3,000 2,980
Banc One (A)
5.556%, 06/02/98 4,000 3,999
Bankers Trust Alex Brown
Holdings Funding (A)
5.632%, 10/22/98 4,000 3,913
Barton Capital (A)
5.554%, 06/19/98 4,000 3,989
Centric Capital (A)
5.578%, 07/10/98 3,500 3,479
Greenwich Funding (A)
5.500%, 07/15/98 4,000 3,973
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
J.P. Morgan (A)
5.645%, 11/16/98 $4,000 $ 3,898
Merrill Lynch (A)
5.536%, 06/19/98 4,000 3,989
Prudential Funding (A)
5.653%, 06/01/98 5,000 5,000
UBS Finance (A)
5.643%, 06/01/98 5,000 5,000
Woodstreet Funding (A)
5.653%, 06/01/98 5,000 5,000
--------
46,463
--------
MUNICIPALS -- 8.9%
Dekalb County, Georgia,
Emory University
5.650%, 07/08/98 4,200 4,200
Lower Colorado River Authority
5.630%, 06/30/98 2,000 2,000
New York City, New York
5.630%, 07/02/98 1,000 1,000
5.650%, 07/08/98 1,600 1,600
Saint Paul, Minnesota GO
5.720%, 08/14/98 2,500 2,500
--------
11,300
--------
TOTAL COMMERCIAL PAPER
(Cost $65,650) 65,650
--------
CORPORATE BONDS -- 1.8%
First Chicago National Bank
6.050%, 11/04/98 1,663 1,665
General Electric Capital, MTN
6.430%, 08/24/98 650 651
--------
TOTAL CORPORATE BONDS
(Cost $2,316) 2,316
--------
U.S. GOVERNMENT AGENCY OBLIGATION -- 3.9%
Federal Home Loan Bank
5.835%, 12/17/98 5,000 4,998
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $4,998) 4,998
--------
33
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 PRIME MONEY MARKET FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TAXABLE MUNICIPAL BONDS -- 16.0%
Barton Healthcare LLC (B)
5.700%, 06/03/98 $ 1,000 $ 1,000
Catholic Health Initiatives (B)
5.600%, 06/03/98 1,000 1,000
Community Health System,
LOC (B)
5.850%, 06/03/98 1,050 1,050
Kit Carson County, Colorado,
Agricultural Development
RB, LOC (B)
5.750%, 06/03/98 2,000 2,000
Los Angeles, California,
Community Redevelopment
Agency Taxable RB, FSA (B)
5.650%, 06/03/98 5,000 5,000
Maryland State Health & Higher
Education Facilities RB,
Series B, LOC (B)
5.750%, 06/03/98 2,300 2,300
Maryland State Health & Higher
Education RB, LOC (B)
5.700%, 06/04/98 4,100 4,100
Olathe, Kansas, Industrial
RB, LOC (B)
5.600%, 06/04/98 4,000 4,000
--------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $20,450) 20,450
--------
CERTIFICATE OF DEPOSIT -- 3.2%
Societe Generale
5.765%, 04/19/99 4,000 4,000
--------
TOTAL CERTIFICATE OF DEPOSIT
(Cost $4,000) 4,000
--------
REPURCHASE AGREEMENTS -- 23.3%
J. P. Morgan
5.570%, dated 05/29/98, matures
06/01/98, repurchase price
$14,760,878 (collateralized
by U.S. Treasury Instruments:
total market value
$15,046,630) (C) 14,754 14,754
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Prudential Securities
5.570%, dated 05/29/98, matures
06/01/98, repurchase price
$15,006,962 (collateralized by
U.S. Treasury Instruments:
total market value
$15,308,170) (C) $15,000 $ 15,000
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $29,754) 29,754
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $127,168) 127,168
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.3% 420
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 127,594,411 outstanding
shares of beneficial interest 127,594
Accumulated net realized loss
on investments (6)
--------
TOTAL NET ASSETS -- 100.0% $127,588
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
========
(A) THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE EFFECTIVE YIELD AS
OF MAY 31, 1998.
(B) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON MAY 31, 1998. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(C) TRI-PARTY REPURCHASE AGREEMENT
GO--GENERAL OBLIGATION
LOC--SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
MTN--MEDIUM TERM NOTE
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR THE
SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FSA--FINANCIAL SECURITY ASSURANCE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
34
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
TAXABLE MUNICIPAL BONDS 6%
ASSET-BACKED SECURITIES 21%
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS 3%
U.S. GOVERNMENT AGENCY OBLIGATIONS 4%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 6%
CORPORATE OBLIGATIONS 40%
U.S. TREASURY OBLIGATIONS 16%
CASH EQUIVALENTS 4%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 15.7%
U.S. Treasury Bond
5.500%, 03/31/03 $ 2,000 $ 1,994
U.S. Treasury Notes
7.125%, 10/15/98 1,000 1,007
5.875%, 01/31/99 1,000 1,002
7.750%, 11/30/99 4,000 4,125
7.125%, 02/29/00 1,200 1,231
6.750%, 04/30/00 3,000 3,064
5.750%, 11/15/00 165 166
5.625%, 11/30/00 5,000 5,010
6.375%, 09/30/01 11,000 11,255
6.625%, 03/31/02 2,000 2,070
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $30,762) 30,924
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.3%
Federal Home Loan Mortgage Corporation
6.375%, 12/23/03 1,100 1,094
Federal National Mortgage Association
5.625%, 03/15/01 5,500 5,493
5.750%, 04/15/03 2,000 1,998
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $8,535) 8,585
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS -- 3.4%
Federal Deposit Insurance
Corporation, REMIC
6.750%, 07/25/26 $1,342 $ 1,348
Federal Home Loan Mortgage
Corporation
8.000%, 01/01/02 267 274
Federal Home Loan Mortgage
Corporation, REMIC
6.500%, 09/15/07 2,283 2,295
7.250%, 04/25/24 401 402
Federal National Mortgage
Association
8.500%, 07/01/98 110 114
Federal National Mortgage
Association, REMIC
8.950%, 05/25/03 800 825
5.500%, 04/25/04 1,382 1,378
--------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS
(Cost $6,600) 6,636
--------
TAXABLE MUNICIPAL BONDS -- 6.3%
Carondelet, California, Health
Systems RB, Daniel Freeman
Hospitals, MBIA
6.250%, 07/01/01 4,000 4,020
Jacksonville, Florida, Health
Facilities Authority RB, National
Benevolent Project, Series B (A)
6.510%, 10/01/98 1,565 1,565
New York State Dormitory
Authority RB
6.550%, 04/01/00 2,500 2,519
New York State Mortgage
Agency RB
5.930%, 10/01/98 2,000 2,014
Pennsylvania State Housing
Finance Agency RB, FHA
7.000%, 10/01/06 2,265 2,375
--------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $12,328) 12,493
--------
35
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 SHORT-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
ASSET-BACKED SECURITIES -- 20.4%
Auto Leasing Investors,
Series 1997, Class A-2
5.926%, 08/14/00 $5,000 $ 5,002
Centrex Auto Trust,
Series 1996-A, Class A
6.750%, 10/15/04 1,138 1,161
Chase Manhattan Auto
Owners Trust, Series 1997-B,
Class A-3
6.350%, 02/15/01 5,000 5,025
Discover Card Master Trust,
Series 1993-2, Class B
5.750%, 11/16/01 5,000 4,991
Firstplus Home Improvement
Loan Trust, Series 1996-3,
Class A2
6.850%, 09/20/07 1,218 1,225
Fleetwood Credit Grantor Trust,
Series 1995-B, Class A
6.550%, 05/16/11 890 897
General Motors Acceptance
Corporation Grantor Trust,
Series 1995-A, Class A
7.150%, 03/15/00 102 103
Green Tree Recreational,
Equipment & Consumer
Trust, Series 1996-A, Class A1
5.550%, 02/15/18 478 477
MS Auto Grantor Trust,
Series 1995-1, Class A
6.200%, 07/01/01 172 175
PNC Student Loan Trust I,
Series 1997-2, Class A-5
6.530%, 01/25/03 5,000 5,105
Reliance Auto Receivables,
Series 1996-A, Class A
6.100%, 07/15/02 923 926
Sears Credit Account Master
Trust, Series 1996-4, Class A
6.450%, 10/15/06 1,000 1,012
Standard Credit Card Master
Trust, Series 1995-6-B
6.900%, 06/07/98 4,000 4,001
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
University Support Services,
Series 1993-A, Class B (A)
8.030%, 08/20/08 $ 66 $ 68
WFS Financial Owner Trust,
Series 1997-C, Class A4
6.150%, 09/20/02 5,000 5,016
World Omni Automobile Lease
Securitization Trust III,
Series 1997-B, Class A-4
6.200%, 11/25/03 5,000 5,035
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $39,959) 40,219
--------
NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS -- 5.6%
Bankamerica Manufactured
Contrast Trust III,
Series 1997-2, Class A5
6.390%, 12/10/12 5,500 5,536
CIT RV Owners Trust,
Series 1995-A, Class A
6.250%, 01/15/11 340 342
CoreStates Home Equity
Loan Trust, Series 1996-1,
Class A1
6.200%, 04/15/04 192 194
Crown Home Equity Loan
Trust, Series 1996-1, Class A3
6.810%, 06/25/11 2,000 2,041
IMC Home Equity Loan Trust,
Series 1996-1, Class A3
6.030%, 09/25/10 1,500 1,508
Prudential Home Mortgage
Securities, Series 1993-31,
Class A7
6.000%, 08/25/00 1,350 1,344
--------
TOTAL NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $10,875) 10,965
--------
36
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CORPORATE OBLIGATIONS -- 39.0%
FINANCIAL SERVICES -- 24.8%
BankAmerica Capital III (A)
6.226%, 01/15/27 $5,000 $ 4,981
Cigna, MTN
7.900%, 12/14/98 1,000 1,010
Equitable Companies
Installment Bond
6.750%, 12/01/00 1,080 1,088
Finova Capital
6.500%, 07/28/02 5,000 5,050
First National Bank of
Commerce, MTN
6.500%, 01/14/00 5,000 5,037
Ford Motor Credit
6.000%, 01/14/03 5,000 4,975
General Motors Acceptance
7.875%, 03/07/01 2,000 2,090
5.875%, 01/22/03 2,000 1,965
General Motors
Acceptance, MTN
6.040%, 03/19/99 5,000 5,011
Heller Financial
6.460%, 10/27/00 5,000 5,019
MBNA America Bank NA (A)
5.750%, 09/09/99 5,000 5,004
Nationsbank Capital
Trust III, YB (A)
6.206%, 01/15/27 2,500 2,466
Smith Barney Holdings
7.500%, 05/01/02 5,000 5,225
--------
48,921
--------
INDUSTRIAL -- 13.7%
American General
7.700%, 10/15/99 5,000 5,112
Celulosa Arauco y
Constitucion SA, YB
7.250%, 06/11/98 5,000 5,000
Comdisco, MTN
6.470%, 09/30/98 5,000 5,007
McKesson
6.600%, 03/01/00 5,000 5,050
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Middletown Trust, YB
10.875%, 07/15/98 $ 720 $ 724
Sears Roebuck
9.500%, 06/01/99 1,000 1,034
Williams
7.500%, 09/15/99 5,000 5,075
--------
27,002
--------
UTILITY -- 0.5%
Narragansett Electric
6.630%, 08/12/99 1,000 1,005
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $76,447) 76,928
--------
REPURCHASE AGREEMENT -- 4.1%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98,
repurchase price
$8,181,370 (collateralized
by U.S. Treasury
Instruments: total
market value
$8,346,371) (B) 8,178 8,178
--------
TOTAL REPURCHASE AGREEMENT
(Cost $8,178) 8,178
--------
TOTAL INVESTMENTS -- 98.8%
(Cost $193,684) 194,928
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.2% 2,328
--------
37
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 SHORT-TERM INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 19,548,307 outstanding
shares of beneficial interest $208,450
Distributions in excess of net
investment income (9)
Accumulated net realized loss
on investments (12,477)
Net unrealized appreciation
on investments 1,244
--------
TOTAL NET ASSETS -- 100.0% $197,256
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.09
========
(A) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON MAY 31, 1998.
(B) TRI-PARTY REPURCHASE AGREEMENT
MTN--MEDIUM TERM NOTE
RB--REVENUE BOND
YB--YANKEE BOND THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT
SUPPORT FOR THE SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
FHA--FEDERAL HOUSING ADMINISTRATION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
ASSET-BACKED SECURITIES 5%
U.S. GOVERNMENT AGENCY OBLIGATIONS 3%
CORPORATE OBLIGATIONS 21%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 6%
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS 13%
U.S. TREASURY OBLIGATIONS 43%
YANKEE BONDS 4%
CASH EQUIVALENTS 5%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 42.5%
U.S. Treasury Bonds
7.875%, 02/15/21 $ 6,460 $ 8,044
8.000%, 11/15/21 9,250 11,700
6.000%, 02/15/26 6,700 6,809
6.500%, 11/15/26 7,560 8,204
6.125%, 11/15/27 500 523
U.S. Treasury Notes
5.875%, 01/31/99 12,550 12,577
6.750%, 06/30/99 5,000 5,064
6.000%, 08/15/99 5,990 6,022
5.500%, 12/31/00 13,175 13,155
6.625%, 06/30/01 5,000 5,146
6.250%, 10/31/01 17,305 17,655
5.875%, 09/30/02 8,000 8,083
5.750%, 08/15/03 5,200 5,241
5.625%, 02/15/06 6,000 5,994
6.500%, 10/15/06 26,750 28,211
6.125%, 08/15/07 23,846 24,630
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $166,009) 167,058
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.1%
Federal Home Loan
Mortgage Corporation
7.740%, 06/01/04 $ 2,000 $ 2,039
8.530%, 02/02/05 5,000 5,222
Federal National Mortgage
Association
5.625%, 03/15/01 4,000 3,995
5.750%, 04/15/03 1,000 999
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $11,990) 12,255
--------
U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS -- 13.1%
Federal Home Loan Mortgage
Corporation
7.750%, 09/01/05 761 793
Federal Home Loan Mortgage
Corporation, REMIC
6.500%, 07/15/20 1,510 1,504
Federal National Mortgage
Association
6.500%, 05/01/11 4,027 4,049
Federal National Mortgage
Association (A)
6.000%, 07/25/13 17,000 16,803
Federal National Mortgage
Association, REMIC
7.000%, 09/18/14 5,000 5,212
6.000%, 12/25/16 2,541 2,444
Government National
Mortgage Association
7.000%, 10/15/23 1,551 1,576
8.000%, 06/15/25 231 241
8.000%, 10/15/25 329 343
8.000%, 01/15/26 139 145
8.000%, 02/15/26 169 176
7.500%, 04/15/26 4,020 4,143
8.000%, 05/15/26 241 252
7.000%, 06/15/26 6,004 6,121
8.000%, 06/15/26 611 635
7.500%, 02/15/27 74 77
8.000%, 03/15/27 1,573 1,636
7.125%, 01/15/29 5,126 5,200
--------
39
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $49,588) $ 51,350
--------
ASSET-BACKED SECURITIES -- 4.8%
Fingerhut Master Trust,
Series 1996-1, Class A
6.450%, 02/20/02 $1,720 1,727
First Deposit Master Trust,
Series 1993-2, Class A
5.750%, 06/15/01 1,000 1,000
Fleetwood Credit Grantor Trust,
Series 1995-B, Class A
6.550%, 05/16/11 1,335 1,345
Green Tree Financial,
Series 1995-5, Class M1
7.650%, 09/15/26 5,000 5,388
Nomura Asset Securities,
Series 1996-MD5, Class A1B
7.120%, 04/13/36 5,000 5,269
Premier Auto Trust,
Series 1996-4, Class A3
6.200%, 11/06/00 2,020 2,027
Prime Credit Card Master Trust,
Series 1992-2, Class A2
7.450%, 11/15/02 1,430 1,469
Standard Credit Card Master Trust,
Series 1993-3, Class A
5.500%, 02/07/00 500 499
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $18,035) 18,724
--------
NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS -- 6.1%
AFC Home Equity Loan Trust,
Series 1996-3, Class 1A4
7.540%, 12/25/27 4,999 5,147
Equitable Life Assurance Society
of the U.S., Series 174,
Class A1 (B)
7.240%, 05/15/06 5,000 5,290
Merrill Lynch Mortgage Investors,
Series 1989-H, Class B
10.000%, 01/15/10 3,647 3,732
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Merrill Lynch Mortgage Investors,
Series 1994-G, Class A3
8.350%, 05/15/14 $5,000 $ 5,568
Oakwood Mortgage Investors,
Series 1995-B, Class A3
6.900%, 01/15/21 4,040 4,133
--------
TOTAL NON-AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $22,708) 23,870
--------
CORPORATE OBLIGATIONS -- 20.8%
FINANCIAL SERVICES -- 9.3%
Allstate
6.750%, 06/15/03 1,000 1,011
First Security
6.875%, 11/15/06 5,000 5,150
First Union, Mandatory
Put @ 100 (C)
6.550%, 10/15/05 9,000 9,259
Fleet Mortgage Group
6.500%, 09/15/99 3,400 3,418
Merrill Lynch & Company
7.000%, 01/15/07 5,000 5,250
Safeco
6.875%, 07/15/07 5,000 5,169
Vesta Insurance Group
8.750%, 07/15/25 3,855 4,554
Xerox Credit, MTN (D)
7.400%, 11/21/11 2,600 2,623
--------
36,434
--------
INDUSTRIAL -- 11.5%
American Home Products
7.700%, 02/15/00 5,960 6,139
Baxter International
6.625%, 02/15/28 3,000 2,977
Burlington North
9.250%, 10/01/06 5,070 5,976
Diamond Shamrock,
Mandatory Put @ 100 (C)
7.650%, 07/01/06 8,000 8,700
Fortune Brands
6.250%, 04/01/08 3,600 3,600
General Motors
9.125%, 07/15/01 5,000 5,431
40
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
INDUSTRIAL (CONTINUED)
H.J. Heinz
6.000%, 03/15/08 $3,500 $ 3,478
Masco
6.625%, 04/15/18 5,700 5,721
McKesson (B)
6.300%, 03/01/05 3,200 3,208
--------
45,230
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $79,729) 81,664
--------
YANKEE BONDS -- 4.1%
Endesa - Chile Empresa
Nacional Electric
7.325%, 02/01/37 5,000 4,987
Hydro-Quebec
7.375%, 02/01/03 1,000 1,048
Hyundai Semiconductor,
Tranche B (B)
8.250%, 05/15/04 7,650 6,120
Trans-Canada Pipelines
9.125%, 04/20/06 3,340 3,883
--------
TOTAL YANKEE BONDS
(Cost $17,599) 16,038
--------
REPURCHASE AGREEMENT -- 4.8%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $18,871,303 (collateralized
by U.S. Treasury Instruments:
total market value
$19,237,368) (E) 18,863 18,863
--------
TOTAL REPURCHASE AGREEMENT
(Cost $18,863) 18,863
--------
TOTAL INVESTMENTS -- 99.3%
(Cost $384,521) 389,822
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.7% 2,734
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 38,308,156 outstanding
shares of beneficial interest $386,913
Accumulated net realized loss
on investments (341)
Net unrealized appreciation
on investments 5,301
Undistributed net investment income 683
--------
TOTAL NET ASSETS -- 100.0% $392,556
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.25
========
(A) WHEN ISSUED SECURITY.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONAL INVESTORS.
(C) MANDATORY PUT SECURITY. THE MANDATORY PUT DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
(D) STEP BOND. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE RATE IN
EFFECT AS OF MAY 31, 1998. THE INITIAL COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE TO A PRE-DETERMINED HIGHER RATE.
(E) TRI-PARTY REPURCHASE AGREEMENT
MTN--MEDIUM TERM NOTE
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS 14%
U.S. GOVERNMENT AGENCY OBLIGATIONS 32%
ASSET-BACKED SECURITY 2%
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS 4%
U.S GOVERNMENT GUARANTEED OBLIGATIONS 8%
U.S. TREASURY OBLIGATIONS 34%
CASH EQUIVALENTS 6%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 34.5%
U.S. Treasury Bonds
11.250%, 02/15/15 $ 700 $ 1,107
6.000%, 02/15/26 16,100 16,361
6.125%, 11/15/27 11,000 11,501
U.S. Treasury Notes
5.375%, 01/31/00 2,800 2,793
5.500%, 02/29/00 1,000 999
5.500%, 03/31/00 9,100 9,094
8.000%, 05/15/01 2,000 2,131
6.625%, 07/31/01 4,463 4,597
6.250%, 10/31/01 2,000 2,040
7.500%, 11/15/01 1,600 1,695
6.250%, 01/31/02 2,000 2,042
6.250%, 06/30/02 19,000 19,444
6.000%, 07/31/02 1,000 1,015
6.250%, 02/15/07 770 801
6.625%, 05/15/07 500 533
6.125%, 08/15/07 8,800 9,089
U.S. Treasury STRIPS (A)
10.390%, 08/15/10 1,000 495
12.269%, 05/15/20 5,000 1,371
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $86,151) 87,108
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 31.4%
Agency of Housing and Urban
Development, Series 1995-A
8.240%, 08/01/02 $ 2,000 $ 2,177
Agency of Housing and Urban
Development, Series 1997-A
6.210%, 08/01/01 4,000 4,056
6.360%, 08/01/04 4,500 4,615
CABEI AID
6.620%, 10/29/12 10,000 10,416
Costa Rica AID
7.360%, 08/01/01 1,540 1,577
Federal Farm Credit Bank
5.420%, 08/04/98 3,000 2,997
8.650%, 10/01/99 1,900 1,971
7.350%, 03/24/05 350 380
Federal Home Loan Bank
5.500%, 04/14/00 5,000 4,983
6.580%, 01/07/03 3,000 3,040
7.660%, 07/20/04 350 383
Federal Home Loan Mortgage
Corporation
8.530%, 02/02/05 1,000 1,044
7.340%, 11/03/06 1,000 1,018
Federal National Mortgage
Association
5.625%, 03/15/01 5,000 4,994
5.750%, 04/15/03 12,400 12,388
7.550%, 06/10/04 1,500 1,527
7.400%, 07/01/04 725 783
6.580%, 03/01/06 1,000 1,010
Private Export Funding
Corporation
5.500%, 03/15/01 2,500 2,481
6.310%, 09/30/04 7,000 7,201
6.620%, 10/01/05 1,740 1,821
7.110%, 04/15/07 2,000 2,172
Student Loan Marketing
Association (B)
5.345%, 08/20/98 2,500 2,499
5.345%, 11/10/98 2,000 1,999
Tennessee Valley Authority
Principal STRIPS (A)
7.813%, 04/15/42 4,000 1,760
--------
42
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $78,014) $ 79,292
--------
U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS -- 13.8%
Federal Deposit Insurance
Corporation, REMIC
6.750%, 07/25/26 $3,355 3,369
Federal Home Loan Mortgage
Corporation
7.000%, 07/15/03 1,400 1,428
7.000%, 10/01/03 160 163
Federal Home Loan Mortgage
Corporation Gold
7.000%, 12/01/10 1,798 1,835
Federal Home Loan Mortgage
Corporation, REMIC
6.500%, 09/15/07 2,089 2,100
6.750%, 02/15/20 1,080 1,088
Federal National Mortgage
Association
8.000%, 07/01/07 300 310
6.500%, 05/01/11 2,013 2,025
7.785%, 02/01/19 4,909 5,532
10.000%, 10/01/20 2,366 2,566
10.000%, 12/01/20 3,884 4,211
Federal National Mortgage
Association, REMIC
5.500%, 04/25/04 1,382 1,378
Government National Mortgage
Association
8.500%, 10/15/04 104 110
8.500%, 01/15/06 66 71
9.000%, 11/15/17 1,224 1,332
7.000%, 10/15/23 813 827
7.500%, 02/15/27 2,318 2,390
Student Loan Marketing
Association (B)
5.695%, 10/25/05 4,084 4,080
--------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS
(Cost $33,981) 34,815
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT GUARANTEED
OBLIGATIONS -- 7.5%
Global Industries
7.250%, 07/15/22 $12,061 $ 13,045
Rochester, New York, U.S.
Government Note, Series 1991-A
5.930%, 08/01/99 100 100
Secunda Atlantic Title XI
6.695%, 04/01/18 4,000 4,107
Sulphur Carriers
8.300%, 10/15/09 1,724 1,837
--------
TOTAL U.S. GOVERNMENT
GUARANTEED OBLIGATIONS
(Cost $17,594) 19,089
--------
ASSET-BACKED SECURITY -- 2.0%
PNC Student Loan Trust I,
Series 1997-2, Class A-2
6.138%, 01/25/00 5,000 5,029
--------
TOTAL ASSET-BACKED SECURITY
(Cost $5,000) 5,029
--------
NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS -- 4.2%
Merrill Lynch Trust, Series 31,
Class G
9.450%, 06/01/18 10,000 10,239
Ryland Acceptance Four,
Series 32, Class B
8.600%, 05/01/16 518 528
--------
TOTAL NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS
(Cost $11,223) 10,767
--------
43
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 5.5%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $13,875,031 (collateralized
by U.S. Treasury Instruments:
total market value
$14,148,117) (C) $13,869 $ 13,869
--------
TOTAL REPURCHASE AGREEMENT
(Cost $13,869) 13,869
--------
TOTAL INVESTMENTS -- 98.9%
(Cost $245,832) 249,969
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 2,750
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 26,331,797 outstanding
shares of beneficial interest $254,731
Distributions in excess of net
investment income (794)
Accumulated net realized loss
on investments (5,355)
Net unrealized appreciation
on investments 4,137
--------
TOTAL NET ASSETS -- 100.0% $252,719
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $9.60
========
(A) ZERO COUPON SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE EFFECTIVE YIELD AS OF MAY 31, 1998.
(B) VARIABLE RATE SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE RATE IN EFFECT ON MAY 31, 1998. THE DATE SHOWN IS THE NEXT SCHEDULED
RESET DATE.
(C) TRI-PARTY REPURCHASE AGREEMENT
AID--AGENCY FOR INTERNATIONAL DEVELOPMENT
REMIC--REAL ESTATE MORTGAGE INVESTMENT CONDUIT
STRIPS--SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
GENERAL OBLIGATION BONDS 28%
INDUSTRIAL DEVELOPMENT &
POLLUTION CONTROL BONDS 1%
OTHER REVENUE BONDS 4%
REVENUE BONDS 1%
RESOURCE RECOVERY BONDS 3%
HOUSING BONDS 10%
EDUCATION BONDS 3%
UTILITY BONDS 22%
ALTERNATIVE MINIMUM TAX BONDS 4%
HEALTH CARE BONDS 11%
CASH EQUIVALENTS 4%
TRANSPORTATION BONDS 5%
PUBLIC FACILITY BONDS 3%
WATER & SEWER BONDS 1%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 97.9%
ALABAMA -- 0.8%
Alabama State Housing Finance
Authority RB, Series D-1, GNMA
6.000%, 10/01/16 $ 990 $ 1,053
Alabama State Water Pollution
Control Authoriy RB, AMBAC
5.000%, 02/15/13 1,500 1,506
--------
2,559
--------
ALASKA -- 0.4%
Alaska State Industrial
Development & Export
Authority RB, Series B, GOA
5.850%, 04/01/05 1,000 1,071
--------
CALIFORNIA -- 7.3%
Burbank, Wastewater Treatment
RB, Series A, FGIC
5.500%, 06/01/15 1,500 1,560
California State GO
5.250%, 06/01/11 1,000 1,039
California State GO, FGIC
5.250%, 10/01/10 3,000 3,161
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
California State GO,
Series BH, AMT, FSA
5.250%, 12/01/12 $4,350 $ 4,393
California State Health
Facilities RB, Downey
Community Hospital
5.750%, 05/15/15 4,150 4,269
California State Home
Mortgage RB, Series A, MBIA
5.850%, 08/01/16 2,000 2,117
California State Housing
Finance Agency RB, Home
Mortgage, MBIA
5.950%, 08/01/10 1,830 1,958
Los Angeles County,
Metropolitan Transportation
Authority RB, AMBAC
5.700%, 07/01/12 1,135 1,219
Los Angeles GO, Series A, FGIC
5.800%, 09/01/09 1,250 1,344
San Francisco, City & County
Sewer RB, Series A, FGIC
5.700%, 10/01/11 1,000 1,066
--------
22,126
--------
COLORADO -- 1.0%
Denver, Multi-Family Housing RB,
Section 8, Series A
5.350%, 10/01/12 2,000 2,032
Goldsmith, Metropolitan
District GO, MBIA
6.125%, 12/01/12 1,000 1,067
--------
3,099
--------
CONNECTICUT -- 6.2%
Connecticut State GO, Series A
5.250%, 03/01/14 2,445 2,506
Connecticut State Health &
Education Facilities RB,
Series D, GOI
6.750%, 07/01/12 1,250 1,352
Connecticut State Health &
Education Facilities Authority
RB, Hospital For Special Care
5.375%, 07/01/17 1,000 1,014
45
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CONNECTICUT (CONTINUED)
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Sub-
Series E-1, GOA
5.900%, 05/15/15 $1,000 $ 1,059
Connecticut State Resource
Recovery Authority RB, American
Fuel Company, Series A, MBIA
5.125%, 11/15/14 3,500 3,469
Connecticut State Resource
Recovery Authority RB, Mid-
Connecticut System Project,
Series A, AMT, MBIA
5.500%, 11/15/11 4,500 4,787
Connecticut State Resource
Recovery Authority RB,
Wallingford Resources Project,
Series 1, AMT
6.625%, 11/15/01 1,990 2,129
Connecticut State Higher Education
Supplemental Loan Authority RB,
Family Education Loan Program,
Series A
5.625%, 11/15/07 1,360 1,394
South Central Connecticut
Regional Water Authority RB,
11th Series, FGIC
5.750%, 08/01/12 1,000 1,066
--------
18,776
--------
DISTRICT OF COLUMBIA -- 2.0%
District of Columbia GO,
Series A, MBIA
5.000%, 06/01/15 2,500 2,450
District of Columbia GO,
Series B, MBIA
6.000%, 06/01/08 2,305 2,521
Georgetown University RB,
Series A, MBIA
5.950%, 04/01/14 1,000 1,086
--------
6,057
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
FLORIDA -- 2.8%
Dade County GO, Series EE, FGIC
5.625%, 10/01/14 $2,560 $ 2,733
Dade County, Special
Obligation RB, Courthouse
Center Project
5.900%, 04/01/10 1,500 1,607
Florida State Board of Education
GO, Series E
5.700%, 06/01/14 2,000 2,097
Jacksonville, Electric
Authority RB
5.500%, 10/01/13 2,000 2,077
--------
8,514
--------
GEORGIA -- 1.4%
Georgia State Municipal Electric
Authority RB, MBIA
5.125%, 01/01/12 3,000 3,045
Georgia State Municipal Electric
Authority Special Obligation
RB, Series DD, AMBAC
7.000%, 01/01/08 1,000 1,184
--------
4,229
--------
ILLINOIS -- 1.4%
Chicago, O'Hare International
Airport RB, AMBAC
5.625%, 01/01/12 2,000 2,097
Illinios State Health Facilities
Authority RB, Rockford
Health Systems, AMBAC
5.125%, 08/15/15 1,000 1,001
Illinois State Civic Center RB,
Series A, AMBAC
6.000%, 12/15/15 1,000 1,024
--------
4,122
--------
INDIANA -- 0.9%
Marion County, Hospital
Authority RB, Methodist
Hospital of Indiana
6.500%, 09/01/13 2,450 2,569
--------
46
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
LOUISIANA -- 1.8%
Louisiana State GO, FSA
5.000%, 04/15/14 $2,000 $ 2,005
Orleans, Levee District RB,
Series A, FSA
5.950%, 11/01/14 3,080 3,365
--------
5,370
--------
MAINE -- 2.0%
Maine Municipal Bond
Bank RB, FSA
5.150%, 11/01/13 1,250 1,269
Maine State Health & Higher
Educational Facilities
Authority RB, MBIA
5.000%, 07/01/11 1,680 1,703
Maine State Housing
Authority RB, Series C-1
5.700%, 11/15/15 2,000 2,080
Maine State Municipal Bond
Bank RB, Series A, LOC
5.700%, 11/01/13 1,090 1,132
--------
6,184
--------
MARYLAND -- 1.7%
Maryland State & Local
Facilities GO, 1st Series
5.000%, 03/01/10 1,500 1,554
Maryland State GO
5.600%, 03/15/08 3,275 3,529
--------
5,083
--------
MASSACHUSETTS -- 11.4%
Boston, City Hospital
Project RB, Series B, FHA
5.750%, 02/15/13 1,300 1,336
Boston, City Hospital
Project RB, Series B, MBIA
5.750%, 02/15/13 1,500 1,562
Holyoke GO, Series A, FSA
5.600%, 06/15/10 1,365 1,461
Massachusetts State Bay
Transportation Authority RB,
Series A, MBIA
5.000%, 03/01/18 720 715
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State GO, AMBAC
5.000%, 08/01/14 $2,500 $ 2,519
Massachusetts State GO,
Series A, MBIA
5.000%, 04/01/14 4,650 4,662
Massachusetts State GO,
Series B, FGIC
5.500%, 06/01/11 2,000 2,122
Massachusetts State Health &
Educational Facilities
Authority RB, Dana Farber
Cancer Project, Series G-1
6.250%, 12/01/08 1,000 1,101
Massachusetts State Health &
Educational Facilities Authority
RB, Medical, Academic &
Scientific Project, Series A
6.200%, 01/01/03 1,140 1,223
6.250%, 01/01/05 1,060 1,163
Massachusetts State Health &
Educational Facilities Authority
RB, New England Deaconess
Hospital Project, Series D, GOI
6.625%, 04/01/12 1,000 1,106
Massachusetts State Health &
Educational Facilities Authority
RB, Suffolk University Project,
Series C, CONLEE
5.850%, 07/01/16 1,000 1,070
Massachusetts State Housing
Finance Agency RB, Series 44
5.900%, 12/01/13 1,000 1,051
Massachusetts State Housing
Finance Agency RB,
Series A, MBIA
5.600%, 07/01/07 475 511
5.700%, 07/01/08 475 511
Massachusetts State Housing
Finance Agency RB,
Series E, FNMA
6.250%, 11/15/12 2,600 2,805
Massachusetts State Industrial
Finance Agency RB,
College Issue, CONLEE
5.875%, 07/01/11 1,090 1,189
47
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Municipal
Wholesale Electric
Company RB, AMBAC
5.150%, 07/01/16 $2,000 $ 1,982
Massachusetts State Resource
Recovery Authority RB,
Refusetech Project, Series A
6.150%, 07/01/02 1,595 1,689
6.300%, 07/01/05 3,220 3,449
Massachusetts State Turnpike
Authority RB, Metropolitan
Highway System, Sub-
Series B, MBIA
5.250%, 01/01/17 1,000 1,007
Massachusetts State Turnpike
Authority RB, Metropolitan
Highway System, Series C,
MBIA (B)
5.400%, 01/01/16 1,000 411
--------
34,645
--------
MICHIGAN -- 1.7%
Michigan State Hospital Finance
Authority RB, Oakwood Hospital
Group Project, Series A, FGIC
5.400%, 11/01/07 1,500 1,577
Michigan State Public Power
Agency RB, Belle River
Project-A, MBIA
5.250%, 01/01/18 3,405 3,422
--------
4,999
--------
MINNESOTA -- 2.5%
Minnesota State GO
5.000%, 06/01/14 5,000 5,049
Northern Minnesota State
Municipal Power Agency RB,
Electric System, FSA
5.250%, 01/01/12 2,490 2,534
--------
7,583
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MISSISSIPPI -- 1.5%
Mississippi State Capital
Imports GO, Series A
5.000%, 07/01/09 $1,000 $ 1,036
Mississippi State GO
5.000%, 06/01/15 3,645 3,645
--------
4,681
--------
MISSOURI -- 1.0%
St. Charles County, Public
Water Supply District # 2
COP, Series A, MBIA
5.500%, 12/01/14 3,000 3,086
--------
NEBRASKA -- 0.9%
Nebraska State Investment
Finance Authority RB,
Childrens Healthcare
Services, AMBAC
5.500%, 08/15/17 1,435 1,483
Nebraska State Public Power
Supply System RB,
Series B, MBIA
5.250%, 01/01/13 1,190 1,211
--------
2,694
--------
NEVADA -- 0.8%
Nevada State GO
5.000%, 05/15/15 2,500 2,494
--------
NEW HAMPSHIRE -- 1.0%
New Hampshire State Higher
Education & Health Facilities
Authority RB, Dartmouth
Education Loan Remarketing
5.300%, 06/01/15 1,045 1,075
New Hampshire State Higher
Education & Health Facilities
Authority RB, LOC
5.800%, 10/01/12 1,000 1,015
New Hampshire State Housing
Finance Authority RB,
Series B, FHA
5.850%, 07/01/10 1,000 1,051
--------
3,141
--------
48
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
NEW YORK -- 11.4%
Metropolitan Transportation
Authority RB, Commuter
Facilities, Series A, FGIC
5.750%, 07/01/11 $1,000 $ 1,073
Metropolitan Transportation
Authority RB, Transportaion
Service Contract, Series R
5.500%, 07/01/14 1,740 1,794
New York City GO
5.000%, 08/01/14 4,000 3,940
New York City GO, Series A
6.250%, 08/01/08 2,000 2,235
New York City GO, Series B
6.200%, 08/15/06 1,250 1,380
New York City GO, Series D
6.000%, 02/15/09 1,000 1,076
6.000%, 02/15/12 1,500 1,613
New York City GO, Series F
6.500%, 02/15/07 1,500 1,674
5.250%, 08/01/14 3,000 3,026
New York City GO, Series F,
Pre-refunded @ 102 (A)
6.500%, 02/15/05 1,365 1,548
New York Metropolitan Transit
Authority Commuter
Facilities RB, Series A, FSA
5.500%, 07/01/15 1,530 1,599
New York State Dormitory
Authority RB, City University
System Consolidated,
Third-1, FGIC
5.250%, 07/01/13 1,580 1,616
New York State Dormitory
Authority RB, North
General Hospital-G
5.100%, 02/15/12 2,400 2,379
New York State Dormitory
Authority RB, Series A, STGTD
5.500%, 05/15/10 1,000 1,030
New York State Environmental
Quality GO
5.125%, 01/15/16 2,000 1,993
New York State GO,
Series C, AMBAC
5.375%, 10/01/11 3,000 3,128
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
New York State Housing Finance
Agency RB, Series A, FSA
5.800%, 11/01/09 $1,720 $ 1,845
New York State Urban
Development Authority RB,
Youth Facilities Project, MBIA
5.700%, 04/01/14 1,505 1,575
--------
34,524
--------
NORTH CAROLINA -- 3.1%
North Carolina State, Eastern
Municipal Power Agency RB
6.000%, 01/01/14 4,000 4,145
5.600%, 01/01/16 2,000 2,018
North Carolina State, Eastern
Municipal Power
Agency RB, FGIC
6.000%, 01/01/13 2,000 2,150
North Carolina State, Eastern
Municipal Power Agency RB,
Series D
5.875%, 01/01/14 1,035 1,066
--------
9,379
--------
OHIO -- 2.1%
Franklin County Hospital RB,
AMBAC
5.750%, 05/15/12 2,100 2,216
Ohio State Building Authority RB,
Adult Correctional Facilities
Project, MBIA
5.700%, 10/01/06 1,000 1,085
Ohio State Public Facilities
Commission RB, Higher
Education Authority, Series II-A
5.000%, 05/01/08 2,900 3,002
--------
6,303
--------
PENNSYLVANIA -- 5.8%
Pennsylvania State GO
5.250%, 06/15/12 2,155 2,230
Pennsylvania State GO,
1st Series, AMBAC
5.125%, 03/15/12 2,000 2,043
49
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania State Higher
Education & Health
Services RB, Series A
5.750%, 01/01/12 $1,300 $ 1,381
Pennsylvania State Housing
Finance Agency RB, Single
Family Mortgages, Series A
6.000%, 10/01/13 2,000 2,138
Pennsylvania State Turnpike
Commission RB, Series A, AMBAC
5.500%, 12/01/12 1,450 1,512
Philadelphia, Airport RB, FGIC
5.375%, 06/15/14 3,000 3,053
Philadelphia, Water and
Wastewater Projects RB, FGIC
5.650%, 06/15/12 5,000 5,238
--------
17,595
--------
PUERTO RICO -- 3.6%
Puerto Rico Commonwealth GO
5.500%, 07/01/12 2,000 2,125
5.750%, 07/01/17 2,000 2,125
Puerto Rico Electric Power
Authority RB
5.500%, 07/01/16 3,000 3,090
Puerto Rico Electric Power
Authority RB, Series CC, FSA
5.000%, 07/01/10 2,435 2,508
Puerto Rico Public Education &
Health Facilities RB,
Series M, CGTD
5.750%, 07/01/15 1,000 1,041
--------
10,889
--------
RHODE ISLAND -- 3.5%
Bristol County, Water Authority RB,
Series A, MBIA
5.200%, 12/01/13 1,080 1,098
Rhode Island State Depositors
Economic Protection RB,
Series B, MBIA
5.800%, 08/01/09 1,000 1,115
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Rhode Island State Health &
Educational Building RB,
Landmark Medical Project, FSA
5.600%, 10/01/12 $1,000 $ 1,046
Rhode Island State Housing &
Mortgage Finance RB,
Series 7B, AMT
6.700%, 10/01/12 1,750 1,877
Rhode Island State Housing &
Mortgage Finance RB, Series 15B
6.100%, 10/01/05 500 539
6.200%, 10/01/06 1,110 1,190
Rhode Island State Housing &
Mortgage Finance RB, Series 19A
5.700%, 04/01/15 2,500 2,572
Rhode Island State Housing &
Mortgage Finance RB,
Series A, AMBAC
5.700%, 07/01/07 1,000 1,076
--------
10,513
--------
SOUTH CAROLINA -- 0.4%
South Carolina State Public
Service Authority RB,
Series B, FGIC
5.875%, 01/01/14 1,150 1,239
--------
TEXAS -- 3.7%
Dallas RB, Texas Civic Center
Refunding & Improvement, MBIA
5.000%, 08/15/16 3,000 2,970
Tarrant County, Health Facilities
Authority RB, Harris Methodist
Health System Project,
Series A, AMBAC
5.125%, 09/01/12 2,700 2,737
Texas A&M University RB
5.200%, 05/15/10 2,580 2,670
Texas State GO, Series A
5.700%, 10/01/07 1,500 1,588
5.750%, 10/01/08 1,280 1,382
--------
11,347
--------
50
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
UTAH -- 0.9%
Utah State Intermountain Power
Agency RB, Series A, AMBAC
6.500%, 07/01/08 $2,500 $ 2,891
--------
VERMONT -- 0.6%
Vermont State Educational &
Health Buildings RB, Medical
Center Hospital of Vermont
Project, FGIC
5.750%, 09/01/07 1,800 1,908
--------
VIRGINIA -- 0.6%
Virginia State Housing
Development Authority RB,
Series H
5.700%, 11/01/07 1,655 1,775
--------
WASHINGTON -- 10.2%
Washington State Public Power
Supply Systems RB, Series A, FSA
6.250%, 07/01/12 425 454
Washington State Public Power
Supply Systems RB, Series A,
Pre-refunded @ 102, FSA (A)
6.250%, 07/01/02 1,575 1,725
Washington State Public Power
Supply Systems RB, FSA
6.300%, 07/01/09 2,000 2,165
Washington State Public Power
Supply Systems RB, Nuclear
Power Project No. 1, FSA
5.400%, 07/01/12 7,800 7,956
Washington State Public Power
Supply Systems RB, Nuclear
Power Project No. 1, Series B
5.125%, 07/01/13 3,000 3,004
Washington State Public Power
Supply Systems RB, Nuclear
Power Project No. 2, FGIC
5.550%, 07/01/10 2,500 2,600
Washington State Public Power
Supply Systems RB, Nuclear
Power Project No. 2, Series A
6.100%, 07/01/06 1,030 1,134
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Washington State Public Power
Supply Systems RB, Nuclear
Power Project No. 3,
Series A, FSA
5.100%, 07/01/10 $1,395 $ 1,430
Washington State Public Power
Supply Systems RB, Nuclear
Project No. 1
5.000%, 07/01/13 2,000 1,978
Washington State Public Power
Supply Systems RB, Nuclear
Project No. 2, Series A
5.000%, 07/01/11 7,615 7,586
Washington State Public Power
Supply Systems RB, Nuclear
Project No. 2, Series A, FSA
5.125%, 07/01/11 1,000 1,019
--------
31,051
--------
WISCONSIN -- 1.5%
Wisconsin State GO, Series A
5.800%, 05/01/07 1,355 1,460
Wisconsin State Housing &
Economic Development
Authority RB, Home Ownership,
Series E, GOA
5.900%, 09/01/16 1,000 1,051
Wisconsin State Housing &
Economic Development
Authority RB, Series C, GOA
5.800%, 11/01/13 2,125 2,207
--------
4,718
--------
TOTAL MUNICIPAL BONDS
(Cost $283,266) 297,214
--------
51
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 4.6%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $13,893,235 (collateralized
by U.S. Treasury Instruments:
total market value
$14,173,564) (C) $13,887 $ 13,887
--------
TOTAL REPURCHASE AGREEMENT
(Cost $13,887) 13,887
--------
TOTAL INVESTMENTS -- 102.5%
(Cost $297,153) 311,101
--------
OTHER ASSETS AND LIABILITIES,
NET -- (2.5%) (7,523)
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 28,850,438 outstanding
shares of beneficial interest 286,451
Accumulated net realized gain
on investments 3,179
Net unrealized appreciation
on investments 13,948
--------
TOTAL NET ASSETS -- 100.0% $303,578
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.52
========
(A) PRE-REFUNDED SECURITY. THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
(B) ZERO COUPON BOND. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
EFFECTIVE YIELD AS OF MAY 31, 1998.
(C) TRI-PARTY REPURCHASE AGREEMENT
AMT--ALTERNATIVE MINIMUM TAX
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
LOC--SECURITES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDEDUNDERLYING CREDIT SUPPORT FOR THE
SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CGTD--COMMONWEALTH GUARANTEED
CONLEE--COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FHA--FEDERAL HOUSING ADMINISTRATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA--FINANCIAL SECURITY ASSURANCE
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GOA--GENERAL OBLIGATION OF AUTHORITY
GOI--GENERAL OBLIGATION OF INSTITUTION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
STGTD--STATE GUARANTEED
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
52
<PAGE>
BOSTON 1784 FUNDS
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED -- PLOT POINTS AS FOLLOWS:]
HEALTH CARE BONDS 18%
OTHER REVENUE BONDS 4%
RESOURCE RECOVERY BONDS 9%
PUBLIC FACILITY BONDS 2%
CASH EQUIVALENTS 6%
GENERAL OBLIGATION BONDS 22%
TRANSPORTATION BONDS 13%
ALTERNATIVE MINIMUM TAX BONDS 4%
HOUSING BONDS 12%
UTILITY BONDS 2%
EDUCATION BONDS 3%
WATER & SEWER BONDS 2%
INDUSTRIAL DEVELOPMENT &
POLLUTION CONTROL BONDS 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 95.3%
CONNECTICUT -- 80.3%
Bridgeport GO, AMBAC
5.450%, 03/01/11 $1,550 $ 1,645
Bridgeport GO, FGIC
8.750%, 08/15/05 500 635
Bridgeport GO, Series A
6.125%, 03/01/05 2,250 2,402
Bristol, Resource Recovery RB,
Ogden Martin System Project
6.500%, 07/01/14 3,000 3,300
Connecticut State Airport RB,
Bradley International
Airport, FGIC
7.650%, 10/01/12 2,000 2,360
Connecticut State Clean Water
Funding RB
5.600%, 06/01/09 750 808
Connecticut State COP,
Middletown Courthouse
Facilities Project, MBIA
6.250%, 12/15/08 1,500 1,620
Connecticut State Development
RB, Duncaster Project
6.700%, 09/01/07 3,350 3,635
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Connecticut State
Development RB, MBIA
6.550%, 06/15/09 $ 500 $ 564
Connecticut State Development
RB, Pfizer Project
6.550%, 02/15/13 250 275
Connecticut State GO
5.250%, 03/15/14 9,500 9,761
Connecticut State GO, FGIC
5.000%, 09/01/14 880 888
Connecticut State GO, Series A
6.500%, 03/15/07 750 821
5.125%, 03/15/15 3,895 3,934
Connecticut State GO, Series B
5.125%, 03/15/11 1,000 1,037
Connecticut State GO, Series C
5.800%, 08/15/08 1,500 1,633
Connecticut State Health &
Education Facilities
Authority RB, AMBAC
5.200%, 07/01/14 2,840 2,900
5.000%, 07/01/17 1,000 994
Connecticut State Health &
Education Facilities Authority
RB, Bridgeport Hospital,
Series C, CONLEE
5.250%, 07/01/15 1,615 1,639
Connecticut State Health &
Education Facilities Authority
RB, Connecticut State
University System, Series A, MBIA
5.125%, 11/01/12 500 512
Connecticut State Health &
Education Facilities Authority
RB, Greenwich Hospital,
Series A, MBIA
5.750%, 07/01/16 2,000 2,125
Connecticut State Health &
Education Facilities Authority
RB, Hospital For Special Care
5.375%, 07/01/17 4,000 4,055
Connecticut State Health &
Education Facilities Authority
RB, New Britain Hospital,
Series B, AMBAC
6.000%, 07/01/09 500 547
53
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CONNECTICUT (CONTINUED)
Connecticut State Health &
Education Facilities Authority
RB, New Haven Hospital,
Series H, MBIA
5.625%, 07/01/16 $1,000 $ 1,053
Connecticut State Health &
Education Facilities Authority
RB, New Horizons Village
Project, AMBAC
7.050%, 11/01/09 1,000 1,166
Connecticut State Health &
Education Facilities Authority
RB, Newington Children's
Hospital, Series A, MBIA
5.850%, 07/01/07 1,110 1,213
Connecticut State Health &
Education Facilities Authority
RB, Sharon Health Care
Project, AMBAC
6.000%, 11/01/09 1,000 1,105
Connecticut State Health &
Education Facilities Authority
RB, Stamford Hospital, MBIA
5.400%, 07/01/09 2,000 2,140
Connecticut State Health &
Education Facilities Authority
RB, Wadsworth Nursing
Home, AMBAC
7.125%, 11/01/14 500 579
Connecticut State Health &
Education Facilities RB,
Series D, GOI
6.750%, 07/01/12 2,750 2,973
Connecticut State Higher
Education RB, Family
Education Loan Program,
Series A, AMT
7.000%, 11/15/05 1,190 1,270
Connecticut State Higher
Education RB, Series A
6.500%, 11/15/00 245 257
Connecticut State Housing
Finance Authority RB, GOA
6.200%, 05/15/14 430 459
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Series A, GOA
5.950%, 05/15/11 $3,215 $ 3,444
6.200%, 05/15/14 1,350 1,428
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Series B
6.050%, 11/15/03 500 538
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Series B, FHA
7.200%, 11/15/01 710 727
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program,
Series C-1, GOA
6.000%, 11/15/10 1,010 1,082
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program,
Sub-Series A-3, GOA
5.950%, 05/15/17 1,000 1,051
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Sub-Series B1
6.000%, 11/15/15 2,000 2,118
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Sub-
Series B1, GOA
6.000%, 05/15/08 300 324
Connecticut State Housing
Finance Authority RB, Mortgage
Finance Program, Sub-
Series E-1, GOA
5.900%, 05/15/15 3,200 3,388
Connecticut State Resource
Recovery Authority RB,
American Fuel Company,
Series A, MBIA
5.125%, 11/15/14 3,625 3,593
Connecticut State Resource
Recovery Authority RB,
Bridgeport Resources, Series A
7.625%, 01/01/09 600 618
54
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
CONNECTICUT (CONTINUED)
Connecticut State Resource
Recovery Authority RB, Mid-
Connecticut System Project,
Series A, AMT, MBIA
5.500%, 11/15/11 $1,500 $ 1,596
Connecticut State Resource
Recovery Authority RB, Mid-
Connecticut System Project,
Series A, MBIA
5.375%, 11/15/10 2,000 2,115
Connecticut State Resource
Recovery Authority RB,
Series A, AMT
8.000%, 11/15/08 1,500 1,572
Connecticut State Resource
Recovery Authority RB,
Wallingford Resources Project,
Series 1, AMT
6.700%, 11/15/02 800 871
Connecticut State Special
Tax RB, AMBAC
5.250%, 01/01/11 500 520
Connecticut State Special Tax RB,
Transportation Infrastructure,
Series A
5.400%, 09/01/09 500 525
5.700%, 06/01/12 1,160 1,240
Connecticut State Special Tax RB,
Transportation Infrastructure,
Series A, FGIC
5.600%, 06/01/13 1,000 1,050
5.250%, 10/01/14 2,100 2,166
Connecticut State Special Tax RB,
Transportation Infrastructure,
Series B, FGIC
6.100%, 09/01/08 500 566
5.500%, 10/01/11 4,920 5,307
5.600%, 10/01/12 1,000 1,085
5.600%, 10/01/13 1,000 1,085
Connecticut State Transportation
Infrastructure RB, Series C
5.000%, 10/01/13 2,455 2,480
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Eastern Connecticut Resource
Recovery Authority RB,
Wheelabrator Libson Project,
Series A
5.500%, 01/01/14 $ 2,775 $ 2,772
Hartford GO, FGIC
5.700%, 10/01/12 500 540
5.750%, 10/01/13 1,000 1,079
4.700%, 01/15/15 1,340 1,310
New Haven, Air Right Packaging
Facility RB, MBIA
6.500%, 12/01/15 2,000 2,168
South Central Connecticut
Regional Water Authority RB,
Series A, MBIA
6.000%, 08/01/09 985 1,072
6.000%, 08/01/10 1,045 1,135
Stamford GO
5.000%, 07/15/15 2,195 2,206
University of Connecticut RB,
Series A, MBIA
5.250%, 04/01/14 1,000 1,030
--------
114,106
--------
GUAM -- 0.8%
Guam Power Authority RB,
Series A, AMBAC
5.900%, 10/01/08 1,000 1,101
--------
PUERTO RICO -- 14.2%
Puerto Rico Commonwealth GO
5.750%, 07/01/17 2,700 2,869
Puerto Rico Commonwealth
GO (A)
4.850%, 07/01/14 4,500 2,019
Puerto Rico Electric Power
Authority RB
5.500%, 07/01/14 1,000 1,034
5.500%, 07/01/16 1,000 1,030
Puerto Rico Highway &
Transportation RB, Series X
5.300%, 07/01/04 700 732
55
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PUERTO RICO (CONTINUED)
Puerto Rico Industrial, Tourist,
Educational, Medical &
Environmental Control
Facilities RB, Abbott
Chemicals Project
6.500%, 07/01/09 $ 500 $ 501
Puerto Rico Industrial, Tourist,
Educational, Medical &
Environmental Control
Facilities RB, International
American University,
Series A, MBIA
5.250%, 10/01/12 725 757
5.375%, 10/01/13 975 1,024
5.500%, 10/01/14 650 684
Puerto Rico Industrial, Tourist,
Educational, Medical &
Environmental Control
Facilities RB, PepsiCo Project
6.250%, 11/15/13 2,750 3,018
Puerto Rico Infrastructure
Financing Authority RB, AMBAC
5.250%, 07/01/10 2,500 2,638
Puerto Rico Municipal Finance
Agency RB, Series A, FSA
6.000%, 07/01/09 2,650 2,908
Puerto Rico Public Buildings
Authority RB, MBIA
5.000%, 07/01/11 1,000 1,021
--------
20,235
--------
TOTAL MUNICIPAL BONDS
(Cost $128,765) 135,442
--------
REPURCHASE AGREEMENT -- 6.1%
Paine Webber
5.550%, dated 05/29/98, matures
06/01/98, repurchase price
$8,712,644 (collateralized by
U.S. Treasury Instruments:
total market value
$8,880,743) (B) 8,709 8,709
--------
TOTAL REPURCHASE AGREEMENT
(Cost $8,709) 8,709
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL INVESTMENTS -- 101.4%
(Cost $137,474) $144,151
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.4%) (2,044)
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 13,147,925 outstanding
shares of beneficial interest 134,688
Accumulated net realized gain
on investments 742
Net unrealized appreciation
on investments 6,677
--------
TOTAL NET ASSETS -- 100.0% $142,107
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.81
========
(A) ZERO COUPON BOND. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
EFFECTIVE YIELD AS OF MAY 31, 1998.
(B) TRI-PARTY REPURCHASE AGREEMENT
AMT--ALTERNATIVE MINIMUM TAX
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR THE
SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
CONLEE--COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FHA--FEDERAL HOUSING ADMINISTRATION
FSA--FINANCIAL SECURITY ASSURANCE
GOA--GENERAL OBLIGATION OF AUTHORITY
GOI--GENERAL OBLIGATION OF INSTITUTION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
56
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
GENERAL OBLIGATION BONDS 17%
CASH EQUIVALENTS 5%
EDUCATION BONDS 4%
WATER & SEWER BONDS 17%
OTHER REVENUE BONDS 6%
PRE-REFUNDED SECURITIES 2%
HOUSING BONDS 7%
ALTERNATIVE MINIMUM TAX BONDS 3%
HEALTH CARE BONDS 17%
RESOURCE RECOVERY BONDS 3%
TRANSPORTATION BONDS 8%
UTILITY BONDS 11%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 93.2%
FLORIDA -- 91.2%
Brevard County, Health Facility
Authority RB, Holmes Regional
Medical Center, MBIA
5.625%, 10/01/14 $1,000 $ 1,055
Brevard County, Housing &
Finance Authority RB,
Series B, FSA
7.000%, 03/01/13 330 351
Broward County, Solid
Waste RB, MBIA
5.875%, 07/01/08 1,500 1,618
Cape Coral, Water Improvement
RB, FSA
6.375%, 06/01/09 1,000 1,090
Dade County, Aviation RB,
Series A, AMT, MBIA
5.750%, 10/01/15 1,000 1,069
Dade County, Housing Finance
Authority RB, Series D, FSA
6.950%, 12/15/12 695 745
Dade County, Water & Sewer
System RB, FGIC
5.500%, 10/01/18 3,000 3,116
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Escambia County, Housing Finance
Authority RB, Series A, AMT, FHA
7.300%, 10/01/17 $ 555 $ 581
Florida State Board of Education
Capital Outlay GO, Series A
5.750%, 01/01/13 1,000 1,051
5.500%, 06/01/15 2,500 2,594
Florida State Board of Education
Capital Outlay GO, Series B, MBIA
5.750%, 06/01/11 1,250 1,339
Florida State Finance
Department RB, MBIA
5.500%, 07/01/12 1,000 1,070
Florida State Finance
Department RB, Series A, AMBAC
5.700%, 07/01/09 2,000 2,140
Florida State Housing RB, MBIA
5.050%, 07/01/12 2,000 2,002
Florida State Pollution Control RB,
Series Y, Pre-refunded @ 101 (A)
6.400%, 07/01/02 1,000 1,092
Florida State Turnpike
Authority RB, FGIC
5.250%, 07/01/11 2,000 2,070
Fort Lauderdale GO
5.500%, 07/01/15 1,000 1,035
Gainesville, Utilities System RB,
Series B
5.500%, 10/01/13 2,000 2,088
Hillsborough County, Allegany
Health Systems RB, MBIA
6.375%, 12/01/12 1,300 1,441
Hillsborough County, Aviation
Authority, Tampa International
Airport RB, Series B, AMBAC
5.125%, 10/01/17 2,000 2,005
Indian Trace Community, Water
Management RB, MBIA
5.500%, 05/01/07 1,000 1,083
Manatee County, Florida School
Board COP, MBIA
4.950%, 07/01/14 1,000 1,000
Naples, Community Hospital
Project RB, MBIA
5.500%, 10/01/16 1,000 1,043
North Port, Utility System RB, FGIC
6.150%, 10/01/09 1,000 1,085
57
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
FLORIDA (CONTINUED)
Orlando, Water & Electric
Utilities Commission RB
5.250%, 10/01/14 $1,000 $ 1,014
Polk County, Utility
Systems RB, FGIC
5.250%, 10/01/17 1,500 1,530
Port St. Lucie, Special Assessment,
District 1, MBIA
5.850%, 10/01/11 3,070 3,346
Reedy Creek, Improvements GO,
Series A, MBIA
5.750%, 06/01/14 2,500 2,625
Tampa Catholic Health
Systems A2 RB, AMBAC
4.875%, 11/15/15 1,250 1,217
4.875%, 11/15/18 500 481
Tampa Health Systems
Catholic Health RB
4.875%, 11/15/15 1,000 974
Tampa Health Systems RB,
AMBAC
4.875%, 11/15/14 1,000 980
Volusia County, Hospital
Facilities RB, Memorial Health
Systems Project, AMBAC
5.500%, 11/15/16 1,250 1,313
--------
47,243
--------
PUERTO RICO -- 2.0%
Puerto Rico Industrial, Tourist,
Educational, Medical, &
Environmental Control Facilities
RB, International American
University, Series A, MBIA
5.250%, 10/01/12 1,000 1,044
--------
TOTAL MUNICIPAL BONDS
(Cost $46,369) 48,287
--------
REPURCHASE AGREEMENT -- 4.9%
Paine Webber
5.550%, dated 05/29/98, matures
06/01/98, repurchase price
$2,547,442 (collateralized by U.S.
Treasury Instruments: total market
value $2,595,518) (B) 2,546 2,546
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,546) $ 2,546
--------
TOTAL INVESTMENTS -- 98.1%
(Cost $48,915) 50,833
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.9% 960
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 5,028,215 outstanding
shares of beneficial interest 49,451
Accumulated net realized
gain on investments 424
Net unrealized appreciation
on investments 1,918
--------
TOTAL NET ASSETS -- 100.0% $ 51,793
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.30
========
(A) PRE-REFUNDED SECURITY. THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
(B) TRI-PARTY REPURCHASE AGREEMENT
AMT--ALTERNATIVE MINIMUM TAX
COP--CERTIFICATE OF PARTICIPATION
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR THE
SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FHA--FEDERAL HOUSING ADMINISTRATION
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
GENERAL OBLIGATION BONDS 29%
ALTERNATIVE MINIMUM TAX BONDS 5%
HEALTH CARE BONDS 10%
HOUSING BONDS 6%
TRANSPORTATION BONDS 14%
PRE-REFUNDED SECURITIES 4%
EDUCATION BONDS 11%
UTILITY BONDS 2%
RESOURCE RECOVERY BONDS 1%
CASH EQUIVALENTS 5%
WATER & SEWER BONDS 13%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 93.9%
MASSACHUSETTS -- 91.8%
Boston GO, Series A, AMBAC
5.650%, 02/01/09 $1,500 $ 1,592
Boston, Water and Sewer
Community RB, Series A, FGIC
5.125%, 11/01/15 3,320 3,349
Brockton GO, MBIA
5.125%, 04/01/15 1,500 1,521
Chelsea GO, School Loan
Project, AMBAC
6.000%, 06/15/04 650 709
5.700%, 06/15/06 1,000 1,082
Gloucester GO, FGIC
5.100%, 08/01/14 1,105 1,119
Haverhill GO, FGIC
5.300%, 06/15/12 1,500 1,556
Holyoke GO, FSA
5.200%, 08/01/17 690 699
Holyoke GO, Series A, FSA
5.600%, 06/15/11 1,000 1,066
5.500%, 06/15/16 815 846
Lawrence GO, AMBAC
6.250%, 02/15/09 1,475 1,621
Lowell GO, AMBAC
5.500%, 08/01/11 2,740 2,891
5.500%, 08/01/12 1,720 1,808
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Lowell GO, FSA
5.500%, 01/15/10 $1,140 $ 1,201
6.625%, 04/01/15 1,000 1,124
Massachusetts State Bay
Transportation Authority RB,
Series A, GOA
5.500%, 03/01/07 1,500 1,614
5.800%, 03/01/10 2,640 2,887
Massachusetts State Bay
Transportation Authority RB,
Series B, GOA
6.000%, 03/01/12 4,000 4,315
Massachusetts State Bay
Transportation Authority RB,
Series D, GOA
5.600%, 03/01/08 1,885 2,050
Massachusetts State Bay
Transportation Authority RB,
Series A, MBIA
5.000%, 03/01/18 3,000 2,977
5.750%, 03/01/18 3,325 3,508
Massachusetts State Educational
Financing Authority RB,
Series A, AMT, MBIA
5.125%, 12/01/14 1,000 991
Massachusetts State Educational
Loan Authority RB, Issue E,
Series B, AMT, AMBAC
6.000%, 01/01/12 410 432
6.300%, 07/01/12 870 927
Massachusetts State GO,
Pre-refunded @ 101 (A)
5.750%, 06/01/06 3,000 3,304
Massachusetts State GO,
Series A
5.500%, 02/01/11 3,500 3,666
Massachusetts State GO,
Series A, MBIA
5.000%, 04/01/14 3,000 3,007
Massachusetts State GO,
Series B
6.500%, 08/01/08 5,315 6,185
Massachusetts State GO,
Series B, FGIC
5.500%, 11/01/07 1,000 1,082
59
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND (CONTINUED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State GO,
Series B, MBIA
5.400%, 11/01/07 $2,000 $ 2,152
Massachusetts State GO,
Series B, Pre-refunded @ 102 (A)
6.000%, 08/01/04 3,000 3,326
Massachusetts State GO,
Series B, Pre-refunded @ 102,
FGIC (A)
5.875%, 08/01/04 2,000 2,210
Massachusetts State GO,
Series C
5.000%, 08/01/17 3,000 2,962
Massachusetts State Health &
Education Facilities Authority
RB, Berklee College of Music,
Series E, MBIA
5.000%, 10/01/15 975 969
Massachusetts State Health &
Education Facilities Authority RB,
Hallmark Health Systems,
Series A, FSA
5.000%, 07/01/12 1,000 1,004
Massachusetts State Health &
Education Facilities Authority
RB, Partners Healthcare System,
Series A, MBIA
5.375%, 07/01/17 2,465 2,505
Massachusetts State Health &
Education Facilities RB,
Catholic Health East, Series A,
AMBAC
5.000%, 11/15/18 2,000 1,960
Massachusetts State Health &
Educational Facilities Authority
RB, Baystate Medical Center
Project, Series D, FGIC
6.000%, 07/01/15 2,000 2,145
Massachusetts State Health &
Educational Facilities Authority
RB, Dana Farber Cancer
Project, Series E
6.250%, 10/01/09 1,000 1,075
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State Health &
Educational Facilities Authority
RB, Dana Farber Cancer
Project, Series F, FGIC
6.000%, 12/01/15 $1,445 $ 1,555
Massachusetts State Health &
Educational Facilities Authority
RB, Dana Farber Cancer
Project, Series G-1
6.250%, 12/01/09 1,175 1,288
Massachusetts State Health &
Educational Facilities Authority
RB, Emerson Hospital Project,
Series D, FSA
5.800%, 08/15/18 3,000 3,135
Massachusetts State Health &
Educational Facilities Authority
RB, Harvard University Project,
Series M, GOI
5.750%, 12/01/11 1,000 1,044
Massachusetts State Health &
Educational Facilities Authority
RB, Lahey Clinic Medical
Center Project, Series B, MBIA
5.625%, 07/01/15 500 521
Massachusetts State Health &
Educational Facilities Authority
RB, Massachusetts General
Hospital, Series G, AMBAC
5.375%, 07/01/11 2,000 2,068
Massachusetts State Health &
Educational Facilities Authority
RB, Newton-Wellesley Hospital
Project, Issue E, MBIA
5.875%, 07/01/15 3,000 3,206
Massachusetts State Health &
Educational Facilities Authority
RB, Northeastern University
Project, Series E, MBIA
6.500%, 10/01/12 1,000 1,101
Massachusetts State Health &
Educational Facilities Authority
RB, Smith College Project,
Series D, GOI
5.750%, 07/01/16 2,600 2,707
60
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Health &
Educational Facilities Authority
RB, Tufts University Project,
Series F, FGIC
5.950%, 08/15/18 $3,000 $ 3,191
Massachusetts State Health &
Educational Facilities Authority
RB, Williams College, Series F
5.750%, 07/01/19 1,000 1,048
Massachusetts State Health and
Education Facilities Authority
RB, Amherst College, Series G
5.250%, 11/01/15 1,125 1,142
Massachusetts State Housing
Finance Agency RB, Rental
Mortgage, Series C, AMT, AMBAC
5.450%, 07/01/18 2,805 2,816
Massachusetts State Housing
Finance Agency RB, Residential
Development Project,
Series A, FNMA
6.875%, 11/15/11 1,750 1,894
Massachusetts State Housing
Finance Agency RB, Series A,
AMBAC
6.300%, 10/01/13 4,950 5,278
Massachusetts State Housing
Finance Agency RB, Series A,
MBIA
5.850%, 12/01/08 1,245 1,335
6.100%, 07/01/15 1,590 1,699
Massachusetts State Housing
Finance Agency RB, Single
Family Housing Project,
Series 14, FHA
7.700%, 12/01/14 1,895 1,980
Massachusetts State Industrial
Finance Agency RB, Babson
College Project, Series A
5.375%, 10/01/17 1,000 1,014
Massachusetts State Industrial
Finance Agency RB, Babson
College Project, Series A, MBIA
6.375%, 10/01/09 1,000 1,095
5.750%, 10/01/15 1,000 1,061
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Massachusetts State Industrial
Finance Agency RB, College of
Holy Cross, MBIA
5.500%, 03/01/16 $1,500 $ 1,560
Massachusetts State Industrial
Finance Agency RB, Worcester
Polytechnical Institution, MBIA
5.125%, 09/01/17 1,550 1,552
Massachusetts State Municipal
Wholesale Electric Company RB,
Series B, MBIA
6.750%, 07/01/05 1,000 1,104
Massachusetts State Municipal
Wholesale Electric Company RB,
Series D, MBIA
6.000%, 07/01/05 1,000 1,078
Massachusetts State Municipal
Wholesale Electric Company RB,
Series E, MBIA
6.000%, 07/01/11 2,500 2,678
Massachusetts State Port Authority
RB, Series A, AMT
6.000%, 07/01/13 1,050 1,135
Massachusetts State Port Authority
RB, Series B, AMT
5.250%, 07/01/14 1,385 1,406
5.000%, 07/01/13 1,790 1,786
Massachusetts State Resource
Recovery Authority RB,
Refusetech Project, Series A
6.150%, 07/01/02 900 953
6.300%, 07/01/05 1,000 1,071
Massachusetts State Special
Obligation RB, Series A
5.500%, 06/01/07 2,000 2,118
5.750%, 06/01/11 2,780 3,020
5.750%, 06/01/12 700 760
5.000%, 06/01/17 500 497
Massachusetts State Turnpike
Authority RB, Metropolitan
Highway System,
Series A, MBIA
5.125%, 01/01/17 1,000 1,001
61
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State Turnpike
Authority RB, Metropolitan
Highway System, Sub-
Series B, MBIA
5.250%, 01/01/17 $1,000 $ 1,008
Massachusetts State Turnpike
Authority RB, Western Turnpike,
Series A, MBIA
5.550%, 01/01/17 2,000 2,016
Massachusetts State Water
Authority RB, Series B, MBIA
5.500%, 03/01/17 3,500 3,592
Massachusetts State Water
Pollution Abatement Trust RB,
New Bedford Project, Series A
5.700%, 02/01/12 1,450 1,559
5.700%, 02/01/15 3,000 3,184
Massachusetts State Water
Pollution Abatement Trust RB,
Pooled Loan Program, Series 1
5.600%, 08/01/13 2,090 2,197
Massachusetts State Water
Pollution Abatement Trust RB,
Pooled Loan Program, Series 2
6.125%, 02/01/07 730 820
Massachusetts State Water
Pollution Abatement Trust RB,
Series A
5.450%, 02/01/13 1,000 1,040
5.250%, 08/01/14 1,000 1,029
Massachusetts State Water
Resource Authority RB,
Series B, GOA
5.875%, 11/01/04 1,000 1,084
6.250%, 11/01/10 3,175 3,453
Massachusetts State Water
Resource Authority RB,
Series C, GOA
6.000%, 11/01/05 2,000 2,175
6.000%, 12/01/11 2,000 2,280
Mendon Upton Regional School
District GO, FGIC
5.500%, 06/01/15 1,405 1,466
5.500%, 06/01/17 1,500 1,556
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Nantucket GO
6.800%, 12/01/11 $1,425 $ 1,576
Nantucket GO, MBIA
5.250%, 07/15/10 2,250 2,363
Nantucket Islands Land Bank GO,
Series E
7.000%, 07/01/05 1,505 1,639
Northampton GO, MBIA
5.750%, 05/15/16 775 824
Palmer GO, MBIA
5.500%, 10/01/10 1,500 1,577
Peabody GO, Series A
5.000%, 08/01/13 310 310
5.000%, 08/01/14 510 504
Springfield GO, AMBAC
5.300%, 08/01/11 1,000 1,044
5.300%, 08/01/13 1,000 1,031
Springfield GO, FSA
5.000%, 09/01/11 1,885 1,925
University of Lowell Building
Authority RB, Fifth Series A,
AMBAC
5.625%, 11/01/14 3,000 3,165
Uxbridge GO, MBIA
5.400%, 11/15/16 750 773
West Springfield GO, FGIC
5.000%, 03/01/18 1,225 1,216
Worcester GO, FSA
6.250%, 10/01/08 430 477
Worcester GO, Series G, MBIA
5.300%, 07/01/15 1,000 1,024
--------
189,241
--------
PUERTO RICO -- 2.1%
Puerto Rico Commonwealth
GO, FSA
5.500%, 07/01/13 1,000 1,044
Puerto Rico Commonwealth
GO, Series A
6.000%, 07/01/06 1,000 1,071
Puerto Rico Industrial, Tourist,
Educational, Medical, &
Environmental Control Facilities
RB, International American
University, Series A, MBIA
5.250%, 10/01/12 1,000 1,044
62
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
PUERTO RICO (CONTINUED)
Puerto Rico Refunding Public
Improvement GO
5.500%, 07/01/13 $1,000 $ 1,060
--------
4,219
--------
TOTAL MUNICIPAL BONDS
(Cost $185,021) 193,460
--------
REPURCHASE AGREEMENT -- 4.7%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $9,744,087 (collateralized
by U.S. Treasury Instruments:
total market value
$9,924,039) (B) 9,740 9,740
--------
TOTAL REPURCHASE AGREEMENT
(Cost $9,740) 9,740
--------
TOTAL INVESTMENTS -- 98.6%
(Cost $194,761) 203,200
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.4% 2,937
--------
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 19,784,525 outstanding
shares of beneficial interest $198,881
Accumulated net realized loss
on investments (1,183)
Net unrealized appreciation
on investments 8,439
--------
TOTAL NET ASSETS -- 100.0% $206,137
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.42
========
(A) PRE-REFUNDED SECURITY. THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
(B) TRI-PARTY REPURCHASE AGREEMENT
AMT--ALTERNATIVE MINIMUM TAX
GO--GENERAL OBLIGATION
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR THE
SECURITIES AS SET FORTH IN THE STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FHA--FEDERAL HOUSING ADMINISTRATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA--FINANCIAL SECURITY ASSURANCE
GOA--GENERAL OBLIGATION OF AUTHORITY
GOI--GENERAL OBLIGATION OF INSTITUTION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
63
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
GENERAL OBLIGATION BONDS 23%
INDUSTRIAL DEVELOPMENT &
POLLUTION CONTROL BONDS 4%
EDUCATION BONDS 11%
ALTERNATIVE MINIMUM TAX BONDS 6%
HOUSING BONDS 11%
OTHER REVENUE BONDS 6%
HEALTH CARE BONDS 8%
CASH EQUIVALENTS 7%
PRE-REFUNDED SECURITIES 3%
PUBLIC FACILITY BONDS 6%
TRANSPORTATION BONDS 6%
UTILITY BONDS 4%
WATER & SEWER BONDS 5%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
MUNICIPAL BONDS -- 91.4%
RHODE ISLAND -- 75.8%
Bristol County, Water
Authority RB, MBIA
5.200%, 12/01/14 $1,000 $ 1,019
Cranston GO, MBIA
6.100%, 06/15/10 1,000 1,106
6.100%, 06/15/15 1,500 1,644
Cumberland GO, MBIA
5.900%, 10/01/06 500 530
5.100%, 09/01/14 500 506
Exeter West Greenwich
Regional School District
GO, MBIA
5.400%, 11/15/10 1,000 1,065
Kent County, Water
Authority RB, MBIA
6.000%, 07/15/08 500 546
North Providence GO,
Series A, MBIA
6.000%, 07/01/12 1,100 1,215
6.050%, 07/01/13 500 553
Pawtucket GO, FGIC
5.625%, 04/15/07 750 800
5.750%, 04/15/08 500 535
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Providence GO, FSA
5.050%, 01/15/05 $1,090 $ 1,131
5.100%, 01/15/06 1,085 1,130
Providence GO, Series A, FSA
5.700%, 07/15/12 1,825 1,953
Providence, Housing Development
Authority RB, Barbara Jordan
Apartments Project, Series A, MBIA
6.500%, 07/01/09 425 461
Providence, Public Building
Authority GO, Series A, FSA
5.400%, 12/15/11 500 524
Providence, Public Building
Authority RB, FSA
5.250%, 12/15/14 1,500 1,532
Rhode Island Depositors Economic
Protection RB, Special Obligation,
Series A, FSA
5.750%, 08/01/14 1,000 1,101
Rhode Island State Clean Water
Agency RB, Safe Drinking Water
Project, Series A, AMBAC
6.500%, 01/01/09 500 562
Rhode Island State Clean Water
Agency RB, Series A, MBIA
6.600%, 10/01/08 500 551
6.750%, 10/01/13 500 552
Rhode Island State Clean Water
Agency RB, Water
Protection, MBIA
5.875%, 10/01/15 865 919
Rhode Island State Convention
Center Authority RB, Series A,
AMBAC
5.500%, 05/15/13 1,000 1,047
Rhode Island State Depositor's
Economic Protection Agency RB,
Series A, FSA
6.500%, 08/01/07 500 576
Rhode Island State Depositor's
Economic Protection Agency RB,
Series B, MBIA
5.800%, 08/01/12 1,000 1,104
64
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
RHODE ISLAND (CONTINUED)
Rhode Island State Health &
Education RB, Brown University
5.000%, 09/01/15 $1,000 $ 999
5.000%, 09/01/16 1,000 999
5.000%, 09/01/17 1,000 993
Rhode Island State Health &
Educational Building RB
4.750%, 09/01/14 1,215 1,186
Rhode Island State Health &
Educational Building RB, Kent
Hospital Project, MBIA
7.000%, 07/01/10 500 547
Rhode Island State Health &
Educational Building RB,
Landmark Medical Project, FSA
5.600%, 10/01/12 1,000 1,046
Rhode Island State Health &
Educational Building RB, New
England Institutional Project,
CONLEE
5.900%, 03/01/10 400 423
Rhode Island State Health &
Educational Building RB,
Rhode Island School
MBIA
5.625%, 06/01/16 2,000 2,098
Rhode Island State Health &
Educational Building RB,
Roger Williams Hospital Project
7.750%, 07/01/16 1,000 1,073
5.250%, 11/15/16 1,000 1,016
Rhode Island State Health &
Educational Building RB,
Roger Williams Hospital
Project, CONLEE
6.500%, 11/15/08 500 551
Rhode Island State Health &
Educational Building RB,
Roger Williams Hospital
Project, Pre-refunded @ 102,
CONLEE (B)
7.200%, 11/15/04 1,500 1,770
Rhode Island State Health &
Educational Building RB,
Salve Regina Project, CONLEE
6.200%, 03/15/08 1,000 1,083
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Rhode Island State Housing &
Mortgage Finance RB
5.550%, 04/01/17 $ 500 $ 509
Rhode Island State Housing &
Mortgage Finance RB, Series 13
6.700%, 10/01/15 2,000 2,163
Rhode Island State Housing &
Mortgage Finance RB, Series 19A
5.700%, 04/01/15 1,500 1,543
Rhode Island State Housing &
Mortgage Finance RB, Series 2
7.700%, 10/01/10 500 523
Rhode Island State Housing &
Mortgage Finance RB,
Series 7B, AMT
6.700%, 10/01/12 750 804
Rhode Island State Housing &
Mortgage Finance RB,
Series A, LOC
5.650%, 10/01/07 1,000 1,040
Rhode Island State Housing &
Mortgage Finance RB,
Series E-1, AMT, FHA
7.500%, 10/01/11 935 993
Rhode Island State Industrial
Facilities RB
6.000%, 11/01/14 2,250 2,396
Rhode Island State Industrial
Facilities RB, AMT, LOC
6.500%, 03/01/14 500 534
Rhode Island State Port
Authority & Economic
Development RB, Shepard
Building Project, Series B,
Pre-refunded @ 102,
AMBAC (B)
6.500%, 06/01/04 500 567
6.750%, 06/01/04 515 590
Rhode Island State Public
Projects RB, Series A
5.250%, 02/01/10 1,000 1,045
Rhode Island State Student
Loan Authority RB, Series A, LOC
6.550%, 12/01/00 500 526
65
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
RHODE ISLAND (CONTINUED)
Rhode Island State Student
Loan Authority RB, Series B, AMT
7.000%, 12/01/04 $1,390 $ 1,501
Rhode Island State Student
Loan Authority RB, Series B,
AMT, LOC
6.850%, 12/01/02 500 541
Rhode Island State Turnpike &
Bridge Authority RB
5.000%, 12/01/11 1,000 1,004
5.350%, 12/01/17 2,130 2,146
Villa Excelsior, Housing
Development Mortgages RB, MBIA
6.650%, 07/01/12 470 510
Warwick GO, Series A, FGIC
5.000%, 03/01/15 1,180 1,173
5.000%, 03/01/16 1,205 1,193
Westerly GO, AMBAC
5.850%, 09/15/08 450 485
--------
58,232
--------
PUERTO RICO -- 15.6%
Puerto Rico Commonwealth GO
5.750%, 07/01/17 $1,000 $ 1,062
Puerto Rico Commonwealth
GO (A)
4.850%, 07/01/14 3,500 1,571
Puerto Rico Electric Power
Authority RB
5.500%, 07/01/16 3,000 3,090
Puerto Rico Highway &
Transportation Authority
RB, Series V
6.375%, 07/01/07 1,135 1,226
Puerto Rico Industrial, Medical
& Environmental Pollution
Control RB, PepsiCo Project,
Series A
6.250%, 11/15/13 500 549
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
Puerto Rico Industrial, Tourist,
Educational, Medical, &
Environmental Control Facilities
RB, International American
University, Series A, MBIA
5.250%, 10/01/12 $ 360 $ 376
5.375%, 10/01/13 1,550 1,627
5.500%, 10/01/14 350 368
Puerto Rico Public Education &
Health Facilities RB,
Series M, CGTD
5.750%, 07/01/15 2,000 2,082
--------
11,951
--------
TOTAL MUNICIPAL BONDS
(Cost $66,929) 70,183
--------
CASH EQUIVALENTS -- 2.6%
Federated Tax-Free Money
Market Fund 1,000 1,000
Fidelity Tax-Exempt Money
Market Fund 1,000 1,000
--------
TOTAL CASH EQUIVALENTS
(Cost $2,000) 2,000
--------
REPURCHASE AGREEMENT -- 4.9%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $3,792,058 (collateralized
by U.S. Treasury Instruments:
total market value
$3,867,831) (C) 3,790 3,790
--------
TOTAL REPURCHASE AGREEMENT
(Cost $3,790) 3,790
--------
TOTAL INVESTMENTS -- 98.9%
(Cost $72,719) 75,973
--------
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% 824
--------
66
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION VALUE (000)
- ------------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 7,229,802 outstanding
shares of beneficial interest $73,464
Accumulated net realized gain
on investments 79
Net unrealized appreciation
on investments 3,254
-------
TOTAL NET ASSETS -- 100.0% $76,797
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.62
=======
(A) ZERO COUPON BOND. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
EFFECTIVE YIELD AS OF MAY 31, 1998.
(B) PRE-REFUNDED SECURITY. THE PRE-REFUNDED DATE IS SHOWN AS THE MATURITY DATE
ON THE STATEMENT OF NET ASSETS.
(C) TRI-PARTY REPURCHASE AGREEMENT
AMT--ALTERNATIVE MINIMUM TAX
GO--GENERAL OBLIGATION
LOC--SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT ISSUED BY A MAJOR
COMMERCIAL BANK OR OTHER FINANCIAL INSTITUTION.
RB--REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR THE
SECURITIES SET FORTH IN THE STATEMENT OF NET ASSETS.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
CGTD--COMMONWEALTH GUARANTEED
CONLEE--COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION
FGIC--FINANCIAL GUARANTY INSURANCE CORPORATION
FHA--FEDERAL HOUSING ADMINISTRATION
FSA--FINANCIAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
67
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
CASH EQUIVALENTS 6%
COMMON STOCKS 52%
ASSET-BACKED SECURITIES 3%
CORPORATE OBLIGATIONS 10%
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS 4%
U.S. TREASURY OBLIGATIONS 21%
U.S. GOVERNMENT AGENCY OBLIGATIONS 4%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 51.4%
AIR TRANSPORTATION -- 2.1%
AMR* 7,000 $ 1,078
-------
BASIC INDUSTRIES -- 0.9%
Corning 3,100 122
Willamette Industries 9,000 309
-------
431
-------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 0.6%
Comcast, Cl A 4,200 144
Tele-Communications, Cl A* 4,200 144
-------
288
-------
CAPITAL GOODS/CONSTRUCTION-- 5.7%
Applied Materials* 2,000 64
Dover 16,000 600
General Electric 9,000 750
Molex 8,000 223
Raytheon Company, Cl B 6,000 328
W.W. Grainger 8,500 897
-------
2,862
-------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER NON-DURABLES/
WHOLESALE TRADE -- 3.9%
Colgate-Palmolive 1,700 $ 148
Nestle, ADR 12,000 1,287
Procter & Gamble 6,200 520
-------
1,955
-------
DRUGS -- 1.0%
Alza, Cl A* 2,200 106
Centocor* 4,000 156
Novartis* 2,700 229
-------
491
-------
ENERGY -- 5.3%
Baker Hughes 16,500 594
El Paso Natural Gas 4,800 185
Exxon 6,500 458
Mobil 7,300 569
Schlumberger 11,150 870
-------
2,676
-------
ENTERTAINMENT -- 0.3%
Mirage Resorts* 7,800 162
-------
FINANCIAL SERVICES -- 5.9%
BankAmerica 6,000 496
Citicorp 2,500 373
Equitable 4,400 303
Fannie Mae 6,500 389
Nationsbank 3,400 258
Norwest 29,000 1,127
-------
2,946
-------
FOOD, BEVERAGE & TOBACCO -- 0.6%
Campbell Soup 2,200 120
Nabisco Holdings, Cl A 3,600 167
-------
287
-------
HEALTH CARE -- 4.3%
Genzyme* 19,000 520
Johnson & Johnson 12,000 829
Merck 7,000 819
-------
2,168
-------
68
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
INSURANCE -- 4.3%
Allstate 10,000 $ 941
American International Group 9,000 1,114
Exel 1,500 113
-------
2,168
-------
MEDICAL PRODUCTS & SERVICES-- 2.2%
Boston Scientific* 9,300 593
Elan, ADR* 5,400 330
Medtronic 3,500 195
-------
1,118
-------
MISCELLANEOUS BUSINESS SERVICES-- 1.2%
DST Systems* 5,300 280
Parametric Technology* 4,100 126
Sterling Commerce* 4,400 175
-------
581
-------
REAL ESTATE INVESTMENT TRUSTS -- 0.3%
Camden Property Trust 4,800 147
-------
RETAIL -- 1.5%
Costco* 2,500 145
CVS 3,600 253
Estee Lauder 3,500 224
Wal-Mart Stores 2,800 155
-------
777
-------
SPECIALTY MACHINERY -- 0.5%
U.S. Filter* 9,100 277
-------
TECHNOLOGY -- 5.7%
Analog Devices* 7,800 193
Cambridge Technology Partners* 5,500 276
Cisco Systems* 2,600 197
Computer Associates
International 16,500 866
Hewlett Packard 3,500 217
Lucent Technologies 15,500 1,100
-------
2,849
-------
- ------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------------------
TELEPHONES &
TELECOMMUNICATIONS -- 3.5%
Airtouch Communications* 4,400 $ 210
Ericsson Telephone, ADR 25,000 697
SBC Communications 22,000 855
-------
1,762
-------
WHOLESALE -- 1.6%
Sysco 35,000 816
-------
TOTAL COMMON STOCKS
(Cost $18,021) 25,839
-------
PREFERRED STOCK -- 0.4%
Hartford Capital II 8,000 211
-------
TOTAL PREFERRED STOCK
(Cost $200) 211
-------
U.S. TREASURY OBLIGATIONS -- 21.1%
U.S. Treasury Bonds
7.250%, 05/15/16 $1,500 1,730
8.125%, 08/15/19 100 127
7.250%, 08/15/22 500 586
7.125%, 02/15/23 300 347
6.125%, 11/15/27 500 523
U.S. Treasury Notes
5.875%, 10/31/98 600 601
5.000%, 01/31/99 100 100
5.500%, 02/29/00 500 500
5.500%, 04/15/00 200 200
6.250%, 05/31/00 500 507
6.125%, 07/31/00 400 405
6.125%, 09/30/00 1,000 1,013
5.625%, 11/30/00 365 366
6.250%, 02/28/02 500 511
6.250%, 06/30/02 1,000 1,023
5.750%, 11/30/02 1,000 1,005
6.500%, 08/15/05 500 525
6.125%, 08/15/07 500 516
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,367) 10,585
-------
69
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 ASSET ALLOCATION FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.5%
Federal National Mortgage
Association
5.750%, 04/15/03 $500 $ 500
Federal National Mortgage
Association, MTN
7.070%, 06/25/01 500 507
7.240%, 01/04/07 500 508
Private Export Funding Corporation
8.400%, 07/31/01 25 27
Tennessee Valley Authority
Principal STRIPS (A)
7.813%, 04/15/42 500 220
-------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $1,700) 1,762
-------
U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS -- 4.2%
Federal National Mortgage
Association
6.500%, 03/01/11 497 500
6.500%, 05/01/28 990 984
Federal National Mortgage
Association (B)
6.000%, 07/25/13 500 493
Government National Mortgage
Association
7.500%, 06/15/23 156 161
-------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS
(Cost $2,122) 2,138
-------
CORPORATE OBLIGATIONS -- 9.4%
FINANCIAL SERVICES -- 5.7%
Allstate, CP
5.875%, 06/15/98 100 100
Chase Manhattan
8.000%, 06/15/99 200 204
Chrysler Financial
6.230%, 07/17/98 320 320
Ford Motor Credit
6.750%, 05/15/05 100 103
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
General Motors Acceptance
6.625%, 10/01/02 $ 200 $ 203
Morgan Stanley, Dean Witter,
Discover & Company
6.375%, 08/01/02 1,000 1,007
Reliastar Financial
7.125%, 03/01/03 500 515
Safeco
6.875%, 07/15/07 410 424
-------
2,876
-------
INDUSTRIAL -- 3.7%
Burlington North
9.250%, 10/01/06 250 295
Ford Motor
7.250%, 10/01/08 250 268
H.J. Heinz
6.000%, 03/15/08 500 497
Sears Roebuck
6.250%, 01/15/04 500 502
Trans-Canada Pipelines, YB
9.125%, 04/20/06 250 291
-------
1,853
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $4,665) 4,729
-------
ASSET-BACKED SECURITIES -- 3.3%
Ford Credit Grantor Trust,
Series 1994-B, Class A
7.300%, 10/15/99 9 10
PNC Student Loan Trust I,
Series 1997-2, Class A6
6.572%, 01/25/04 600 613
Premier Auto Trust,
Series 1993-4, Class A2
4.650%, 02/02/99 3 4
Sears Credit Account Master Trust,
Series 1996-4, Class A
6.450%, 10/15/06 500 506
Sears Credit Account Master Trust,
Series 1997-1, Class A
6.200%, 07/16/07 500 507
-------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,609) 1,640
-------
70
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 6.4%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $3,216,088 (collateralized
by U.S. Treasury Instruments:
total market value
$3,282,567) (C) $3,215 $ 3,215
-------
TOTAL REPURCHASE AGREEMENT
(Cost $3,215) 3,215
-------
TOTAL INVESTMENTS -- 99.7%
(Cost $41,899) 50,119
-------
OTHER ASSETS AND LIABILITIES,
NET -- 0.3% 164
-------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 3,315,859 outstanding
shares of beneficial interest 40,769
Undistributed net investment income 295
Accumulated net realized gain
on investments 999
Net unrealized appreciation
on investments 8,220
-------
TOTAL NET ASSETS -- 100.0% $50,283
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $15.16
=======
- ------------------------------------------------------
- ------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) ZERO COUPON SECURITY. THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS
THE EFFECTIVE RATE AS OF MAY 31, 1998.
(B) WHEN ISSUED SECURITY
(C) TRI-PARTY REPURCHASE AGREEMENT
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
CP--COMMERCIAL PAPER
MTN--MEDIUM TERM NOTE
STRIPS--SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
YB--YANKEE BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
71
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
CAPITAL GOODS/CONSTRUCTION 2%
CONSUMER DURABLES 6%
CONSUMER NON-DURABLES 4%
ENERGY 10%
ENTERTAINMENT 2%
FINANCIAL SERVICES 5%
HEALTH CARE 8%
INSURANCE 7%
MEDICAL PRODUCTS & SERVICES 5%
MERCHANDISE STORES 8%
MISCELLANEOUS BUSINESS SERVICES 2%
RESTAURANTS 10%
TECHNOLOGY 23%
CASH EQUIVALENTS 5%
BASIC INDUSTRIES 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 95.2%
BASIC INDUSTRIES -- 2.8%
Corning 50,000 $ 1,972
Crown Cork & Seal 100,000 5,187
Monsanto 150,000 8,306
--------
15,465
--------
BROADCASTING, NEWSPAPERS
& ADVERTISING -- 0.4%
Univision Communications* 70,000 2,432
--------
CAPITAL GOODS/CONSTRUCTION -- 2.5%
General Electric 80,000 6,670
Hardinge 109,375 4,320
Owens-Illinois* 66,200 2,975
--------
13,965
--------
CONSUMER DURABLES -- 5.7%
Cintas 100,000 4,569
Newell 125,000 6,031
Rentokil Group 3,000,000 20,923
--------
31,523
--------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER NON-DURABLES -- 3.8%
Coca Cola 158,112 $ 12,392
Gillette 60,000 7,027
Northland Cranberries 116,000 1,834
--------
21,253
--------
ENERGY -- 9.5%
El Paso Natural Gas 100,000 3,862
Enron 150,000 7,519
Exxon 150,000 10,575
Mobil 100,000 7,800
Royal Dutch Petroleum ADR 200,000 11,212
Schlumberger 150,000 11,709
--------
52,677
--------
ENTERTAINMENT -- 2.5%
Walt Disney 120,000 13,575
--------
FINANCIAL SERVICES -- 4.6%
BankAmerica 100,000 8,269
Espirito Santo Financial Group 250,000 6,359
Household International 50,000 6,766
Litchfield Financial* 178,500 4,105
--------
25,499
--------
HEALTH CARE -- 8.7%
Abbott Laboratories 84,633 6,279
Aviron* 100,000 2,800
Cardinal Health 100,000 8,912
Eli Lilly 100,000 6,144
Guidant 100,000 6,444
Johnson & Johnson 100,000 6,906
Pfizer 100,000 10,481
--------
47,966
--------
INSURANCE -- 7.0%
Allstate 100,000 9,412
American International Group 60,000 7,429
Chubb 50,000 3,978
St. Paul 200,000 8,875
Travelers 150,000 9,150
--------
38,844
--------
72
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
MEDICAL PRODUCTS & SERVICES -- 5.2%
Boston Scientific* 110,000 $ 7,013
Medtronic 200,000 11,125
Sofamor/Danek Group* 125,325 10,418
--------
28,556
--------
MERCHANDISE STORES -- 7.7%
Bed Bath & Beyond* 300,000 15,056
GrandVision 200,000 8,110
Home Depot 250,000 19,641
--------
42,807
--------
MISCELLANEOUS BUSINESS SERVICES -- 1.7%
DST Systems* 100,000 5,288
Peoplesoft* 100,000 4,369
--------
9,657
--------
RESTAURANTS -- 10.1%
Outback Steakhouse* 70,000 2,581
Papa John's International* 228,000 9,491
Pizza Express 1,381,000 19,134
Rainforest Cafe* 480,000 6,675
Wetherspoon J.D. 3,525,000 18,039
--------
55,920
--------
TECHNOLOGY -- 23.0%
Cambridge Technology Partners* 279,000 13,994
Cisco Systems* 112,500 8,508
Hewlett Packard 150,000 9,319
Intel 190,000 13,573
Microsoft* 220,000 18,659
SAP AG 90,000 49,809
Security Dynamics
Technologies* 150,000 3,169
Texas Instruments 200,000 10,275
--------
127,306
--------
TOTAL COMMON STOCKS
(Cost $268,994) 527,445
--------
- ------------------------------------------------------
DESCRIPTION PAR (000) VALUE (000)
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 4.7%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98,
repurchase price $25,877,262
(collateralized by
U.S. Treasury Instruments:
total market value
$26,387,766) (A) $25,865 $ 25,865
--------
TOTAL REPURCHASE AGREEMENT
(Cost $25,865) 25,865
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $294,859) 553,310
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.1% 687
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 25,507,549 outstanding
shares of beneficial interest 293,755
Accumulated net realized gain
on investments 1,791
Net unrealized appreciation
on investments 258,451
--------
TOTAL NET ASSETS -- 100.0% $553,997
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $21.72
========
* NON-INCOME PRODUCING SECURITY
(A) TRI-PARTY REPURCHASE AGREEMENT
ADR--AMERICAN DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
73
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 GROWTH FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
BASIC INDUSTRIES 1%
BROADCASTING, NEWSPAPERS, & ADVERTISING 1%
CAPITAL GOODS/MACHINERY 2%
CHEMICALS 1%
CONSUMER DURABLES 7%
CONSUMER NON-DURABLES 3%
ENERGY 9%
FINANCIAL SERVICES 4%
HEALTH CARE 9%
INSURANCE 5%
MEDICAL PRODUCTS & SERVICES 7%
MERCHANDISE STORES 5%
MISCELLANEOUS BUSINESS SERVICES 6%
RESTAURANTS 15%
TECHNOLOGY 21%
TELEPHONES & TELECOMMUNICATIONS 1%
CASH EQUIVALENTS 3%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
COMMON STOCKS -- 98.2%
AIR TRANSPORTATION -- 0.5%
Virgin Express Holdings* 70,000 $ 1,208
--------
BASIC INDUSTRIES -- 0.6%
Sealed Air* 28,050 1,501
--------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 0.8%
Scandinavian Broadcasting* 28,000 861
Univision Communications* 36,000 1,251
--------
2,112
--------
CAPITAL GOODS/MACHINERY -- 5.1%
Hardinge 50,000 1,975
Manitowoc 100,000 4,100
Rentokil Group 1,000,000 6,974
--------
13,049
--------
CHEMICALS -- 1.0%
Macdermid 60,000 2,460
--------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
CONSUMER DURABLES -- 4.1%
Cintas 100,000 $ 4,569
Danaher 25,000 1,808
Miller Herman 147,600 4,087
--------
10,464
--------
CONSUMER NON-DURABLES -- 3.2%
Northland Cranberries 250,000 3,953
Robert Half International* 84,675 4,287
--------
8,240
--------
ENERGY -- 8.9%
Basin Exploration* 250,000 3,938
Cal Dive International* 30,000 1,016
Callon Petroleum* 115,000 1,898
Domain Energy* 146,000 1,752
Global Marine* 112,000 2,499
Helmerich & Payne 32,400 818
Petsec Energy* 150,000 2,531
Seagull Energy* 51,100 846
St. Mary Land & Exploration 120,000 3,270
Stone Energy* 100,000 3,544
Tosco 21,900 695
--------
22,807
--------
FINANCIAL SERVICES -- 3.9%
Espirito Santo Financial Group 80,000 2,035
Euronet Services* 92,200 547
Fifth Third Bancorp 20,502 1,010
Household International 20,000 2,706
MBNA 35,718 1,132
Star Banc 42,600 2,599
--------
10,029
--------
HEALTH CARE -- 8.8%
Arterial Vascular* 120,000 3,709
Aviron* 50,000 1,400
Biosite Diagnostics* 70,000 858
Boston Biomedica* 7,000 34
Dentsply International 95,000 3,206
Enamelon* 155,000 1,569
Healthsouth Rehabilitation* 21,800 619
Omnicare 100,000 3,506
Sabratek* 125,000 3,281
74
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
HEALTH CARE (CONTINUED)
Sangstat Medical* 100,000 $ 2,625
Twinlab* 50,000 1,856
--------
22,663
--------
INSURANCE -- 5.3%
American International Group 15,262 1,890
Executive Risk 30,000 1,888
First Health Group, Cl A* 75,000 4,261
MGIC Investment 43,650 2,616
Travelers 50,000 3,050
--------
13,705
--------
MEDICAL PRODUCTS & SERVICES-- 7.2%
Alternative Living Services* 75,000 2,034
Boston Scientific* 100,000 6,375
Sofamor/Danek Group* 43,050 3,579
Symphonix Devices* 100,000 1,050
Theragenics* 200,000 5,575
--------
18,613
--------
MERCHANDISE STORES -- 4.8%
Bed Bath & Beyond* 210,500 10,565
GrandVision 48,000 1,946
--------
12,511
--------
MISCELLANEOUS BUSINESS SERVICES -- 5.5%
Aspect Development* 145,000 8,292
Avant!* 150,000 3,853
DST Systems* 30,000 1,586
Pierce Leahy* 17,000 442
--------
14,173
--------
RESTAURANTS -- 15.7%
Famous Dave's of America* 250,000 1,484
Pizza Express 779,000 10,793
Rainforest Cafe* 380,000 5,284
Telepizza 1,000,000 10,066
Wetherspoon J.D. 2,500,000 12,794
--------
40,421
--------
- ------------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- ------------------------------------------------------
TECHNOLOGY -- 21.0%
Analog Devices* 73,900 $ 1,824
Applied Graphics
Technologies* 125,000 6,031
Barringer Technologies
Warrant* 25,000 20
Barringer Technologies* 25,000 263
Cambridge Technology
Partners* 150,000 7,524
Data Dimensions* 75,000 1,059
I2 Technologies* 50,000 2,978
Leitch Technology 150,000 2,894
Qlogic* 125,000 5,063
SAP AG 25,000 13,836
Schawk 122,000 1,830
Security Dynamics
Technologies* 65,000 1,373
Visio* 200,000 9,375
--------
54,070
--------
TELEPHONES &
TELECOMMUNICATIONS -- 1.3%
Paging Network* 150,000 2,053
PLD Telekom* 200,000 1,406
--------
3,459
--------
UTILITIES -- 0.5%
AES* 27,400 1,303
--------
TOTAL COMMON STOCKS
(Cost $181,901) 252,788
--------
REPURCHASE AGREEMENT -- 3.3%
Paine Webber
5.550%, dated 05/29/98, matures
06/01/98, repurchase price
$8,634,064 (collateralized by
U.S. Treasury Instruments:
total market value
$8,804,404) (A) $8,630 8,630
--------
TOTAL REPURCHASE AGREEMENT
(Cost $8,630) 8,630
--------
75
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 GROWTH FUND (CONCLUDED)
- -------------------------------------------------------
DESCRIPTION VALUE (000)
- -------------------------------------------------------
TOTAL INVESTMENTS -- 101.5%
(Cost $190,531) $261,418
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.5%) (3,868)
--------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par
value) based on 19,915,680
outstanding shares of
beneficial interest 180,334
Distributions in excess of
net investment income (1)
Accumulated net realized gain
on investments 6,330
Net unrealized appreciation
on investments 70,887
--------
TOTAL NET ASSETS -- 100.0% $257,550
========
- -------------------------------------------------------
DESCRIPTION VALUE
- -------------------------------------------------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $12.93
========
* NON-INCOME PRODUCING SECURITY
(A) TRI-PARTY REPURCHASE AGREEMENT
CL--CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
76
<PAGE>
BOSTON 1784 FUNDS
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
[PIE CHART OMITTED--PLOT POINTS AS FOLLOWS:]
FRANCE 12%
GERMANY 10%
JAPAN 10%
NETHERLANDS 9%
SWITZERLAND 9%
UNITED KINGDOM 16%
OTHER EUROPE 19%
EMERGING MARKETS 6%
UNITED STATES 5%
CANADA 4%
% OF TOTAL PORTFOLIO INVESTMENTS
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
FOREIGN COMMON STOCKS -- 95.4%
CANADA -- 3.9%
Bank of Nova Scotia 237,920 $ 6,371
Hudson Bay 110,000 2,432
Loblaw 21,100 464
Newcourt Credit Group 88,200 4,330
Northern Telecom 51,320 3,287
Northern Telecom, ADR 20,220 1,294
--------
18,178
--------
CHILE -- 0.2%
Compania Cervecerias
Unidas, ADR 32,850 788
--------
CHINA -- 0.3%
Guangdong Kelon Electric
Holding 1,406,000 1,343
--------
FINLAND -- 1.6%
Nokia Oyj, Series A 88,974 5,858
Orion-Yhtyma, Series B 59,500 1,783
--------
7,641
--------
FRANCE -- 11.9%
Accor 32,610 8,944
Alcatel Alsthom 44,302 9,478
Atos (A) 32,232 5,926
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
Axa UAP 54,336 $ 6,185
Cap Gemini 48,889 7,297
Credit Commerical de France 28,500 2,173
Promodes 6,429 3,131
Rhone Poulenc, Series A 130,000 7,214
Synthelabo 34,691 5,758
--------
56,106
--------
GERMANY -- 10.6%
Adidas 46,441 8,199
Allianz 27,147 8,581
Bayerische Vereinsbank 35,000 2,933
Deutsche Bank 95,214 8,196
Deutsche Pfandbrief &
Hypothekenbank 78,711 6,299
Muenchener Rueckversicherungs-
Gesellschaft 8,042 3,653
SAP AG 18,442 9,530
Volkswagen 2,800 2,271
--------
49,662
--------
HUNGARY -- 0.4%
Gedeon Richter, GDR 20,000 1,691
--------
INDONESIA -- 0.0%
PT Indofood Sukses Makmur 140,000 20
--------
IRELAND -- 1.5%
Bank of Ireland 250,000 4,694
CBT Group ADR 50,000 2,487
--------
7,181
--------
ITALY -- 5.6%
Credito Italiano 1,759,453 9,808
ENI 382,595 2,704
Istituto Nazionale delle
Assicurazioni 2,090,000 6,505
Telecom Italia 938,156 7,085
--------
26,102
--------
JAPAN -- 10.3%
Advantest 31,900 1,971
Fujitsu 376,000 4,316
Long-Term Credit Bank
of Japan 2,300,000 3,337
Matsushita Communications 115,000 3,238
77
<PAGE>
AS OF MAY 31, 1998
STATEMENT OF NET ASSETS
================================================================================
BOSTON 1784 INTERNATIONAL EQUITY FUND (CONCLUDED)
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
JAPAN (CONTINUED)
NEC 370,000 $ 3,766
Nichiei 51,700 3,471
Nikko Securities 580,000 1,826
Nippon Telegraph & Telephone 450 3,703
NTT Data 107 4,295
Orix 46,000 2,992
Ricoh 515,000 5,562
Rohm 73,000 7,589
Shinko Electric Industries 59,000 2,479
--------
48,545
--------
MEXICO -- 2.7%
Cemex, ADR (A) 357,900 3,483
Coca-Cola Femsa, ADR 219,000 3,723
Consorcio ARA SA 306,000 1,177
Fomento Economico
Mexicano, ADR (A) 104,600 3,452
Kimberly-Clark de Mexico,
Series A 240,500 980
--------
12,815
--------
NETHERLANDS -- 9.5%
Benckiser, Series B (A) 71,000 4,031
Getronics 204,904 10,187
Hunter Douglas 103,868 5,293
Koninklijke Ahold 138,453 4,371
Numico NV 147,684 5,191
Nutreco Holding NV 65,000 2,294
Philips Electronics 79,600 7,563
Randstad Holdings 101,302 5,631
--------
44,561
--------
NORWAY -- 1.1%
Petroleum-Geo Services (A) 31,902 2,104
Tomra Systems 91,122 2,830
--------
4,934
--------
POLAND -- 0.0%
Mostostal Export 2,740 5
--------
- ------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------
PORTUGAL -- 2.7%
Banco Comercial Portugues 267,372 $ 8,856
Electricidade de Portugal 136,542 3,589
--------
12,445
--------
SOUTH AFRICA -- 0.7%
Liberty Life of Africa 127,200 3,532
--------
SPAIN -- 2.6%
Banco Central
Hispanoamericano 86,625 2,839
Centros Comerciales
Continente 150,000 3,446
Sol Melia 52,000 2,399
Telefonica de Espana 82,910 3,705
--------
12,389
--------
SWEDEN -- 3.5%
Electrolux AB, Series B 81,647 8,126
Nordbanken Holding AB 567,000 4,015
Volvo AB, Series B 140,000 4,475
--------
16,616
--------
SWITZERLAND -- 8.9%
Adecco 20,000 8,234
Nestle SA 2,200 4,738
Novartis 6,130 10,376
Roche Holding Genusscheine 860 8,843
Union Bank of Switzerland 5,700 9,579
--------
41,770
--------
TAIWAN -- 0.8%
ASE Test 84,000 3,696
--------
UNITED KINGDOM -- 16.6%
Arjo Wiggins Appleton 700,000 2,811
Bank of Scotland 533,276 6,168
Barclays 218,000 5,815
British-Borneo Petrol
Syndicate 549,999 3,510
David S Smith Holdings 630,000 2,592
George Wimpey 1,000,000 2,138
Glaxo Wellcome 500,911 13,475
Granada Group 284,886 5,343
78
<PAGE>
BOSTON 1784 FUNDS
================================================================================
- -----------------------------------------------------
DESCRIPTION SHARES/PAR (000) VALUE (000)
- -----------------------------------------------------
UNITED KINGDOM (CONTINUED)
Kingfisher 300,000 $ 5,313
Sema Group 190,841 7,502
Shell Transportation & Trading 772,815 5,708
Smithkline Beecham 730,392 7,911
WPP Group 866,000 5,541
Zeneca Group 105,000 4,266
--------
78,093
--------
TOTAL FOREIGN COMMON STOCKS
(Cost $346,390) 448,113
--------
FOREIGN PREFERRED STOCKS -- 0.9%
BRAZIL -- 1.0%
Telefonos de Sao Paulo 14,739,000 3,178
Telesp Celular 14,739,000 1,358
--------
4,536
--------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $4,637) 4,536
--------
REPURCHASE AGREEMENT -- 4.9%
Paine Webber
5.550%, dated 05/29/98,
matures 06/01/98, repurchase
price $22,916,509 (collateralized
by U.S. Treasury Instruments:
total market value
$23,359,661) (B) $22,906 22,906
--------
TOTAL REPURCHASE AGREEMENT
(Cost $22,906) 22,906
--------
TOTAL INVESTMENTS -- 101.2%
(Cost $373,933) 475,555
--------
OTHER ASSETS AND LIABILITIES,
NET -- (1.2%) (5,736)
--------
- -----------------------------------------------------
DESCRIPTION VALUE (000)
- -----------------------------------------------------
NET ASSETS:
Capital Shares (unlimited
authorization -- no par value)
based on 34,310,861 outstanding
shares of beneficial interest $365,928
Accumulated net realized gain
on investments 1,297
Net unrealized appreciation on
forward foreign currency contracts,
foreign currency and translation
of other assets and liabilities in
foreign currency 1,999
Net unrealized appreciation
on investments 101,622
Accumulated net investment loss (1,027)
--------
TOTAL NET ASSETS -- 100.0% $469,819
========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE $13.69
========
(A) NON-INCOME PRODUCING SECURITY
(B) TRI-PARTY REPURCHASE AGREEMENT
ADR--AMERICAN DEPOSITORY RECEIPT
GDR--GLOBAL DEPOSITORY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
79
<PAGE>
BOSTON 1784 FUNDS
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (000)
===============================================================================================================================
FOR THE YEAR ENDED MAY 31, 1998 (EXCEPT WHERE NOTED)
BOSTON BOSTON
BOSTON BOSTON 1784 BOSTON 1784
1784 1784 PRIME 1784 BOSTON U.S. GOVERNMENT
TAX-FREE U.S. TREASURY MONEY SHORT-TERM 1784 MEDIUM-TERM
MONEY MARKET MONEY MARKET MARKET INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
======================================================================================
<S> <C> <C> <C> <C> <C> <C>
INCOME:
INTEREST INCOME $37,050 $20,635 $6,951 $12,098 $23,576 $15,430
DIVIDEND INCOME -- -- -- -- 1,100 --
LESS: FOREIGN TAXES WITHHELD -- -- -- -- -- --
------- ------- ------ ------- ------- -------
TOTAL INCOME 37,050 20,635 6,951 12,098 24,676 15,430
------- ------- ------ ------- ------- -------
EXPENSES:
INVESTMENT ADVISORY FEES 3,896 1,485 488 960 2,721 1,730
LESS: WAIVER OF INVESTMENT ADVISORY FEES -- (199) (58) -- (238) (159)
ADMINISTRATOR FEES 694 265 87 137 262 167
SHAREHOLDER SERVICING FEES -- 371 122 -- -- --
12B-1 FEES -- -- -- 480 919 585
LESS: WAIVER OF 12B-1 FEES -- -- -- (480) (919) (585)
TRANSFER AGENT FEES & EXPENSES 137 335 106 37 54 39
REGISTRATION FEES 111 19 5 6 30 15
TRUSTEE FEES 23 10 3 5 9 5
PRINTING 69 27 1 14 26 16
AMORTIZATION OF DEFERRED
ORGANIZATIONAL COSTS 9 9 7 -- -- 8
PROFESSIONAL FEES 86 30 10 16 31 20
CUSTODIAN FEES 65 48 19 24 34 27
OTHER EXPENSES 48 13 4 20 13 2
------- ------- ------ ------- ------- -------
TOTAL EXPENSES, NET OF WAIVERS 5,138 2,413 794 1,219 2,942 1,870
------- ------- ------ ------- ------- -------
NET INVESTMENT INCOME (LOSS) 31,912 18,222 6,157 10,879 21,734 13,560
------- ------- ------ ------- ------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS (11) 3 (1) 837 3,216 643
NET REALIZED LOSS FROM FORWARD FOREIGN
CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- --
NET CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS -- -- -- 1,278 5,632 4,799
NET CHANGE IN UNREALIZED
APPRECIATION ON FORWARD FOREIGN
CURRENCY CONTRACTS, FOREIGN CURRENCIES
AND TRANSLATION OF OTHER ASSETS
AND LIABILITIES IN FOREIGN CURRENCY -- -- -- -- -- --
------- ------- ------ ------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (11) 3 (1) 2,115 8,848 5,442
------- ------- ------ ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $31,901 $18,225 $6,156 $12,994 $30,582 $19,002
======= ======= ====== ======= ======= =======
<FN>
(1) BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 30, 1997.
REFLECTS OPERATIONS FOR THE PERIOD JUNE 30, 1997 TO MAY 31, 1998.
</FN>
BOSTON BOSTON BOSTON BOSTON BOSTON
1784 1784 1784 1784 1784 BOSTON BOSTON BOSTON
TAX-EXEMPT CONNECTICUT FLORIDA MASSACHUSETTS RHODE ISLAND 1784 1784 BOSTON 1784
MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT ASSET GROWTH AND 1784 INTERNATIONAL
INCOME INCOME INCOME INCOME INCOME ALLOCATION INCOME GROWTH EQUITY
FUND FUND FUND (1) FUND FUND FUND FUND FUND FUND
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$15,202 $6,416 $2,383 $ 9,495 $3,508 $1,306 $ 1,473 $ 632 $ 1,955
-- -- -- -- -- 257 4,996 1,007 4,817
-- -- -- -- -- -- (24) (38) (632)
------- ------- ------- ------- ------ ------ -------- ------- -------
15,202 6,416 2,383 9,495 3,508 1,563 6,445 1,601 6,140
------- ------- ------- ------- ------ ------ -------- ------- -------
2,075 869 327 1,316 478 318 3,785 2,110 4,808
(198) (105) (60) (154) (71) -- -- -- --
200 84 31 127 46 31 365 204 344
-- -- -- -- -- -- -- -- --
701 294 110 445 161 108 1,279 713 1,202
(701) (294) (110) (445) (161) (108) (1,279) (713) (1,202)
45 36 15 52 30 35 169 100 68
25 15 15 22 9 5 23 30 27
7 3 1 4 1 1 12 7 12
20 8 2 12 5 3 36 20 35
9 -- 8 9 1 9 9 -- --
24 10 5 15 5 4 43 24 40
28 16 8 20 11 12 135 92 585
8 4 2 -- 1 2 15 -- 49
------- ------- ------- ------- ------ ------ -------- ------- -------
2,243 940 354 1,423 516 420 4,592 2,587 5,968
------- ------- ------- ------- ------ ------ -------- ------- -------
12,959 5,476 2,029 8,072 2,992 1,143 1,853 (986) 172
------- ------- ------- ------- ------ ------ -------- ------- -------
4,330 905 510 159 133 2,239 3,027 10,066 2,006
-- -- -- -- -- -- -- -- (1,046)
7,040 3,929 924 6,487 1,822 4,325 116,058 23,681 21,711
-- -- -- -- -- -- -- -- 1,965
------- ------- ------- ------- ------ ------ -------- ------- -------
11,370 4,834 1,434 6,646 1,955 6,564 119,085 33,747 24,636
------- ------- ------- ------- ------ ------ -------- ------- -------
$24,329 $10,310 $3,463 $14,718 $4,947 $7,707 $120,938 $32,761 $24,808
======= ======= ======= ======= ====== ====== ======== ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
80 & 81
<PAGE>
BOSTON 1784 FUNDS
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (000)
=============================================================================================================
BOSTON BOSTON
1784 1784
TAX-FREE U.S. TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
==================================================
6/1/97 6/1/96 6/1/97 6/1/96
TO TO TO TO
5/31/98 5/31/97 5/31/98 5/31/97
--------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 31,912 $ 22,285 $ 18,222 $ 12,140
NET REALIZED GAIN (LOSS) ON INVESTMENTS (11) (94) 3 20
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS -- -- -- --
NET CHANGE IN UNREALIZED APPRECIATION
ON FORWARD CURRENCY CONTRACTS, FOREIGN
CURRENCIES AND TRANSLATION OF OTHER
ASSETS AND LIABILITIES IN FOREIGN CURRENCY -- -- -- --
---------- ---------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 31,901 22,191 18,225 12,160
---------- ---------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (31,912) (22,285) (18,208) (12,143)
REALIZED CAPITAL GAINS -- -- (14) --
---------- ---------- -------- --------
TOTAL DISTRIBUTIONS (31,912) (22,285) (18,222) (12,143)
---------- ---------- -------- --------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- -- --
VALUE FROM SHARES ISSUED IN CONNECTION WITH
ACQUISITION OF COMMON TRUST FUND ASSETS -- -- -- --
VALUE FROM SHARES ISSUED IN REORGANIZATION (3) -- -- -- 320,110
PROCEEDS FROM SHARES ISSUED 1,710,272 1,353,963 731,609 402,271
REINVESTMENT OF CASH DISTRIBUTIONS 5,475 3,660 17,633 11,681
COST OF SHARES REDEEMED (1,553,624) (1,061,545) (766,882) (422,784)
---------- ---------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 162,123 296,078 (17,640) 311,278
---------- ---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 162,112 295,984 (17,637) 311,295
NET ASSETS:
BEGINNING OF PERIOD 845,612 549,628 390,294 78,999
---------- ---------- -------- --------
NET ASSETS:
END OF PERIOD $1,007,724 $ 845,612 $372,657 $390,294
========== ========== ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN CONNECTION WITH ACQUISITION OF
COMMON TRUST FUND ASSETS -- -- -- --
SHARES ISSUED
IN REORGANIZATION (3) -- -- -- 320,110
SHARES ISSUED 1,710,272 1,353,963 731,609 402,271
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 5,475 3,660 17,631 11,681
SHARES REDEEMED (1,553,624) (1,061,545) (766,882) (422,784)
---------- ---------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 162,123 296,078 (17,642) 311,278
========== ========== ======== ========
BOSTON BOSTON
1784 1784
PRIME SHORT-TERM
MONEY MARKET INCOME
FUND FUND
======================================================
6/1/97 1/1/97 1/1/96 6/1/97 6/1/96
TO TO TO TO TO
5/31/98 5/31/97(1) 12/31/96 5/31/98 5/31/97
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME $ 6,157 $ 2,378 $ 10,146 $ 10,879 $ 8,149
NET REALIZED GAIN (LOSS) ON INVESTMENTS (1) -- 4 837 (896)
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS -- -- -- 1,278 506
NET CHANGE IN UNREALIZED APPRECIATION
ON FORWARD CURRENCY CONTRACTS, FOREIGN
CURRENCIES AND TRANSLATION OF OTHER
ASSETS AND LIABILITIES IN FOREIGN CURRENCY -- -- -- -- --
-------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 6,156 2,378 10,150 12,994 7,759
-------- -------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (6,157) (2,378) (10,146) (10,880) (8,167)
REALIZED CAPITAL GAINS -- -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6,157) (2,378) (10,146) (10,880) (8,167)
-------- -------- -------- -------- --------
SHARE TRANSACTIONS:
CAPITAL CONTRIBUTION FROM ADVISER -- -- 124 -- --
VALUE FROM SHARES ISSUED IN CONNECTION WITH
ACQUISITION OF COMMON TRUST FUND ASSETS -- -- -- -- --
VALUE FROM SHARES ISSUED IN REORGANIZATION (3) -- -- -- -- 43,620
PROCEEDS FROM SHARES ISSUED 334,675 184,607 326,422 47,498 117,953
REINVESTMENT OF CASH DISTRIBUTIONS 3,939 1,497 2,371 6,500 4,503
COST OF SHARES REDEEMED (334,124) (156,234) (445,825) (52,889) (58,018)
-------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 4,490 29,870 (116,908) 1,109 108,058
-------- -------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,489 29,870 (116,904) 3,223 107,650
NET ASSETS:
BEGINNING OF PERIOD 123,099 93,229 210,133 194,033 86,383
-------- -------- -------- -------- --------
NET ASSETS:
END OF PERIOD $127,588 $123,099 $ 93,229 $197,256 $194,033
======== ======== ======== ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN CONNECTION WITH ACQUISITION OF
COMMON TRUST FUND ASSETS -- -- -- -- --
SHARES ISSUED
IN REORGANIZATION (3) -- -- -- -- 4,325
SHARES ISSUED 334,675 184,607 326,422 4,714 11,771
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 3,939 1,497 2,371 645 451
SHARES REDEEMED (334,124) (156,234) (445,825) (5,251) (5,809)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 4,490 29,870 (117,032) 108 10,738
======== ======== ======== ======== ========
<FN>
(1)UNTIL DECEMBER 9, 1996, BOSTON 1784 PRIME MONEY MARKET FUND WAS KNOWN AS BAYFUNDS MONEY MARKET PORTFOLIO. THE FUND
CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MAY 31.
(2)BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 30, 1997.
(3)ON NOVEMBER 25, 1996, THE ASSETS OF FOUR PORTFOLIOS OF BAYFUNDS WERE REORGANIZED WITH CERTAIN BOSTON 1784 FUNDS.
PLEASE SEE THE NOTES TO FINANCIAL STATEMENTS FOR FURTHER INFORMATION REGARDING THESE TRANSACTIONS.
</FN>
BOSTON BOSTON BOSTON BOSTON BOSTON
1784 1784 1784 1784 1784
BOSTON U.S. GOVERNMENT TAX-EXEMPT CONNECTICUT FLORIDA MASSACHUSETTS
1784 MEDIUM-TERM MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
===================================================================================================================
6/1/97 6/1/96 6/1/97 6/1/96 6/1/97 6/1/96 6/1/97 6/1/96 6/30/97 6/1/97 6/1/96
TO TO TO TO TO TO TO TO TO TO TO
5/31/98 5/31/97 5/31/98 5/31/97 5/31/98 5/31/97 5/31/98 5/31/97 5/31/98(2) 5/31/98 5/31/97
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$21,734 $ 18,143 $ 13,560 $ 12,118 $ 12,959 $ 11,066 $ 5,476 $ 4,518 $ 2,029 $ 8,072 $ 6,057
3,216 (2,487) 643 (2,236) 4,330 1,674 905 31 510 159 (447)
5,632 4,925 4,799 3,128 7,040 3,983 3,929 1,816 924 6,487 3,226
-- -- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
30,582 20,581 19,002 13,010 24,329 16,723 10,310 6,365 3,463 14,718 8,836
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
(21,861) (18,013) (13,561) (12,118) (12,959) (11,066) (5,476) (4,518) (2,029) (8,072) (6,057)
-- (2,124) -- -- (2,598) (1,723) (193) (41) (86) -- --
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
(21,861) (20,137) (13,561) (12,118) (15,557) (12,789) (5,669) (4,559) (2,115) (8,072) (6,057)
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- 41,223 -- --
-- 51,241 -- -- -- -- -- -- -- -- --
97,384 84,395 66,378 68,956 69,083 70,317 48,673 31,723 12,935 82,919 64,278
4,251 4,890 1,330 1,552 2,973 1,730 1,144 683 91 2,261 1,602
(52,578) (41,214) (29,571) (29,753) (27,776) (22,242) (15,455) (12,549) (3,804) (33,148) (27,819)
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
49,057 99,312 38,137 40,755 44,280 49,805 34,362 19,857 50,445 52,032 38,061
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
57,778 99,756 43,578 41,647 53,052 53,739 39,003 21,663 51,793 58,678 40,840
334,778 235,022 209,141 167,494 250,526 196,787 103,104 81,441 -- 147,459 106,619
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
$392,556 $334,778 $252,719 $209,141 $303,578 $250,526 $142,107 $103,104 $51,793 $206,137 $147,459
======== ======== ======== ======== ======== ======== ======== ======== ======= ======== ========
-- -- -- -- -- -- -- -- 4,122 -- --
-- 5,014 -- -- -- -- -- -- -- -- --
9,526 8,371 6,957 7,349 6,620 6,949 4,557 3,076 1,269 8,043 6,482
415 484 139 166 287 170 107 66 9 219 161
(5,145) (4,100) (3,093) (3,167) (2,663) (2,201) (1,449) (1,217) (372) (3,213) (2,807)
- -------- -------- -------- -------- -------- -------- -------- -------- ------- -------- --------
4,796 9,769 4,003 4,348 4,244 4,918 3,215 1,925 5,028 5,049 3,836
======== ======== ======== ======== ======== ======== ======== ======== ======= ======== ========
</TABLE>
82 & 83
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (000)
=======================================================================================================================
BOSTON
1784 BOSTON BOSTON
RHODE ISLAND 1784 1784 BOSTON
TAX-EXEMPT ASSET GROWTH AND 1784
INCOME ALLOCATION INCOME GROWTH
FUND FUND FUND FUND
========================================================================
6/1/97 6/1/96 6/1/97 6/1/96 6/1/97 6/1/96 6/1/97 6/1/96
TO TO TO TO TO TO TO TO
5/31/98 5/31/97 5/31/98 5/31/97 5/31/98 5/31/97 5/31/98 5/31/97
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME (LOSS) $ 2,992 $ 2,256 $ 1,143 $ 695 $ 1,853 $ 2,861 $ (986) $ 289
NET REALIZED GAIN ON INVESTMENTS 133 197 2,239 474 3,027 9,803 10,066 14,567
NET REALIZED GAIN (LOSS) FROM FORWARD
FOREIGN CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS -- -- -- -- -- -- -- --
NET CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS 1,822 912 4,325 2,426 116,058 51,083 23,681 463
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON FOREIGN FORWARD
CURRENCY CONTRACTS, FOREIGN CURRENCIES
AND TRANSLATION OF OTHER ASSETS AND
LIABILITIES IN FOREIGN CURRENCY -- -- -- -- -- -- -- --
------- ------- ------- ------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 4,947 3,365 7,707 3,595 120,938 63,747 32,761 15,319
------- ------- ------- ------- -------- -------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (2,992) (2,256) (1,113) (592) (2,391) (2,434) -- (732)
REALIZED CAPITAL GAINS (230) -- (1,519) (577) (9,315) (7,027) (17,945) --
------- ------- ------- ------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (3,222) (2,256) (2,632) (1,169) (11,706) (9,461) (17,945) (732)
------- ------- ------- ------- -------- -------- -------- --------
SHARE TRANSACTIONS:
VALUE FROM SHARES ISSUED
IN REORGANIZATION (1) -- -- -- -- -- -- -- 129,676
PROCEEDS FROM SHARES ISSUED 26,731 19,042 18,164 20,840 174,666 185,731 147,413 123,890
REINVESTMENT OF CASH DISTRIBUTIONS 686 250 2,550 1,089 9,909 6,509 14,178 186
COST OF SHARES REDEEMED (6,097) (4,553) (11,028) (5,664) (197,762) (92,037) (180,344) (52,878)
------- ------- ------- ------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 21,320 14,739 9,686 16,265 (13,187) 100,203 (18,753) 200,874
------- ------- ------- ------- -------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,045 15,848 14,761 18,691 96,045 154,489 (3,937) 215,461
NET ASSETS:
BEGINNING OF PERIOD 53,752 37,904 35,522 16,831 457,952 303,463 261,487 46,026
------- ------- ------- ------- -------- -------- -------- --------
NET ASSETS:
END OF PERIOD $76,797 $53,752 $50,283 $35,522 $553,997 $457,952 $257,550 $261,487
======= ======= ======= ======= ======== ======== ======== ========
CAPITAL SHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (1) -- -- -- -- -- -- -- 11,053
SHARES ISSUED 2,532 1,864 1,246 1,644 8,883 11,485 11,199 10,882
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 65 24 178 86 516 403 1,107 16
SHARES REDEEMED (578) (445) (759) (446) (10,004) (5,699) (13,815) (4,611)
------- ------- ------- ------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES 2,019 1,443 665 1,284 (605) 6,189 (1,509) 17,340
======= ======= ======= ======= ======== ======== ======== ========
BOSTON
1784
INTERNATIONAL
EQUITY
FUND
====================
6/1/97 6/1/96
TO TO
5/31/98 5/31/97
--------------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
NET INVESTMENT INCOME (LOSS) $ 172 $ 1,727
NET REALIZED GAIN ON INVESTMENTS 2,006 5,936
NET REALIZED GAIN (LOSS) FROM FORWARD
FOREIGN CURRENCY CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS (1,046) 4,430
NET CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS 21,711 38,228
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON FOREIGN FORWARD
CURRENCY CONTRACTS, FOREIGN CURRENCIES
AND TRANSLATION OF OTHER ASSETS AND
LIABILITIES IN FOREIGN CURRENCY 1,965 (1,264)
--------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 24,808 49,057
--------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
NET INVESTMENT INCOME (5,351) (3,270)
REALIZED CAPITAL GAINS (5,264) (2,145)
--------- --------
TOTAL DISTRIBUTIONS (10,615) (5,415)
--------- --------
SHARE TRANSACTIONS:
VALUE FROM SHARES ISSUED
IN REORGANIZATION (1) -- --
PROCEEDS FROM SHARES ISSUED 188,204 338,092
REINVESTMENT OF CASH DISTRIBUTIONS 4,260 2,095
COST OF SHARES REDEEMED (239,886) (243,241)
--------- --------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (47,422) 96,946
--------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (33,229) 140,588
NETASSETS:
BEGINNING OF PERIOD 503,048 362,460
--------- --------
NETASSETS:
END OF PERIOD $ 469,819 $503,048
========= ========
CAPITALSHARE TRANSACTIONS:
SHARES ISSUED IN REORGANIZATION (1) -- --
SHARES ISSUED 14,285 27,383
SHARES ISSUED IN LIEU OF CASH DISTRIBUTIONS 351 170
SHARES REDEEMED (18,447) (19,517)
--------- --------
NET INCREASE (DECREASE) IN CAPITAL SHARES (3,811) 8,036
========= ========
<FN>
(1)ON NOVEMBER 25, 1996, THE ASSETS OF FOUR PORTFOLIOS OF BAYFUNDS WERE
REORGANIZED WITH CERTAIN BOSTON 1784 FUNDS. PLEASE SEE THE NOTES TO FINANCIAL
STATEMENTS FOR FURTHER INFORMATION REGARDING THESE TRANSACTIONS.
</FN>
</TABLE>
84
<PAGE>
BOSTON 1784 FUNDS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
============================================================================================================================
BOSTON 1784 MONEY MARKET FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
NET NET NET
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF
VALUE NET FROM NET VALUE END OF EXPENSES
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 $1.00 0.03 (0.03) $1.00 3.33% $1,007,724 0.53%
FOR THE YEAR ENDED
MAY 31, 1997 $1.00 0.03 (0.03) $1.00 3.22% $ 845,612 0.54%
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $ 549,628 0.54%
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $ 539,412 0.50%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) $1.00 0.02 (0.02) $1.00 2.31%* $ 407,448 0.27%
- ----------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 $1.00 0.05 (0.05) $1.00 5.02% $ 372,657 0.65%
FOR THE YEAR ENDED
MAY 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $ 390,294 0.64%
FOR THE YEAR ENDED
MAY 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64%
FOR THE YEAR ENDED
MAY 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60%
FOR THE PERIOD ENDED
MAY 31, 1994 (2) $1.00 0.03 (0.03) $1.00 2.64%* $ 5,593 0.65%
- ----------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 PRIME MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 $1.00 0.05 (0.05) $1.00 5.16% $ 127,588 0.65%
FOR THE PERIOD ENDED
MAY 31, 1997 (3) $1.00 0.02 (0.02) $1.00 2.07%* $ 123,099 0.65%
FOR THE YEAR ENDED
DECEMBER 31, 1996 $1.00 0.05 (0.05) $1.00 5.02% $ 93,229 0.66%
FOR THE YEAR ENDED
DECEMBER 31, 1995 $1.00 0.05 (0.05) $1.00 5.49% $ 156,532 0.62%
FOR THE YEAR ENDED
DECEMBER 31, 1994 $1.00 0.04 (0.04) $1.00 3.75% $ 136,923 0.65%
FOR THE YEAR ENDED
DECEMBER 31, 1993 $1.00 0.03 (0.03) $1.00 2.72% $ 168,909 0.59%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------
RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
OF NET TO AVERAGE TO AVERAGE
INCOME NET ASSETS NET ASSETS
TO AVERAGE (EXCLUDING (EXCLUDING
NET ASSETS WAIVERS) WAIVERS)
- ----------------------------------------------------------------
<S> <C> <C> <C>
BOSTON 1784 TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 3.28% 0.53% 3.28%
FOR THE YEAR ENDED
MAY 31, 1997 3.17% 0.56% 3.15%
FOR THE YEAR ENDED
MAY 31, 1996 3.49% 0.60% 3.43%
FOR THE YEAR ENDED
MAY 31, 1995 3.28% 0.61% 3.17%
FOR THE PERIOD ENDED
MAY 31, 1994 (1) 2.39% 0.71% 1.95%
- ----------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 4.91% 0.70% 4.86%
FOR THE YEAR ENDED
MAY 31, 1997 4.76% 0.72% 4.68%
FOR THE YEAR ENDED
MAY 31, 1996 5.02% 0.75% 4.91%
FOR THE YEAR ENDED
MAY 31, 1995 5.13% 0.92% 4.81%
FOR THE PERIOD ENDED
MAY 31, 1994 (2) 2.91% 6.42% (2.86)%
- ----------------------------------------------------------------
BOSTON 1784 PRIME MONEY MARKET FUND
FOR THE YEAR ENDED
MAY 31, 1998 5.05% 0.70% 5.00%
FOR THE PERIOD ENDED
MAY 31, 1997 (3) 4.98% 0.75% 4.88%
FOR THE YEAR ENDED
DECEMBER 31, 1996 4.85% 0.66% 4.85%
FOR THE YEAR ENDED
DECEMBER 31, 1995 5.40% 0.62% 5.40%
FOR THE YEAR ENDED
DECEMBER 31, 1994 3.64% 0.69% 3.60%
FOR THE YEAR ENDED
DECEMBER 31, 1993 2.68% 0.70% 2.57%
- ----------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 TAX-FREE MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 14, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 U.S. TREASURY MONEY MARKET FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FORM THE PERIOD HAVE BEEN ANNUALIZED.
(3) BOSTON 1784 PRIME MONEY MARKET FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MAY 31.
REFLECTS OPERATIONS FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 31, 1997.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
85
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
================================================================================================================================
BOSTON 1784 BOND FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $ 9.98 0.57 0.11 (0.57) -- $10.09 6.98%
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.93 0.58 0.05 (0.58) -- $ 9.98 6.47%
FOR THE YEAR ENDED
MAY 31, 1996 $10.09 0.60 (0.12) (0.60) (0.04) $ 9.93 4.87%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $10.00 0.56 0.09 (0.56) -- $10.09 6.74%*
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $ 9.99 0.61 0.26 (0.61) -- $10.25 8.88%
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.90 0.63 0.17 (0.63) (0.08) $ 9.99 8.32%
FOR THE YEAR ENDED
MAY 31, 1996 $10.39 0.65 (0.37) (0.65) (0.12) $ 9.90 2.64%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $10.00 0.62 0.39 (0.62) -- $10.39 10.69%*
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $ 9.37 0.55 0.23 (0.55) -- $ 9.60 8.56%
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.31 0.59 0.06 (0.59) -- $ 9.37 7.16%
FOR THE YEAR ENDED
MAY 31, 1996 $ 9.57 0.61 (0.26) (0.61) -- $ 9.31 3.65%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.36 0.58 0.21 (0.58) -- $ 9.57 8.79%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $10.00 0.59 (0.64) (0.59) -- $ 9.36 (0.65)%*
- --------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $197,256 0.64% 5.67% 0.89% 5.42% 83.84%
FOR THE YEAR ENDED
MAY 31, 1997 $194,033 0.65% 5.78% 0.93% 5.50% 128.11%
FOR THE YEAR ENDED
MAY 31, 1996 $ 86,383 0.63% 5.87% 1.06% 5.44% 95.06%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $ 52,581 0.48% 6.31% 1.27% 5.52% 84.54%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $392,556 0.80% 5.91% 1.11% 5.60% 79.09%
FOR THE YEAR ENDED
MAY 31, 1997 $334,778 0.80% 6.31% 1.15% 5.96% 78.63%
FOR THE YEAR ENDED
MAY 31, 1996 $235,022 0.80% 6.17% 1.20% 5.77% 100.51%
FOR THE PERIOD ENDED
MAY 31, 1995(1) $196,515 0.55% 7.01% 1.23% 6.33% 80.53%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $252,719 0.80% 5.80% 1.12% 5.48% 73.65%
FOR THE YEAR ENDED
MAY 31, 1997 $209,141 0.79% 6.30% 1.16% 5.93% 98.22%
FOR THE YEAR ENDED
MAY 31, 1996 $167,494 0.80% 6.23% 1.24% 5.79% 158.66%
FOR THE YEAR ENDED
MAY 31, 1995 $130,081 0.80% 6.24% 1.27% 5.77% 142.14%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $ 92,387 0.31% 6.08% 1.35% 5.04% 144.77%
- -----------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 SHORT-TERM INCOME FUND AND BOSTON 1784 INCOME FUND COMMENCED OPERATIONS ON JULY 1, 1994.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
86
<PAGE>
BOSTON 1784 FUNDS
================================================================================
<TABLE>
<CAPTION>
BOSTON 1784 TAX-EXEMPT INCOME FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $10.18 0.48 0.44 (0.48) (0.10) $10.52 9.24%
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.99 0.50 0.19 (0.50) -- $10.18 7.74%
FOR THE YEAR ENDED
MAY 31, 1996 $10.14 0.51 (0.09) (0.51) (0.06) $ 9.99 4.31%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.90 0.48 0.24 (0.48) -- $10.14 7.58%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $10.00 0.49 (0.10) (0.49) -- $ 9.90 3.93%*
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
MAY 31, 1998 $10.38 0.50 0.45 (0.50) (0.02) $10.81 9.29%
FOR THE YEAR ENDED
MAY 31, 1997 $10.17 0.51 0.21 (0.51) -- $10.38 7.26%
FOR THE YEAR ENDED
MAY 31, 1996 $10.27 0.53 (0.10) (0.53) -- $10.17 4.20%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $10.00 0.45 0.27 (0.45) -- $10.27 7.45%*
- ---------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
FOR THE PERIOD ENDED
MAY 31, 1998(3) $10.00 0.43 0.32 (0.43) (0.02) $10.30 7.63%*
- ---------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $10.01 0.47 0.41 (0.47) -- $10.42 8.91%
FOR THE YEAR ENDED
MAY 31, 1997 $ 9.78 0.47 0.23 (0.47) -- $10.01 7.30%
FOR THE YEAR ENDED
MAY 31, 1996 $ 9.90 0.48 (0.12) (0.48) -- $ 9.78 3.64%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.81 0.47 0.09 (0.47) -- $ 9.90 6.00%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $10.00 0.50 (0.19) (0.50) -- $ 9.81 3.04%*
- ---------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $10.31 0.49 0.35 (0.49) (0.04) $10.62 8.28%
FOR THE YEAR ENDED
MAY 31, 1997 $10.06 0.50 0.25 (0.50) -- $10.31 7.61%
FOR THE YEAR ENDED
MAY 31, 1996 $10.13 0.53 (0.07) (0.53) -- $10.06 4.65%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $10.00 0.45 0.13 (0.45) -- $10.13 6.09%*
- ---------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $303,578 0.80% 4.62% 1.12% 4.30% 34.06%
FOR THE YEAR ENDED
MAY 31, 1997 $250,526 0.80% 4.92% 1.17% 4.55% 33.24%
FOR THE YEAR ENDED
MAY 31, 1996 $196,787 0.79% 4.90% 1.21% 4.48% 37.35%
FOR THE YEAR ENDED
MAY 31, 1995 $176,345 0.80% 5.02% 1.26% 4.56% 74.74%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 36,365 0.32% 5.06% 1.61% 3.77% 98.83%
- -----------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
MAY 31, 1998 $142,107 0.80% 4.66% 1.14% 4.32% 16.81%
FOR THE YEAR ENDED
MAY 31, 1997 $103,104 0.76% 4.94% 1.17% 4.53% 4.28%
FOR THE YEAR ENDED
MAY 31, 1996 $ 81,441 0.75% 5.02% 1.29% 4.48% 20.41%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $ 61,369 0.52% 5.44% 1.40% 4.56% 35.56%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
FOR THE PERIOD ENDED
MAY 31, 1998(3) $ 51,793 0.80% 4.59% 1.19% 4.20% 21.35%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $206,137 0.80% 4.54% 1.14% 4.20% 6.45%
FOR THE YEAR ENDED
MAY 31, 1997 $147,459 0.79% 4.74% 1.18% 4.35% 9.47%
FOR THE YEAR ENDED
MAY 31, 1996 $106,619 0.80% 4.73% 1.28% 4.25% 47.00%
FOR THE YEAR ENDED
MAY 31, 1995 $ 82,058 0.80% 4.93% 1.35% 4.38% 34.59%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 49,662 0.33% 5.10% 1.41% 4.02% 13.99%
- -----------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $ 76,797 0.80% 4.64% 1.16% 4.28% 13.79%
FOR THE YEAR ENDED
MAY 31, 1997 $ 53,752 0.79% 4.88% 1.21% 4.46% 8.18%
FOR THE YEAR ENDED
MAY 31, 1996 $ 37,904 0.77% 5.16% 1.35% 4.58% 19.68%
FOR THE PERIOD ENDED
MAY 31, 1995(2) $ 32,495 0.54% 5.56% 1.60% 4.50% 57.51%
- -----------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND AND BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 14, 1993. ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND AND BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON AUGUST 1, 1994. ALL RATIOS FOR THE
PERIOD HAVE BEEN ANNUALIZED.
(3) BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND COMMENCED OPERATIONS ON JUNE 30, 1997.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
87
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
================================================================================
BOSTON 1784 STOCK FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND NET
ASSET NET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAINS OR FROM NET FROM VALUE
BEGINNING INCOME (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 ASSET ALLOCATION FUND
FOR THE YEAR ENDED
MAY 31, 1998 $13.40 0.37 2.30 (0.38) (0.53) $15.16 20.51%
FOR THE YEAR ENDED
MAY 31, 1997 $12.31 0.34 1.44 (0.33) (0.36) $13.40 14.89%
FOR THE YEAR ENDED
MAY 31, 1996 $10.99 0.31 1.61 (0.31) (0.29) $12.31 17.83%
FOR THE YEAR ENDED
MAY 31, 1995 $ 9.84 0.28 1.15 (0.27) (0.01) $10.99 14.84%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $10.00 0.19 (0.20) (0.15) (0.00) $ 9.84 (0.15)%*
- -----------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $17.54 0.07 4.55 (0.09) (0.35) $21.72 26.71%
FOR THE YEAR ENDED
MAY 31, 1997 $15.23 0.12 2.63 (0.11) (0.33) $17.54 18.33%
FOR THE YEAR ENDED
MAY 31, 1996 $12.16 0.10 3.08 (0.11) (0.00) $15.23 26.32%
FOR THE YEAR ENDED
MAY 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $10.00 0.12 0.56 (0.11) (0.00) $10.57 6.80%*
- -----------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
FOR THE YEAR ENDED
MAY 31, 1998 $12.20 (0.05) 1.59 -- (0.81) $12.93 12.64%
FOR THE YEAR ENDED
MAY 31, 1997 $11.27 0.02 0.96 (0.05) (0.00) $12.20 8.77%
FOR THE PERIOD ENDED
MAY 31, 1996(3) $10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%*
- -----------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
FOR THE YEAR ENDED
MAY 31, 1998 $13.20 (0.02) 0.80 (0.15) (0.14) $13.69 6.19%
FOR THE YEAR ENDED
MAY 31, 1997 $12.05 0.07 1.23 (0.09) (0.06) $13.20 10.93%
FOR THE YEAR ENDED
MAY 31, 1996 $10.41 0.11 1.85 (0.27) (0.05) $12.05 19.08%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%*
- -----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RATIO RATIO OF
NET RATIO OF EXPENSES NET INCOME
ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
END OF EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON 1784 ASSET ALLOCATION FUND
FOR THE YEAR ENDED
MAY 31, 1998 $ 50,283 0.98% 2.66% 1.23% 2.41% 47.83%
FOR THE YEAR ENDED
MAY 31, 1997 $ 35,522 1.07% 2.87% 1.37% 2.57% 23.60%
FOR THE YEAR ENDED
MAY 31, 1996 $ 16,831 1.25% 2.86% 1.90% 2.21% 39.56%
FOR THE YEAR ENDED
MAY 31, 1995 $ 8,622 1.25% 2.88% 2.51% 1.62% 67.23%
FOR THE PERIOD ENDED
MAY 31, 1994(1) $ 6,928 1.25% 2.62% 3.61% 0.26% 28.19%
- -------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
FOR THE YEAR ENDED
MAY 31, 1998 $553,997 0.90% 0.36% 1.15% 0.11% 39.03%
FOR THE YEAR ENDED
MAY 31, 1997 $457,952 0.92% 0.77% 1.19% 0.50% 15.35%
FOR THE YEAR ENDED
MAY 31, 1996 $303,463 0.94% 0.78% 1.24% 0.48% 39.50%
FOR THE YEAR ENDED
MAY 31, 1995 $229,200 0.94% 1.05% 1.23% 0.76% 38.94%
FOR THE PERIOD ENDED
MAY 31, 1994(2) $121,717 0.35% 1.23% 1.36% 0.22% 31.55%
- -------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
FOR THE YEAR ENDED
MAY 31, 1998 $257,550 0.91% (0.35%) 1.16% (0.60%) 48.60%
FOR THE YEAR ENDED
MAY 31, 1997 $261,487 0.77% 0.17% 1.15% (0.21%) 57.46%
FOR THE PERIOD ENDED
MAY 31, 1996(3) $ 46,026 0.20% 1.75% 1.73% 0.22% 0.00%
- -------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
FOR THE YEAR ENDED
MAY 31, 1998 $469,819 1.24% 0.04% 1.49% (0.21%) 103.47%
FOR THE YEAR ENDED
MAY 31, 1997 $503,048 1.27% 0.41% 1.52% 0.16% 22.88%
FOR THE YEAR ENDED
MAY 31, 1996 $362,460 1.13% 0.76% 1.61% 0.28% 15.55%
FOR THE PERIOD ENDED
MAY 31, 1995(4) $148,439 0.89% 2.06% 1.70% 1.25% 11.03%
- -------------------------------------------------------------------------------------------------------------------
<FN>
* RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) BOSTON 1784 ASSET ALLOCATION FUND COMMENCED OPERATIONS ON JUNE 14, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) BOSTON 1784 GROWTH AND INCOME FUND COMMENCED OPERATIONS ON JUNE 7, 1993.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
(3) BOSTON 1784 GROWTH FUND COMMENCED OPERATIONS ON MARCH 28, 1996. ALL RATIOS
FOR THE PERIOD HAVE BEEN ANNUALIZED.
(4) BOSTON 1784 INTERNATIONAL EQUITY FUND COMMENCED OPERATIONS ON JANUARY 3, 1995.
ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
88
<PAGE>
BOSTON 1784 FUNDS
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
Boston 1784 Tax-Free Money Market, Boston 1784 U.S. Treasury Money Market,
Boston 1784 Prime Money Market (the "Money Market Funds"), Boston 1784
Short-Term Income, Boston 1784 Income, Boston 1784 U.S. Government Medium-Term
Income (the "Bond Funds"), Boston 1784 Tax-Exempt Medium-Term Income, Boston
1784 Connecticut Tax-Exempt Income, Boston 1784 Florida Tax-Exempt Income,
Boston 1784 Massachusetts Tax-Exempt Income, Boston 1784 Rhode Island Tax-Exempt
Income (the "Tax-Exempt Income Funds"), Boston 1784 Asset Allocation, Boston
1784 Growth and Income, Boston 1784 Growth and Boston 1784 International Equity
Funds (the "Stock Funds") are portfolios offered by Boston 1784 Funds (the
"Trust"), an open-end investment company registered under the Investment Company
Act of 1940, as amended. The Trust is offering shares in 17 separate portfolios
(the "Funds") as of May 31, 1998:
MONEY MARKET FUNDS:
BOSTON 1784 TAX-FREE MONEY MARKET FUND
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
BOSTON 1784 PRIME MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
BOND FUNDS:
BOSTON 1784 SHORT-TERM INCOME FUND
BOSTON 1784 INCOME FUND
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
TAX-EXEMPT INCOME FUNDS:
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS:
BOSTON 1784 ASSET ALLOCATION FUND
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
BOSTON 1784 INTERNATIONAL EQUITY FUND
The Funds' prospectuses provide a description of each Fund's investment
objectives, policies and strategies. The financial statements of Boston 1784
Institutional U.S. Treasury Money Market Fund and Boston 1784 Institutional
Prime Money Market Fund are not presented herein but are presented separately.
The assets of each Fund are segregated, and a shareholder's interest is limited
to the Fund in which shares are held. The financial statements have been
prepared in accordance with generally accepted accounting principles which
require the use of management's estimates. Actual results could differ from
these estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds.
SECURITY VALUATION --
In valuing each of the Stock, Bond and Tax-Exempt Income Funds' assets, bonds
and other fixed income securities are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by
89
<PAGE>
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
the Board of Trustees of the Trust. In making such valuations, the pricing
services may employ methodologies that utilize actual market transactions,
broker-dealer supplied valuations or other electronic data processing
techniques.
Equity securities listed on a domestic securities exchange for which
quotations are readily available, including securities traded over the counter,
are valued by a pricing service at the last quoted sale price on the principal
exchange on which they are traded on valuation date, or, if there is no such
reported sale on the valuation date, at the most recent quoted bid price.
Equity securities which are primarily traded on a foreign exchange are
generally valued by a pricing service, at the preceding closing value on the
exchange.
Securities for which market quotations are not readily available are valued
at their fair value as determined in good faith by the Board of Trustees of the
Trust, or pursuant to procedures adopted by the Board subject to review by the
Board of the resulting valuations.
Investment securities of the Money Market Funds are stated at amortized
cost, which approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity and are
included in interest income.
FOREIGN CURRENCY TRANSACTIONS --
The books and records of the Funds are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis:
I. market value of investment securities, assets and liabilities at the
current rate of exchange; and
II. purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of gains and losses on investment
securities that are due to changes in the foreign exchange rates from that due
to changes in market prices of such securities.
The Funds report certain foreign currency related transactions as
components of unrealized and realized gains for financial reporting purposes,
whereas such components are treated as ordinary income for federal income tax
purposes.
SECURITY TRANSACTIONS AND INVESTMENT INCOME --
Security transactions are accounted for on the trade date of the security
purchase or sale. Costs used in determining net realized capital gains and
losses on the sale of securities are those of the specific securities sold,
adjusted for the accretion and amortization of the purchase discounts and
premiums during the respective holding period, with the exception of Boston 1784
U.S. Government Medium- Term Income Fund which does not accrete or amortize
purchase discounts and premiums. Interest income is recorded on the accrual
basis. Dividend income is recorded on ex-date.
REPURCHASE AGREEMENTS --
The Funds invest in tri-party repurchase agreements. Securities pledged as
collateral for tri-party repurchase agreements are
90
<PAGE>
BOSTON 1784 FUNDS
================================================================================
maintained in a segregated account by the broker's custodian bank until maturity
of the repurchase agreements. Provisions of the agreements and procedures
adopted by the Adviser ensure that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters into insolvency proceedings, realization
on the collateral by the Fund may be delayed or limited.
EXPENSES --
Expenses that are directly related to one of the Funds are charged directly to
that Fund. Other operating expenses of the Trust are prorated to the Funds on
the basis of relative net assets.
DISTRIBUTIONS TO SHAREHOLDERS --
The Money Market, Bond and Tax-Exempt Income Funds declare distributions from
net investment income on a daily basis, payable on the first business day of the
following month. Boston 1784 Asset Allocation and Boston 1784 Growth and Income
Funds declare and pay dividends on a quarterly basis. Boston 1784 Growth Fund
declares and pays dividends on a semi-annual basis. Boston 1784 International
Equity Fund declares and pays dividends on an annual basis. Any net realized
capital gains on sales of securities for a Fund are distributed to its
shareholders at least annually.
FEDERAL INCOME TAXES --
The Trust's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Accordingly, no provision for federal income
taxes is required in the financial statements. The Funds may be subject to taxes
imposed by countries in which they invest with respect to their investments in
issuers existing or operating in such countries. Such taxes are generally based
on either income earned or repatriated. The Funds accrue such taxes when related
income is earned. The timing and characterization of certain income and capital
gains distributions are determined annually in accordance with federal tax
regulations that may differ from generally accepted accounting principles. These
differences relate primarily to foreign currency-denominated investments,
paydowns on asset-backed securities and certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ from distributions during such
period. Accordingly, the Funds may periodically make reclassifications among
certain capital accounts without impacting the net asset value of the Funds.
ORGANIZATIONAL COSTS --
Organizational costs have been deferred in the accounts of the Funds and are
being amortized on a straight line basis over a period of sixty months
commencing with operations. In the event any of the initial shares of the Funds
are redeemed by any holder thereof during the period that the Funds are
amortizing their organizational costs, the redemption proceeds
91
<PAGE>
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
payable to the holders thereof by the Funds will be reduced by the unamortized
organizational costs in the same ratio as the number of shares redeemed bears to
the initial shares outstanding at the time of redemption.
OTHER--
Some countries in which the Funds invest require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, for various reasons, including a
deterioration in a country's balance of payments, a country may impose temporary
restrictions on foreign capital remittances abroad.
The security exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Funds may
be inhibited.
3. INVESTMENT ADVISORY AND CUSTODIAL SERVICES
Pursuant to an investment advisory agreement dated June 1, 1993, investment
advisory services are provided to the Trust by Bank-Boston, N.A. (the
"Adviser"). The Adviser is entitled to receive a fee of 0.40% of the average
daily net assets of Boston 1784 Tax-Free Money Market, Boston 1784 U.S. Treasury
Money Market and Boston 1784 Prime Money Market Funds, 0.50% of the average
daily net assets of Boston 1784 Short-Term Income Fund, 0.74% of the average
daily net assets of Boston 1784 Income, Boston 1784 U.S. Government Medium-Term
Income, Boston 1784 Tax-Exempt Medium-Term Income, Boston 1784 Connecticut
Tax-Exempt Income, Boston 1784 Florida Tax-Exempt Income, Boston 1784
Massachusetts Tax-Exempt Income, Boston 1784 Rhode Island Tax-Exempt Income,
Boston 1784 Asset Allocation, Boston 1784 Growth and Income and Boston 1784
Growth Funds. Such fees are computed daily and paid monthly. The Adviser has
voluntarily agreed to waive a portion of its fee as necessary to assist the
Funds in maintaining competitive expense ratios. Boston 1784 International
Equity Fund has entered into separate investment advisory agreements (each an
"Advisory Agreement") with BankBoston, N.A. ("BankBoston") and with Kleinwort
Benson Investment Management Americas Inc. ("Kleinwort" and together with
BankBoston the "International Advisers"). The Advisory Agreement with BankBoston
is dated as of November 28, 1994; the Advisory Agreement with Kleinwort is dated
as of October 27, 1995. The International Advisers are entitled to receive an
aggregate fee of 1.00% of the average daily net assets of Boston 1784
International Equity Fund. Such fee is computed daily and paid monthly.
BankBoston has voluntarily agreed to waive a portion of its fee as necessary to
assist Boston 1784 International Equity Fund in maintaining a competitive
expense ratio.
The Trust and BankBoston, N.A. (the
92
<PAGE>
BOSTON 1784 FUNDS
================================================================================
"Custodian") are parties to a custodial agreement dated June 1, 1993 under which
the Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended. The Custodian is entitled to
receive an annual fee, to be paid monthly, of 0.01% for the first $100 million
in average daily net assets, 0.0075% for the next $100 million in average daily
net assets and 0.0050% for the average daily net assets over $200 million of
each of the Funds. In its capacity as custodian to the Trust, the Custodian
plays no role in determining the investment policies of the Trust or which
securities are to be purchased or sold by the Funds.
4. ADMINISTRATIVE AND DISTRIBUTION SERVICES
Pursuant to an administration agreement dated December 1, 1996, SEI Investments
Mutual Funds Services (formerly SEI Fund Resources), a wholly-owned subsidiary
of SEI Investments Company, acts as the Trust's Administrator, and is entitled
to receive an annual fee of 0.085% of the Trust's first $5 billion of average
daily net assets and 0.045% of the Trust's average daily net assets over $5
billion. Such fee is computed daily and paid monthly.
SEI Investments Distribution Co. ("SEI Investments"), a wholly-owned
subsidiary of SEI Investments Company, became the Trust's Distributor pursuant
to a distribution agreement dated June 1, 1993 as amended and restated October
27, 1995. The Trust has adopted a distribution plan with respect to each of the
Stock, Bond and Tax-Exempt Income Funds pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (collectively, the "Plan"). The
Distribution Agreement and the Plan provide that the Trust will pay the
Distributor a fee, calculated daily and paid monthly, at an annual rate of 0.25%
of the average daily net assets of each of the Bond, Tax-Exempt Income and Stock
Funds. The Distributor agreed to voluntarily waive all of its 12b-1 distribution
fee for the fiscal year ended May 31, 1998.
Pursuant to a Shareholder Services Agreement dated December 1, 1996,
BankBoston, N.A. provides certain shareholder services to Boston 1784 U.S.
Treasury Money Market Fund and Boston 1784 Prime Money Market Fund and receives
compensation, computed daily and paid monthly, at an annual rate of 0.10% of the
average daily net assets of each such Fund. BankBoston, N.A. provides
shareholder services to the other Boston 1784 Funds presented in this report,
for which it does not receive compensation.
Certain officers of the Trust are also officers of the Administrator. Such
officers are paid no fees by the Trust.
The Trust has paid legal fees to a law firm of which the Secretary of the
Trust is a member.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments, for the year ended May 31, 1998, are as
presented below for the Bond, Tax-Exempt Income and Stock Funds.
93
<PAGE>
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
FUND INVESTMENT TRANSACTIONS (000):
PURCHASES SALES
=================================================================================================================
U.S. GOVERNMENT U.S. GOVERNMENT
FOR THE YEAR ENDED MAY 31, 1998 SECURITIES OTHER SECURITIES OTHER
============================= ============================
<S> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND $ 41,088 $90,837 $51,052 $78,721
BOSTON 1784 INCOME FUND 214,872 99,915 110,257 161,004
BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND 172,795 9,000 134,391 10,747
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND -- 146,308 -- 92,318
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND -- 55,290 -- 18,150
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND -- 16,188 -- 9,523
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND -- 60,166 -- 10,723
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND -- 26,128 -- 8,052
BOSTON 1784 ASSET ALLOCATION FUND 9,562 16,936 7,019 12,091
BOSTON 1784 GROWTH AND INCOME FUND -- 188,621 -- 213,325
BOSTON 1784 GROWTH FUND -- 131,813 -- 160,959
BOSTON 1784 INTERNATIONAL EQUITY FUND -- 536,094 -- 476,667
At May 31, 1998, the following Funds have capital loss carryforwards (000):
EXPIRATION
AMOUNT DATE
=====================================
<S> <C> <C>
BOSTON 1784 TAX-FREE MONEY MARKET FUND $ 136 2004-2006
BOSTON 1784 PRIME MONEY MARKET FUND 24 2002
BOSTON 1784 SHORT-TERM INCOME FUND 12,428 2002-2005
BOSTON 1784 INCOME FUND 304 2005
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 5,087 2003-2005
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 1,184 2003-2005
</TABLE>
94
<PAGE>
BOSTON 1784 FUNDS
================================================================================
At May 31, 1998, the total cost of securities and the net realized gains or
losses on securities sold for federal income tax purposes was not materially
different from amounts reported for financial purposes.
The aggregate gross unrealized gains or losses on securities at May 31,
1998 for the Bond, Tax-Exempt Income and Stock Funds are as follows (000):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES GAINS
====================================================
<S> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND $ 1,316 $ (72) $ 1,244
BOSTON 1784 INCOME FUND 7,717 (2,416) 5,301
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND 4,992 (855) 4,137
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND 14,051 (103) 13,948
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND 6,729 (52) 6,677
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND 1,959 (41) 1,918
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND 8,506 (67) 8,439
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND 3,315 (61) 3,254
BOSTON 1784 ASSET ALLOCATION FUND 8,497 (277) 8,220
BOSTON 1784 GROWTH AND INCOME FUND 261,735 (3,284) 258,451
BOSTON 1784 GROWTH FUND 82,408 (11,521) 70,887
BOSTON 1784 INTERNATIONAL EQUITY FUND 112,693 (11,071) 101,622
</TABLE>
95
<PAGE>
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. CONCENTRATION OF CREDIT RISK
Boston 1784 Tax-Free Money Market, Boston 1784 Tax-Exempt Medium-Term Income,
Boston 1784 Connecticut Tax-Exempt Income, Boston 1784 Florida Tax-Exempt
Income, Boston 1784 Massachusetts Tax-Exempt Income and Boston 1784 Rhode Island
Tax-Exempt Income Funds invest in debt instruments of municipal issuers. The
issuers' ability to meet their obligations may be affected by economic
developments in a specific state or region. Boston 1784 Connecticut Tax-Exempt
Income, Boston 1784 Florida Tax-Exempt Income, Boston 1784 Massachusetts
Tax-Exempt Income and Boston 1784 Rhode Island Tax-Exempt Income Funds invest
primarily in obligations located in Connecticut, Florida, Massachusetts and
Rhode Island, respectively.
7. LINE OF CREDIT
The Funds have a bank line of credit, under which borrowings are secured by
investment securities of the borrowing Fund. Borrowings may not exceed 10% of
the Fund's total assets for the Money Market Funds, Boston 1784 U.S. Government
Medium-Term Income, Boston 1784 Tax-Exempt Medium-Term Income, Boston 1784
Massachusetts Tax-Exempt Income, Boston 1784 Asset Allocation, Boston 1784
Growth and Income and Boston 1784 Growth Funds and 15% of the Fund's total
assets for Boston 1784 Short-Term Income, Boston 1784 Income, Boston 1784
Connecticut Tax-Exempt Income, Boston 1784 Rhode Island Tax-Exempt Income and
Boston 1784 International Equity Funds.
Borrowings under the line are charged interest at the current overnight
Federal Funds rate plus a variable rate determined at the date of borrowing.
Each Fund is individually, and not jointly, liable for its particular advances
under the line. There is no commitment fee on the unused portion of the line of
credit. During the year ended May 31, 1998, only the International Equity Fund
borrowed against the Line of Credit with maximum borrowings of $6,500,000
during the period from February 3, 1998 through February 11, 1998. The
International Equity Fund paid $8,932 in interest at a weighted average rate of
7.10%. There were no outstanding borrowings at May 31, 1998.
8. REORGANIZATION WITH BAYFUNDS
On July 31, 1996, the Board of Trustees of the Trust and on July 31, 1996 and
August 15, 1996, the Board of Trustees of BayFunds approved an Agreement and
Plan of Reorganization (the "Reorganization Agreement") providing for the
transfer of all assets and liabilities of the portfolios of BayFunds in exchange
for the issuance of shares in certain Funds in tax-free reorganizations (except
in the case of the reorganization of BayFunds U.S. Treasury Money Market
Portfolio with Boston 1784 U.S. Treasury Money Market Fund and Boston 1784
Institutional U.S. Treasury Money Market Fund,
96
<PAGE>
BOSTON 1784 FUNDS
================================================================================
which did not qualify for tax-free treatment). At a special meeting of the
shareholders held on November 6, 1996, the shareholders of BayFunds voted to
approve the Reorganization Agreement. Pursuant to the Reorganization Agreement,
on November 25, 1996 substantially all of the assets and liabilities of BayFunds
U.S. Treasury Money Market Portfolio, BayFunds Equity Portfolio, BayFunds Short
Term Yield Portfolio and BayFunds Bond Portfolio were transferred to
corresponding Boston 1784 Funds in exchange for shares of such Fund. In
addition, on December 9, 1996, all assets and liabilities of the BayFunds Money
Market Portfolio were transferred to the newly-organized Boston 1784 Prime Money
Market Fund. The details of these reorganizations as they relate to the Funds
are described below.
The following table summarizes certain relevant information of the Funds
prior to and immediately after the reorganizations on November 25, 1996 and
December 9, 1996.
<TABLE>
<CAPTION>
COMBINED
SHARES NET ASSETS
SHARES NET ASSETS ISSUED IN AFTER
BAYFUNDS AT 11/25/96 AT 11/25/96 BOSTON 1784 FUNDS REORGANIZATION REORGANIZATION
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES 1,047,875,735 1,047,875,735 INSTITUTIONAL U.S. TREASURY MONEY MARKET 1,047,875,735 2,061,477,418
INVESTMENT SHARES 320,109,970 320,109,970 U.S. TREASURY MONEY MARKET 320,109,970 424,383,927
EQYITY PORTFOLIO
INSTITUTIONAL SHARES 6,084,433 90,308,716 GROWTH 7,697,195 232,770,598
INVESTMENT SHARES 2,652,009 39,367,199 GROWTH 3,355,364 232,770,598
SHORT TERM YIELD PORTFOLIO
INSTITUTIONAL SHARES 3,061,193 28,076,910 SHORT-TERM INCOME 2,783,999 142,633,338
INVESTMENT SHARES 1,694,530 15,543,024 SHORT-TERM INCOME 1,541,097 142,633,338
BOND PORTFOLIO
INSTITUTIONAL SHARES 4,543,688 45,727,982 INCOME 4,474,157 306,880,031
INVESTMENT SHARES 547,758 5,512,661 INCOME 539,376 306,880,031
COMBINED
SHARES NET ASSETS
SHARES NET ASSETS ISSUED IN AFTER
BAYFUNDS AT 12/9/96 AT 12/9/96 BOSTON 1784 FUNDS REORGANIZATION REORGANIZATION
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO
TRUST SHARES 94,945,689 94,945,452 PRIME MONEY MARKET 94,945,452 139,536,060
INVESTMENT SHARES 44,590,608 44,590,496 PRIME MONEY MARKET 44,590,608 139,536,060
NAV
PER SHARE
ON DAY OF
BAYFUNDS REORGANIZATION
========================================
<S> <C>
U.S. TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES 1.00
INVESTMENT SHARES 1.00
EQUITY PORTFOLIO
INSTITUTIONAL SHARES 11.73
INVESTMENT SHARES 11.73
SHORT TERM YIELD PORTFOLIO
INSTITUTIONAL SHARES 10.09
INVESTMENT SHARES 10.09
BOND PORTFOLIO
INSTITUTIONAL SHARES 10.22
INVESTMENT SHARES 10.22
NAV
PER SHARE
ON DAY OF
BAYFUNDS REORGANIZATION
========================================
MONEY MARKET PORTFOLIO
TRUST SHARES 1.00
INVESTMENT SHARES 1.00
</TABLE>
The acquired unrealized appreciation at November 25, 1996 of BayFunds Equity,
Short Term Yield and Bond Portfolios was $43,352,830, $81,551 and $311,988,
respectively.
97
<PAGE>
MAY 31, 1998
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
================================================================================
9. COMMON TRUST FUND CONVERSION
On June 30, 1997, BankBoston's Florida Tax-Exempt Bond Common Trust Fund was
converted into Boston 1784 Florida Tax-Exempt Income Fund. The assets, which
consisted of securities and related receivables, were converted on a tax-free
basis. The net assets (including unrealized appreciation) of the Common Trust
Fund immediately before the conversion, and the number of shares issued, were as
follows:
BOSTON 1784
FLORIDA TAX-EXEMPT
UNREALIZED INCOME FUND SHARES
NET ASSETS APPRECIATION ISSUED
=======================================================
$41,223,322 $994,489 4,122,332
10. FORWARD FOREIGN CURRENCY CONTRACTS
Boston 1784 International Equity and Boston 1784 Income Funds entered into
forward foreign currency exchange contracts as hedges against specific
transactions or portfolio positions. The aggregate principal amounts of the
contracts are not recorded, as the Funds do not intend to hold the contracts to
maturity. All commitments are "marked-to-market" daily at the applicable foreign
exchange rate and any resulting unrealized gains or losses are recorded
currently. The Funds realize gains and losses at the time the forward contracts
are extinguished. Such contracts, which protect the value of the Fund's
investment securities against a decline in value of the hedged currency, do not
eliminate fluctuations in the underlying prices of the securities. They simply
establish an exchange rate at a future date. Although such contracts tend to
minimize the risk of loss due to a decline in the value of a hedged currency,
they also tend to limit any potential gain that might be realized should the
value of such foreign currency increase.
98
<PAGE>
BOSTON 1784 FUNDS
================================================================================
The following forward foreign currency contracts were outstanding at May 31,
1998:
- --------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
FOREIGN CURRENCY SALES:
CONTRACT TO IN EXCHANGE UNREALIZED
MATURITY DELIVER FOR APPRECIATION
DATE (000) (000) (000)
==================================================================
7/01/98 JPY 6,140,000 $46,543 $2,021
=============
- ------------------------------------------------------------------
CURRENCY LEGEND
JPY--Japanese Yen
99
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF BOSTON 1784 FUNDS
IN OUR OPINION, THE ACCOMPANYING STATEMENTS OF NET ASSETS AND THE RELATED
STATEMENTS OF OPERATIONS AND OF CHANGES IN NET ASSETS AND THE FINANCIAL
HIGHLIGHTS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL
POSITION OF BOSTON 1784 FUNDS (COMPRISING, RESPECTIVELY, BOSTON 1784
TAX-FREE MONEY MARKET FUND, BOSTON 1784 U.S. TREASURY MONEY MARKET FUND,
BOSTON 1784 PRIME MONEY MARKET FUND, BOSTON 1784 SHORT-TERM INCOME FUND,
BOSTON 1784 INCOME FUND, BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME
FUND, BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND, BOSTON 1784
CONNECTICUT TAX-EXEMPT INCOME FUND, BOSTON 1784 FLORIDA TAX-EXEMPT INCOME
FUND, BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND, BOSTON 1784 RHODE
ISLAND TAX-EXEMPT INCOME FUND, BOSTON 1784 ASSET ALLOCATION FUND, BOSTON
1784 GROWTH AND INCOME FUND, BOSTON 1784 GROWTH FUND AND BOSTON 1784
INTERNATIONAL EQUITY FUND REFERRED TO COLLECTIVELY HEREIN AS THE "FUNDS"),
AT MAY 31, 1998, THE RESULTS OF THEIR OPERATIONS, CHANGES IN THEIR NET
ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS PRESENTED
(EXCEPT FOR THE YEAR ENDED DECEMBER 31, 1995 AND PRIOR PERIODS FOR BOSTON
1784 PRIME MONEY MARKET FUND) IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. THE FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED
DECEMBER 31, 1995 AND EACH OF THE PRIOR PERIODS PRESENTED FOR BOSTON 1784
PRIME MONEY MARKET FUND WERE AUDITED BY OTHER AUDITORS, WHOSE REPORT DATED
FEBRUARY 6, 1996 EXPRESSED AN UNQUALIFIED OPINION THEREON. THESE FINANCIAL
STATEMENTS AND FINANCIAL HIGHLIGHTS (HEREAFTER REFERRED TO AS "FINANCIAL
STATEMENTS") ARE THE RESPONSIBILITY OF THE FUNDS' MANAGEMENT; OUR
RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL STATEMENTS
BASED ON OUR AUDITS. WE CONDUCTED OUR AUDITS OF THESE FINANCIAL STATEMENTS
IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS WHICH REQUIRE
THAT WE PLAN AND PERFORM THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT
WHETHER THE FINANCIAL STATEMENTS ARE FREE OF MATERIAL MISSTATEMENT. AN
AUDIT INCLUDES EXAMINING, ON A TEST BASIS, EVIDENCE SUPPORTING THE AMOUNTS
AND DISCLOSURES IN THE FINANCIAL STATEMENTS, ASSESSING THE ACCOUNTING
PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY MANAGEMENT, AND
EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE BELIEVE THAT
OUR AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT MAY 31, 1998 BY
CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE BASIS
FOR THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 10, 1998
100
<PAGE>
BOSTON 1784 FUNDS
NOTICE TO SHAREHOLDERS OF
BOSTON 1784 FUNDS (UNAUDITED)
================================================================================
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS,
THIS NOTICE IS FOR INFORMATIONAL PURPOSES ONLY.
<TABLE>
<CAPTION>
(A)* (B)* (C)*
LONG-TERM MID-TERM ORDINARY (E)**
CAPITAL GAINS CAPITAL GAIN INCOME TOTAL (D)** TAX- (F)**
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT FOREIGN
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST TAX CREDIT
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE
MONEY MARKET 0% 0% 100% 100% 0% 88% 0%
U.S. TREASURY
MONEY MARKET 0% 0% 100% 100% 0% 0% 0%
PRIME
MONEY MARKET 0% 0% 100% 100% 0% 0% 0%
SHORT-TERM INCOME 0% 0% 100% 100% 0% 0% 0%
INCOME 0% 0% 100% 100% 4% 0% 0%
U.S. GOVERNMENT
MEDIUM-TERM INCOME 0% 0% 100% 100% 0% 0% 0%
TAX-EXEMPT
MEDIUM-TERM INCOME 7% 10% 83% 100% 0% 95% 0%
CONNECTICUT
TAX-EXEMPT INCOME 3% 1% 96% 100% 0% 95% 0%
FLORIDA
TAX-EXEMPT INCOME 0% 0% 100% 100% 0% 93% 0%
MASSACHUSETTS
TAX-EXEMPT INCOME 0% 0% 100% 100% 0% 94% 0%
RHODE ISLAND
TAX-EXEMPT INCOME 2% 5% 93% 100% 0% 93% 0%
ASSET ALLOCATION 38% 17% 45% 100% 22% 0% 0%
GROWTH AND INCOME 23% 57% 20% 100% 94% 0% 0%
GROWTH 22% 78% 0% 100% 0% 0% 0%
INTERNATIONAL EQUITY 2% 37% 61% 100% 0% 0% 12%
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE DIVIDENDS RECEIVED DEDUCTION.
* ITEMS (A), (B) AND (C) ARE BASED ON A PERCENTAGE OF THE FUND'S TOTAL DISTRIBUTIONS.
** ITEMS (D), (E) AND (F) ARE BASED ON A PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF THE FUND.
PLEASE CONSULT YOUR TAX ADVISER FOR PROPER TREATMENT OF THIS INFORMATION.
</FN>
</TABLE>
101
<PAGE>
NOTICE TO SHAREHOLDERS OF
BOSTON 1784 FUNDS (UNAUDITED)
================================================================================
FOR TAXPAYERS FILING ON A CALENDAR YEAR BASIS, THIS NOTICE IS FOR INFORMATIONAL
PURPOSES ONLY.
Boston 1784 International Equity Fund has made an election under Section
853 of the International Revenue Code to provide a foreign tax deduction
or credit to its shareholders for the fiscal year ended May 31, 1998. The
information provided below is pertinent to taxpayers who meet the
following two criteria: 1) file a U.S. Federal Income Tax Return on the
basis of the fiscal year ended May 31, 1998, and 2) held shares of Boston
1784 International Equity Fund on the dividend record date of December 31,
1997.
The per share income and foreign taxes paid to each country is listed
in the following schedule.
GROSS FOREIGN
COUNTRY DIVIDEND TAXES PAID
================================================================
Argentina 0.0013 0.0000
Australia 0.0051 0.0003
Austria 0.0005 0.0000
Brazil 0.0025 0.0002
Canada 0.0011 0.0000
Chile 0.0050 0.0009
Colombia 0.0005 0.0000
France 0.0141 0.0019
Germany 0.0087 0.0015
Great Britain 0.0536 0.0093
Greece 0.0009 0.0000
Hong Kong 0.0108 0.0000
Hungary 0.0002 0.0000
India 0.0006 0.0000
Indonesia 0.0009 0.0002
Ireland 0.0004 0.0000
Israel 0.0001 0.0000
Italy 0.0052 0.0010
Japan 0.0188 0.0031
Korea 0.0006 0.0000
Malaysia 0.0016 0.0005
Mexico 0.0015 0.0000
Netherlands 0.0097 0.0017
Norway 0.0006 0.0001
Peru 0.0008 0.0000
Philippines 0.0008 0.0002
Poland 0.0003 0.0000
Portugal 0.0011 0.0001
Singapore 0.0039 0.0009
South Africa 0.0003 0.0000
Spain 0.0059 0.0010
Sweden 0.0037 0.0006
Switzerland 0.0071 0.0007
Thailand 0.0015 0.0002
Turkey 0.0006 0.0000
-------- --------
0.1703 0.0244
102
<PAGE>
BOSTON 1784 FUNDS
NOTES
================================================================================
103
<PAGE>
NOTES
================================================================================
104
<PAGE>
<PAGE>
MONEY MARKET FUNDS
[BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND
[BULLET] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
[BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND*
[BULLET] BOSTON 1784 PRIME MONEY MARKET FUND
[BULLET] BOSTON 1784 INSTITUTIONAL PRIME 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
================================================================================
TAX-EXEMPT INCOME FUNDS
[BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM
INCOME FUND
[BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
[BULLET] BOSTON 1784 FLORIDA TAX-EXEMPT
INCOME FUND
[BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
[BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT 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
*COVERED BY BOSTON 1784 INSTITUTIONAL MONEY
MARKET FUNDS ANNUAL REPORT
BOSTON
1784
FUNDS
[LOGO OMITTED]
BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
BOARD OF TRUSTEES
David H. Carter
Tarrant Cutler
Kenneth A. Froot
Sara L. Johnson
Kathryn Flacke Muncil
Robert A. Nesher
Alvin J. Silk
INVESTMENT ADVISER
BankBoston, N.A.
Boston, MA 02110
================================================================================
CO-ADVISER FOR
BOSTON 1784 INTERNATIONAL
EQUITY FUND
Kleinwort Benson Investment
Management Americas Inc.
New York, NY 10005
ADMINISTRATOR
SEI Investments Mutual Funds Services
Oaks, PA 19456
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, PA 19456
LEGAL COUNSEL
Bingham Dana LLP
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers, LLP
Philadelphia, PA 19103
CUSTODIAN
BankBoston, N.A.
Boston, MA 02110
This report and the financial statements contained herein are for the
general information of the shareholders of the funds named above. This
report is not authorized for distribution to prospective investors in a
fund unless preceded or accompanied by a currently effective prospectus.
MF-0148
