Rule 497(c)
File Nos. 33-58004 and 811-7474
Fund Information
And Prospectus
[Logo omitted]
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BOSTON
1784
FUNDS
SEPTEMBER 15, 1998
[PHOTO OF SKYLINE OMITTED]
NOT PART OF THE PROSPECTUS
<PAGE>
BOSTON 1784 FUNDS[SERVICE MARK]
THE TWO CENTURIES OF TRADITION BEHIND OUR NAME
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BOSTON 1784 FUNDS ARE MANAGED BY BANKBOSTON. FOUNDED IN 1784, THE BANK HAS
EARNED A REPUTATION FOR PRUDENT MONEY MANAGEMENT AND COUNSEL TO INDIVIDUALS AND
BUSINESSES THROUGHOUT NEW ENGLAND. ITS HERITAGE, ACHIEVEMENTS AND SCOPE PLACE
THE BANK AT THE HEART OF BOSTON'S MONEY MANAGEMENT INDUSTRY--A BUSINESS IT
HELPED CREATE. BOSTON 1784 FUNDS EMBODY THIS TRADITION IN A MUTUAL FUND FAMILY
WITH A WIDE RANGE OF INVESTMENT CHOICES.
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
IMPORTANT INFORMATION ABOUT BOSTON 1784 FUNDS
BOSTON 1784 FUNDS ARE NOT FDIC INSURED, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY, ANY BANK, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
BANKBOSTON, N.A. SERVES AS INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
FOR BOSTON 1784 FUNDS. BOSTON 1784 FUNDS ARE DISTRIBUTED BY SEI INVESTMENTS
DISTRIBUTION CO. THE DISTRIBUTOR IS NOT AFFILIATED WITH 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. 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.
NOT PART OF THE PROSPECTUS
1
<PAGE>
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INVESTMENT MANAGEMENT STRENGTH--
BOSTON 1784 FUNDS ARE MANAGED BY THE SAME INVESTMENT PROFESSIONALS WHO OVERSEE
MORE THAN $24 BILLION FOR CLIENTS OF BANKBOSTON. WITH A 100-YEAR TRACK RECORD,
THE BANK'S INVESTMENT MANAGERS HAVE EARNED NATIONAL RECOGNITION AND RESPECT, AS
WELL AS THE CONFIDENCE OF PRIVATE BANKING AND TRUST CLIENTS ACROSS THE COUNTRY.
A FAMILY OF MUTUAL FUNDS--
BOSTON 1784 FUNDS FAMILY INCLUDES STOCK, BOND, TAX-EXEMPT AND MONEY MARKET FUNDS
TO MEET A WIDE RANGE OF INVESTMENT GOALS. YOU MAY SELECT INDIVIDUAL FUNDS TO
TARGET VERY SPECIFIC INVESTMENT OBJECTIVES OR COMBINE BOSTON 1784 FUNDS TO
CREATE AN ENTIRE PORTFOLIO STRUCTURED IN THE MOST EFFECTIVE WAY TO MEET YOUR
LONG-TERM GOALS.
EXPERT PLANNING AND GUIDANCE--
WHEN YOU HAVE QUESTIONS OR WANT ADVICE, YOU CAN TALK TO A FINANCIAL SERVICES
COUNSELOR (FSC) WHO WILL PROVIDE EXPERT, STRAIGHTFORWARD HELP BASED ON YOUR
GOALS.
[PHOTO OF BUILDINGS OMITTED]
NOT PART OF THE PROSPECTUS
2
<PAGE>
INVESTMENT MANAGEMENT STRENGTH
- --------------------------------------------------------------------------------
BankBoston professionals have extensive experience helping individual clients
achieve their financial goals through disciplined, personalized investment
strategies. These same professionals also manage Boston 1784 Funds.
The experience of this team is a major factor behind investment results that
have earned national recognition. The performance of Boston 1784 Funds has been
cited in The Wall Street Journal, Fortune and Money magazine. Several of the
Funds have appeared repeatedly on The Wall Street Journal's monthly Mutual Fund
Scorecard.
You may have seen portfolio managers from Boston 1784 Funds on television, where
they have appeared on CNBC and Wall Street Week. Edward G. ("Ned") Riley, Jr.,
Chief Investment Officer of Boston 1784 Funds, also writes a monthly column on
equity investing and is frequently quoted in the financial press as a recognized
expert.
NOT PART OF THE PROSPECTUS
[PHOTO OF MANAGERS OMITTED]
<PAGE>
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INTRODUCING THE BOSTON 1784 FUNDS TEAM, AND THE FUNDS THEY MANAGE AND CO-MANAGE.
(PICTURED LEFT TO RIGHT)
MICHAEL PELOSI, CFA
BOSTON 1784 ASSET ALLOCATION FUND
LISA W. LEBOEUF
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
EMMETT M. WRIGHT, CFA
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
BOSTON 1784 INCOME FUND
BOSTON 1784 ASSET ALLOCATION FUND
SUSAN A. SANDERSON, CFA
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
THEODORE E. OBER
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
MARY K. WERLER, CFA
BOSTON 1784 SHORT-TERM INCOME FUND
BOSTON 1784 PRIME MONEY MARKET FUND
BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
EUGENE D. TAKACH
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
KENTON J. IDE, CFA
BOSTON 1784 INTERNATIONAL EQUITY FUND
DAVID H. THOMPSON, CFA
BOSTON 1784 TAX-FREE MONEY MARKET 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 RHODE ISLAND TAX-EXEMPT INCOME FUND
CARL W. PAPPO
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
JULIET COHN (NOT PICTURED) of Kleinwort Benson
Investment Management Americas Inc.
co-manages Boston 1784 International
Equity Fund
[Photo of Edward G. ("Ned") Riley, Jr. omitted]
"AFTER FOUR MAJOR DOWN MARKETS, FIVE MAJOR UP MARKETS, FIVE RECESSIONS AND EIGHT
U.S. PRESIDENTS, WE'VE DEVELOPED A DISCIPLINED PHILOSOPHY BASED ON EXPERIENCE.
SIMPLY PUT, WE FOCUS ON LONG-TERM TRENDS THAT WILL PROPEL COMPANIES AND THE
ECONOMY AS THEY GROW. WE DON'T LIKE FADS AND, EVEN IN OUR MORE AGGRESSIVE FUNDS,
WE TAKE A PRUDENT APPROACH TO MONEY MANAGEMENT. WE DEMAND SOUND REASONS FOR
EVERY DECISION WE MAKE."
Edward G. ("Ned") Riley, Jr.
CHIEF INVESTMENT OFFICER
BOSTON 1784 FUNDS
[PHOTO OF MANAGERS OMITTED]
<PAGE>
A FAMILY OF MUTUAL FUNDS
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MANY INVESTORS PREFER TO COMBINE SEVERAL TYPES OF MUTUAL FUNDS BECAUSE EACH CAN
PLAY A DIFFERENT ROLE IN A PORTFOLIO. HERE'S A BRIEF OVERVIEW OF THE
CHARACTERISTICS OF STOCK, BOND AND MONEY MARKET MUTUAL FUNDS.
STOCK FUNDS
If you're seeking long-term growth or want to help protect the value of your
assets from inflation, stock funds can be a good choice. Stock funds are
generally classified by the types of companies in which they invest, such as
small or large companies, high-growth companies or foreign companies. Stock
funds offer the greatest potential for long-term gains but also the highest
short-term risk.
BOND FUNDS
If you're seeking current income or want to add some stability to a stock fund
portfolio, you should consider bond funds. Bond funds are classified by the
types of debt instruments in which they invest, such as government or corporate
bonds. Bond funds rise in value when interest rates fall--and vice versa.
TAX-EXEMPT BOND FUNDS
If you're in a high tax bracket, these funds can provide income that's free from
income taxes.* They invest primarily in investment grade municipal bonds and
similar securities. You may want to choose a fund that is exempt from both state
and federal income taxes.
MONEY MARKET FUNDS
All money market funds seek to maintain a stable $1.00 share price so that they
provide a good place to invest your short-term assets safely.
U.S. TREASURY MONEY MARKET FUNDS
These funds invest in the safest of all investments: U.S. government securities.
Since they have very limited investment risk, they generate a modest level of
income.
GENERAL MONEY MARKET FUNDS
These funds invest in "commercial paper" and other short-term financial
instruments which are obligations of corporations or the U.S. Government.
TAX-EXEMPT MONEY MARKET FUNDS
These funds invest in short-term loans to municipalities, so there are little to
no federal taxes on the income produced.*
* INCOME MAY BE SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND/OR LOCAL TAXES.
THE RISK/REWARD PYRAMID
THE INVESTMENT PYRAMID SUGGESTS A WAY TO THINK ABOUT INVESTING. AT ITS BASE ARE
MONEY MARKET FUNDS--A SOLID FOUNDATION FOR A PORTFOLIO BECAUSE THEY ARE LOW RISK
AND OFFER HIGH LIQUIDITY. INCOME-GENERATING BOND FUNDS HAVE HIGHER RETURN
POTENTIAL BUT ALSO RISE AND FALL IN VALUE AS INTEREST RATES CHANGE. AT THE TOP
OF THE PYRAMID ARE STOCK FUNDS. THEY OFFER THE HIGHEST POTENTIAL LONG-TERM
RETURNS, BUT ALSO THE HIGHEST LEVELS OF SHORT-TERM RISK.
NOT PART OF THE PROSPECTUS
5
<PAGE>
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BOSTON 1784 SHORT-TERM INCOME
BOSTON 1784 INCOME
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME
- ----------------------------------------------
BOSTON 1784 ASSET ALLOCATION
BOSTON 1784 GROWTH AND INCOME
BOSTON 1784 GROWTH
BOSTON 1784 INTERNATIONAL EQUITY
- --------------------------------
[GRAPHIC OF RISK/REWARD PYRAMID OMITTED]
RISK/REWARD
[Graphic of angled upward pointing arrow omitted]
STOCK
FUNDS
- --------------------------------------------------
BOND TAX EXEMPT
FUNDS FUNDS
- --------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------
- ---------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET
BOSTON 1784 U.S. TREASURY MONEY MARKET
BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET
BOSTON 1784 PRIME MONEY MARKET
BOSTON 1784 INSTITUTIONAL PRIME
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
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME
A SMART WAY TO INVEST TAX DEFERRED
ANY TAXABLE STOCK, BOND OR MONEY MARKET FUND CAN BECOME A TAX-DEFERRED
INVESTMENT IN AN IRA. AS A RESULT, YOUR MONEY MAY GROW FASTER BECAUSE ALL YOUR
INTEREST, DIVIDENDS AND GAINS KEEP WORKING FOR YOU. YOUR FINANCIAL SERVICES
COUNSELOR CAN EXPLAIN ALL THE ADVANTAGES OF USING BOSTON 1784 FUNDS IN YOUR IRA.
NOT PART OF THE PROSPECTUS
6
<PAGE>
EXPERT PLANNING AND GUIDANCE
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WHEN YOU INVEST IN BOSTON 1784 FUNDS, YOU GAIN ACCESS TO PROFESSIONAL INVESTMENT
GUIDANCE AND PLANNING. YOUR FINANCIAL SERVICES COUNSELOR (FSC) IS ALWAYS READY
TO ANSWER YOUR QUESTIONS ABOUT BOSTON 1784 FUNDS OR YOUR INVESTMENT APPROACH.
YOUR FSC BEGINS BY GETTING TO KNOW YOU AND:
[SQUARE BULLET OMITTED] Your specific investing goals.
[SQUARE BULLET OMITTED] The composition of your current investment portfolio.
[SQUARE BULLET OMITTED] Your time horizon and comfort level with risk.
[SQUARE BULLET OMITTED] The level of income you may require from your
investments.
It's a process that will help organize your approach to investing, so you can
make more confident investment decisions--and one that should be repeated as
your family situation, income or other factors change to keep your investment
approach on track. Over time, as your relationship with your FSC develops,
you'll discover what a valuable resource professional investment advice can be.
[PHOTO OMITTED]
NOT PART OF THE PROSPECTUS
7
<PAGE>
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INVESTING MORE EFFECTIVELY.
Whether you are investing for a more secure retirement, to pay education
expenses, or to increase your current income, your Financial Services Counselor
can provide a personal plan prepared and tailored for your particular situation.
It's based on the concept of "asset allocation"-- diversifying your portfolio
across several different types of investments. Studies have shown that how you
divide your investment among stocks, bonds and money market securities is the
single most important factor affecting your total return over time.
Using color charts and graphs, your plan will clearly depict your current
investing position and, if appropriate, a new asset allocation to help you reach
your goals. Your FSC will use these plans to help you assess your retirement,
education and general asset allocation objectives.
For information on any of these planning tools, or to speak with a Financial
Services Counselor, call 1-800-BKB-1784.
[Area Graph omitted--Plot points as follows:]
<TABLE>
<CAPTION>
INITIAL INVESTMENT ANNUAL CONTRIBUTION $5,000 26-YEAR RESULT
$50,000 [ARROW GRAPHIC OMITTED] $1,662,000
- -------------------------------------------------------------------------------------------
STOCKS BONDS CASH EQUIVALENTS PORTFOLIO
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1/72 $ 25,000.00 $ 15,000.00 $ 10,000.00
1/78 51,447.36 30,868.42 20,578.95 $102,894.73
1/85 138,404.20 83,042.52 55,361.68 276,808.39
1/92 393,615.80 236,169.50 157,446.30 787,231.58
1/98 831,007.80 498,604.70 332,403.10 1,662,015.63
- -------------------------------------------------------------------------------------------
</TABLE>
THIS GRAPH SHOWS HISTORICAL GROWTH OF INVESTMENTS AND CONTRIBUTIONS OVER A
26-YEAR TIME HORIZON. IT ASSUMES AN INITIAL INVESTMENT OF $50,000 AND A $5,000
ANNUAL SAVINGS CONTRIBUTION DIVIDED AS FOLLOWS: 50% STOCKS, 30% BONDS AND 20%
CASH EQUIVALENTS. THIS IS NOT AN ESTIMATE OF FUTURE RESULTS AND DOES NOT
REPRESENT SPECIFIC INVESTMENTS. THE GRAPH DOES NOT REFLECT TAXES, INVESTMENT
MANAGEMENT FEES OR OTHER EXPENSES. PAST PERFORMANCE CANNOT GUARANTEE FUTURE
RESULTS.
* STOCKS ARE REPRESENTED BY THE STANDARD & POOR'S 500 COMPOSITE INDEX, AN
UNMANAGED INDEX THAT'S GENERALLY CONSIDERED REPRESENTATIVE OF THE U.S. STOCK
MARKET. BONDS ARE REPRESENTED BY LONG-TERM GOVERNMENT BOND TOTAL RETURNS.
MONEY MARKET SECURITIES ARE REPRESENTED BY 3-MONTH TREASURY BILL RETURNS.
SOURCE: IBBOTSON ASSOCIATES 1998 YEARBOOK.
ASSET ALLOCATION EXAMPLE
[PIE GRAPH OMITTED--PLOT POINTS AS FOLLOWS:]
CASH 20%
BONDS 30%
STOCKS 50%
THIS ASSET ALLOCATION EXAMPLE REFLECTS WHAT PERCENTAGE OF A PORTFOLIO IS
INVESTED IN STOCKS, BONDS AND CASH EQUIVALENTS (CDS, MONEY MARKET FUNDS AND
SAVINGS ACCOUNTS).* APPLYING THIS ALLOCATION TO THE HISTORICAL PERFORMANCE OF
THESE ASSET CLASSES (SEE ABOVE) CAN HELP YOU PLAN FOR YOUR RETIREMENT SAVINGS.
NOT PART OF THE PROSPECTUS
8
<PAGE>
BOSTON 1784 FUNDS
WHEN YOU'RE LOOKING FOR...
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[SQUARE BULLET] A TRADITION OF INVESTMENT EXPERTISE.
BankBoston has been helping clients invest for a century and
helped create Boston's money management industry.
[SQUARE BULLET] EXPERIENCED, RESPECTED INVESTMENT MANAGEMENT.
Boston 1784 Funds are managed by professionals who oversee more
than $24 billion--and who have earned national recognition.
[SQUARE BULLET] CHOICES FOR INVESTMENT DIVERSIFICATION.
Choose individual Boston 1784 Funds that match your goals and
risk tolerance, or combine them to achieve the right asset
allocation for you.
[SQUARE BULLET] PLANNING TO HELP YOU REACH YOUR OBJECTIVES.
Special planning tools are available to help you map out an
investment strategy to reach your retirement, education or
other goals.
[SQUARE BULLET] PROFESSIONAL INVESTMENT COUNSELING.
Work with a Financial Services Counselor who gets to know you
and your investment goals and preferences.
IF YOU HAVE QUESTIONS ABOUT INVESTING IN ANY BOSTON 1784 FUNDS, OR FOR
INFORMATION ABOUT USING BOSTON 1784 FUNDS IN YOUR IRA, CONTACT YOUR FINANCIAL
SERVICES COUNSELOR OR CALL 1-800-BKB-1784.
[PHOTO OMITTED]
NOT PART OF THE PROSPECTUS
9
<PAGE>
BOSTON 1784 FUNDS[SERVICE MARK]
MONEY MARKET FUNDS
[SQUARE BOX] BOSTON 1784 TAX-FREE MONEY MARKET FUND
[SQUARE BOX] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
[SQUARE BOX] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
[SQUARE BOX] BOSTON 1784 PRIME MONEY MARKET FUND
[SQUARE BOX] BOSTON 1784 INSTITUTIONAL PRIME MONEY
MARKET FUND
BOND FUNDS
[SQUARE BOX] BOSTON 1784 SHORT-TERM INCOME FUND
[SQUARE BOX] BOSTON 1784 INCOME FUND
[SQUARE BOX] BOSTON 1784 U.S. GOVERNMENT MEDIUM-
TERM INCOME FUND
TAX-EXEMPT INCOME FUNDS
[SQUARE BOX] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM
INCOME FUND
[SQUARE BOX] BOSTON 1784 CONNECTICUT TAX-EXEMPT
INCOME FUND
[SQUARE BOX] BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
[SQUARE BOX] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT
INCOME FUND
[SQUARE BOX] BOSTON 1784 RHODE ISLAND TAX-EXEMPT
INCOME FUND
STOCK FUNDS
[SQUARE BOX] BOSTON 1784 ASSET ALLOCATION FUND
[SQUARE BOX] BOSTON 1784 GROWTH AND INCOME FUND
[SQUARE BOX] BOSTON 1784 GROWTH FUND
[SQUARE BOX] BOSTON 1784 INTERNATIONAL EQUITY FUND
Prospectus
[Boston 1784 Funds Logo Omitted]
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
September 15, 1998
<PAGE>
TABLE OF CONTENTS
================================================================================
BOSTON 1784 MONEY MARKET FUNDS.................................................1
BOSTON 1784 BOND FUNDS.........................................................7
BOSTON 1784 TAX-EXEMPT INCOME FUNDS...........................................13
BOSTON 1784 STOCK FUNDS.......................................................20
SHAREHOLDER SERVICES..........................................................27
HOW TO REACH THE FUNDS..........................................27
TYPES OF ACCOUNTS...............................................27
HOW TO OPEN AN ACCOUNT..........................................27
HOW TO PURCHASE SHARES..........................................27
HOW TO SELL SHARES..............................................28
SHAREHOLDER SERVICES AND POLICIES...............................30
PRICING OF FUND SHARES........................................................31
DISTRIBUTIONS.................................................................31
FEDERAL TAX CONSIDERATIONS....................................................32
MORE ABOUT BOSTON 1784 FUNDS..................................................33
MONEY MARKET FUNDS..............................................33
BOND FUNDS......................................................34
TAX-EXEMPT FUNDS................................................36
STOCK FUNDS.....................................................38
MANAGEMENT....................................................................41
DISTRIBUTION ARRANGEMENTS.....................................................42
FINANCIAL HIGHLIGHTS..........................................................43
PROSPECTUS
<PAGE>
BOSTON 1784 MONEY MARKET FUNDS
================================================================================
TAX-FREE MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
PRIME MONEY MARKET FUND
INSTITUTIONAL PRIME MONEY MARKET FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 MONEY MARKET FUND
AND THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION ON
THESE FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
TAX-FREE MONEY MARKET FUND
The Tax-Free Money Market Fund's goals are to preserve the principal value of a
shareholder's investment and maintain a high degree of liquidity while providing
current income that is exempt from federal income tax.
U.S. TREASURY MONEY MARKET FUND
The U.S. Treasury Money Market Fund's goals are to preserve the principal value
of a shareholder's investment and maintain a high degree of liquidity while
providing current income.
INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
The Institutional U.S. Treasury Money Market Fund's goals are to preserve the
principal value of a shareholder's investment and maintain a high degree of
liquidity while providing current income.
PRIME MONEY MARKET FUND
The Prime Money Market Fund's goals are to preserve the principal value of a
shareholder's investment and maintain a high degree of liquidity while providing
current income.
INSTITUTIONAL PRIME
MONEY MARKET FUND
The Institutional Prime Money Market Fund's goals are to preserve the principal
value of a shareholder's investment and to maintain a high degree of liquidity
while providing current income.
-----------------------------------------------------------------------------
WHAT IS A MONEY MARKET FUND?
A MONEY MARKET FUND is a type of mutual fund that tries to maintain a share
price of $1.00 while paying income to its shareholders. A stable share price
protects your investment from loss ("PRESERVATION OF PRINCIPAL"). If you need
to sell your shares at any time, you should receive your initial investment
plus any income that you have earned (thereby providing "LIQUIDITY").
However, a money market fund does not guarantee that you will receive your
money back.
A money market fund must follow strict rules as to the investment quality,
maturity, diversification and other features of the securities it purchases
and the average remaining maturity of the securities cannot be greater than
90 days. The remaining maturity of a security is the period of time until the
principal amount must be repaid.
-----------------------------------------------------------------------------
[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
TAX-FREE MONEY MARKET FUND
The Tax-Free Money Market Fund invests primarily in short-term municipal
securities, which are debt securities issued by states, cities and towns and
other political or public entities or agencies. The interest paid on these debt
securities is free from federal income tax.
The Fund may also enter into repurchase agreements and invest in limited amounts
in securities paying interest that is not free from federal taxes.
PROSPECTUS
1
<PAGE>
BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
================================================================================
U.S. TREASURY MONEY MARKET FUND
The U.S. Treasury Money Market Fund invests primarily in short-term U.S.
government obligations, including Treasury securities, U.S. government agency
securities and repurchase agreements secured by U.S. government securities.
-----------------------------------------------------------------------------
WHAT ARE U.S. GOVERNMENT OBLIGATIONS?
U.S. GOVERNMENT OBLIGATIONS or securities are bonds or other debt obligations
issued by, or whose principal and interest are guaranteed by, the U.S.
government or one of its agencies or instrumentalities. U.S. Treasury
securities and some obligations of U.S. government agencies and
instrumentalities are supported by the "full faith and credit" of the United
States. Some U.S. government obligations are backed by the right of the
issuer to borrow from the U.S. Treasury, and others only by the credit of the
issuing agency or instrumentality. U.S. government obligations generally have
less credit risk than other debt obligations.
-----------------------------------------------------------------------------
INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
The Institutional U.S. Treasury Money Market Fund invests primarily in short-
term U.S. government obligations, including Treasury securities, U.S. government
agency securities and repurchase agreements secured by U.S. government
securities.
PRIME MONEY MARKET FUND
The Prime Money Market Fund invests primarily in high quality short-term debt
obligations, including commercial paper, asset-backed commercial paper,
corporate bonds, U.S. government agency obligations, taxable municipal
securities and repurchase agreements.
INSTITUTIONAL PRIME
MONEY MARKET FUND
The Institutional Prime Money Market Fund invests primarily in high quality
short-term debt obligations, including commercial paper, asset-backed commercial
paper, corporate bonds, U.S. government agency obligations, taxable municipal
securities and repurchase agreements.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS OF
INVESTING IN BOSTON 1784
MONEY MARKET FUNDS?
The principal risks of investing in the Money Market Funds and the circumstances
reasonably likely, in the opinion of the Adviser, to adversely affect your
investment are described below. Please note that there are many other factors
which could adversely affect your investment, and that could prevent a Fund from
achieving its objectives, which are not described here. The principal risks are:
[bullet] The rate of income will vary from day to day depending on short-term
interest rates.
[bullet] It is possible that a major change in interest rates or a default on
a security or a repurchase agreement held by a Fund could cause the
value of your investment to decline.
[bullet] Each Money Market Fund may invest up to 5% of its total assets in
zero coupon securities called STRIPS, which are the separately
traded interest and principal component parts of U.S. Treasury
securities. The interest-only component is extremely sensitive to
the rate of principal payments on the underlying obligation. The
market value of the principal-only component generally is unusually
volatile in response to changes in interest rates.
[bullet] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency.
[bullet] Although the Funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in
the Funds.
PROSPECTUS
2
<PAGE>
================================================================================
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
TAX-FREE MONEY MARKET FUND
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR INVESTORS WHO:
[bullet] are investing for a short period of time or as part of a savings plan;
[bullet] are uncomfortable with an investment that will go up and down in value;
[bullet] want to earn income exempt from federal taxes.
It is not an appropriate investment for tax-sheltered accounts such as IRAs.
U.S. TREASURY MONEY MARKET FUND
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR INVESTORS WHO:
[bullet] are investing for a short period of time or as part of a savings plan;
[bullet] are uncomfortable with an investment that will go up and down in value;
[bullet] want the added safety of U.S. government securities.
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR INSTITUTIONAL INVESTORS WHO:
[bullet] are investing for a short period of time;
[bullet] want the added safety of U.S. government securities.
PRIME MONEY MARKET FUND
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR INVESTORS WHO:
[bullet] are investing for a short period of time or as part of a savings plan;
[bullet] are uncomfortable with an investment that will go up and down in value;
[bullet] are looking for higher returns than are usually available from Treasury
money market funds.
INSTITUTIONAL PRIME MONEY MARKET FUND
THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR INSTITUTIONAL INVESTORS WHO:
[bullet] are investing for a short period of time;
[bullet] are looking for higher returns than are usually available from Treasury
money market funds.
None of the Money Market Funds alone provides a balanced investment plan.
PROSPECTUS
3
<PAGE>
BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks
and performance. The charts show changes in the Funds' performance
from year to year. The tables show how the Funds' average annual
returns for the periods indicated compare to those of a broad
measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S
PERFORMANCE IN PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW A
FUND WILL DO IN THE FUTURE.
================================================================================
TAX-FREE MONEY MARKET FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - 2.71%
1995 - 3.75%
1996 - 3.25%
1997 - 3.33%
The total return for the six months ended June 30, 1998 was 1.59%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 0.96% June 30, 1995
Lowest 0.58% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Tax-Free Money Market Fund 3.33% 3.16%
IBC/Financial Data Stockbroker 3.08% 3.09%%
and General Purpose
Tax-Free Average
- --------------------------------------------------------------------------------
*(SINCE 5/31/93)
================================================================================
U.S. TREASURY MONEY MARKET FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - 3.72%
1995 - 5.43%
1996 - 4.82%
1997 - 4.96%
The total return for the six months ended June 30, 1998 was 2.46%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 1.38% June 30, 1995
Lowest 0.64% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/7/93)
U.S. Treasury Money Market Fund 4.96% 4.46%
IBC/Financial Data U.S. 4.94% 4.76%*
Government & Agencies Average
- --------------------------------------------------------------------------------
*(SINCE 5/31/93)
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
4
<PAGE>
================================================================================
================================================================================
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - 4.04%
1995 - 5.69%
1996 - 5.14%
1997 - 5.30%
The total return for the six months ended June 30, 1998 was 2.62%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 1.43% June 30, 1995
Lowest 0.76 March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Institutional U.S. Treasury 5.30% 4.79%
Money Market Fund
IBC/Financial Data Government- 5.21% 5.08%*
Only Institutional-Only Average
- --------------------------------------------------------------------------------
*(SINCE 5/30/93)
================================================================================
PRIME MONEY MARKET FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1992 - 3.48%
1993 - 2.72%
1994 - 3.75%
1995 - 5.49%
1996 - 5.02%
1997 - 5.14%
The total return for the six months ended June 30, 1998 was 2.52%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1992-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 1.39% June 30, 1995
Lowest 0.66% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/6/91)
Prime Money 5.14% 4.36% 4.36%
Market Fund
IBC/Financial Data 5.01% 4.32% 4.89%*
First Tier Money
Market Average
- --------------------------------------------------------------------------------
*(SINCE 5/31/91)
================================================================================
INSTITUTIONAL PRIME MONEY MARKET FUND
================================================================================
The Fund began operations during 1997 and does not have a full calendar year of
investment returns at the date of this prospectus. The Fund's total return for
the fiscal year ended May 31, 1998 is provided in the "Financial Highlights"
section of this Prospectus.
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
5
<PAGE>
BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 MONEY MARKET FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------------------------------------
TAX-FREE U.S. TREASURY INSTITUTIONAL U.S. PRIME INSTITUTIONAL
MONEY MONEY TREASURY MONEY MONEY PRIME MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND MARKET FUND
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None None None
Maximum Sales Charge (Load) None None None None None
Imposed on Reinvested Dividends
Redemption Fee None None None None None
Exchange Fee None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fees .40% .40% .20% .40% .20%
Distribution (12b-1) Fees None None None None None
Other Expenses .13% .30% .13% .30% .22
Total Annual Fund Operating Expenses .53% .70%* .33% .70%* .42*
- ----------------------------------------------------------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because of a fee waiver
by the Funds' Adviser. The Adviser waives a portion of its management fees in
order to keep each Fund's total operating expenses at a specified level. The
Adviser may eliminate all or a part of the fee waiver at any time. With the fee
waiver, the Funds' actual total annual fund operating expenses were as follows:
U.S. TREASURY MONEY MARKET FUND .65%
PRIME MONEY MARKET FUND .65%
INSTITUTIONAL PRIME MONEY MARKET FUND .27%
- --------------------------------------------------------------------------------
EXAMPLE
- --------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 MONEY MARKET FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE
EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED
AND THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- ----------------------------------------------------------------------------------------------------------------------------------
TAX-FREE U.S. TREASURY INSTITUTIONAL U.S. TREASURY PRIME MONEY INSTITUTIONAL PRIME
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND MARKET FUND MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------------
1 year $ 54 $ 72 $ 34 $ 72 $ 43
3 years 170 224 106 224 135
5 years 296 390 185 390 235
10 years 665 871 418 871 530
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
6
<PAGE>
BOSTON 1784 BOND FUNDS
================================================================================
SHORT-TERM INCOME FUND
INCOME FUND
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 BOND FUND AND THE
PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION ON THESE
FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
SHORT-TERM INCOME FUND
The Short-Term Income Fund's goal is to provide investors with maximum current
income, and, as a secondary goal, to preserve investors' capital.
INCOME FUND
The Income Fund's goal is to provide investors with maximum current income, and,
as a secondary goal, to preserve investors' capital.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. Government Medium-Term Income Fund's goal is to provide investors with
current income consistent with preservation of capital.
-----------------------------------------------------------------------------
WHAT IS A BOND?
A BOND, which is also called a DEBT SECURITY or DEBT OBLIGATION, is like a
loan. The issuer of the bond, which could be the U.S. government, a
corporation, or a city or state, borrows money from investors and agrees to
pay back the loan amount (the PRINCIPAL) on a certain date (the MATURITY
DATE). Usually, the issuer also agrees to pay interest on certain dates
during the period of the loan. Some bonds, such as ZERO COUPON BONDS, do not
pay interest, but instead pay back more at maturity than the original loan.
Most bonds pay a fixed rate of interest (or income), but some bonds' interest
rates may change based on market or other factors.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
WHAT DOES IT MEAN TO "PRESERVE CAPITAL"?
CAPITAL, also called PRINCIPAL, refers to the amount of money
that you invest in a fund. If you choose to have your dividends and other
distributions reinvested in additional shares of a fund, the amount of the
distributions will be added to your initial investment to increase the amount
of your capital. If the price of the fund's shares or net asset value (NAV)
increases because of increases in the value of the securities in the fund,
your capital will also increase. If, however, the value of the fund's
investments go down and the price of the fund's shares decreases, you will
lose some of your capital. A fund that seeks to preserve capital or principal
tries to maintain a stable share price so that you do not lose money.
-----------------------------------------------------------------------------
[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
SHORT-TERM INCOME FUND
The Short-Term Income Fund invests primarily in investment grade debt
securities, such as corporate bonds, notes, mortgage-backed and asset-backed
securities, taxable municipal securities and U.S. Treasury and government agency
obligations.
The Fund may invest in Yankee bonds, which are dollar-denominated bonds issued
in the U.S. by foreign borrowers. Yankee bonds may offer higher income than
bonds issued by U.S. borrowers. The Fund may also invest in bonds issued by
foreign issuers and payable in foreign currencies.
Under normal conditions, at least 65% of the securities will be rated A or
better by a rating agency, or be of comparable quality as determined by the
Adviser.
PROSPECTUS
7
<PAGE>
BOSTON 1784 BOND FUNDS (CONTINUED)
================================================================================
In order to limit fluctuations in share price, the Fund tries to maintain an
average weighted maturity of less than three years under normal circumstances.
INCOME FUND
The Income Fund invests primarily in investment grade debt securities,
including U.S. government obligations, corporate bonds and mortgage-backed
and asset-backed securities.
The Fund may invest in Yankee bonds, which are dollar-denominated bonds issued
in the U.S. by foreign borrowers. Yankee bonds may offer higher income than
bonds issued by U.S. borrowers. The Fund may also invest in bonds issued by
foreign issuers and payable in foreign currencies.
Under normal conditions, at least 65% of the securities will be rated A or
better by a rating agency, or be of comparable quality as determined by the
Adviser.
The Fund's average weighted maturity is normally expected to be between 7 and 30
years.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. Government Medium-Term Income Fund invests primarily in short- to
intermediate-term U.S. Treasury and government agency securities and both
government agency and non-government agency mortgage-backed securities.
U.S. government obligations generally have less credit risk than other debt
obligations.
The Fund's average weighted maturity is normally expected to be from 3 to 10
years.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 BOND FUNDS?
The principal risks of investing in the Bond Funds and the circumstances
reasonably likely, in the opinion of the Adviser, to adversely affect your
investment are described below. As with any non-money market mutual fund, the
share price of each Fund and each Fund's yield will change daily because of
changes in interest rates and other market conditions and factors. You may lose
money if you invest in these Funds. Please note that there are many other
circumstances which could adversely affect your investment, and that could
prevent a Fund from achieving its objectives, which are not described here. The
principal risks of investing in the Bond Funds are:
[bullet] INTEREST RATE RISK: In general, bond prices rise when interest rates
fall and fall when interest rates rise. Longer term bonds and zero
coupon bonds are generally more sensitive to interest rate changes than
shorter term bonds. Generally, the longer the average maturity of the
bonds in a Fund, the more the Fund's share price will fluctuate in
response to interest rate changes.
[bullet] CREDIT RISK: It is possible that some of the issuers will not make
payments on debt securities held by a Fund, or there could be defaults
on repurchase agreements held by a Fund. Or, an issuer may suffer
adverse changes in financial condition that could lower the credit
quality of a security, leading to greater volatility in the price of
the security and in shares of a Fund. A change in the quality rating of
a bond can affect the bond's liquidity and make it more difficult for
the Fund to sell.
[bullet] PREPAYMENT RISK: The issuers of securities held by a Fund may be able
to prepay principal due on the securities, particularly during periods
of declining interest rates. Securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise. In
addition, rising interest rates may cause prepayments to occur at a
slower than expected rate, thereby effectively lengthening the maturity
of the security and making the security more sensitive to interest rate
changes. Prepayment risk is a major risk of mortgage-backed securities.
[bullet] SPECIAL RISKS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES: The Fund will
receive payments on its mortgage-backed securities that are part
interest and part return of principal. These payments may vary based on
the rate at which homeowners pay off their loans. When a homeowner
makes a prepayment, the Fund receives a larger portion of its principal
investment back, which means that there will be a decrease in monthly
interest payments. Some mortgage-backed securities may have structures
that make their reaction to interest rates and other factors difficult
to predict, making their prices very volatile.
[bullet] FOREIGN SECURITIES: Investments in foreign securities may involve risks
in addition to those of U.S. investments, including increased political
and economic risk and exposure to currency fluctuations.
[bullet] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
PROSPECTUS
8
<PAGE>
================================================================================
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
SHORT-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[bullet] seeking current income;
[bullet] seeking a higher yield than a money market fund or a bank savings
account;
[bullet] seeking more price stability than a longer-term bond fund but are able
to tolerate some fluctuations in the value of their investment.
INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[bullet] seeking a higher level of current income than is available from
shorter-term securities;
[bullet] able to tolerate the greater price fluctuations associated with longer-
term securities and higher levels of income.
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[bullet] seeking higher levels of current income than is available from
shorter-term securities or money market funds;
[bullet] seeking the added measure of protection against credit risk provided by
U.S. government securities;
[bullet] able to tolerate the fluctuations in price associated with medium-term
securities.
None of the Bond Funds alone provides a balanced investment plan.
PROSPECTUS
9
<PAGE>
BOSTON 1784 BOND FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks
and performance. The charts show changes in the Funds' performance
from year to year. The tables show how the Funds' average annual
returns for the periods indicated compare to those of a broad
measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S
PERFORMANCE IN PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW A
FUND WILL DO IN THE FUTURE.
================================================================================
SHORT-TERM INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1995 - 11.36%
1996 - 4.25%
1997 - 6.30%
The total return for the six months ended June 30, 1998 was 3.01%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 3.31% June 30, 1995
Lowest -0.27% March 31, 1996
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Short-Term Income Fund 6.30% 6.42%
Lehman Brothers Mutual Fund 7.12% 7.18%
1-5 Year Government/Corporate
Bond Index
- --------------------------------------------------------------------------------
================================================================================
INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1995 - 17.98%
1996 - 2.60%
1997 - 7.85%
The total return for the six months ended June 30, 1998 was 3.14%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 6.34% June 30, 1995
Lowest -2.42% March 31, 1996
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Income Fund 7.85% 7.94%
Lehman Brothers Aggregate 9.68% 9.16%
Bond Index
- --------------------------------------------------------------------------------
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
10
<PAGE>
================================================================================
================================================================================
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - -3.78%
1995 - 15.89%
1996 - 1.98%
1997 - 8.08%
The total return for the six months ended June 30, 1998 was 3.03%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.51% June 30, 1995
Lowest -2.93% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/7/93)
U.S. Government Medium-Term 8.08% 5.43%
Income Fund
Lehman Brothers Intermediate 7.72% 5.99%
U.S. Government Bond Index
- --------------------------------------------------------------------------------
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
11
<PAGE>
BOSTON 1784 BOND FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 BOND FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- -------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT
SHORT-TERM INCOME MEDIUM-TERM
INCOME FUND FUND INCOME FUND
<S> <C> <C> <C>
Maximum Sales Charge (Load) None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None
Maximum Sales Charge (Load) None None None
Imposed on Reinvested Dividends
Redemption Fee None None None
Exchange Fee None None None
- -------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- -------------------------------------------------------------------------------------------------------------------------------
Management Fees .50% .74% .74%
Distribution (12b-1) Fees .25% .25% .25%
Other Expenses .14% .12% .13%
Total Annual Fund Operating Expenses .89%* 1.11%* 1.12%*
- -------------------------------------------------------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because of fee waivers
by the Funds' Adviser and Distributor. The Adviser waives a portion of its
management fees in order to keep each Fund's total operating expenses at a
specified level and the Distributor waives its entire Distribution Fee. The
Adviser and the Distributor may eliminate all or a part of the fee waivers at
any time. With these fee waivers, the Funds' actual total annual operating
expenses were as follows:
SHORT-TERM INCOME FUND .64%
INCOME FUND .80%
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND .80%
- ---------------------------------------------------------------------------------------------------------------------------
EXAMPLE
- ---------------------------------------------------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 BOND FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE
ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED AND
THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INCOME FUND U.S. GOVERNMENT
INCOME FUND MEDIUM-TERM INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
1 year $ 91 $ 113 $ 114
3 years 284 353 356
5 years 493 612 617
10 years 1,096 1,352 1,363
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
12
<PAGE>
BOSTON 1784 TAX-EXEMPT INCOME FUNDS
================================================================================
TAX-EXEMPT MEDIUM-TERM INCOME FUND
CONNECTICUT TAX-EXEMPT INCOME FUND
FLORIDA TAX-EXEMPT INCOME FUND
MASSACHUSETTS TAX-EXEMPT INCOME FUND
RHODE ISLAND TAX-EXEMPT INCOME FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 TAX-EXEMPT INCOME
FUND AND THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION
ON THESE FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
TAX-EXEMPT MEDIUM-TERM INCOME FUND
The Tax-Exempt Medium-Term Income Fund's goal is to provide investors with
current income, exempt from federal income tax, consistent with preservation of
capital.
CONNECTICUT TAX-EXEMPT INCOME FUND
The Connecticut Tax-Exempt Income Fund's goal is to provide investors with
current income exempt from both federal and Connecticut personal income tax.
Preservation of capital is a secondary goal.
FLORIDA TAX-EXEMPT INCOME FUND
The Florida Tax-Exempt Income Fund's goal 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.
MASSACHUSETTS TAX-EXEMPT
INCOME FUND
The Massachusetts Tax-Exempt Income Fund's goal is to provide investors with
current income, exempt from both federal and Massachusetts personal income tax,
consistent with preservation of capital.
RHODE ISLAND TAX-EXEMPT INCOME FUND
The Rhode Island Tax-Exempt Income Fund's goal 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.
-----------------------------------------------------------------------------
WHAT ARE MUNICIPAL SECURITIES?
MUNICIPAL SECURITIES are debt obligations of states, cities, towns, and other
political subdivisions, agencies or public authorities that pay interest that
is exempt from federal income tax. Municipal securities also include debt
obligations of other qualifying issuers such as Puerto Rico, Guam, the Virgin
Islands and Native American Tribes. Municipal securities are often issued to
raise money for public services and projects such as schools, hospitals and
public transportation systems. Some municipal securities (for example,
INDUSTRIAL DEVELOPMENT BONDS) may be backed by private companies and used to
provide financing for corporate facilities or other private projects. In most
states, municipal securities issued by entities within the state are also
exempt from that state's taxes. Municipal securities may be in the form of
BONDS, NOTES and COMMERCIAL PAPER, may have a fixed or floating rate of
interest, or be issued as ZERO COUPON BONDS.
-----------------------------------------------------------------------------
[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
TAX-EXEMPT MEDIUM-TERM INCOME FUND
The Tax-Exempt Medium-Term Income Fund invests primarily in a diversified
portfolio of municipal securities.
The Fund may also invest in limited amounts in debt securities that pay interest
that is not exempt from federal tax, such as U.S. government obligations,
corporate bonds, money market instruments and repurchase agreements.
PROSPECTUS
13
<PAGE>
BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)
================================================================================
The Fund may, from time to time, invest as a hedging strategy in a limited
amount of futures contracts or options on futures contracts. The Fund may only
use futures contracts and options on futures contracts in an effort to offset
unfavorable changes in the value of securities held by the Fund for investment
purposes.
In an effort to preserve capital and lessen credit risk, the Fund invests
primarily in investment grade securities, and generally invests in securities
rated A or better. Certain securities held by the Fund may be covered by
municipal bond insurance. The average weighted maturity of the debt securities
in the Fund is normally expected to be from 5 to 10 years.
-----------------------------------------------------------------------------
WHAT ARE INVESTMENT GRADE SECURITIES?
INVESTMENT GRADE SECURITIES are securities that have been determined by a
rating agency to have a medium to high probability of being paid, although
there is always a risk of default. Investment grade securities are rated BBB,
A, AA OR AAA by Standard & Poor's Corporation or Baa, A, Aa or Aaa by Moody's
Investors Service.
-----------------------------------------------------------------------------
CONNECTICUT TAX-EXEMPT INCOME FUND
The Connecticut Tax-Exempt Income Fund invests primarily in municipal securities
that pay interest that is exempt from federal income tax and Connecticut
personal income tax. Issuers of these securities are generally located in
Connecticut.
The Fund may also invest in limited amounts in municipal securities that are
exempt from federal income tax, but not exempt from Connecticut taxes, as well
as taxable debt securities such as U.S. government obligations, corporate bonds,
money market instruments and repurchase agreements.
The Fund may, from time to time, invest as a hedging strategy in a limited
amount of futures contracts or options on futures contracts. The Fund may only
use futures contracts and options on futures contracts in an effort to offset
unfavorable changes in the value of securities held by the Fund for investment
purposes.
The Fund invests primarily in investment grade securities, and generally invests
in securities rated A or better. Certain securities held by the Fund may be
covered by municipal bond insurance. The average weighted maturity of the debt
securities held by the Fund is normally expected to be from 5 to 10 years.
FLORIDA TAX-EXEMPT INCOME FUND
The Florida Tax-Exempt Income Fund invests primarily in municipal securities
that pay interest that is exempt from federal income tax and that are exempt
from Florida intangible personal property tax. Issuers of these securities are
generally located in Florida.
The Fund may also invest in limited amounts in municipal securities that are
exempt from federal income tax, but not exempt from Florida taxes, as well as
taxable debt securities such as U.S. government obligations, corporate bonds,
money market instruments and repurchase agreements.
The Fund may, from time to time, invest as a hedging strategy
in a limited amount of futures contracts or options on futures contracts. The
Fund may only use futures contracts and options on futures contracts in an
effort to offset unfavorable changes in the value of securities held by the Fund
for investment purposes.
The Fund invests primarily in investment grade securities, and generally invests
in securities rated A or better. Certain securities held by the Fund may be
covered by municipal bond insurance. The average weighted maturity of the debt
securities held by the Fund is normally expected to be from 5 to 10 years.
MASSACHUSETTS TAX-EXEMPT INCOME FUND
The Massachusetts Tax-Exempt Income Fund invests primarily in municipal
securities that pay interest that is exempt from federal income tax and
Massachusetts personal income tax. Issuers of these securities are generally
located in Massachusetts.
The Fund may also invest in limited amounts in municipal securities that are
exempt from federal income tax, but not exempt from Massachusetts taxes, as well
as taxable debt securities such as U.S. government obligations, corporate bonds,
money market instruments and repurchase agreements.
The Fund may, from time to time, invest as a hedging strategy
in a limited amount of futures contracts or options on futures contracts. The
Fund may only use futures contracts and options on futures contracts in an
effort to offset unfavorable changes in the value of securities held by the Fund
for investment purposes.
The Fund invests primarily in investment grade securities, and generally invests
in securities rated A or better. Certain securities held by the Fund may be
covered by municipal bond insurance. The average weighted maturity of the debt
securities held by the Fund is normally expected to be from 5 to 10 years.
RHODE ISLAND TAX-EXEMPT INCOME FUND
The Rhode Island Tax-Exempt Income Fund invests primarily in municipal
securities that pay interest that is exempt from federal income tax, and Rhode
Island personal income and business corporation taxes. Issuers of these
securities are generally located in Rhode Island.
PROSPECTUS
14
<PAGE>
================================================================================
The Fund may also invest in limited amounts in municipal securities that are
exempt from federal income tax, but not exempt from Rhode Island taxes, as well
as taxable debt securities such as U.S. government obligations, corporate bonds,
money market instruments and repurchase agreements.
The Fund may, from time to time, invest as a hedging strategy in a limited
amount of futures contracts or options on futures contracts. The Fund may only
use futures contracts and options on futures contracts in an effort to offset
unfavorable changes in the value of securities held by the Fund for investment
purposes.
The Fund invests primarily in investment grade securities, and generally invests
in securities rated A or better. Certain securities held by the Fund may be
covered by municipal bond insurance. The average weighted maturity of the debt
securities held by the Fund is normally expected to be from 5 to 10 years.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 TAX-EXEMPT INCOME FUNDS?
The principal risks of investing in the Tax-Exempt Income Funds and the
circumstances reasonably likely, in the opinion of the Adviser, to adversely
affect your investment are described below. As with any non-money market mutual
fund, the share price of each Fund and each Fund's yield will change daily based
on changes in interest rates and other market conditions and factors. You may
lose money if you invest in these Funds. Please note that there are many other
circumstances which could adversely affect your investment, and that could
prevent a Fund from achieving its objectives, which are not described here. The
principal risks of investing in the Tax-Exempt Income Funds are:
[BULLET] INTEREST RATE RISK: In general, the prices of municipal securities and
other debt securities rise when interest rates fall and fall when
interest rates rise. Longer term obligations and zero coupon bonds are
usually more sensitive to interest rate changes than shorter term
obligations. Generally, the longer the average maturity of the bonds in
a Fund, the more the Fund's share price will fluctuate in response to
interest rate changes.
[BULLET] CREDIT RISK: Although the Funds invest primarily in investment grade
securities, these securities may have some credit risk. It is possible
that some of the issuers will not make payments on the municipal or
other debt securities held by the Fund or there could be defaults on
repurchase agreements held by a Fund. Or, an issuer may suffer adverse
changes in its financial condition that could lower the credit quality
of a security, leading to greater volatility in the price of the
security and in shares of the Fund. An adverse change in the quality
rating of a bond can affect the bond's liquidity and make it more
difficult for the Fund to sell.
[BULLET] MUNICIPAL MARKET RISK: There are special factors which may affect the
value of municipal securities and, as a result, a Fund's share price.
These factors include political or legislative changes, uncertainties
related to the tax status of the securities or the rights of investors
in the securities.
[BULLET] PREPAYMENT RISK: The issuers of securities held by a Fund
may be able to prepay principal due on the securities, particularly
during periods of declining interest rates. Securities subject to
prepayment risk generally offer less potential for gains when interest
rates decline, and may offer a greater potential for loss when interest
rates rise. In addition, rising interest rates may cause prepayments to
occur at a slower than expected rate, thereby effectively lengthening
the maturity of the security and making the security more sensitive to
interest rate changes.
[BULLET] LACK OF DIVERSIFICATION: The Connecticut, Florida, Massachusetts and
Rhode Island Funds are not diversified, which means that they may
invest a relatively high percentage of their assets in the obligations
of a limited number of issuers. As a result, these Funds may be more
susceptible to any single economic, political or regulatory occurrence.
These Funds are also particularly susceptible to events affecting
issuers in their particular states. You should consider the greater
risk of investing in these single state Funds compared to more
diversified mutual funds.
[BULLET] FUTURES AND OPTIONS ON FUTURES: Although the Tax-Exempt Income Funds
will use futures and options on futures for hedging purposes only, the
hedging strategy may not be successful if the portfolio manager is
unable to accurately predict movements in the prices of individual
securities held by a Fund or if the strategy does not correlate well
with the Fund's investments. The use of futures and options on futures,
which are commonly referred to as derivatives, may produce a loss for
the Fund, even when used only for hedging purposes.
[BULLET] WHEN-ISSUED SECURITIES: Each of the Funds may enter into agreements to
purchase debt securities before the securities have been issued. The
Fund takes a risk that the market value of these securities will
decline before the securities are delivered to the Fund.
[BULLET] An investment in the Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
PROSPECTUS
15
<PAGE>
BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)
================================================================================
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
TAX-EXEMPT MEDIUM-TERM INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[Bullet] seeking current income that is exempt from federal income tax;
[Bullet] seeking a higher tax-equivalent yield than is available from
shorter-term tax-exempt securities or money market funds;
[Bullet] able to tolerate moderate risk and some fluctuation in share price.
CONNECTICUT TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[Bullet] seeking current income that is exempt from federal income tax and
Connecticut personal income tax;
[Bullet] seeking a higher tax-equivalent yield than is available from
shorter-term tax-exempt securities or money market funds;
[Bullet] able to tolerate moderate risk and some fluctuation in share price.
FLORIDA TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[Bullet] seeking current income that is exempt from federal income tax through
an investment that is exempt from Florida intangible personal property
tax;
[Bullet] seeking a higher tax-equivalent yield than is available from shorter-
term tax-exempt securities or money market funds;
[Bullet] able to tolerate moderate risk and some fluctuation in share price.
MASSACHUSETTS TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[Bullet] seeking current income that is exempt from federal income tax and
Massachusetts personal income tax;
[Bullet] seeking a higher tax-equivalent yield than is available from shorter-
term tax-exempt securities or money market funds;
[Bullet] able to tolerate moderate risk and some fluctuation in share price.
RHODE ISLAND TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR INVESTORS WHO ARE:
[Bullet] seeking current income that is exempt from federal income tax and Rhode
Island personal income and business corporation taxes;
[Bullet] seeking higher levels of tax-equivalent yield than is available from
shorter-term tax-exempt securities or money market funds;
[Bullet] able to tolerate moderate risk and some fluctuation in share price.
The Tax-Exempt Funds are not an appropriate investment for tax-sheltered
accounts such as IRAs. None of these Funds alone provides a balanced investment
plan.
PROSPECTUS
16
<PAGE>
================================================================================
[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks
and performance. The charts show changes in the Funds' performance
from year to year. The tables show how the Funds' average annual
returns for the periods indicated compare to those of a broad
measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S
PERFORMANCE IN PAST YEARS IS NOT NECESSARILY AN
INDICATION OF HOW A FUND WILL DO IN THE FUTURE.
================================================================================
TAX-EXEMPT MEDIUM-TERM INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - -3.02%
1995 - 14.31%
1996 - 4.20%
1997 - 9.10%
The total return for the six months ended June 30, 1998 was 2.66%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.39% March 31, 1995
Lowest -4.20% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Tax-Exempt Medium-Term 9.10% 6.68%
Income Fund
Lehman Brothers 7-Year 7.69% 6.29*
Municipal Bond Index
- --------------------------------------------------------------------------------
*(SINCE 5/31/93)
================================================================================
CONNECTICUT TAX-EXEMPT INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1995 - 14.66%
1996 - 3.63%
1997 - 8.53%
The total return for the six months ended June 30, 1998 was 3.05%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.91% March 31, 1995
Lowest -1.25% March 31, 1996
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 8/1/94)
Connecticut Tax-Exempt 8.53% 7.43%
Income Fund
Lehman Brothers 7-Year 7.69% 7.12%*
Municipal Bond Index
- --------------------------------------------------------------------------------
*(SINCE 7/31/94)
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
17
<PAGE>
BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)
================================================================================
================================================================================
FLORIDA TAX-EXEMPT INCOME FUND
================================================================================
The Fund began operations during 1997 and, as a result, does not have a full
calendar year of investment returns at the date of this Prospectus. The Fund's
total return for the fiscal year ended May 31, 1998 is provided in the
"Financial Highlights" section of this Prospectus.
================================================================================
MASSACHUSETTS TAX-EXEMPT INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - -5.45%
1995 - 13.73%
1996 - 3.32%
1997 - 8.89%
The total return for the six months ended June 30, 1998 was 2.44%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.45% March 31, 1995
Lowest -5.15% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Massachusetts Tax-Exempt 8.89% 5.83%
Income Fund
Lehman Brothers 7-Year 7.69% 6.29%*
Municipal Bond Index
- --------------------------------------------------------------------------------
*(SINCE 5/31/93)
================================================================================
RHODE ISLAND TAX-EXEMPT INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1995 - 14.13%
1996 - 4.65%
1997 - 8.28%
The total return for the six months ended June 30, 1998 was 2.48%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.66% March 31, 1995
Lowest -0.98% March 31, 1996
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 8/1/94)
Rhode Island Tax-Exempt 8.28% 7.18%
Income Fund
Lehman Brothers 7-Year 7.69% 7.12%
Municipal Bond Index
- --------------------------------------------------------------------------------
FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.
PROSPECTUS
18
<PAGE>
================================================================================
[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 TAX-EXEMPT INCOME FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT CONNECTICUT FLORIDA MASSACHUSETTS RHODE ISLAND
MEDIUM-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
INCOME FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None None None
Maximum Sales Charge (Load) None None None None None
Imposed on Reinvested Dividends
Redemption Fee None None None None None
Exchange Fee None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fees .74% .74% .74% .74% .74%
Distribution (12b-1) Fees .25% .25% .25% .25% .25%
Other Expenses .13% .15% .20% .15% .17%
Total Annual Fund Operating Expenses 1.12%* 1.14%* 1.19%* 1.14%* 1.16%*
- ----------------------------------------------------------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because of fee waivers
by the Funds' Adviser and Distributor. The Adviser waives a portion of its
management fees in order to keep each Fund's total operating expenses at a
specified level and the Distributor waives its entire Distribution Fee. The
Adviser and the Distributor may eliminate all or a part of the fee waivers at
any time. With the fee waivers, the Funds' actual total annual operating
expenses were as follows:
TAX-EXEMPT MEDIUM-TERM INCOME FUND .80% MASSACHUSETTS TAX-EXEMPT INCOME FUND .80%
CONNECTICUT TAX-EXEMPT INCOME FUND .80% RHODE ISLAND TAX-EXEMPT INCOME FUND .80%
FLORIDA TAX-EXEMPT INCOME FUND .80%
- ----------------------------------------------------------------------------------------------------------------------------------
EXAMPLE
- ----------------------------------------------------------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 TAX-EXEMPT INCOME FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE
EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED
AND THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- ----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MEDIUM- CONNECTICUT TAX- FLORIDA TAX- MASSACHUSETTS TAX- RHODE ISLAND TAX-
TERM INCOME FUND EXEMPT INCOME FUND EXEMPT INCOME FUND EXEMPT INCOME FUND EXEMPT INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
1 year $ 114 $ 116 $ 121 $ 116 $ 118
3 years 356 362 378 362 368
5 years 617 628 654 628 638
10 years 1,363 1,386 1,443 1,386 1,409
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
19
<PAGE>
BOSTON 1784 STOCK FUNDS
================================================================================
ASSET ALLOCATION FUND
GROWTH AND INCOME FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
THIS RISK/RETURN SUMMARY BRIEFLY DESCRIBES EACH BOSTON 1784 STOCK FUND AND THE
PRINCIPAL RISKS OF INVESTING IN THE FUNDS. FOR FURTHER INFORMATION ON THESE
FUNDS, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON 1784 FUNDS.
[GRAPHIC OF COMPASS OMITTED]
WHAT ARE THE FUNDS' GOALS?
ASSET ALLOCATION FUND
The Asset Allocation Fund's goal is to provide investors with a favorable total
rate of return through current income and capital appreciation consistent with
preservation of capital, derived from investing in fixed income and equity
securities.
GROWTH AND INCOME FUND
The Growth and Income Fund's primary goal is to provide investors with long-term
growth of capital with a secondary goal of income.
GROWTH FUND
The Growth Fund's primary goal is to provide investors with capital
appreciation. Dividend income, if any, is incidental to this goal.
INTERNATIONAL EQUITY FUND
The International Equity Fund's goal is to provide investors
with long-term growth of capital. Dividend income, if any, is incidental to
this goal.
-----------------------------------------------------------------------------
WHAT IS CAPITAL APPRECIATION?
A Fund that seeks CAPITAL APPRECIATION or GROWTH OF CAPITAL tries to increase
the value of your investment. CAPITAL, also called PRINCIPAL, refers to the
amount of money that you invest in a fund. If the price of the fund's shares
or net asset value (NAV) goes up due to an increase in the value of the
securities in the fund, your capital will also grow or appreciate. If,
however, the price of the fund's shares decreases due to a decline in the
value of securities in the fund, you will lose some of your capital. If you
choose to have your dividends and other distributions reinvested in
additional shares of a fund, the amount of the distributions will be added to
your initial investment and increase the amount of your capital.
-----------------------------------------------------------------------------
[GRAPHIC OF CHESS PIECE OMITTED]
WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?
ASSET ALLOCATION FUND
The Asset Allocation Fund invests in a carefully balanced mix of equity and debt
securities and money market instruments.
The Fund's equity securities include the stock of large U.S. companies, and from
time to time, mid-sized domestic companies and large, multi-national companies
based outside of the United States.
The Fund's debt securities include investment grade debt obligations such as
U.S. government securities, corporate bonds and mortgage-backed and asset-backed
securities.
The Fund's portfolio managers decide what percentage of the Fund's assets will
be invested in debt, equity and money market securities based on the managers'
judgment of various economic factors. The Fund expects that normally:
[BULLET] 30% to 70% of its assets will be invested in equity securities;
[BULLET] 30% to 60% of its assets will be invested in intermediate- and
long-term debt obligations;
[BULLET] up to 40% of its assets may be invested in short-term debt and money
market instruments.
GROWTH AND INCOME FUND
The Growth and Income Fund invests primarily in the common stock of established
U.S. and foreign companies where the Adviser believes there is opportunity for
growth.
When investing in U. S. companies, the Fund principally invests in companies
with a market capitalization of at least $1 billion, although the Fund also
invests in companies with smaller capitalizations. While the established
companies in which the Fund primarily invests are more likely than less
established companies to provide the Fund with dividend income, the principal
focus in the selection of securities for the Fund is growth potential,
consistent with the Fund's primary objective.
PROSPECTUS
20
<PAGE>
================================================================================
When investing in foreign companies, the Fund may also invest in smaller
companies and companies located in developing countries.
In addition to common stocks, the Fund may invest in other securities, including
convertible debt securities and preferred stock. The Fund may engage in foreign
currency hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund.
-----------------------------------------------------------------------------
WHAT IS CAPITALIZATION?
CAPITALIZATION or MARKET CAPITALIZATION is the total value of a company's
stock in the marketplace or on a stock exchange. For example, a company that
has issued one million shares that are currently selling for $50 per share
would have a capitalization of $50,000,000.
-----------------------------------------------------------------------------
GROWTH FUND
The Growth Fund invests primarily in the common stock of U.S. and foreign
companies which the Adviser believes have above-average growth potential.
When investing in U. S. companies, the Fund principally invests in companies
with a market capitalization of at least $250 million, although the Fund also
invests in companies with smaller capitalizations. Companies with
capitalizations of less than $1 billion are generally considered to have small
capitalizations.
When investing in foreign companies, the Fund may also invest in smaller
companies and in companies located in developing countries.
In addition to common stocks, the Fund may invest in other securities, including
convertible debt securities and preferred stock. The Fund may engage in foreign
currency hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund.
INTERNATIONAL EQUITY FUND
The International Equity Fund invests primarily in stocks and other equity
interests issued by foreign companies. The Fund seeks to invest in a number of
countries with different economic characteristics and may invest in developing
countries.
The Fund may also invest in other securities, including non-convertible debt
securities and money market instruments. The Fund may engage in foreign currency
hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund.
[GRAPHIC OF FLAG MAN OMITTED]
WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 STOCK FUNDS?
The principal risks of investing in the Stock Funds and the circumstances
reasonably likely, in the opinion of the Adviser, to adversely affect your
investment are described below. As with any non-money market mutual fund, the
share price of each Fund will change daily based on market conditions and other
factors. You may lose money if you invest in these Funds. Please note that there
are many other circumstances which could adversely affect your investment, and
that could prevent a Fund from achieving its objectives, which are not described
here. The principal risks of investing in the Stock Funds are:
[Bullet] MARKET RISK: This is the risk that the price of a security will rise or
fall due to changing economic, political or market conditions, or due
to a company's individual situation.
[Bullet] SMALLER COMPANIES: The securities of smaller companies may have more
risks than those of larger companies--they may be more susceptible to
market downturns and their prices may be more volatile.
[Bullet] FOREIGN SECURITIES: Investments in foreign securities involve risks
relating to political, social and economic developments abroad, as well
as risks resulting from the differences between the regulations to
which U.S. and foreign issuers and markets are subject.
[Bullet] These risks may include expropriation, confiscatory taxation,
withholding taxes on dividends and interest, limitations on
the use or transfer of portfolio assets, and political or
social instability.
[Bullet] Enforcing legal rights may be difficult, costly and slow in
foreign countries, and there may be special problems enforcing
claims against foreign governments. In addition, foreign
companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and
there may be less public information about their operations.
PROSPECTUS
21
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[Bullet] Foreign markets may be less liquid and more volatile than U.S. markets,
and may offer less protection to investors such as the Funds. Equity
securities traded in certain foreign countries may trade at high
price-earnings multiples that are unsustainable.
[Bullet] Since foreign securities often trade in currencies other than the U.S.
dollar, changes in currency exchange rates will affect a Fund's net
asset value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the U.S.
dollar relative to these other currencies will adversely affect the
value of the Fund.
[Bullet] Each of the Stock Funds may invest in issuers located in developing
countries.
[Bullet] Developing countries are generally defined as countries in the
initial stages of their industrialization cycles with low per
capita income.
[Bullet] All of the risks of investing in foreign securities are
heightened by investing in developing countries.
[Bullet] The markets of developing countries have been more volatile
than the markets of developed countries with more mature
economies. These markets often have provided higher rates of
return, and greater risks, to investors.
[Bullet] INTEREST RATE RISK: In general, the prices of debt securities rise when
interest rates fall and fall when interest rates rise. Longer term
obligations are usually more sensitive to interest rate changes.
[Bullet] CREDIT RISK: It is possible that some issuers will not make payments on
debt obligations held by a Fund. Or, an issuer may suffer adverse
changes in financial condition that could lower the credit quality of a
security, leading to greater volatility in the price of the security
and in shares of the Fund. A change in the quality rating of a bond can
also affect the bond's liquidity and make it more difficult for the
Fund to sell.
[Bullet] PREPAYMENT RISK: The issuers of securities held by a Fund may be able
to prepay principal due on the securities, particularly during periods
of declining interest rates. Securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise. In
addition, rising interest rates may cause prepayments to occur at a
slower than expected rate, thereby effectively lengthening the maturity
of the security and making the security more sensitive to interest rate
changes. Prepayment risk is a major risk of mortgage-backed securities.
[Bullet] SPECIAL CHARACTERISTICS OF CONVERTIBLE SECURITIES: Convertible
securities are subject to the market risk of stocks, while also subject
to interest rate risk and the credit risk of the issuers. Call
provisions may allow the issuer to repay the debt before it matures.
[Bullet] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
PROSPECTUS
22
<PAGE>
================================================================================
================================================================================
WHO MAY WANT TO INVEST?
================================================================================
ASSET ALLOCATION FUND
THE ASSET ALLOCATION FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:
[Bullet] seeking a balanced investment program;
[Bullet] seeking protection against inflation;
[Bullet] able to tolerate a substantial loss in the value of their investment.
GROWTH AND INCOME FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:
[Bullet] seeking high long-term growth;
[Bullet] able to tolerate a substantial loss in the value of their investment.
GROWTH FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:
[Bullet] seeking high long-term growth;
[Bullet] able to tolerate a substantial loss in the value of their investment;
[Bullet] able to tolerate the additional risks of investing in smaller
companies;
[Bullet] not seeking income.
INTERNATIONAL EQUITY FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:
[Bullet] seeking high long-term growth;
[Bullet] looking for exposure in the international markets and able to tolerate
the additional risks associated with these markets;
[Bullet] able to tolerate a substantial loss in the value of their investments;
[Bullet] not seeking income.
None of the Stock Funds alone (except for the Asset Allocation Fund) provides a
balanced investment plan.
PROSPECTUS
23
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF FLAGS OMITTED]
HOW HAVE THE FUNDS PERFORMED?
The charts and tables below give an indication of the Funds' risks
and performance. The charts show changes in the Funds' performance
from year to year. The tables show how the Funds' average annual
returns for the periods indicated compare to those of a broad
measure of market performance.
WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT A FUND'S
PERFORMANCE IN PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW A
FUND WILL DO IN THE FUTURE.
================================================================================
ASSET ALLOCATION FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - -0.65%
1995 - 29.55%
1996 - 10.48%
1997 - 20.74%
The total return for the six months ended June 30, 1998 was 9.40%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 10.79% June 30, 1997
Lowest -3.33% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/14/93)
Asset Allocation Fund 20.74% 13.07%
S&P 500 Composite Index 33.36% 21.39%*
Lehman Brothers 9.68% 6.86%
Aggregate Bond Index
- --------------------------------------------------------------------------------
*(SINCE 6/11/93)
The table above compares the average annual return of the Fund, which holds a
mix of stocks, bonds and other debt securities, to an unmanaged stock index and
an unmanaged bond index for the periods indicated.
================================================================================
GROWTH AND INCOME FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1994 - -0.18%
1995 - 30.56%
1996 - 23.63%
1997 - 19.66%
The total return for the six months ended June 30, 1998 was 19.93%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 13.03% June 30, 1997
Lowest -3.63% June 30, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/7/93)
Growth and Income Fund 19.66% 17.34%
S&P 500 Composite Index 33.36% 21.14%*
- --------------------------------------------------------------------------------
*(SINCE 6/4/93)
PROSPECTUS
24
<PAGE>
================================================================================
================================================================================
GROWTH FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1997 - 13.92%
The total return for the six months ended June 30, 1998 was 4.95%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 14.46% September 30, 1997
Lowest -7.07% December 31, 1997
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 3/28/96)
Growth Fund 13.92% 17.98%
Russell 2000 Index 22.36% 19.32%
- --------------------------------------------------------------------------------
================================================================================
INTERNATIONAL EQUITY FUND
================================================================================
TOTAL RETURN
(per calendar year)
[bar graph omitted] plot points as follows.
1995 - 13.34%
1996 - 13.68%
1997 - -0.92%
The total return for the six months ended June 30, 1998 was 15.13%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1997)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 12.12% June 30, 1997
Lowest -9.42% December 31, 1997
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1997)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 1/2/95)
International Equity Fund -0.92% 8.47%
Morgan Stanley MSCI EAFE Index 1.78% 6.28%*
- --------------------------------------------------------------------------------
*(SINCE 12/31/94)
PROSPECTUS
25
<PAGE>
BOSTON 1784 STOCK FUNDS (CONTINUED)
================================================================================
[GRAPHIC OF CALCULATOR OMITTED]
WHAT ARE THE FEES AND EXPENSES OF THE FUNDS?
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 STOCK FUNDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- -----------------------------------------------------------------------------------------------------------------------------
ASSET GROWTH AND GROWTH INTERNATIONAL
ALLOCATION FUND INCOME FUND FUND EQUITY FUND
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None None
Maximum Sales Charge (Load) None None None None
Imposed on Reinvested Dividends
Redemption Fee None None None None
Exchange Fee None None None None
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) as a % of average net assets
- -----------------------------------------------------------------------------------------------------------------------------
Management Fees .74% .74% .74% 1.00%
Distribution (12b-1) Fees .25% .25% .25% .25%
Other Expenses .24% .16% .17% .24
Total Annual Fund Operating Expenses 1.23%* 1.15%* 1.16%* 1.49%*
- -----------------------------------------------------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because the Funds'
Distributor waives its entire Distribution Fee. The Distributor may eliminate
all or a part of the fee waiver at any time. With the fee waiver, the Funds'
actual total annual operating expenses were as follows:
ASSET ALLOCATION FUND .98%
GROWTH AND INCOME FUND .90%
GROWTH FUND .91%
INTERNATIONAL EQUITY FUND 1.24%
- -----------------------------------------------------------------------------------------------------------------------------
EXAMPLE
- -----------------------------------------------------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 STOCK FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE
ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED AND
THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S
OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE ABOVE. ALTHOUGH YOUR
ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- -----------------------------------------------------------------------------------------------------------------------------
ASSET GROWTH AND GROWTH INTERNATIONAL
ALLOCATION FUND INCOME FUND FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
1 year $ 125 $ 117 $ 118 $ 152
3 years 390 365 368 471
5 years 676 633 638 813
10 years 1,489 1,398 1,409 1,779
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS
26
<PAGE>
SHAREHOLDER SERVICES
================================================================================
This section describes how to do business with the Funds and the services that
are available to shareholders.
HOW TO REACH THE FUNDS
BY TELEPHONE 1-800-BKB-1784
Call for account or Fund information
Monday through Friday 8 a.m. to 8 p.m.
or Saturday and Sunday 9 a.m.
to 4 p.m. (Eastern time).
BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524
BY OVERNIGHT Boston 1784 Funds
COURIER c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171
TYPES OF ACCOUNTS
If you are investing in the Funds for the first time, you will need to establish
an account. You may establish the following types of accounts by completing an
account application. To obtain an application, call 1-800-BKB-1784.
[Bullet] INDIVIDUAL OR JOINT OWNERSHIP. Individual accounts are owned by one
person. Joint accounts have two or more owners. The Funds will treat
any individual owner of a joint account as authorized to give
instructions on purchases, sales and exchanges of shares of a Fund
without notice to the other owners, except that for any transaction
requiring a signature guarantee, the signature guarantee of each
account owner is required.
[Bullet] GIFT OR TRANSFER TO MINOR (UGMA OR UTMA). A UGMA (Uniform Gifts to
Minors Act) or UTMA (Uniform Transfers to Minors Act) account is
maintained by a custodian for the benefit of a minor. To open a UGMA or
UTMA account, you must include the minor's social security number on
the application.
[Bullet] TRUST. A trust can open an account. The name of each trustee, the name
of the trust and the date of the trust agreement must be included on
the application.
[Bullet] CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES. Corporations,
partnerships and other legal entities may also open an account. The
application and resolution form must be signed by a general partner of
the partnership or an authorized officer of the corporation or other
legal entity.
[Bullet] RETIREMENT. If you are eligible, you may set up your account under a
tax-sheltered retirement plan, such as an Individual Retirement
Account. BankBoston offers a number of retirement plans through which
Fund shares may be purchased. Call 1-800-BKB-1784 for more information.
HOW TO OPEN AN ACCOUNT
Complete and sign the appropriate account application. Please be sure to provide
your social security or taxpayer identification number on the application. Make
your check payable to Boston 1784 Funds. Send all items to one of the following
addresses:
BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524
BY OVERNIGHT Boston 1784 Funds
COURIER c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171
You may also purchase shares through certain financial institutions, including
BankBoston. These institutions may have their own procedures for buying and
selling shares, and may charge fees. Contact your financial institution for more
information.
HOW TO PURCHASE SHARES
Shares of the Funds are sold on a continuous basis and may be purchased from the
Distributor or a broker-dealer or financial institution that has an agreement
with the Distributor. Purchases may be made Monday through Friday, except on
certain holidays.
Each Fund's share price, called net asset value per share, is calculated every
business day. Each Fund's shares are sold without a sales charge. Shares are
purchased at net asset value the next time it is calculated after your
investment is received and accepted by the Distributor. For information on how
shares are priced, please see "Pricing of Fund Shares" below.
For the U.S. Treasury Money Market Fund, Institutional U.S. Treasury Money
Market Fund and Institutional Prime Money Market Fund, the Distributor must
receive payment by wire transfer or other immediately available Funds by the
close of business on the day your order is received and accepted. For the other
Money Market Funds, your investment is considered received when your check is
converted into immediately available funds. This normally happens within two
business days. On days when the financial markets close early, such as
PROSPECTUS
27
<PAGE>
SHAREHOLDER SERVICES (CONTINUED)
================================================================================
the day after Thanksgiving and Christmas Eve, purchase orders for the U.S.
Treasury Money Market Fund, Institutional U.S. Treasury Money Market Fund and
Institutional Prime Money Market Fund must be received by 12 noon.
NEW PURCHASES. If you are new to the Funds, complete and sign an account
application and mail it along with your check. To establish the telephone
purchase option on your new account, complete the "Telephone Privilege
Authorization" section on the application and attach a check or savings
withdrawal slip from your bank account which you have "voided" by writing the
word "VOID" across the front.
If you wish to open an account by debiting your checking or savings account,
please attach a "voided" check or savings withdrawal slip, and complete the
"Electronic Transfer and Bank Wire" section of the application.
If you are investing through a tax-sheltered retirement plan for the first time,
you will need a special application. Retirement investing also involves its own
investment procedures. Call 1-800-BKB-1784 for more information.
ADDITIONAL PURCHASES. If you already have money invested in a Fund, you can
invest additional money in that Fund in the following ways:
BY MAIL. Complete the remittance slip attached to the bottom of your
confirmation statement. If your investment is in a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to
one of the addresses listed above under "How To Open An Account."
BY TELEPHONE. This service allows you to purchase additional shares quickly
and conveniently through an electronic transfer of money. When you make an
additional purchase by telephone, the Funds will automatically deduct money
from your predesignated bank account for the desired amount. If you have not
established the telephone purchase option, call 1-800-BKB-1784 to request the
appropriate form.
BY WIRE. Purchases may also be made by wiring money from your bank account to
your Boston 1784 Fund account. Each time you wish to send a wire, you must
call 1-800-BKB-1784 to receive wiring instructions before you send money.
AUTOMATIC INVESTMENT PROGRAM. Automatic investing is an easy way to add to your
account on a regular basis. Boston 1784 Funds offer an automatic investment plan
to help you achieve your financial goals as simply and conveniently as possible.
Please note that minimum purchase amounts apply. Call 1-800-BKB-1784 for
information.
PAYING FOR SHARES. Please note the following:
[Bullet] Purchases may be made by check, wire transfer and electronic transfer.
[Bullet] All purchases must be made in U.S. dollars.
[Bullet] Checks must be drawn on U.S. banks and must be payable to Boston 1784
Funds. Checks that are not made payable directly to Boston 1784 Funds
("third party checks") are not accepted.
[Bullet] Cash and credit card checks are not accepted.
[Bullet] If a check does not clear your bank, the Funds reserve the right to
cancel the purchase.
[Bullet] If the Funds are unable to debit your predesignated bank account on the
day you purchase shares, they may make additional attempts or cancel
the purchase.
If your purchase is canceled, you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the canceled purchase. The Funds have the authority to redeem
shares in your account(s) to cover any losses due to changes in share price. The
Funds reserve the right to reject any specific purchase request.
MINIMUM INVESTMENTS. The following minimums apply unless they are waived by the
Distributor.
To open an account $1,000.00*
For tax-sheltered retirement plans 250.00
To add to an account 250.00**
Through automatic investment plans 50.00
Minimum account balance 1,000.00*
For tax-sheltered retirement plans 250.00
* $100,000 for the Institutional U.S. Treasury Money Market Fund and the
Institutional Prime Money Market Fund
**$5,000 for the Institutional U.S. Treasury Money Market Fund and the
Institutional Prime Money Market Fund
HOW TO SELL SHARES
Selling your shares in a Fund is called a "redemption" because the Fund buys
back its shares. On any business day, you may sell (redeem) all or a portion of
your shares. If your redemption request is over $100,000, you will need a
signature guarantee (see below). If the shares being sold were recently
purchased by check, telephone or through an automatic investment program, the
Funds may delay the mailing of your redemption check for up to 10 business days
after purchase to allow the purchase to clear.
PROSPECTUS
28
<PAGE>
================================================================================
Your transaction will be processed at net asset value the next time it is
calculated after the Funds receive your redemption request in good order. You
may gain or lose money when you redeem your shares. Please note that a
redemption is treated as a sale for tax purposes, and could result in taxable
gain or loss in a non-tax-sheltered account.
BY MAIL. To redeem all or part of your shares by mail, please send your request
in writing to one of the addresses listed above under "How To Open An Account"
and include the following information:
[Bullet] the name of the Fund(s),
[Bullet] the account number(s),
[Bullet] the amount of money or number of shares being redeemed,
[Bullet] the name(s) on the account,
[Bullet] the signature of a registered account owner, and
[Bullet] your daytime telephone number.
Signature requirements vary based on the type of account you have:
[Bullet] INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON: Written instructions must
be signed by an individual shareholder, or in the case of joint
accounts, one of the shareholders (except where a signature guarantee
is required, in which case the signature guarantee of each account
owner is required), exactly as the name(s) appears on the account.
[Bullet] UGMA OR UTMA: Written instructions must be signed by the custodian as
it appears on the account.
[Bullet] SOLE PROPRIETOR, GENERAL PARTNER: Written instructions must be signed
by an authorized individual as it appears on the account.
[Bullet] CORPORATION, ASSOCIATION: Written instructions must be signed by the
person(s) authorized to act on the account. A resolution form,
authorizing the signer to act, must accompany the request if not on
file with the Funds.
[Bullet] TRUST: Written instructions must be signed by the trustee(s). If the
name of the current trustee(s) does not appear on the account, a
certified certificate of incumbency dated within 60 days must also be
submitted.
[Bullet] RETIREMENT: Written instructions must be signed by the account owner.
Call 1-800-BKB-1784 for more information.
BY TELEPHONE. If you selected this option on your account application, you may
make redemptions from your account by calling 1-800-BKB-1784. The Funds require
that requests for redemptions over $100,000 be in writing with signatures
guaranteed (see below). You may not close your account by telephone. If you
would like to establish this option on an existing account, please call
1-800-BKB-1784. See "Telephone transactions" below.
SYSTEMATIC WITHDRAWAL PLAN. Under this plan, you may redeem a specific dollar
amount from your account on a regular basis. For more information or to sign up
for this service, please call 1-800-BKB-1784.
PAYMENT OF REDEMPTION PROCEEDS. Payments may be made by check, wire transfer or
electronic transfer.
BY CHECK Redemption proceeds will be sent to the shareholder(s) on
our records at the address on our records within seven days
after receipt of a valid redemption request.
BY WIRE If you have selected this option on your application, your
redemption proceeds will be wired directly into your
designated bank account, normally on the next business day
after receipt of your redemption request is received (the
same business day for the Money Market Funds). There is no
limitation on redemptions by wire. However, there is a $12
fee for each wire and your bank may charge an additional
fee to receive the wire. If you would like to establish
this option on an existing account, please call
1-800-BKB-1784 to sign up for this service. Wire
redemptions are not available for retirement accounts.
BY ELECTRONIC If you have established this option, your redemption
TRANSFER proceeds will be transferred electronically to your
predesignated bank account. To establish this option on an
existing account, please call 1-800-BKB- 1784 to request
the appropriate form.
SIGNATURE GUARANTEES. In addition to the signature requirements described above,
a signature guarantee is required if:
[Bullet] You would like the check made payable to anyone other than the
shareholder(s) on our records.
[Bullet] You would like the check mailed to an address other than the address on
our records.
[Bullet] You would like the check mailed to an address on our records that has
changed in the past 30 days.
[Bullet] Your redemption request is over $100,000.
PROSPECTUS
29
<PAGE>
SHAREHOLDER SERVICES (CONTINUED)
================================================================================
The Funds may also require signature guarantees for other redemptions. A
signature guarantee assures that a signature is genuine and protects
shareholders from unauthorized account transfers. Banks, savings and loan
associations, trust companies, credit unions, broker-dealers and member firms of
a national securities exchange may guarantee signatures. Call your financial
institution to determine if it has this capability.
SHAREHOLDER SERVICES AND POLICIES
EXCHANGES. On any business day, you may exchange all or a portion of your shares
into any other Fund in the Boston 1784 Funds family. To make exchanges, please
follow the procedures under "How To Sell Shares." Exchanges are processed at the
net asset value next calculated after an exchange request in good order is
received and approved. Please read the prospectus for the Fund into which you
are exchanging. The Funds reserve the right to reject any exchange request or to
change or terminate the exchange privilege at any time. An exchange is the sale
of shares of one Fund and purchase of shares of another, and could result in
taxable gain or loss in a non-tax-sheltered account.
REDEMPTION PROCEEDS. The Funds' policy is to pay redemption proceeds in cash,
but the Funds reserve the right to change this policy and to pay in kind in
certain cases by delivering to you investment securities equal to the redemption
price. In these cases, you might have to pay brokerage costs when converting the
securities to cash. The right of any shareholder to receive redemption proceeds
may be suspended, or payment may be postponed, in certain circumstances. These
circumstances include any period the New York Stock Exchange is closed (other
than weekends or holidays) or trading on the Exchange is restricted, any period
when an emergency exists and any time the Securities and Exchange Commission
allows mutual funds to delay payments for the protection of investors.
TAXPAYER IDENTIFICATION NUMBER. On the account application or other appropriate
form, you will be asked to certify that your social security or taxpayer
identification number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are subject to
backup withholding or you did not certify your taxpayer identification number,
the IRS requires the Funds to withhold 31% of any dividends and redemption or
exchange proceeds. The Funds reserve the right to reject any application that
does not include a certified social security or taxpayer identification number.
SHARE OWNERSHIP. The Funds keep a record of the ownership of their shares and
share certificates are not issued.
INVOLUNTARY REDEMPTIONS. If your account balance falls below
the minimum required investment as a result of selling or exchanging shares, you
will be given 60 days to re-establish the minimum balance. If you do not, your
account may be closed and the proceeds sent to you.
TELEPHONE TRANSACTIONS. You may buy, sell or exchange shares
by telephone if you selected this option on your account application or have
completed the appropriate form. The Funds and their agents will not be
responsible for any losses that may result from acting on wire or telephone
instructions that it reasonably believes to be genuine. The Funds and their
agents will each follow reasonable procedures to confirm that instructions
received by telephone are genuine, which may include taping telephone
conversations. It may be difficult to reach the Funds by telephone during
periods of unusual market activity.
ADDRESS CHANGES. A change in address on your account must be made in writing and
be signed by all account owners. Include the name of your Fund(s), the account
numbers(s), the name(s) on the account and both the old and new addresses. Call
1-800-BKB-1784 if you need more information.
NAME/ACCOUNT OWNERSHIP CHANGES. To change the name on an account, the shares are
generally transferred to a new account. A signature guarantee must be provided
and, in some cases, certain legal documents may be required. For more
information, call 1-800-BKB-1784. If your shares are held by a financial
institution, contact that financial institution for ownership changes.
STATEMENTS AND REPORTS. The Funds will send you a confirmation statement after
every transaction that affects your account balance or registration. If you are
enrolled in an automatic investment program and invest on a monthly basis, you
will receive quarterly confirmations. Information about the tax status of income
dividends and capital gains distributions will be mailed to shareholders early
each year.
Financial reports for the Funds, which include a list of the Funds' portfolio
holdings, will be mailed twice each year to all shareholders.
CHECKWRITING. Checkwriting privileges are available on the following Funds:
Boston 1784 Tax-Free Money Market Fund, Boston 1784 U.S. Treasury Money Market
Fund, Boston 1784 Prime Money Market Fund and Boston 1784 Short-Term Income
Fund. Checks may be written for a minimum of $250 each check. Call
1-800-BKB-1784 for more information.
Please note that you may not use a check to close your account.
PROSPECTUS
30
<PAGE>
PRICING OF FUND SHARES
================================================================================
Each Funds' net asset value per share or NAV is calculated on each day the New
York Stock Exchange is open, except for Columbus Day and Veteran's Day. The NAV
is the value of a single share of a Fund.
BOND FUNDS, TAX-EXEMPT INCOME FUNDS AND STOCK FUNDS
Each of these Funds' NAV is calculated at the close of business of the New York
Stock Exchange, normally 4:00 p.m. Eastern time. The NAV is generally based on
the market value of the securities held in the Fund. If market values are not
available, the fair value of securities is determined using procedures that the
Board of Trustees has approved.
Foreign securities are valued based on quotations from the primary market in
which they are traded, and are converted from the local currency into U.S.
dollars using current exchange rates. Foreign securities may trade in their
primary markets on weekends or other days when the Fund does not price its
shares. Therefore, the NAV of Funds holding foreign securities may change on
days when shareholders will not be able to buy or sell their Fund shares.
MONEY MARKET FUNDS
The U.S. Treasury Money Market Fund, Institutional U.S. Treasury Money Market
Fund and Institutional Prime Money Market Fund calculate NAV at 3:00 p.m.
Eastern time (12 noon on days when the financial markets close early). The
Tax-Free Money Market Fund and Prime Money Market Fund calculate NAV at 12 noon.
In determining each Money Market Fund's NAV, securities are valued at amortized
cost, which is approximately equal to market value.
DISTRIBUTIONS
================================================================================
As a Fund shareholder, you are entitled to your share of a Fund's net income and
gains on its investments. Each Fund passes substantially all of its earnings
along to its investors as distributions. When a Fund earns dividends from stocks
and interest from bonds and other debt securities and distributes these earnings
to shareholders, it is called a DIVIDEND DISTRIBUTION. A Fund realizes capital
gains when it sells securities for a higher price than it paid. When these gains
are distributed to shareholders, it is called a CAPITAL GAIN DISTRIBUTION.
Dividend distributions may be made several times a year, while capital gain
distributions are generally made annually.
MONEY MARKET FUNDS
Your dividend distributions are declared each day, starting on the day you
purchase your shares. They are paid to your account on the first business day of
each month that you are a shareholder. You will not receive a dividend for the
day on which you sell shares.
BOND FUNDS AND TAX-EXEMPT
INCOME FUNDS
Your dividend distributions are declared each day, starting the day after you
purchase your shares, although they are paid to your account on the first
business day of each month that you are a shareholder.
STOCK FUNDS
If you are a shareholder in the Asset Allocation Fund or Growth and Income Fund,
your dividend distributions, if any, will be paid quarterly, generally on the
last day of March, June, September and December.
If you are a shareholder in the Growth Fund, your dividend distributions, if
any, will be paid semi-annually, generally on the last day of June and December.
If you are a shareholder in the International Equity Fund, your dividend
distributions, if any, will be paid annually, generally on the last day of
December.
ALL FUNDS
You will receive distributions from a Fund in additional shares of that Fund
unless you choose to receive your distributions in cash. If you wish to change
the way in which you receive distributions, you should call 1-800-BKB-1784 for
instructions.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Funds as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
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FEDERAL TAX CONSIDERATIONS
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Your investment in a Fund will have tax consequences that
you should consider. Some of the more common federal tax consequences are
described here, but you should consult your tax adviser about your own
particular situation.
TAXES ON DISTRIBUTIONS
You will generally have to pay federal income tax on all Fund distributions
except for certain dividend distributions from the Tax-Exempt Funds and the
Tax-Free Money Market Fund. Your distributions will be taxed in the same manner
whether you receive the distributions in cash or additional shares of the Fund.
Distributions that are derived from net long-term capital gains generally will
be taxed as long-term capital gains. The rate of tax will generally depend on
how long the Fund held the securities on which it realized the gains. All other
distributions, including short-term capital gains, generally will be taxed as
ordinary income.
The Money Market Funds (other than the Tax-Free Money Market Fund) and the Bond
Funds expect that their distributions will consist primarily of ordinary income.
The Growth Fund, Growth and Income Fund and International Equity Fund expect
that their distributions will consist primarily of net long-term capital gains.
The Tax-Exempt Funds and the Tax-Free Money Market Fund may make distributions
called "exempt-interest dividends" that are exempt from federal income tax.
Exempt-interest dividends will not necessarily be exempt from state and local
income taxes. These Funds may also make taxable distributions (including all
capital gains distributions). You generally are required to report all Fund
distributions, including exempt-interest dividends, on your federal income tax
return.
TAXES ON SALES OR EXCHANGES
If you sell your shares of a Fund (including a Tax-Exempt Fund), or exchange
them for shares of another Fund, you generally will be subject to tax on any
taxable gain. Your taxable gain is computed by subtracting your tax basis in the
shares from the redemption proceeds (in the case of a sale) or the value of the
shares received (in the case of an exchange).
Because your tax basis depends on the original purchase price and on the price
at which any dividends may have been reinvested, you should be sure to keep your
account statements so that you or your tax preparer will be able to determine
whether a sale or exchange will result in a taxable gain.
"BUYING A DIVIDEND"
If you buy shares in a Stock Fund just before the Fund makes any distribution,
or if you buy shares in any Bond Fund or Tax-Exempt Fund just prior to a capital
gain distribution, you will receive some of the purchase price back in the form
of a taxable distribution.
LOAN INTEREST. If you borrow money to purchase or hold shares of a Tax-Exempt
Fund or of the Tax-Free Money Market Fund, interest on your loan will not be
deductable.
TAX WITHHOLDING. If you are not a U.S. citizen or resident, or if you are
subject to "backup withholding," the Funds may be required to withhold a portion
of your distributions and, in some cases, redemption proceeds, as a payment of
federal income tax.
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MONEY MARKET FUNDS
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Boston 1784 Funds currently offer five 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
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Money Market Funds are described
below. These are the strategies that, in the opinion of the Adviser, are most
likely to be important in trying to achieve each Fund's investment objective. Of
course, there can be no assurance that any Fund will achieve its investment
objective. Please note that each Fund may also use strategies and invest in
securities that are not described below but which are described in the Statement
of Additional Information.
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WHAT ARE MONEY MARKET INSTRUMENTS?
A MONEY MARKET INSTRUMENT is a short-term IOU issued
by banks or other U.S. corporations, or the U.S. government
or state or local governments. Money market instruments
have maturity dates of 13 months or less. Money market instruments
may include certificates of deposit, bankers' acceptances, variable
rate demand notes, fixed-term obligations, commercial paper, asset-backed
commercial paper and repurchase agreements.
- --------------------------------------------------------------------------------
Each Money Market Fund has specific investment policies and procedures designed
to maintain a constant net asset value of $1.00 per share. Each Fund complies
with industry regulations that apply to money market funds. These regulations
require that each Fund's investments mature or be deemed to mature within 397
days from the date purchased and that the average maturity of each Fund's
investments (on a dollar-weighted basis) be 90 days or less. In addition, all of
the Funds' investments must be in U.S. dollar-denominated high quality
securities which have been determined by the Adviser to present minimal credit
risks. Investments in high quality, short-term securities such as money market
instruments may, in many circumstances, result in a lower yield than would be
available from investments in securities with a lower quality or a longer term.
Each Money Market Fund may invest more than 25% of its assets in money market
instruments issued by banks, including foreign branches of U.S. banks and U.S.
branches of foreign banks, and in U.S. government obligations. The Tax-Free
Money Market Fund may also invest more than 25% of its assets in tax-exempt
securities issued by governments or political subdivisions of governments.
TAX-FREE MONEY MARKET FUND
The TAX-FREE MONEY MARKET FUND invests primarily in short-term municipal money
market instruments that are issued by states, territories and possessions of the
United States (including the District of Columbia) and their political
subdivisions, agencies and instrumentalities. These securities pay interest that
is exempt from federal income tax, including the alternative minimum tax.
The Fund attempts to generate a relatively high tax-exempt yield by investing in
municipal money market instruments that are issued in states that have little or
no income tax. The Fund invests in both "general obligation" securities, which
are backed by the full faith, credit and taxing power of the issuer and in
"revenue" securities, which are payable only from revenues from a specific
project or another specific revenue source. Normally, at least 80% of the Fund's
net assets are invested in these municipal money market instruments.
The Fund may also invest in taxable money market instruments, particularly if
the after-tax return on those securities is greater than the return on municipal
money market instruments. Under normal circumstances, not more than 20% of the
Fund's assets are invested in taxable instruments.
U.S. TREASURY MONEY MARKET FUND
AND INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
The U.S. TREASURY MONEY MARKET FUND and INSTITUTIONAL U.S. TREASURY MONEY MARKET
FUND invest primarily in money market instruments issued by the U.S. Treasury,
including bills, notes and bonds, and repurchase agreements secured by U.S.
Treasury securities. Under normal circumstances, at least 65% of the Funds'
assets are invested in these securities. The Funds invest the rest of their
assets in U.S. government obligations issued by agencies or instrumentalities,
including mortgage-backed securities.
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MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
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When selecting securities for these Funds, the portfolio managers use a
"top-down" approach, looking first at general economic factors and market
conditions, then at individual securities. The portfolio managers look for value
while adhering to the credit and other restrictions on money market funds.
ALTHOUGH THE FUNDS INVEST IN U.S. GOVERNMENT OBLIGATIONS, AN INVESTMENT IN THE
FUNDS IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
PRIME MONEY MARKET FUND AND INSTITUTIONAL PRIME MONEY MARKET FUND
The PRIME MONEY MARKET FUND and INSTITUTIONAL PRIME MONEY MARKET FUND invest
primarily in a variety of high quality money market instruments.
The portfolio managers employ a "top-down" approach when selecting securities
for these Funds, looking for value while adhering to the quality and other
restrictions on money market funds.
- --------------------------------------------------------------------------------
WHAT IS A "TOP-DOWN" APPROACH?
Managers of mutual funds use different styles when selecting securities to
purchase. When using a "TOP-DOWN" APPROACH, the portfolio manager looks first
at broad market factors, and on the basis of those market factors, chooses
certain sectors or industries within the overall market. The manager then
looks at individual companies within those sectors or industries.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS OF BOSTON 1784 MONEY MARKET FUNDS
DAVID H. THOMPSON, Director of Fund Management, has been the manager of the
Tax-Free Money Market Fund since 1998. Mr. Thompson, who has more than 27 years
of experience in investment management, research analysis and securities
trading, has been Director of Fund Management at BankBoston since 1985.
EMMETT M. WRIGHT, Senior Fund Manager, has been the manager of the U.S. Treasury
Money Market Fund and the Institutional U.S. Treasury Money Market Fund since
they began operations. Mr. Wright, who has more than six years of investment
management and research analysis experience, was an associate Fund Manager at
BankBoston from 1993 to 1994 and has been a Fund Manager at BankBoston since
1994.
LISA W. LEBOEUF, Fund Manager, has been a co-manager of the U.S. Treasury Money
Market Fund and the Institutional U.S. Treasury Money Market Fund since January
1997. Ms. LeBoeuf, who has seven years experience in investment management, has
been with BankBoston since 1978.
MARY K. WERLER, Senior Fund Manager, and LISA W. LEBOEUF, Fund Manager, have
been co-managers of the Prime Money Market Fund since December 1996 and
co-managers of the Institutional Prime Money Market Fund since it began
operations in November 1997. Ms. Werler, who has more than eleven years of
investment management experience, has been a Fund Manager at BankBoston since
1993. From 1987 to 1993, Ms. Werler was an Associate Portfolio Manager with
Keystone Investment Co. Ms. LeBoeuf's investment experience is described above.
================================================================================
BOND FUNDS
================================================================================
Boston 1784 Funds currently offer three Bond Funds:
[bullet] BOSTON 1784 SHORT-TERM INCOME FUND
[bullet] BOSTON 1784 INCOME FUND
[bullet] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Bond Funds are described below. These
are the strategies that, in the opinion of the Adviser, are most likely to be
important in trying to achieve each Fund's investment objective. Of course,
there can be no assurance that any Fund will achieve its investment objective.
Please note that each Fund may also use strategies and invest in securities that
are not described below, but which are described in the Statement of Additional
Information.
Investors should note that during periods of unusual economic
or market conditions or for temporary defensive purposes or liquidity, each Fund
may invest without limit in cash and in U.S. dollar-denominated high quality
money market instruments and other short-term securities. These investments may
result in a lower yield than would be available from investments with a lower
quality or longer term and may prevent a Fund from achieving its investment
objective.
Each Fund is actively managed, and the portfolio managers may trade securities
frequently, resulting, from time to time, in an annual portfolio turnover rate
of over 100%. Trading securities may produce capital gains, which are taxable to
shareholders
PROSPECTUS
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when distributed. Active trading may also increase the amount of mark-ups and
fees that the Fund pays to broker-dealers when it buys and sells securities. The
"Financial Highlights" section of this prospectus shows each Fund's historical
portfolio turnover rate.
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WHAT ARE MORTGAGE-BACKED SECURITIES?
Home mortgage loans are typically grouped together into "POOLS" by banks and
other lending institutions, and interests in these pools are then sold to
investors, allowing the bank or other lending institution to have more money
available to loan to home buyers. When homeowners make interest and principal
payments, these payments are passed on to the investors in the pool. Most of
these pools are guaranteed by U. S. government agencies or by government
sponsored private corporations--familiarly called "GINNIE MAES", "FANNIE
MAES" and "FREDDIE MACS".
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND
AND INCOME FUND
The SHORT-TERM INCOME FUND and INCOME FUND invest primarily in debt securities,
such as U.S. government obligations, corporate bonds, notes, mortgage- and
asset-backed securities, and taxable municipal securities. Under normal
circumstances, at least 80% of each Fund's assets are invested in these
securities. Both Funds may invest up to 30% of their assets in securities of
foreign issuers, including Yankee bonds, which are dollar-denominated bonds
issued in the U.S. by foreign borrowers, and issuers in developing countries.
The SHORT-TERM INCOME FUND and INCOME FUND generally invest in investment grade
securities. Under normal circumstances, the Funds expect to invest at least 65%
of their assets in securities rated A or better by Standard & Poor's or Moody's
or of comparable quality as determined by the Adviser. The Funds' portfolios may
also include lower rated investment grade securities, securities which were
investment grade when purchased by a Fund but that have since been down-graded,
and securities that are not investment grade at the time of purchase but which
the portfolio managers believe will experience an increase in rating to
investment grade. The ratings are described in the Statement of Additional
Information. Higher quality securities tend to have lower yields than lower
quality securities.
When managing the SHORT-TERM INCOME FUND, the portfolio manager's emphasis is on
keeping fluctuations in the price of Fund shares at a minimum. For this reason,
the Fund's average weighted maturity is normally expected to be not more than
three years and the Fund generally maintains an average maturity of between 1.8
years and 2.3 years. Short-term debt securities tend to fluctuate less in price,
but also tend to have lower yields, than longer-term securities of comparable
quality. However, the Fund is not a money market fund and the price of its
shares will fluctuate.
The portfolio managers of the SHORT-TERM INCOME FUND and INCOME FUND use a
"top-down" approach to select securities. They review economic outlook,
inflation expectation and interest rates to help identify sector weightings and
define maturity and duration selection before choosing individual securities.
The portfolio managers look at the diversification of the portfolios, and the
marketability and liquidity of the individual securities they select. Although
the Funds are actively managed, the portfolio managers attempt to manage the
Funds so as to minimize capital gains distributions.
The INCOME FUND'S average weighted maturity is expected to be from seven to
thirty years under normal circumstances. While longer-term securities tend to
have higher yields than short-term securities, their prices tend to fluctuate
more as a result of interest rate changes and other factors.
U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. GOVERNMENT MEDIUM-TERM INCOME FUND invests primarily in U.S. government
obligations and repurchase agreements secured by U.S. government obligations.
Under normal circumstances, at least 65% of the Fund's assets are invested in
these securities.
The Fund invests in both U.S. Treasury obligations and obligations such as
mortgage-backed securities issued or guaranteed by the U.S. government or its
agencies. The Fund also invests in non-government agency mortgage-backed
securities. ALTHOUGH THE FUND INVESTS PRIMARILY IN U.S. GOVERNMENT OBLIGATIONS,
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
When selecting securities for the Fund, the portfolio managers use a "top-down"
economic analysis to determine economic outlook, and the direction in which
inflation and interest rates are expected to move, before selecting individual
securities for the Fund. The portfolio managers also analyze the yield curve
under multiple market conditions to help define maturity and duration selection.
The Fund's average weighted maturity is normally expected to be from three to
ten years.
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PORTFOLIO MANAGERS OF BOSTON 1784 BOND FUNDS
MARY K. WERLER, Senior Fund Manager, has been the manager of the Short-Term
Income Fund since the Fund began operations in July 1994. Ms. Werler, who has
more than eleven years of investment management experience, has been a Fund
Manager at BankBoston since 1993. From 1987 to 1993, Ms. Werler was an Associate
Portfolio Manager with Keystone Investment Co.
EMMETT M. WRIGHT, Senior Fund Manager, has been the manager of the U.S.
Government Medium-Term Income Fund and a manager of the Income Fund since
September 1995. Mr. Wright, who has more than six years of investment management
and research analysis experience, was an Associate Fund Manager at BankBoston
from 1993 to 1994 and has been a Fund Manager at BankBoston since 1994.
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TAX-EXEMPT INCOME FUNDS
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Boston 1784 Funds currently offer five 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
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Tax-Exempt Income Funds are described
below. These are the strategies that, in the opinion of the Adviser, are most
likely to be important in trying to achieve each Fund's investment objective. Of
course, there can be no assurance that any Fund will achieve its investment
objective. Please note that each Fund may also use strategies and invest in
securities that are not described below, but which are described in the
Statement of Additional Information.
Each Tax-Exempt Income Fund invests primarily in municipal securities. The Funds
may invest in "general obligation" bonds, which are backed by the full faith,
credit and taxing power of the issuer, and in "revenue" bonds, which are payable
only from the revenues generated by a specific project or another specific
revenue source. The Funds may also invest in limited amounts in other mutual
funds or investment companies that invest primarily in municipal securities.
Each of the Tax-Exempt Income Funds also may invest in debt securities that pay
interest that is not exempt from federal or state taxes or is subject to the
alternative minimum tax, such as U.S. government obligations, corporate bonds,
bank obligations, money market instruments, commercial paper and repurchase
agreements. Under normal circumstances, not more than 20% of each Fund's assets
are invested in these securities.
Each of the Tax-Exempt Income Funds invests in investment grade securities,
which means that they are considered to have a medium to high probability of
being paid. However, all of these securities, and especially those in the lowest
categories of investment grade in which the Funds may invest, have credit risk.
In adverse economic or other circumstances, issuers of these lower graded
securities are more likely to have difficulty making principal and interest
payments than issuers of higher grade securities. For this reason, the
Tax-Exempt Income Funds generally look for securities rated A or better. In
addition, some of the bonds held in the Funds may be covered by municipal bond
insurance, in which case an insurer may make principal and interest payments on
the securities if the issuer fails to do so.
Each of the Tax-Exempt Income Funds may, from time to time, invest as a hedging
strategy in a limited amount of futures contracts or options on futures
contracts. The Funds may only use futures contracts and options on futures
contracts, commonly referred to as derivatives, in an effort to offset
unfavorable changes in the value of securities held by the Funds for
investment purposes.
Investors should note that during periods of unusual economic or market
conditions or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower yield
than would be available from investments with a lower quality or longer term,
and more taxable income, and may prevent a Fund from achieving its investment
objective.
Each of the Tax-Exempt Income Funds is actively managed, although the portfolio
managers attempt to minimize portfolio turnover. However, it is possible that a
Fund's annual portfolio turnover rate could exceed 100%. Trading securities may
produce capital gains, which are taxable to shareholders when distributed.
Active trading may also increase the amount of mark-ups and fees that the Fund
pays to broker-dealers when it buys and sells securities. The "Financial
Highlights" section of this prospectus shows each Fund's historical portfolio
turnover rate.
PROSPECTUS
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TAX-EXEMPT MEDIUM-TERM INCOME FUND
The TAX-EXEMPT MEDIUM-TERM INCOME FUND invests primarily in municipal
securities. Unlike the other Boston 1784 Tax-Exempt Income Funds, this Fund does
not invest primarily in the securities of a particular state, but instead
invests in a broadly diversified portfolio. Under normal circumstances, at least
80% of the Fund's net assets are invested in municipal securities or in mutual
funds or other investment companies that invest in municipal securities. The
Fund's average weighted maturity is normally expected to be from five to ten
years.
When selecting securities for the Tax-Exempt Medium-Term Income Fund, the
portfolio manager seeks to maximize current income while achieving a competitive
total rate of return. The portfolio manager evaluates the suitability of
available bonds according to such factors as creditworthiness, maturity,
liquidity, interest rate, taxability and portfolio diversification. The
portfolio manager conducts research on potential and current securities holdings
in the Funds to determine whether a Fund should purchase or retain the asset.
This is a continuing process, the focus of which changes according to market
conditions, the availability of various permitted investments, and cash flows
both into and out of the Fund. The portfolio manager seeks to diversify the
assets held in the Fund among various issuers, industry sectors and bond
structures.
CONNECTICUT TAX-EXEMPT INCOME FUND, FLORIDA TAX-EXEMPT INCOME FUND,
MASSACHUSETTS TAX-EXEMPT INCOME FUND AND RHODE ISLAND TAX-EXEMPT INCOME FUND
CONNECTICUT TAX-EXEMPT INCOME FUND, FLORIDA TAX-EXEMPT INCOME FUND,
MASSACHUSETTS TAX-EXEMPT INCOME FUND and RHODE ISLAND TAX-EXEMPT INCOME FUND
invest primarily in State municipal securities. State municipal securities pay
interest that is exempt from that state's personal income tax or, in Florida,
exempt from Florida's intangible personal property tax. Each of these Funds also
may invest in municipal securities that pay interest that is not exempt from
state income tax. Under normal circumstances, at least 80% of each Fund's net
assets are invested in municipal securities, or in mutual funds or other
investment companies that invest in municipal securities and at least 65% of
each Fund's assets are invested in State municipal securities. Each Fund's
average weighted maturity is expected to be from five to ten years under normal
circumstances.
The Connecticut Tax-Exempt Income Fund, Florida Tax-Exempt Income Fund,
Massachusetts Tax-Exempt Income Fund and Rhode Island Tax-Exempt Income Fund are
non-diversified, which means that they may invest a relatively high percentage
of their assets in the obligations of a limited number of issuers. As a result,
each Fund may be more susceptible to any single economic, political or
regulatory occurrence. Each Fund is particularly susceptible to events affecting
issuers in its particular state.
When selecting securities for these Funds, the portfolio managers evaluate the
suitability of available bonds according to such factors as creditworthiness,
maturity, liquidity, interest rate, taxability and portfolio diversification.
The portfolio managers conduct research on potential and current securities
holdings in the Funds to determine whether a Fund should purchase or retain the
asset. This is a continuing process, the focus of which changes according to
market conditions, the availability of various permitted investments, and cash
flows both into and out of the Fund. The portfolio managers seek to diversify
the assets held in the Funds among various issuers, industry sectors and bond
structures.
PORTFOLIO MANAGERS OF BOSTON 1784 TAX-EXEMPT INCOME FUNDS
DAVID H. THOMPSON, Director of Fund Management, has been the manager of the
Tax-Exempt Medium-Term Income Fund since the Fund began operations in June 1993
and the manager of the Connecticut Tax-Exempt Income Fund and the Rhode Island
Tax-Exempt Income Fund since September 1995. Mr. Thompson, who has more than 27
years of experience in investment management, research analysis and securities
trading, has been the Director of Fund Management at BankBoston since 1985.
CARL W. PAPPO has been Assistant Fund Manager of the Tax-Exempt Medium-Term
Income Fund, Connecticut Tax-Exempt Income Fund and Rhode Island Tax-Exempt
Income Fund since 1996. Mr. Pappo, who has six years investment management
experience, traded fixed income securities at BayBank Investment Management
prior to joining the BankBoston investment management team.
DAVID H. THOMPSON, Director of Fund Management, and SUSAN A. SANDERSON, Senior
Fund Manager, have been the co-managers of the Florida Tax-Exempt Income Fund
since the Fund began operations in June 1997. Mr. Thompson's investment
experience is described above. Ms. Sanderson, who has more than 15 years
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MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
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of experience in investment management and securities trading, has been a Fund
Manager at BankBoston since 1991.
SUSAN A. SANDERSON, Senior Fund Manager, has been the manager of the
Massachusetts Tax-Exempt Income Fund since the Fund began operations in June
1993. Ms. Sanderson's investment experience is described above.
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STOCK FUNDS
================================================================================
Boston 1784 Funds currently offer four Stock Funds:
[bullet] BOSTON 1784 ASSET ALLOCATION FUND
[bullet] BOSTON 1784 GROWTH AND INCOME FUND
[bullet] BOSTON 1784 GROWTH FUND
[bullet] BOSTON 1784 INTERNATIONAL EQUITY FUND
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies used by the Stock Funds are described below.
These are the strategies that, in the opinion of the Adviser, are most likely to
be important in trying to achieve each Fund's investment objective. Of course,
there can be no assurance that any Fund will achieve its investment objective.
Please note that each Fund may also use strategies and invest in securities that
are not described below but which are described in the Statement of Additional
Information.
Investors should note that during periods of unusual economic or market
conditions, or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower yield
than would be available from investments with a lower quality or longer term and
do not have the potential for capital appreciation that equity securities have,
and may prevent a Fund from achieving its investment objective.
Each of the Stock Funds is actively managed, although the portfolio managers
attempt to minimize portfolio turnover. However, from time to time a Fund's
annual portfolio turnover rate may exceed 100%. The sale of securities may
produce capital gains, which, when distributed, are taxable to shareholders.
Active trading may also increase the amount of commissions or mark-ups the Fund
pays to broker-dealers when the Fund buys and sells securities. The "Financial
Highlights" section of this prospectus shows each Fund's historical portfolio
turnover rate.
ASSET ALLOCATION FUND
The ASSET ALLOCATION FUND allocates its assets between equity securities, debt
securities and short-term or money market instruments. Normally, 30% to 70% of
the Fund's assets are invested in equity securities, 30% to 60% are invested in
intermediate- and long-term debt securities, and 0% to 40% are invested in
short-term debt securities or money market instruments. The portfolio managers
determine the mix of investments between equity and debt securities based on
current economic and market conditions and the underlying value of the
securities.
The equity portion of the Fund is primarily invested in the stocks of large U.S.
companies that the portfolio managers believe offer the prospect for
above-average earnings growth and are available at reasonable prices. From time
to time, the Fund may also invest in mid-sized U.S. companies and in large,
multi-national companies based outside of the U.S. The Fund's equity securities
include common stock, warrants to purchase common stock, debt securities
convertible into common stock, convertible and non-convertible preferred stock
and depositary receipts.
When selecting equity securities for the Fund, the portfolio managers place
particular emphasis on industry selection, seeking stocks in industries that are
outperforming the market, and may overweight the portfolio relative to the S&P
500 in these industries. The Fund may similarly be underweighted relative to the
S&P 500 in certain industries.
When selecting debt securities for the Fund, the portfolio managers use a
"top-down" approach, first performing a broad economic analysis, then
identifying sectors believed to outperform the market over a particular holding
period, and then selecting individual securities. The Fund's debt securities
include investment grade corporate debt securities and debt obligations issued
or guaranteed as to the payment of principal and interest by the U.S. government
or by foreign governments. The Fund also invests in mortgage-backed and
asset-backed securities rated A or better by Standard & Poor's or Moody's or of
comparable quality as determined by the Adviser.
The Fund will use short-term debt and money market instruments, including
short-term U.S. government and corporate obligations, commercial paper, bank
obligations and repurchase agreements, in varying degrees as a risk management
tool.
PROSPECTUS
38
<PAGE>
================================================================================
GROWTH AND INCOME FUND
AND GROWTH FUND
The GROWTH AND INCOME FUND and the GROWTH FUND invest primarily in common stock
(including depositary receipts) of U.S. and foreign issuers. Typically, it is
expected that 80-90% or more of the Funds' assets will be invested in these
securities, although the Funds may invest up to 35% of their assets in other
securities such as convertible and non-convertible debt securities, preferred
stock, warrants, and money market instruments.
The GROWTH AND INCOME FUND emphasizes the stock of U.S. companies with market
capitalizations of at least $1 billion. The portfolio managers may also select
stocks in smaller U.S. companies, and may invest up to 25% of the Fund's assets
in securities of foreign companies, including smaller companies and companies in
developing markets. The portfolio managers look for high quality growth
companies with strong potential for revenue and earnings increases.
The GROWTH FUND emphasizes securities of U.S. companies with a market
capitalization of at least $250 million that the portfolio managers believe have
above-average growth potential. The Fund also may invest in securities of
smaller, lesser-known companies and may invest up to 25% of its assets in
securities of foreign companies, including companies in developing countries.
While some of the Fund's investments may pay dividends, current income is not a
consideration when selecting investments.
The portfolio managers of the GROWTH AND INCOME FUND and GROWTH FUND use a
"bottom-up" approach when selecting securities for the Funds. They look for
companies that they believe are in dynamic high growth sectors of the world
economy, and that are thought to have dominant or strong competitive positions
within their sectors. They also look for companies thought to have quality
management and that are expected to have strong earnings growth potential. When
looking for companies with a higher growth rate than the general market, the
Funds may invest in securities with a higher price-earnings ratio than the
general market.
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM-UP" APPROACH?
When portfolio managers use a "BOTTOM-UP" APPROACH, they look primarily at
individual companies against the context of broader market factors.
- --------------------------------------------------------------------------------
Both the GROWTH AND INCOME FUND and GROWTH FUND may engage in foreign currency
hedging transactions in an attempt to minimize the effects of currency
fluctuations on the Fund. The Funds' attempt to minimize the effects of currency
fluctuations through the use of hedging transactions may not be successful or
the hedging transactions may cause the Funds to be unable to take advantage of a
favorable change in the value of foreign currencies.
INTERNATIONAL EQUITY FUND
The INTERNATIONAL EQUITY FUND invests primarily in equity securities of foreign
issuers, including securities of issuers in developing countries.
The Fund's portfolio is diversified as to both country and industry exposure in
an attempt to limit the impact of an economic downturn in any particular country
or industry sector. The Fund emphasizes equity securities of issuers with market
capitalizations of at least $100 million that the portfolio managers believe are
financially sound, have a track record of growth in earnings and have
above-average growth potential.
The portfolio managers screen a large universe of securities as potential
investments and then identify companies with suitable market capitalization,
liquidity and balance sheet structure whose earnings growth rates have exceeded
national averages. The portfolio is then structured to reflect the relative
attractiveness of the economies of various countries, and to provide industry
diversification. While some of the Fund's investments may pay dividends, current
income is not a consideration when selecting investments.
The Fund may engage in foreign currency hedging transactions in an attempt to
minimize the effects of currency fluctuations on the Fund. The Fund's attempt to
minimize the effects of currency fluctuations through the use of hedging
transactions may not be successful or the hedging transactions may cause the
Fund to be unable to take advantage of a favorable change in the value of
foreign currencies. The Fund may also invest in convertible and non-convertible
bonds and other debt securities and money market instruments.
PROSPECTUS
39
<PAGE>
MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
================================================================================
The costs of foreign investing, such as the costs of maintaining custody of
securities in foreign countries, frequently are higher than those involved in
U.S. investing. As a result, the operating expense ratios of a Fund may be
higher than those of investment companies investing only in U.S. securities.
PORTFOLIO MANAGERS OF THE
BOSTON 1784 STOCK FUNDS
EMMETT M. WRIGHT, Senior Fund Manager, and MICHAEL PELOSI, Senior Fund Manager,
have been co-managers of the Asset Allocation Fund since October 1997. Mr.
Wright, who has more than six years of investment management and research,
analysis experience, was an Associate Fund Manager at BankBoston from 1993 to
1994 and has been a Fund Manager at BankBoston since 1994. Mr. Pelosi, who has
more than fifteen years experience in investment management, research analysis
and securities trading at BankBoston, has been a Portfolio Manager since 1988.
EUGENE D. TAKACH, Senior Fund Manager, and THEODORE E. OBER, Senior Fund
Manager, have been the co-managers of the Growth and Income Fund and the Growth
Fund since the Funds began operations. Mr. Takach, who has more than 30 years
experience in investment management, research analysis and securities trading,
has been a Portfolio Manager at BankBoston since 1971. Mr. Ober, who has more
than ten years experience in investment management and research analysis, has
been a Research Analyst, Fund Manager and Senior Fund Manager at BankBoston
since 1987.
KENTON J. IDE, Director of Investments for BankBoston's Private Bank, and JULIET
COHN, Senior Portfolio Manager at Kleinwort Benson Investment Management
Americas Inc., have been co-managers of the International Equity Fund since the
Fund began operations in January 1995. Mr. Ide, who has more than twenty years
experience in investment management and research analysis, has been with
BankBoston since early 1993. From 1983 to 1993, Mr. Ide was a Senior Vice
President with the Private Client Group of Boston Safe Deposit and Trust
Company. Ms. Cohn, who has more than fifteen years experience in investment
management, has been with Kleinwort since 1987.
PROSPECTUS
40
<PAGE>
MANAGEMENT
================================================================================
INVESTMENT ADVISER
BankBoston is the investment adviser of each Fund and, subject to policies set
by the Trustees, makes investment decisions. BankBoston is the successor to a
bank chartered in 1784 and offers a wide range of banking and investment
services to customers throughout the world. BankBoston has been providing asset
management services since 1890. The Private Bank Division of BankBoston is the
investment management group within BankBoston that advises the Funds. As of July
31, 1998, BankBoston's Private Bank was responsible for the investment
management of approximately $24 billion of individual, institutional, endowment
and corporate assets, including $8.9 billion in assets of the Funds, in money
market, equity, and fixed income securities. BankBoston's Private Bank has
earned national recognition and respect as an investment manager. BankBoston's
legal name is BankBoston, National Association and its address is 100 Federal
Street, Boston, Massachusetts 02110.
Kleinwort Benson Investment Management Americas Inc. ("Kleinwort") serves as
investment adviser to the International Equity Fund with BankBoston. Investment
decisions are joint. Kleinwort, 75 Wall Street, New York, New York 10005, is the
U.S.-registered investment management subsidiary of the London-based Kleinwort
Benson Group plc, a merchant banking group whose origins date back to 1792,
which in turn is an indirect wholly-owned subsidiary of Dresdner Bank AG. Since
it began operations in 1980, Kleinwort has managed investment accounts,
primarily for institutions in North America, comprised of equity, fixed income
and balanced portfolios. Kleinwort and its affiliates manage approximately
$65 billion of assets.
MANAGEMENT FEES
The following chart shows the investment management fees paid by each Fund
during the last fiscal year. The Institutional Prime Money Market Fund and the
Florida Tax-Exempt Income Fund began operations during the past fiscal year and
the fees shown are those currently in effect.
- --------------------------------------------------------------------------------
MANAGEMENT FEES PAID
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund .40%
U.S. Treasury Money Market Fund .35
Institutional U.S. Treasury Money Market Fund .20
Prime Money Market Fund .35
Institutional Prime Money Market Fund .05
Short-Term Income Fund .50
Income Fund .68
U.S. Government Medium-Term Income Fund .67
Tax-Exempt Medium-Term Income Fund .67
Connecticut Tax-Exempt Income Fund .65
Florida Tax-Exempt Income Fund .60
Massachusetts Tax-Exempt Income Fund .65
Rhode Island Tax-Exempt Income Fund .63
Asset Allocation Fund .74
Growth and Income Fund .74
Growth Fund .74
International Equity Fund 1.00
BankBoston waives its investment management fees, if necessary, to limit the
total operating expenses of a Fund to a specified level. BankBoston also may
contribute to the Funds from time to time to help them maintain competitive
expense ratios. These arrangements are voluntary and may be terminated at any
time. The fees without waivers are shown in the fee table in the Risk/Return
Summary.
YEAR 2000
The "Year 2000" issue stems from the use of a two-digit format to define the
year in certain date-sensitive application systems rather than the use of a
four-digit format. As a result, date-sensitive software programs could recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in major systems or process failures or the generation of erroneous data, which
would lead to disruptions in the Funds' business operations.
The Funds have no application systems of their own and are entirely dependent on
their service providers' systems and software. The Funds are working with their
service providers (including their investment advisers, administrator, transfer
agent and custodian) to identify and remedy any Year 2000 issues. However, the
Funds cannot guarantee that all Year 2000 issues will be identified and
remedied, and the failure to successfully identify and remedy all Year 2000
issues could result in an adverse impact on the Funds.
PROSPECTUS
41
<PAGE>
DISTRIBUTION ARRANGEMENTS
================================================================================
Boston 1784 Funds do not charge any sales loads, deferred sales loads or other
fees in connection with the purchase of shares.
Each Fund, other than the Money Market Funds, has adopted a plan under rule
12b-1. The plan allows a Fund to use part of the Fund's assets (up to .25% of
its average daily net assets) for the sale and distribution of its shares,
including advertising, marketing and other promotional activities. Because these
fees are paid out of Fund assets, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales charges.
The Funds' Distributor currently waives these fees on a voluntary basis. This
fee waiver may be terminated in whole or in part at any time.
PROSPECTUS
42
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
====================================================================================================================================
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND A FUND'S FINANCIAL PERFORMANCE FOR THE PAST 5 YEARS [OR, IF
SHORTER, THE PERIOD OF THE FUND'S OPERATIONS]. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL
RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED [OR LOST] ON AN INVESTMENT IN EACH FUND (ASSUMING
REINVESTMENT OF ALL DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS, WHOSE
REPORT, ALONG WITH THE FUNDS' FINANCIAL STATEMENTS, ARE INCLUDED IN THE FUNDS' ANNUAL REPORTS, WHICH ARE AVAILABLE UPON REQUEST.
====================================================================================================================================
MONEY MARKET FUNDS
====================================================================================================================================
NET NET NET RATIO
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET
VALUE NET FROM NET VALUE END OF EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $1.00 0.03 (0.03) $1.00 3.33% $1,007,724 0.53% 3.28%
For the year ended May 31, 1997 $1.00 0.03 (0.03) $1.00 3.22% $ 845,612 0.54% 3.17%
For the year ended May 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $ 549,628 0.54% 3.49%
For the year ended May 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $ 539,412 0.50% 3.28%
For the period ended May 31, 1994 (1) $1.00 0.02 (0.02) $1.00 2.31%* $ 407,448 0.27% 2.39%
- ------------------------------------------------------------------------------------------------------------------------------------
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% 4.91%
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $ 390,294 0.64% 4.76%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64% 5.02%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60% 5.13%
For the period ended May 31, 1994 (2) $1.00 0.03 (0.03) $1.00 2.64%* $ 5,593 0.65% 2.91%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.36% $4,285,801 0.33% 5.24%
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 5.16% $2,591,487 0.33% 5.05%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.45% $ 644,733 0.32% 5.29%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 5.05% $ 395,585 0.30% 5.12%
For the period ended May 31, 1994 (3) $1.00 0.03 (0.03) $1.00 2.99%* $ 181,568 0.22% 3.16%
- ------------------------------------------------------------------------------------------------------------------------------------
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% 5.05%
For the period ended May 31, 1997 (4) $1.00 0.02 (0.02) $1.00 2.07%* $ 123,099 0.65% 4.98%
For the year ended December 31, 1996 (5) $1.00 0.05 (0.05) $1.00 5.02% $ 93,229 0.66% 4.85%
For the year ended December 31, 1995 $1.00 0.05 (0.05) $1.00 5.49% $ 156,532 0.62% 5.40%
For the year ended December 31, 1994 $1.00 0.04 (0.04) $1.00 3.75% $ 136,923 0.65% 3.64%
For the year ended December 31, 1993 $1.00 0.03 (0.03) $1.00 2.72% $ 168,909 0.59% 2.68%
For the period ended December 31, 1992 (6) $1.00 0.02 (0.02) $1.00 2.13%* $ 242,935 0.59% 3.13%
For the period ended April 30, 1992 (7) $1.00 0.03 (0.03) $1.00 3.55% $ 280,931 0.48% 4.61%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
For the period ended May 31, 1998 (8) $1.00 0.03 (0.03) $1.00 5.55% $ 302,338 0.27% 5.36%
RATIO OF RATIO OF NET
EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET
ASSETS (EXCLUDING ASSETS (EXCLUDING
WAIVERS) WAIVERS)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 TAX-FREE MONEY MARKET FUND
<S> <C> <C>
For the year ended May 31, 1998 0.53% 3.28%
For the year ended May 31, 1997 0.56% 3.15%
For the year ended May 31, 1996 0.60% 3.43%
For the year ended May 31, 1995 0.61% 3.17%
For the period ended May 31, 1994 (1) 0.71% 1.95%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1998 0.70% 4.86%
For the year ended May 31, 1997 0.72% 4.68%
For the year ended May 31, 1996 0.75% 4.91%
For the year ended May 31, 1995 0.92% 4.81%
For the period ended May 31, 1994 (2) 6.42% (2.86)%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1998 0.33% 5.24%
For the year ended May 31, 1997 0.34% 5.04%
For the year ended May 31, 1996 0.39% 5.22%
For the year ended May 31, 1995 0.41% 5.01%
For the period ended May 31, 1994 (3) 0.55% 2.83%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 PRIME MONEY MARKET FUND
For the year ended May 31, 1998 0.70% 5.00%
For the period ended May 31, 1997 (4) 0.75% 4.88%
For the year ended December 31, 1996 (5) 0.66% 4.85%
For the year ended December 31, 1995 0.62% 5.40%
For the year ended December 31, 1994 0.69% 3.60%
For the year ended December 31, 1993 0.70% 2.57%
For the period ended December 31, 1992 (6) 0.64% 3.08%
For the period ended April 30, 1992 (7) 0.63% 4.46%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
For the period ended May 31, 1998 (8) 0.42% 5.21%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Tax-Free Money Market Fund commenced operations on June 14, 1993. All ratios for the period have been annualized.
(2) The U.S. Treasury Money Market Fund commenced operations on June 7, 1993. All ratios for the period have been annualized.
(3) The Institutional U.S. Treasury Money Market Fund commenced operations on June 14, 1993. All ratios for the period have been
annualized.
(4) The Prime Money Market Fund changed its fiscal year 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.
(5) Until December 9, 1996, the Prime Money Market Fund was known as the BayFunds Money Market Portfolio and was a portfolio of
BayFunds, an open-end investment company registered under the Investment Company Act of 1940, as amended. Shares of the BayFunds
Money MarketPortfolio were divided into two classes, known as Investment Shares and Trust Shares. The Prime Money Market Fund
has only a single class of outstanding shares. For periods prior to December 9, 1996, Ernst & Young LLP were the auditors of the
BayFunds Money Market Portfolio.
(6) The Prime Money Market Fund changed its fiscal year from April 30 to December 31. Reflects operations for the period from
May 1, 1992 to December 31, 1992. All ratios for the period have been annualized.
(7) Reflects operations for the period from August 1, 1991 (date of initial public investment) to April 30, 1992. During the period
from May 16, 1991 (start of business) to August 1, 1991, net investment income aggregating to $0.01 per share ($1,101) was
distributed to Federated Administrative Services. All ratios for the period have been annualized.
(8) The Institutional Prime Money Market Fund commenced operations on November 5, 1997. All ratios for the period have been
annualized.
</FN>
</TABLE>
PROSPECTUS
43
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
====================================================================================================================================
BOND FUNDS
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $ 9.98 0.57 0.11 (0.57) -- $10.09 6.98% $197,256
For the year ended May 31, 1997 $ 9.93 0.58 0.05 (0.58) -- $ 9.98 6.47% $194,033
For the year ended May 31, 1996 $10.09 0.60 (0.12) (0.60) (0.04 $ 9.93 4.87% $ 86,383
For the period ended May 31, 1995 (1) $10.00 0.56 0.09 (0.56) -- $10.09 6.74%* $ 52,581
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1998 $ 9.99 0.61 0.26 (0.61) -- $10.25 8.88% $392,556
For the year ended May 31, 1997 $ 9.90 0.63 0.17 (0.63) (0.08) $ 9.99 8.32% $334,778
For the year ended May 31, 1996 $10.39 0.65 (0.37) (0.65) (0.12) $ 9.90 2.64% $235,022
For the period ended May 31, 1995 (1) $10.00 0.62 0.39 (0.62) -- $10.39 10.69%* $196,515
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1998 $ 9.37 0.55 0.23 (0.55) -- $ 9.60 8.56% $252,719
For the year ended May 31, 1997 $ 9.31 0.59 0.06 (0.59) -- $ 9.37 7.16% $209,141
For the year ended May 31, 1996 $ 9.57 0.61 (0.26) (0.61) -- $ 9.31 3.65% $167,494
For the year ended May 31, 1995 $ 9.36 0.58 0.21 (0.58) -- $ 9.57 8.79% $130,081
For the period ended May 31, 1994 (2) $10.00 0.59 (0.64) (0.59) -- $ 9.36 (0.65)%* $ 92,387
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.64% 5.67% 0.89% 5.42% 83.84%
For the year ended May 31, 1997 0.65% 5.78% 0.93% 5.50% 128.11%
For the year ended May 31, 1996 0.63% 5.87% 1.06% 5.44% 95.06%
For the period ended May 31, 1995 (1) 0.48% 6.31% 1.27% 5.52% 84.54%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1998 0.80% 5.91% 1.11% 5.60% 79.09%
For the year ended May 31, 1997 0.80% 6.31% 1.15% 5.96% 78.63%
For the year ended May 31, 1996 0.80% 6.17% 1.20% 5.77% 100.51%
For the period ended May 31, 1995 (1) 0.55% 7.01% 1.23% 6.33% 80.53%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1998 0.80% 5.80% 1.12% 5.48% 73.65%
For the year ended May 31, 1997 0.79% 6.30% 1.16% 5.93% 98.22%
For the year ended May 31, 1996 0.80% 6.23% 1.24% 5.79% 158.66%
For the year ended May 31, 1995 0.80% 6.24% 1.27% 5.77% 142.14%
For the period ended May 31, 1994 (2) 0.31% 6.08% 1.35% 5.04% 144.77%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Short-Term Income and Income Funds commenced operations on July 1, 1994. All ratios for the period have been annualized.
(2) The U.S. Government Medium-Term Income Fund commenced operations on June 7, 1993. All ratios for the period have been
annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
TAX-EXEMPT FUNDS
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $10.18 0.48 0.44 (0.48) (0.10) $10.52 9.24% $303,578
For the year ended May 31, 1997 $ 9.99 0.50 0.19 (0.50) -- $10.18 7.74% $250,526
For the year ended May 31, 1996 $10.14 0.51 (0.09) (0.51) (0.06) $ 9.99 4.31% $196,787
For the period ended May 31, 1995 $ 9.90 0.48 0.24 (0.48) -- $10.14 7.58% $176,345
For the period ended May 31, 1994 (1) $10.00 0.49 (0.10) (0.49) -- $ 9.90 3.93%* $ 36,365
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
For the year ended May 31, 1998 $10.38 0.50 0.45 (0.50) (0.02) $10.81 9.29% $142,107
For the year ended May 31, 1997 $10.17 0.51 0.21 (0.51) -- $10.38 7.26% $103,104
For the year ended May 31, 1996 $10.27 0.53 (0.10) (0.53) -- $10.17 4.20% $ 81,441
For the period ended May 31, 1995 (2) $10.00 0.45 0.27 (0.45) -- $10.27 7.45%* $ 61,369
- ------------------------------------------------------------------------------------------------------------------------------------
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%* $ 51,793
- ------------------------------------------------------------------------------------------------------------------------------------
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% $206,137
For the year ended May 31, 1997 $ 9.78 0.47 0.23 (0.47) -- $10.01 7.30% $147,459
For the year ended May 31, 1996 $ 9.90 0.48 (0.12) (0.48) -- $ 9.78 3.64% $106,619
For the period ended May 31, 1995 $ 9.81 0.47 0.09 (0.47) -- $ 9.90 6.00% $ 82,058
For the period ended May 31, 1994 (4) $10.00 0.50 (0.19) (0.50) -- $ 9.81 3.04%* $ 49,662
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.80% 4.62% 1.12% 4.30% 34.06%
For the year ended May 31, 1997 0.80% 4.92% 1.17% 4.55% 33.24%
For the year ended May 31, 1996 0.79% 4.90% 1.21% 4.48% 37.35%
For the period ended May 31, 1995 0.80% 5.02% 1.26% 4.56% 74.74%
For the period ended May 31, 1994 (1) 0.32% 5.06% 1.61% 3.77% 98.83%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
For the year ended May 31, 1998 0.80% 4.66% 1.14% 4.32% 16.81%
For the year ended May 31, 1997 0.76% 4.94% 1.17% 4.53% 4.28%
For the year ended May 31, 1996 0.75% 5.02% 1.29% 4.48% 20.41%
For the period ended May 31, 1995 (2) 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) 0.80% 4.59% 1.19% 4.20% 21.35%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
For the year ended May 31, 1998 0.80% 4.54% 1.14% 4.20% 6.45%
For the year ended May 31, 1997 0.79% 4.74% 1.18% 4.35% 9.47%
For the year ended May 31, 1996 0.80% 4.73% 1.28% 4.25% 47.00%
For the period ended May 31, 1995 0.80% 4.93% 1.35% 4.38% 34.59%
For the period ended May 31, 1994 (4) 0.33% 5.10% 1.41% 4.02% 13.99%
PROSPECTUS
44
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
TAX-EXEMPT FUNDS (CONTINUED)
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $10.31 0.49 0.35 (0.49) (0.04) $10.62 8.28% $76,797
For the year ended May 31, 1997 $10.06 0.50 0.25 (0.50) -- $10.31 7.61% $53,752
For the year ended May 31, 1996 $10.13 0.53 (0.07) (0.53) -- $10.06 4.65% $37,904
For the period ended May 31, 1995 (5) $10.00 0.45 0.13 (0.45) -- $10.13 6.09%* $32,495
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.80% 4.64% 1.16% 4.28% 13.79%
For the year ended May 31, 1997 0.79% 4.88% 1.21% 4.46% 8.18%
For the year ended May 31, 1996 0.77% 5.16% 1.35% 4.58% 19.68%
For the period ended May 31, 1995 (5) 0.54% 5.56% 1.60% 4.50% 57.51%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Tax-Exempt Medium-Term Income Fund commenced operations on June 14, 1993. All ratios for the period have been annualized.
(2) The Connecticut Tax-Exempt Income Fund commenced operations on August 1, 1994. All ratios for the period have been annualized.
(3) The Florida Tax-Exempt Income Fund commenced operations on June 30, 1997. All ratios for the period have been annualized.
(4) The Massachusetts Tax-Exempt Income Fund commenced operations on June 14, 1993. All ratios for the period have been annualized.
(5) The Rhode Island Tax-Exempt Income Fund commenced operations on August 1, 1994. All ratios for the period have been annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
STOCK FUNDS
====================================================================================================================================
NET REALIZED AND NET NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS
VALUE NET GAINS OR FROM NET FROM VALUE END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN (000)
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 $13.40 0.37 2.30 (0.38) (0.53) $15.16 20.51% $ 50,283
For the year ended May 31, 1997 $12.31 0.34 1.44 (0.33) (0.36) $13.40 14.89% $ 35,522
For the year ended May 31, 1996 $10.99 0.31 1.61 (0.31) (0.29) $12.31 17.83% $ 16,831
For the period ended May 31, 1995 $ 9.84 0.28 1.15 (0.27) (0.01) $10.99 14.84% $ 8,622
For the period ended May 31, 1994 (1) $10.00 0.19 (0.20) (0.15) (0.00) $ 9.84 (0.15)%* $ 6,928
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1998 $17.54 0.07 4.55 (0.09) (0.35) $21.72 26.71% $553,997
For the year ended May 31, 1997 $15.23 0.12 2.63 (0.11) (0.33) $17.54 18.33% $457,952
For the year ended May 31, 1996 $12.16 0.10 3.08 (0.11) (0.00) $15.23 26.32% $303,463
For the period ended May 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09% $229,200
For the period ended May 31, 1994 (2) $10.00 0.12 0.56 (0.11) (0.00) $10.57 6.80%* $121,717
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1998 $12.20 (0.05) 1.59 -- (0.81) $12.93 12.64% $257,550
For the year ended May 31, 1997 $11.27 0.02 0.96 (0.05) (0.00 $12.20 8.77% $261,487
For the year ended May 31, 1996 (3) $10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%* $ 46,026
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1998 $13.20 (0.02) 0.80 (0.15) (0.14) $13.69 6.19% $469,819
For the year ended May 31, 1997 $12.05 0.07 1.23 (0.09) (0.06) $13.20 10.93% $503,048
For the year ended May 31, 1996 $10.41 0.11 1.85 (0.27) (0.05) $12.05 19.08% $362,460
For the period ended May 31, 1995 (4) $10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%* $148,439
RATIO OF RATIO OF RATIO OF RATIO OF NET
EXPENSES NET EXPENSES TO INCOME TO
TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1998 0.98% 2.66% 1.23% 2.41% 47.83%
For the year ended May 31, 1997 1.07% 2.87% 1.37% 2.57% 23.60%
For the year ended May 31, 1996 1.25% 2.86% 1.90% 2.21% 39.56%
For the period ended May 31, 1995 1.25% 2.88% 2.51% 1.62% 67.23%
For the period ended May 31, 1994 (1) 1.25% 2.62% 3.61% 0.26% 28.19%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1998 0.90% 0.36% 1.15% 0.11% 39.03%
For the year ended May 31, 1997 0.92% 0.77% 1.19% 0.50% 15.35%
For the year ended May 31, 1996 0.94% 0.78% 1.24% 0.48% 39.50%
For the period ended May 31, 1995 0.94% 1.05% 1.23% 0.76% 38.94%
For the period ended May 31, 1994 (2) 0.35% 1.23% 1.36% 0.22% 31.55%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1998 0.91% (0.35%) 1.16% (0.60%) 48.60%
For the year ended May 31, 1997 0.77% 0.17% 1.15% (0.21%) 57.46%
For the year ended May 31, 1996 (3) 0.20% 1.75% 1.73% 0.22% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1998 1.24% 0.04% 1.49% (0.21%) 103.47%
For the year ended May 31, 1997 1.27% 0.41% 1.52% 0.16% 22.88%
For the year ended May 31, 1996 1.13% 0.76% 1.61% 0.28% 15.55%
For the period ended May 31, 1995 (4) 0.89% 2.06% 1.70% 1.25% 11.03%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Asset Allocation Fund commenced operations on June 14, 1993. All ratios for the period have been annualized.
(2) The Growth and Income Fund commenced operations on June 7, 1993. All ratios for the period have been annualized.
(3) The Growth Fund commenced operations on March 28, 1996. All ratios for the period have been annualized.
(4) The International Equity Fund commenced operations on January 3, 1995. All ratios for the period have been annualized.
</FN>
</TABLE>
PROSPECTUS
45
<PAGE>
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
THE FUNDS.
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS IS AVAILABLE IN THE FUNDS'
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. IN THE FUNDS' ANNUAL REPORT, YOU
WILL FIND A DISCUSSION OF THE MARKET CONDITIONS AND INVESTMENT STRATEGIES THAT
SIGNIFICANTLY AFFECTED THE FUNDS' PERFORMANCE DURING THE LAST FISCAL YEAR.
YOU CAN OBTAIN A FREE COPY OF THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION
AND/OR FREE COPIES OF THE FUNDS' MOST RECENT ANNUAL OR SEMI-ANNUAL REPORT BY
CALLING 1-800-BKB-1784. THE MATERIAL YOU REQUEST WILL BE SENT BY FIRST-CLASS
MAIL, OR OTHER MEANS DESIGNED TO ENSURE EQUALLY PROMPT DELIVERY, WITHIN THREE
BUSINESS DAYS OF RECEIPT OF THE REQUEST.
YOU MAY ALSO CALL 1-800-BKB-1784 TO REQUEST OTHER INFORMATION ABOUT THE FUNDS OR
TO MAKE SHAREHOLDER INQUIRIES.
THE STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE.
INFORMATION ABOUT THE FUNDS (INCLUDING THE STATEMENT OF ADDITIONAL INFORMATION)
CAN BE REVIEWED AND COPIED AT THE SECURITIES AND EXCHANGE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, D.C. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING THE COMMISSION AT 1-800-SEC-0330.
COPIES OF THIS INFORMATION MAY BE OBTAINED, UPON PAYMENT OF A DUPLICATING FEE,
BY WRITING THE PUBLIC REFERENCE SECTION OF THE COMMISSION, WASHINGTON, D.C.
20549-6009.
REPORTS AND OTHER INFORMATION ABOUT THE FUNDS ARE ALSO AVAILABLE ON THE
COMMISSION'S INTERNET SITE AT HTTP://WWW.SEC.GOV.
[BOSTON 1784 FUNDS LOGO OMITTED]
BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
WWW.BOSTON1784FUNDS.COM
FILE NO. 811-7474
<PAGE>
BOSTON 1784 FUNDS
MAKING INVESTING ECONOMICAL AND CONVENIENT
- --------------------------------------------------------------------------------
WHEN YOU INVEST IN BOSTON 1784 FUNDS, YOU CAN COUNT ON THESE BENEFITS FROM THE
FIRST DAY YOU INVEST:
NO SALES, EXCHANGE OR REDEMPTION FEES --
Boston 1784 Funds are all "no-load," which means you can buy shares, move your
money among funds, and sell shares without paying a sales charge.
PROMPT ANSWERS TO YOUR QUESTIONS --
Simply contact your FSC or call 1-800-BKB-1784 with any questions you may have
about Boston 1784 Funds.
LOW MINIMUM INVESTMENT --
You can invest in any Boston 1784 Fund with as little as $1,000, and make
additional investments in amounts as low as $250. You can open an IRA with as
little as $250.*
AUTOMATIC INVESTMENTS OF AS LITTLE AS $50 --
You can arrange to have funds automatically invested from your bank account.
(Ask your FSC about the power of "dollar cost averaging.")**
AUTOMATIC REINVESTMENT OF DIVIDENDS --
You can choose to have all dividends reinvested automatically or to receive
payment by check.
24-HOUR ACCESS --
Get automated account information on your fund balances and current yields by
calling 1-800-BKB-1784, 24 hours a day.
WRITTEN CONFIRMATIONS OF TRANSACTIONS --
Each time you buy or sell shares in a Boston 1784 Fund, you will receive a
confirmation listing all the details of your transaction.
MONTHLY, COMBINED INVESTMENT STATEMENT --
You can combine all your Boston 1784 Funds investments on a single, monthly
statement. It will show all the detailed transaction activity for the month,
provide a summary for the year-to-date, and give you the market value of your
investments on the statement date.
BOSTON 1784 FUNDS CHECKWRITING --
Take advantage of easy access to your investment with unlimited, free
checkwriting if you invest in Boston 1784 Tax-Free Money Market Fund, Boston
1784 U.S. Treasury Money Market Fund, Boston 1784 Prime Money Market Fund, or
Boston 1784 Short-Term Income Fund. Minimum amount per check is $250.
IF YOU HAVE QUESTIONS ABOUT INVESTING IN ANY BOSTON 1784 FUNDS, OR FOR
INFORMATION ABOUT USING BOSTON 1784 FUNDS IN YOUR IRA, CONTACT YOUR FINANCIAL
SERVICES COUNSELOR OR CALL 1-800-BKB-1784.
* NOTE: THE INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND AND INSTITUTIONAL
PRIME MONEY MARKET FUND HAVE HIGHER MINIMUMS FOR INITIAL INVESTMENT AND
AUTOMATIC INVESTMENT.
** PERIODIC INVESTMENT PLANS DO NOT ASSURE A PROFIT OR PROTECT AGAINST LOSS IN
DECLINING MARKETS. THIS TYPE OF PLAN INVOLVES CONTINUOUS INVESTMENTS IN
SECURITIES REGARDLESS OF FLUCTUATING PRICE LEVELS. INVESTORS SHOULD CONSIDER
THEIR FINANCIAL ABILITY TO CONTINUE PURCHASES THROUGH PERIODS OF LOW PRICE
LEVELS.
[PHOTO OMITTED]
NOT PART OF THE PROSPECTUS
<PAGE>
TERMS YOU NEED TO KNOW
- --------------------------------------------------------------------------------
ASSETS: The investment holdings and cash owned by a mutual fund.
AVERAGE WEIGHTED MATURITY: An average of the maturity dates of the securities in
a mutual fund based on the dollar value of those securities. It is calculated by
multiplying the market value of each security by the time remaining to its
maturity, adding these calculations and then dividing the total by the
portfolio's market value.
BALANCE SHEET: Statement of a company's assets (what it owns) and liabilities
(what it owes). It shows the financial condition of a company at a particular
time.
COMMERCIAL PAPER: A short-term IOU (usually 30-270 days) of a corporation, not
backed by assets, that allows it to borrow from banks, mutual funds and other
institutional investors.
CONVERTIBLE DEBT SECURITIES: Bonds or preferred stock that may be converted into
the common stock of a corporation at a prestated price.
DEBENTURES: Bonds that are backed only by the good faith and credit of the
company rather that its assets. The credit rating of these bonds, based on the
ability of the issuer to repay the debt, depends entirely on the financial
strength of the company.
DIVERSIFICATION: The practice of investing broadly across a number of securities
to reduce risk--a hallmark of mutual fund investing.
EQUITY SECURITIES: Securities, such as common stock, which represent a share of
ownership in a company.
EXPENSE RATIO: A fund's cost of doing business--disclosed in the
prospectus--expressed as a percentage of its assets.
FIXED INCOME SECURITIES: Securities that pay a set amount of interest on a
regular basis until they mature, such as bonds.
INCOME: Dividends, interest and/or short-term capital gains paid to
shareholders. Income is earned on a fund's portfolio once operating expenses are
deducted.
LIQUIDITY: The ability to redeem (sell back) mutual fund shares on any business
day and receive the current value (which may be more or less that the original
cost).
NET ASSET VALUE PER SHARE (NAV): The market value of one share of a mutual fund,
calculated by subtracting a fund's liabilities from its assets and dividing by
the number of shares outstanding.
PORTFOLIO TURNOVER RATE: A measure of a fund's trading activity that indicates
how often securities are bought and sold by the fund.
REPURCHASE AGREEMENT: An agreement between a seller and buyer in which the
seller agrees to repurchase securities at an agreed-upon price and time. These
arrangements are usually short-term (18 months or less), often overnight.
TAX-EQUIVALENT YIELD: The yield an investor must receive on a taxable security
to equal the yield on a non-taxable security. Municipal bonds, for example,
often have a lower yield than taxable bonds. But the return on these securities
may be comparable after taxes are deducted. Non-taxable securities are most
suitable for investors in higher income tax brackets.
TOTAL RETURN: 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.
WARRANTS: Securities that entitle an investor to buy shares of common stock in a
company at a specified price for a specified period of time.
YIELD: A measure of a fund's income (dividends and interest) less the fund's
expenses during a specified period. This is based on a formula set by the
Securities and Exchange Commission.
ZERO COUPON SECURITIES: Bonds that do not pay interest, but are sold at deep
discounts from the actual or face value. An investor receives the face value
when the bond matures.
<PAGE>
MONEY MARKET FUNDS
[SQUARE BULLET] BOSTON 1784 TAX-FREE MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 PRIME MONEY MARKET FUND
[SQUARE BULLET] BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
BOND FUNDS
[SQUARE BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
[SQUARE BULLET] BOSTON 1784 INCOME FUND
[SQUARE BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
- --------------------------------------------------------------------------------
TAX-EXEMPT INCOME FUNDS
[SQUARE BULLET] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
[SQUARE BULLET] BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
[SQUARE BULLET] BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
[SQUARE BULLET] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
[SQUARE BULLET] BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
STOCK FUNDS
[SQUARE BULLET] BOSTON 1784 ASSET ALLOCATION FUND
[SQUARE BULLET] BOSTON 1784 GROWTH AND INCOME FUND
[SQUARE BULLET] BOSTON 1784 GROWTH FUND
[SQUARE BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND
BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
WWW. BOSTON1784FUNDS.COM
[LOGO OMITTED]
BOSTON
1784
FUNDS
NOT PART OF THE PROSPECTUS MF-0134 (9/98)
