Rule 497(c)
File Nos. 33-58004
and 811-7474
BOSTON 1784 FUNDS[SERVICE MARK] PROSPECTUS
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PLEASE READ THIS PROSPECTUS BEFORE INVESTING AND KEEP IT ON FILE FOR FUTURE
REFERENCE. IT CONTAINS IMPORTANT INFORMATION, INCLUDING HOW THE FUNDS INVEST AND
SERVICES AVAILABLE TO SHAREHOLDERS.
To learn more about the Funds and their investments, you can obtain a copy of
the Funds' most recent financial report and portfolio listing or a copy of the
Statement of Additional Information dated October 1, 1997, as supplemented
from time to time. The Statement of Additional Information has been filed with
the Securities and Exchange Commission and is incorporated into this Prospectus
by reference. For a free copy of either document, call 1-800-BKB-1784.
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REMEMBER THAT SHARES OF THE FUNDS:
[SQUARE BULLET] ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY;
[SQUARE BULLET] ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
BANKBOSTON, N.A. OR ANY OF ITS AFFILIATES;
[SQUARE BULLET] INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
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AS ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
BANKBOSTON, N.A. SERVES AS INVESTMENT ADVISER, CUSTODIAN AND SHAREHOLDER
SERVICING AGENT FOR BOSTON 1784 FUNDS. BOSTON 1784 FUNDS ARE DISTRIBUTED BY
SEI INVESTMENTS DISTRIBUTION CO., A PARTY INDEPENDENT OF BANKBOSTON, N.A. OR ANY
OF ITS AFFILIATES. FINANCIAL SERVICES COUNSELORS ARE REGISTERED REPRESENTATIVES
OF BANKBOSTON INVESTOR SERVICES, INC. (MEMBER NASD/SIPC), A WHOLLY-OWNED
SUBSIDIARY OF BANKBOSTON, N.A.
INVESTMENTS IN THE MONEY MARKET FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
[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
December 2, 1997
as supplemented February 16, 1998
PROSPECTUS
<PAGE>
TABLE OF CONTENTS
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FUND SUMMARY ............................................................. 1
EXPENSES ................................................................. 2
FINANCIAL HIGHLIGHTS ..................................................... 3
INVESTMENT INFORMATION ................................................... 4
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT POLICIES .... 4
ADDITIONAL INVESTMENT POLICIES ............................. 5
RISK CONSIDERATIONS ........................................ 6
DIVIDENDS AND DISTRIBUTIONS .............................................. 7
MANAGEMENT ............................................................... 8
SHAREHOLDER SERVICES ..................................................... 10
HOW TO REACH THE FUNDS ..................................... 10
TYPES OF ACCOUNTS .......................................... 10
HOW TO OPEN AN ACCOUNT ..................................... 10
HOW TO PURCHASE SHARES ..................................... 11
HOW TO SELL SHARES ......................................... 12
SHAREHOLDER SERVICES AND POLICIES .......................... 14
TAXES .................................................................... 16
GENERAL INFORMATION ...................................................... 17
NET ASSET VALUE ............................................ 17
ORGANIZATION ............................................... 17
VOTING AND OTHER RIGHTS .................................... 17
PERFORMANCE INFORMATION .................................... 18
EXPENSES ................................................... 18
COUNSEL AND INDEPENDENT AUDITORS ........................... 19
APPENDIX A-- TAXABLE EQUIVALENT YIELD TABLES ............................. 20
APPENDIX B-- PERMITTED INVESTMENTS AND INVESTMENT PRACTICES .............. 21
PROSPECTUS
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FUND SUMMARY
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THIS SECTION SUMMARIZES THE FUNDS' INVESTMENT OBJECTIVES AND WHO MAY WANT TO
INVEST. SEE THE REST OF THIS PROSPECTUS FOR MORE INFORMATION, INCLUDING RISK
CONSIDERATIONS. AS WITH ANY MUTUAL FUND, THERE CAN BE NO ASSURANCE THAT A FUND
WILL ACHIEVE ITS INVESTMENT OBJECTIVE. NO FUND, BY ITSELF, IS INTENDED TO BE A
COMPLETE INVESTMENT PROGRAM.
BOSTON 1784 TAX-FREE MONEY MARKET FUND
Objective: to preserve principal value and maintain a high degree of
liquidity while providing current income exempt from federal income
tax.
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND,
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
BOSTON 1784 PRIME MONEY MARKET FUND AND
BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND
Objective: to preserve principal value and maintain a high degree of
liquidity while providing current income.
WHO MAY WANT TO INVEST
These Funds are designed for conservative investors who want liquidity,
current income at money market rates and stability of principal. Since
they emphasize stability, these Funds may be an appropriate component
of a savings plan. The Treasury Funds offer an added measure of safety
with their focus on U.S. government securities.
PROSPECTUS
1
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EXPENSES
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THESE TABLES SHOW SHAREHOLDER TRANSACTION EXPENSES AND ESTIMATED ANNUAL
OPERATING EXPENSES FOR THE FUNDS, AND ARE INTENDED TO ASSIST INVESTORS IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT SHAREHOLDERS IN THE FUNDS WILL
BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE INFORMATION, SEE "MANAGEMENT" ON
PAGE 8 AND "GENERAL INFORMATION - EXPENSES" ON PAGE 18.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on
purchases and reinvested dividends None
Deferred sales charges imposed on redemptions None
Redemption fee* None
Exchange fee None
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*There is a $12 service fee if the Funds wire redemption proceeds to your bank
account.
ANNUAL OPERATING EXPENSES (1)(4)
(EXPRESSED AS A PERCENTAGE OF AVERAGE NET ASSETS)
Total
Advisory Other Operating
Fee(2) Expenses(2) Expenses(2)
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Tax-Free Money
Market Fund .38% .16% .54%
U.S. Treasury Money
Market Fund .33 .32 .65
Institutional U.S. Treasury
Money Market Fund .20 .14 .34
Prime Money
Market Fund .30 .35 .65
Institutional Prime
Money Market Fund(3) .20 .20 .40
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EXAMPLE (1)(4)
A shareholder would pay the following expenses on a $1,000 investment, assuming
a 5% annual return, reinvestment of all dividends and redemption of the shares
after the number of years indicated:
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1 Year 3 Years 5 Years 10 Years
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Tax-Free Money Market Fund $6 $17 $30 $68
U.S. Treasury Money
Market Fund 7 21 36 81
Institutional U.S. Treasury
Money Market Fund 3 11 19 43
Prime Money Market Fund 7 21 36 81
Institutional Prime
Money Market Fund(3) 4 13 N/A N/A
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(1) Unless otherwise noted, the information in the expense table and the example
has been restated to reflect current fees and reflects voluntary fee waivers
and/or reimbursements. The assumption in the example of a 5% annual return
is required by the Securities and Exchange Commission for all mutual funds,
and is not a prediction of any Fund's future performance. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF ANY FUND.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
(2) Without fee waivers and reimbursements, advisory fees would be .40% for each
Fund (.20% for the Institutional U.S. Treasury Money Market Fund and the
Institutional Prime Money Market Fund); and other expenses and total
operating expenses would be .16% and .56% for the Tax-Free Money Market
Fund, .32% and .72% for the U.S. Treasury Money Market Fund, .14% and .34%
for the Institutional U.S. Treasury Money Market Fund, .35% and .75% for
the Prime Money Market Fund, and .20% and .40% for the Institutional Prime
Money Market Fund.
(3) Because the Fund is newly organized, the information in the expense table
and the example is estimated for the current fiscal year.
(4) Shares may be purchased through certain financial institutions including
BankBoston. These institutions may charge fees for purchases and
redemptions of shares of the Funds.
PROSPECTUS
2
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FINANCIAL HIGHLIGHTS
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THIS TABLE CONTAINS FINANCIAL INFORMATION ABOUT THE FUNDS WHICH IS INCLUDED IN
THE FUNDS' ANNUAL REPORTS. EXCEPT AS NOTED BELOW, THE FINANCIAL INFORMATION HAS
BEEN AUDITED BY COOPERS & LYBRAND L.L.P., INDEPENDENT ACCOUNTANTS. THEIR REPORTS
ON THE AUDITED FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS ARE INCLUDED IN THE
ANNUAL REPORTS. THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS FROM THE
ANNUAL REPORTS ARE INCORPORATED BY REFERENCE INTO THE STATEMENT OF ADDITIONAL
INFORMATION. COPIES OF THE ANNUAL REPORTS MAY BE OBTAINED WITHOUT CHARGE BY
CALLING 1-800-BKB-1784. THE INSTITUTIONAL PRIME MONEY MARKET FUND IS NEWLY
ORGANIZED AND HAS NOT YET ISSUED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
NET NET NET
ASSET DISTRIBUTIONS ASSET ASSETS RATIO
VALUE NET FROM NET VALUE END OF EXPENSES
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS
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BOSTON 1784 TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1997 $1.00 0.03 (0.03) $1.00 3.22% $845,612 0.54%
For the year ended May 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $549,628 0.54%
For the year ended May 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $539,412 0.50%
For the period ended May 31, 1994 (1) $1.00 0.02 (0.02) $1.00 2.31%* $407,448 0.27%
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BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $390,294 0.64%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60%
For the period ended May 31, 1994 (2) $1.00 0.03 (0.03) $1.00 2.64%* $ 5,593 0.65%
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BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 5.16% $2,591,487 0.33%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.45% $ 644,733 0.32%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 5.05% $ 395,585 0.30%
For the period ended May 31, 1994 (3) $1.00 0.03 (0.03) $1.00 2.99%* $ 181,568 0.22%
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BOSTON 1784 PRIME MONEY MARKET FUND
For the period
ended May 31, 1997 (4) $1.00 0.02 (0.02) $1.00 2.07%* $123,099 0.65%
For the year ended
December 31, 1996 (5) $1.00 0.05 (0.05) $1.00 5.02% $ 93,229 0.66%
For the year ended December 31, 1995 $1.00 0.05 (0.05) $1.00 5.49% $156,532 0.62%
For the year ended December 31, 1994 $1.00 0.04 (0.04) $1.00 3.75% $136,923 0.65%
For the year ended December 31, 1993 $1.00 0.03 (0.03) $1.00 2.72% $168,909 0.59%
For the period ended
December 31, 1992 (6) $1.00 0.02 (0.02) $1.00 2.13%* $242,935 0.59%
For the period ended April 30, 1992 (7) $1.00 0.03 (0.03) $1.00 3.55% $280,931 0.48%
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RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
OF NET TO AVERAGE TO AVERAGE
INCOME NET ASSETS NET ASSETS
TO AVERAGE (EXCLUDING (EXCLUDING
NET ASSETS WAIVERS) WAIVERS)
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BOSTON 1784 TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C>
For the year ended May 31, 1997 3.17% 0.56% 3.15%
For the year ended May 31, 1996 3.49% 0.60% 3.43%
For the year ended May 31, 1995 3.28% 0.61% 3.17%
For the period ended May 31, 1994 (1) 2.39% 0.71% 1.95%
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BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1997 4.76% 0.72% 4.68%
For the year ended May 31, 1996 5.02% 0.75% 4.91%
For the year ended May 31, 1995 5.13% 0.92% 4.81%
For the period ended May 31, 1994 (2) 2.91% 6.42% (2.86)%
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BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended May 31, 1997 5.05% 0.34% 5.04%
For the year ended May 31, 1996 5.29% 0.39% 5.22%
For the year ended May 31, 1995 5.12% 0.41% 5.01%
For the period ended May 31, 1994 (3) 3.16% 0.55% 2.83%
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BOSTON 1784 PRIME MONEY MARKET FUND
For the period
ended May 31, 1997 (4) 4.98% 0.75% 4.88%
For the year ended
December 31, 1996 (5) 4.85% 0.66% 4.85%
For the year ended December 31, 1995 5.40% 0.62% 5.40%
For the year ended December 31, 1994 3.64% 0.69% 3.60%
For the year ended December 31, 1993 2.68% 0.70% 2.57%
For the period ended
December 31, 1992 (6) 3.13% 0.64% 3.08%
For the period ended April 30, 1992 (7) 4.61% 0.63% 4.46%
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<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 Market Portfolio 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.
</FN>
</TABLE>
PROSPECTUS
3
<PAGE>
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT POLICIES: THIS SECTION DESCRIBES
EACH FUND'S INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT POLICIES. ADDITIONAL
INVESTMENT POLICIES AND RISK CONSIDERATIONS ARE DESCRIBED IN THE NEXT SECTIONS.
EACH FUND'S INVESTMENT OBJECTIVE IS FUNDAMENTAL, MEANING THAT IT CANNOT BE
CHANGED WITHOUT THE APPROVAL OF SHAREHOLDERS OF THAT FUND. OF COURSE, THERE CAN
BE NO ASSURANCE THAT ANY FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.
The investment objective of BOSTON 1784 TAX-FREE MONEY MARKET FUND is to
preserve principal value and maintain a high degree of liquidity while providing
current income exempt from federal income taxes.
The investment objective of BOSTON 1784 U.S. TREASURY MONEY MARKET FUND, BOSTON
1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND, 1784 PRIME MONEY MARKET FUND
and BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET FUND is to preserve principal
value and maintain a high degree of liquidity while providing current income.
The TAX-FREE MONEY MARKET FUND invests primarily in municipal securities.
Municipal securities are debt securities issued by the states, territories and
possessions of the United States (including the District of Columbia) and their
political subdivisions, agencies and instrumentalities that pay interest that is
exempt from federal income tax, including the alternative minimum tax. Municipal
securities also may be issued by other qualifying issuers and include bonds,
notes and commercial paper. Under normal circumstances, at least 80% of the
Fund's net assets are invested in municipal securities. The Fund may also invest
in taxable money market instruments, such as short-term U.S. government
obligations, bank obligations (including certificates of deposit, bankers'
acceptances and fixed time obligations), commercial paper, and other short-term
debt obligations and repurchase agreements. Under normal circumstances, not more
than 20% of the Fund's assets are invested in taxable instruments. See Appendix
A for information on taxable equivalent yields.
The U.S. TREASURY MONEY MARKET FUND and INSTITUTIONAL U.S. TREASURY MONEY MARKET
FUND invest primarily in U.S. Treasury obligations, including bills, notes and
bonds, and repurchase agreements secured by U.S. Treasury obligations. Under
normal circumstances, at least 65% of these Funds' assets are invested in these
securities. U.S. Treasury obligations are supported by the "full faith and
credit" of the United States. Under normal circumstances, these Funds invest the
rest of their assets in obligations of U.S. government agencies or
instrumentalities and repurchase agreements secured by these obligations.
Subject to applicable law, the Institutional Treasury Fund also invests in other
mutual funds that hold only U.S. government obligations and repurchase
agreements secured by these obligations. Some obligations of U.S. government
agencies and instrumentalities are supported by the "full faith and credit" of
the United States, others by the right of the issuer to borrow from the U.S.
Treasury, and others only by the credit of the agency or instrumentality.
ALTHOUGH THE FUNDS INVEST IN U.S. GOVERNMENT OBLIGATIONS, AN INVESTMENT IN THE
FUNDS IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
The PRIME MONEY MARKET FUND and BOSTON 1784 INSTITUTIONAL PRIME MONEY MARKET
FUND invest primarily in high quality money market instruments. These
instruments include short-term U.S. government obligations, corporate bonds,
bank obligations (including certificates of deposit, bankers' acceptances and
fixed time obligations), commercial paper, and other short-term debt obligations
and repurchase agreements.
PROSPECTUS
4
<PAGE>
Each Fund employs specific investment policies and procedures designed to
maintain a constant net asset value of $1.00 per share. There can be no
assurance, however, that a constant net asset value will be maintained on a
continuing basis.
The Funds comply with industry regulations applicable to money market funds.
These regulations require that each Fund's investments mature or be deemed to
mature within 397 days from the date of acquisition, that the average maturity
of each Fund's investments (on a dollar-weighted basis) be 90 days or less, and
that all of the Funds' investments 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 instruments may, in many
circumstances, result in a lower yield than would be available from investments
in instruments with a lower quality or a longer term.
ADDITIONAL INVESTMENT POLICIES: THIS SECTION DESCRIBES ADDITIONAL INVESTMENT
POLICIES OF THE FUNDS. SEE "RISK CONSIDERATIONS" ON PAGE 6 FOR MORE INFORMATION.
NON-U.S. SECURITIES
Each Fund (other than the U.S. Treasury Money Market Fund and the Institutional
U.S. Treasury Money Market Fund) may invest a portion of its assets in non-U.S.
securities. Investing in non-U.S. securities involves risks in addition to those
of investing in U.S. securities. See "Risk Considerations."
TEMPORARY INVESTMENTS
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.
OTHER PERMITTED INVESTMENTS
For more information regarding the Funds' permitted investments and investment
practices, see Appendix B. The Funds will not necessarily invest or engage in
each of the investments and investment practices in Appendix B, but reserve the
right to do so.
OTHER INVESTMENT COMPANIES
The Prime Money Market Fund may invest substantially all of its assets in a
mutual fund having the same investment objective and policies as the Fund. This
structure is known as a master/feeder investment structure. Shareholders of the
Prime Money Market Fund will be given at least 30 days' notice before the Fund
converts to this structure.
INVESTMENT RESTRICTIONS
The Statement of Additional Information contains a list of specific investment
restrictions which govern the investment policies of the Funds, including a
limitation that each Fund may borrow money from banks in an amount not to exceed
331/3% of the Fund's total assets for extraordinary or emergency purposes (e.g.,
to meet redemption requests). Shareholder approval is required to change each
Fund's investment objective. Generally, the Funds' investment policies may be
changed without shareholder approval. If a percentage or rating restriction
(other than a restriction as to borrowing) is adhered to at the time an
investment is made, a later change in percentage or rating resulting from
changes in a
PROSPECTUS
5
<PAGE>
INVESTMENT INFORMATION (CONTINUED)
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Fund's securities will not be a violation of policy.
PORTFOLIO TURNOVER
Securities of a Fund will be sold whenever the Adviser or Advisers believe it is
appropriate to do so in light of the Fund's investment objective, without regard
to the length of time a particular security may have been held. The amount of
brokerage commissions and realization of taxable capital gains will tend to
increase as the level of portfolio activity increases.
BROKERAGE TRANSACTIONS
The primary consideration in placing each Fund's securities transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Funds may execute brokerage or other agency transactions through
an investment adviser or distributor of the Funds. The adviser or distributor
will be paid for these transactions.
RISK CONSIDERATIONS: THE RISKS OF INVESTING IN EACH FUND VARY DEPENDING UPON
THE NATURE OF THE SECURITIES HELD, AND THE INVESTMENT PRACTICES EMPLOYED, ON
ITS BEHALF. CERTAIN OF THESE RISKS ARE DESCRIBED IN THIS SECTION.
NON-U.S. SECURITIES
Investments in non-U.S. 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 non-U.S. issuers and
markets are subject. 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. Enforcing
legal rights may be difficult, costly and slow in non-U.S. countries, and there
may be special problems enforcing claims against non-U.S. governments. In
addition, non-U.S. 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. Non-U.S. markets may be less liquid
and more volatile than U.S. markets, and may offer less protection to investors
such as the Funds.
INVESTMENT PRACTICES
Certain of the investment practices employed for the Funds may entail certain
risks. These risks are in addition to the risks described above and are
described in Appendix B.
PROSPECTUS
6
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
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Substantially all of each Fund's net income from dividends and interest is
declared as a dividend daily to shareholders of record. Shares begin accruing
dividends on the date of purchase, and accrue dividends up to and including the
day prior to redemption. Dividends are paid MONTHLY on the first business day of
each month.
Each Fund's net realized short-term and long-term capital gains, if any, will be
distributed to the Fund's shareholders at least annually. Each Fund may also
make additional distributions to its shareholders to the extent necessary to
avoid the application of the 4% non-deductible excise tax on certain
undistributed income and net capital gains of mutual funds.
Distributions are paid in additional shares issued at net asset value unless the
shareholder elects to receive payment in cash.
If a shareholder has elected to receive dividends and/or distributions in cash,
and the postal or other delivery service fails to deliver checks to the
shareholder's address of record, or the shareholder does not respond to mailings
from the shareholder servicing agent with regard to uncashed distribution
checks, the shareholder's distribution option will automatically be converted to
having dividends and other distributions reinvested in additional shares. No
interest will accrue on amounts represented by uncashed distribution or
redemption checks.
PROSPECTUS
7
<PAGE>
MANAGEMENT
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TRUSTEES AND OFFICERS
Each Fund is supervised by the Board of Trustees of Boston 1784 Funds. More
information on the Trustees and Fund officers may be found under "Management" in
the Statement of Additional Information.
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, 1997, BankBoston's Private Bank was responsible for the investment
management of approximately $24 billion of individual, institutional, endowment
and corporate assets, including nearly $7 billion in assets in the Boston 1784
Funds family, in money market, equity, and fixed income securities. BankBoston's
Private Bank has earned national recognition and respect as an investment
manager. BankBoston is a wholly-owned subsidiary of BankBoston Corporation; its
legal name is BankBoston, National Association and its address is 100 Federal
Street, Boston, Massachusetts 02110. Prior to April 24, 1997, BankBoston's legal
name was The First National Bank of Boston.
The following chart shows the investment advisory fees currently paid by each
Fund. The Institutional Prime Money Market Fund is newly organized and had no
operations during the fiscal year ended May 31, 1997.
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Advisory fees paid
(expressed as a percentage
of average net assets)
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund .38%
U.S. Treasury Money Market Fund. .33
Institutional U.S. Treasury Money Market Fund .20
Prime Money Market Fund .30
BankBoston may waive its investment advisory fees to the extent necessary to
limit the total operating expenses of the Funds to a specified level. BankBoston
also may contribute to the Funds from time to time to help them maintain a
competitive expense ratio. These arrangements would be voluntary and could
be terminated at any time.
BANKING RELATIONSHIPS. BankBoston and its affiliates may have banking
relationships with the issuers of securities purchased for the Funds. These
relationships may include outstanding loans to issuers which may be repaid in
whole or in part with the proceeds of securities purchased for the Funds.
BankBoston has informed the Funds that in making its investment decisions, it
does not obtain or use material inside information in the possession of any
division or department of BankBoston or any of its affiliates.
BANK REGULATORY MATTERS. The Glass-Steagall Act prohibits certain financial
institutions, such as BankBoston, from underwriting securities of open-end
investment companies, such as the Funds. BankBoston believes that its investment
advisory services are not underwriting and are consistent with the
Glass-Steagall Act and other relevant federal and state laws. State laws on this
issue may differ from applicable federal law, and banks and financial
institutions may be required to register as dealers pursuant to state securities
laws. Changes in either federal or state statutes or regulations, or in their
interpretations, could prevent BankBoston from continuing to perform these
services. If that were
PROSPECTUS
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to happen, the Funds would seek alternative means for obtaining these services.
ADMINISTRATOR. SEI Fund Resources provides administrative and fund accounting
services to the Funds, including regulatory reporting, office facilities, and
equipment and personnel. SEI receives a fee for these services, which is
calculated daily and paid monthly, at an annual rate of .085% of the first $5
billion of the combined average daily net assets of the Funds and the other
funds in the Boston 1784 Funds family and .045% of combined average daily net
assets in excess of $5 billion. SEI has agreed to waive portions of its fee from
time to time. SEImay retain sub-administrators, including BankBoston, whose fees
would be paid by SEI.
SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT. Boston Financial Data Services,
2 Heritage Drive, North Quincy, Massachusetts 02171, is the Funds' dividend
disbursing agent. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, is the transfer agent. BankBoston is the
shareholder servicing agent.
DISTRIBUTION ARRANGEMENTS. SEI Investments Distribution Co. (formerly known as
SEI Financial Services Company), 1 Freedom Valley Drive, Oaks, Pennsylvania
19456, is the distributor of shares of each Fund. The Distributor receives no
fee for these services.
From time to time, the Distributor may provide incentive compensation to its own
employees and employees of banks (including BankBoston), broker-dealers and
investment counselors in connection with the sale of shares of the Funds.
Promotional incentives may be cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, will be offered uniformly to all
program participants and will be predicated upon the amount of shares of the
Funds sold by the participant.
CUSTODIAN. BankBoston is the Funds' custodian. Fund securities may be held by a
sub-custodian bank approved by the Trustees.
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SHAREHOLDER SERVICES
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This section describes how to do business with the Funds and shareholder
services that are available.
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 between
9 a.m. and 4 p.m. (Eastern time).
BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524
BY OVERNIGHT COURIER Boston 1784 Funds
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. If you would like to receive an application, please call
1-800-BKB-1784.
[SQUARE BULLET] INDIVIDUAL OR JOINT OWNERSHIP. Individual accounts are owned
by one person. Joint accounts have two or more owners.
[SQUARE 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 a custodial account managed 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.
[SQUARE 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.
[SQUARE 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.
[SQUARE 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 COURIER Boston 1784 Funds
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 purchases and
redemptions, and may charge fees. Contact your financial institution for more
information.
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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. Net asset value is
normally calculated at 12 noon Eastern time (3 p.m. for the U.S. Treasury Money
Market Fund, the Institutional U.S. Treasury Money Market Fund and the
Institutional Prime Money Market Fund). For the Institutional U.S. Treasury
Money Market Fund and the Institutional Prime Money Market Fund, the Distributor
must receive federal funds by the close of business on the day your order is
received and accepted. For the other Funds, your investment is considered
received when your check is converted into federal funds. This normally happens
within two business days.
On days when the financial markets close early, such as the day after
Thanksgiving and Christmas Eve, purchase orders for the U.S. Treasury Money
Market Fund, the Institutional U.S. Treasury Money Market Fund and the
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 "Authorization of Telephone
Transfer" section on the application and attach a "voided" check from your bank
account.
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
"Bank Wire and ACH Instructions" 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 at the bottom of your
confirmation statement. If you are making a purchase into 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 on page 10.
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 debit 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 Fund account. Call 1-800-BKB-1784 to receive wiring instructions prior
to sending any money.
PROSPECTUS
11
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SHAREHOLDER SERVICES (CONTINUED)
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PROGRAMS. Automatic investing is an easy way to add
to your account systematically. The Funds offer automatic investment plans to
help you achieve your financial goals as simply and conveniently as possible.
Minimum purchase amounts apply. Call 1-800-BKB-1784 for information.
PAYING FOR SHARES. Please note the following:
[SQUARE BULLET] Purchases may be made by check, wire transfer and
automated clearing house transactions.
[SQUARE BULLET] All purchases must be made in U.S. dollars.
[SQUARE BULLET] Checks must be drawn on U.S. banks and must be payable to
Boston 1784 Funds. Third party checks are not accepted.
[SQUARE BULLET] Cash and credit card checks are not accepted.
[SQUARE BULLET] If a check does not clear your bank, the Funds reserve the
right to cancel the purchase.
[SQUARE BULLET] If the Funds are unable to debit your predesignated bank
account on the day of purchase, 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 fluctuations 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
On any business day, you may redeem all or a portion of your shares. If the
shares being redeemed were 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.
Your transaction will be processed at net asset value the next time it is
calculated after your redemption request in good order is received. 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, your request should be
sent in writing to one of the addresses listed on page 10 and must include the
following information (please refer to "Signature guarantees" on page 13 if your
redemption request is in excess of $100,000):
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12
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[SQUARE BULLET] the name of the Fund(s),
[SQUARE BULLET] the account number(s),
[SQUARE BULLET] the amount of money or number of shares
being redeemed,
[SQUARE BULLET] the name(s) on the account,
[SQUARE BULLET] the signature(s) of all registered account owners, and
[SQUARE BULLET] your daytime telephone number.
Signature requirements vary based on the type of account you have:
[SQUARE BULLET] INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON: Written
instructions must be signed by each shareholder exactly
as the names appear in the account registration.
[SQUARE BULLET] UGMA OR UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the
account registration.
[SQUARE BULLET] SOLE PROPRIETOR, GENERAL PARTNER: Written instructions
must be signed by an authorized individual in his/her
capacity as it appears in the account registration.
[SQUARE BULLET] CORPORATION, ASSOCIATION: Written instructions must be
signed by the person(s) authorized to act on the account.
In addition, a certified copy of the corporate resolution,
authorizing the signer to act, must accompany the request.
[SQUARE BULLET] TRUST: Written instructions must be signed by the
trustee(s). If the name of the current trustee(s) does not
appear in the account registration, a certificate of
incumbency dated within 60 days must also be submitted.
[SQUARE 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 in excess of $100,000 be in writing with
signatures guaranteed. You may not close your account by telephone.
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) of record at
the address of record within seven days after receipt of a valid
redemption request.
BY WIRE If you are authorized for the wire redemption service, your
redemption proceeds will be wired directly into your designated bank
account normally on the business day of receipt of your redemption
request. 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.
PROSPECTUS
13
<PAGE>
SHAREHOLDER SERVICES (CONTINUED)
- --------------------------------------------------------------------------------
BY If you have established this option, your redemption proceeds will
ELECTRONIC be transferred electronically to your pre-designated bank account.
TRANSFER To establish this option on an existing account, please call 1-800-
(ACH) BKB-1784 to request the appropriate form.
SIGNATURE GUARANTEES. In addition to the signature requirements, a signature
guarantee is required in any of the following circumstances:
[SQUARE BULLET] You would like the check made payable to anyone other
than the shareholder(s) of record.
[SQUARE BULLET] You would like the check mailed to an address other
than the address of record.
[SQUARE BULLET] You would like the check mailed to an address of record
that has changed within the preceding 30 days.
[SQUARE BULLET] Your redemption request is in excess of $100,000.
At the Funds' discretion, signature guarantees may also be required 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 available Fund or any other fund in the Boston 1784 Funds family.
To make exchanges, please follow the procedures for redemptions. 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 modify 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 intend to pay redemption proceeds in cash, but
reserve the right to pay in kind by delivery of investment securities equal to
the redemption price. In these cases, you might incur brokerage costs when
converting the securities to cash. The right of any shareholder to receive
payment of 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 permits mutual funds to postpone 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.
PROSPECTUS
14
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SHARE CERTIFICATES. Share certificates are not issued.
INVOLUNTARY REDEMPTIONS. If your account balance falls below the minimum
required investment as a result of a redemption or exchange, 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. Purchases, exchanges or redemptions may be made by
telephone if you selected this option on your account application. If you wish
to establish this option on an existing account, please call 1-800-BKB-1784 to
request the appropriate form. The Funds and their agents will not be responsible
for any losses resulting from acting upon wire or telephone instructions that it
reasonably believes to be genuine. The Funds and their agents will each employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. Such procedures may include taping of telephone conversations. It may
be difficult to reach the Funds by telephone during periods of unusual market
activity. If you are unable to reach a representative by telephone, please
consider sending written instructions.
ADDRESS CHANGES. To change the address on your account, call 1-800-BKB-1784 or
send a written request 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.
REGISTRATION CHANGES. To change the name on an account, the shares are generally
transferred to a new account. In some cases, legal documentation may be
required. For more information, call 1-800-BKB-1784. If your shares are held of
record 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 your account
registration. If you are enrolled in an automatic investment program and invest
on a monthly basis, you will receive quarterly confirmations. Information
regarding 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 semi-annually to all shareholders.
CHECKWRITING. Checkwriting privileges are available to certain shareholders for
Boston 1784 Tax-Free Money Market Fund, Boston 1784 U.S. Treasury Money Market
Fund, and Boston 1784 Prime Money Market Fund. Call 1-800-BKB-1784 for more
information. You may not use a check to close your account. Checks may be
written against your investment for a minimum of $250 each check.
PROSPECTUS
15
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TAXES
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This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
Each Fund is treated as a separate entity for federal income tax purposes, and
intends to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies so that it will not be liable for any federal
income or excise taxes. Any Fund that receives income from foreign securities
may pay withholding or other taxes to foreign governments during the year,
however, and these taxes will reduce that Fund's dividends.
With certain exceptions, Fund dividends and capital gains distributions are
subject to federal income tax and may also be subject to state and local taxes.
Distributions from interest on U.S. government obligations may be exempt from
state and local taxes. The Tax-Free Money Market Fund expects that its
distributions from interest on municipal securities will usually be exempt from
federal income tax. Dividends and distributions are treated in the same manner
for federal tax purposes whether they are paid in cash or as additional shares.
Generally, distributions from a Fund's net investment income and short-term
capital gains will be taxed as ordinary income. It is not expected that any Fund
distributions will be eligible for the dividends received deduction for
corporations. Distributions of long-term net capital gains will be taxed as
long-term capital gains regardless of how long the shares of a Fund have been
held; however, it is not clear at this time whether all or any part of such
distributions will be eligible to be taxed at a maximum rate below 28%.
Interest on loans to purchase or carry shares of the Tax-Free Money Market Fund
will not be deductible for federal income tax purposes. Exempt-interest
dividends may be subject to alternative minimum tax.
Foreign shareholders may be subject to U.S. withholding taxes.
Early each year, each Fund will notify its shareholders of the amount and tax
status of distributions paid to shareholders for the preceding year. Investors
should consult their own tax advisers regarding the status of their investments
under state and local laws.
PROSPECTUS
16
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GENERAL INFORMATION
- --------------------------------------------------------------------------------
NET ASSET VALUE
Net asset value per share for each Fund, other than the Institutional U.S.
Treasury Money Market Fund and Institutional Prime Money Market Fund, is
calculated each business day at 12 noon Eastern time. Net asset value per share
for the U.S. Treasury Money Market Fund, the Institutional U.S. Treasury Money
Market Fund and the Institutional Prime Money Market Fund are calculated each
business day at 3 p.m. Eastern time (12 noon on days when the financial markets
close early).
All purchases, redemptions and exchanges will be processed at net asset value
the next time it is calculated after a request is received and approved by the
Distributor. In order to receive that day's price, an order must be received by
12 noon Eastern time (3 p.m. for the U.S. Treasury Money Market Fund, the
Institutional U.S. Treasury Money Market Fund and the Institutional Prime Money
Market Fund unless the financial markets close early). Net asset value per share
is calculated by dividing the total value of a Fund's securities and other
assets, less liabilities, by the total number of shares outstanding. Securities
held by the Funds are valued at amortized cost, which approximates market value.
ORGANIZATION
Each Fund is a series of Boston 1784 Funds. Boston 1784 Funds is a Massachusetts
business trust which was organized on February 5, 1993; it also is an open-end
management investment company registered under the Investment Company Act of
1940. Prior to May 27, 1997, Boston 1784 Funds was known as 1784 Funds. On that
date, the Trust and each Fund added "Boston" to their names. Boston 1784 Funds
currently has nineteen active series.
Each Fund is a diversified mutual fund. Under the 1940 Act, a diversified mutual
fund must manage at least 75% of its total assets so that no more than 5% of
those assets are invested in any one company at the time of investment.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
VOTING AND OTHER RIGHTS
Boston 1784 Funds may issue an unlimited number of shares, may create new series
of shares and may divide shares in each series into classes. Each share of each
Fund gives the shareholder one vote in Trustee elections and other matters
submitted to shareholders for vote. All shares of each series of Boston 1784
Funds have equal voting rights except that, in matters affecting only a
particular Fund or class, only shares of that particular Fund or class are
entitled to vote.
The U.S. Treasury Money Market Fund currently offers three classes of shares.
Class A shares are described in this Prospectus. Class C and Class D shares are
available solely in conjunction with certain cash management products offered by
BankBoston. Class C and Class D shares may have different expenses, which may
affect performance. Call 1-800-BKB-1784 for more information.
Since Boston 1784 Funds is a Massachusetts business trust, the Funds are not
required to hold annual shareholder meetings. Shareholder approval will usually
be sought only for changes in certain investment restrictions and for the
election of Trustees under certain circumstances. Trustees may be removed by
shareholders under certain circumstances. Each share of each Fund is entitled to
participate equally in dividends and other distributions and the proceeds of any
liquidation of that Fund, subject to any differing expenses borne by different
classes of the Fund.
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GENERAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
Fund performance may be quoted in advertising, shareholder reports and other
communications in terms of yield, effective yield and total rate of return. All
performance information is historical and is not intended to indicate future
performance. Yields and total rates of return fluctuate in response to market
conditions and other factors, and the value of a Fund's shares when redeemed may
be more or less than their original cost.
Each Fund may provide annualized "yield" and "effective yield" quotations. The
"yield" of a Fund refers to the income generated by an investment in the Fund
over a 7-day, 30-day or one-month period (which period is stated in any such
advertisement or communication). This income is then annualized; that is, the
amount of income generated by the investment over that period is assumed to be
generated each week or month over a one-year period and is shown as a percentage
of the maximum public offering price on the last day of that period. The
"effective yield" is calculated similarly, but when annualized the income earned
by the investment during that 7-day, 30-day or one-month period is assumed to be
reinvested. The effective yield is slightly higher than the yield because of the
compounding effect of this assumed reinvestment. A "yield" quotation, unlike a
total rate of return quotation, does not reflect changes in net asset value.
Each Fund may provide period and average annualized "total rates of return." The
"total rate of return" refers to the change in the value of an investment in the
Fund over a stated period, reflects any change in net asset value per share, and
is compounded to include the value of any shares purchased with any dividends or
capital gains declared during such period. Period total rates of return may be
"annualized." An "annualized" total rate of return assumes that the period total
rate of return is generated over a one-year period.
The Tax-Free Money Market Fund may also advertise a "tax-equivalent yield." The
"tax-equivalent yield" is determined by calculating the yield that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder.
A Fund's performance may from time to time be compared to that of other mutual
funds tracked by mutual fund rating services, broad groups of comparable mutual
funds or unmanaged indices which may assume investment of dividends but
generally do not reflect deductions for administrative and management costs.
Certain Funds may advertise performance that includes results from periods in
which the Funds' assets were managed in a non-registered predecessor vehicle.
Of course, any fees charged by a financial institution to a shareholder will
reduce that shareholder's net return on investment. See the Statement of
Additional Information for more information concerning the calculation of
performance for the Funds.
EXPENSES
In addition to amounts payable to its service providers, each Fund is
responsible for its own expenses, including, among other things, the costs of
securities transactions, the compensation of Trustees that are not affiliated
with BankBoston or the Administrator, government fees, taxes, accounting and
legal fees, expenses of communicating with shareholders, interest expense, and
insurance premiums.
PROSPECTUS
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The following table shows each Fund's expenses for the fiscal year ended May 31,
1997, expressed as a percentage of average net assets. The Institutional Prime
Money Market Fund is newly organized and had no operations during the fiscal
year ended May 31, 1997.
Expenses
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund .54%
U.S. Treasury Money Market Fund .65
Institutional U.S. Treasury Money Market Fund .34
Prime Money Market Fund .65
COUNSEL AND INDEPENDENT AUDITORS
Bingham Dana LLP, Boston, Massachusetts, is counsel for each Fund. Coopers &
Lybrand L.L.P., Philadelphia, Pennsylvania, serves as independent auditor for
each Fund.
The Statement of Additional Information dated October 1, 1997, as supplemented
from time to time, contains more detailed information about the Funds, including
information relating to (i) investment policies and restrictions, (ii) the
Trustees, officers and investment advisers, (iii) securities transactions, (iv)
the Funds' shares, including rights and liabilities of shareholders, (v) the
method used to calculate performance information and (vi) the determination of
net asset value.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL
INFORMATION IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUNDS OR THEIR DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
PROSPECTUS
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APPENDIX A -- TAXABLE EQUIVALENT YIELDS
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THIS TABLE SHOWS THE YIELD INVESTORS NEED TO ACHIEVE FROM A TAXABLE INVESTMENT
TO EQUAL THE YIELD FROM A TAX-EXEMPT INVESTMENT. THESE TABLES DO NOT PREDICT THE
YIELD OF ANY FUND. THEY ARE ACCURATE AS OF SEPTEMBER 15, 1997.
FEDERAL
Equivalent yields: Tax-exempt versus taxable securities
<TABLE>
<CAPTION>
1997
Taxable Income Federal
- ------------------------------- Marginal
Single Joint Rate 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-24,000 $0-40,100 15.00% 2.35% 2.94% 3.53% 4.12% 4.71% 5.29% 5.88% 6.47% 7.06%
24,001-58,150 40,101-96,900 28.00% 2.78% 3.47% 4.17% 4.86% 5.56% 6.25% 6.94% 7.64% 8.33%
58,151-121,300 96,901-147,700 31.00% 2.90% 3.62% 4.35% 5.07% 5.80% 6.52% 7.25% 7.97% 8.70%
121,301-263,750 147,701-263,750 36.00% 3.13% 3.91% 4.69% 5.47% 6.25% 7.03% 7.81% 8.59% 9.38%
over 263,750 over 263,750 39.60% 3.31% 4.14% 4.97% 5.79% 6.62% 7.45% 8.28% 9.11% 9.93%
</TABLE>
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APPENDIX B -- PERMITTED INVESTMENTS AND INVESTMENT PRACTICES
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U.S. TREASURY OBLIGATIONS
U.S. Treasury obligations include bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal Reserve book-entry system
known as Separately Traded Registered Interest and Principal Securities
(STRIPS). STRIPS are sold as zero coupon securities. These securities are
usually structured with two classes that receive different portions of the
interest and principal payments from the underlying obligation. The yield to
maturity on the interest-only class is extremely sensitive to the rate of
principal payments on the underlying obligation. The market value of the
principal-only class generally is unusually volatile in response to changes in
interest rates. See "Zero Coupon Securities" for more information. Each Fund
limits its investments in STRIPS to 20% of its total assets.
U.S. GOVERNMENT AGENCIES
Certain Federal agencies such as the Government National Mortgage Association
(GNMA) have been established as instrumentalities of the U.S. government to
supervise and finance certain types of activities. Issues of these agencies,
while not direct obligations of the U.S. government, are either backed by the
full faith and credit of the United States (e.g., GNMA) or supported by the
issuing agencies' right to borrow from the Treasury. The issues of other
agencies are supported only by the credit of the instrumentality (e.g., Federal
National Mortgage Association).
RECEIPTS
Receipts are interests in separately-traded interest and principal component
parts of U.S. Treasury obligations that are issued by banks and brokerage firms
and are created by depositing U.S. Treasury obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. Receipts
include Treasury Receipts (TRs), Treasury Investment Growth Receipts (TIGRs) and
Certificates of Accrual on Treasury Securities (CATS). TRs, TIGRs and CATS are
sold as zero coupon securities.
ZERO COUPON SECURITIES
A zero coupon security pays no interest or principal to its holder during its
life. A zero coupon security is sold at a discount, frequently substantial, and
redeemed at face value at its maturity date. The market prices of zero coupon
securities are generally more volatile than the market prices of securities of
similar maturity that pay interest periodically, and zero coupon securities are
likely to react more to interest rate changes than non-zero coupon securities
with similar maturity and credit qualities.
BANK OBLIGATIONS
Bank obligations include certificates of deposit, time deposits (including
Eurodollar time deposits) and bankers' acceptances and other short-term debt
obligations issued by domestic banks, foreign subsidiaries or foreign branches
of domestic banks, domestic and foreign branches of foreign banks, domestic
savings and loan associations, and other banking institutions. The Funds have
established certain minimum credit quality standards for bank obligations in
which they invest.
BANKERS' ACCEPTANCES
A banker's acceptance is a bill of exchange or time draft drawn on and accepted
by a commercial bank. It is used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.
(CONTINUED)
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APPENDIX B (CONTINUED)
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CERTIFICATES OF DEPOSIT
A certificate of deposit is a negotiable interest-bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity.
TIME DEPOSITS
A time deposit is a non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market. Time deposits with a withdrawal penalty are considered to be
illiquid securities.
COMMERCIAL PAPER
Commercial paper is the term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from one to 270 days.
MONEY MARKET FUNDS
A money market fund is a mutual fund that limits its investments to high quality
money market instruments with an average weighted maturity of 90 days or less.
Subject to applicable statutory and regulatory limitations, the Tax-Free Money
Market Fund and the Prime Money Market Fund may each invest a certain percentage
of its assets in other mutual funds. Investing in other mutual funds causes
shareholders to bear not only Fund expenses, but also expenses of the underlying
mutual funds.
CORPORATE BONDS
Investment in bonds of U.S. and foreign issuers are used by U.S. and foreign
corporate issuers to borrow money from investors, and may have varying
maturities. Corporate bonds have varying degress of quality and varying degrees
of sensitivity to changes in interest rates. The value of these investments
fluctuates based on changes in interest rates and in the underlying credit
quality of the bond issuers represented in the portfolio.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations may carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature permitting the holder to
demand payment of principal at any time or at specified intervals. These
obligations may include variable amount master demand notes. Such instruments
bear interest at rates which are not fixed, but which vary with changes in
specified market rates or indices, such as a Federal Reserve composite index. A
demand instrument with a demand notice period exceeding seven days may be
considered illiquid if there is no secondary market for such security. The
interest rate on these securities may be reset daily, weekly, quarterly, or some
other reset period and may have a floor or ceiling on interest rate charges.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates.
REPURCHASE AGREEMENTS
A repurchase agreement is an agreement where a person buys a security and
simultaneously commits to sell the security to the seller at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days from the date of purchase. A Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from its right to dispose of the collateral securities or if the Fund realizes a
loss on the sale of the collateral securities. Pursuant to an exemptive order
from the SEC, the Funds may enter into repurchase agreements on a pooled basis.
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REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of securities held by a Fund and
the agreement by the Fund to repurchase the securities at an agreed-upon price,
date and interest payment. When a Fund enters into reverse repurchase
transactions, securities of a dollar amount equal in value to the securities
subject to the agreement will be maintained in a segregated account with the
Fund's custodian. The segregation of assets could impair the Fund's ability to
meet its current obligations or impede investment management if a large portion
of the Fund's assets are involved. Reverse repurchase agreements are considered
to be a form of borrowing.
FORWARD COMMITMENTS OR PURCHASES
ON A WHEN-ISSUED BASIS
Forward commitments or purchases of securities on a when-issued basis are
transactions where the price of the securities is fixed at the time of
commitment and delivery and payment ordinarily take place beyond customary
settlement time. The interest rate realized on these securities is fixed as of
the purchase date and no interest accrues to the buyer before settlement. The
securities are subject to market fluctuation due to changes in market interest
rates; the securities are also subject to fluctuation in value pending
settlement based upon public perception of the creditworthiness of the issuer of
these securities. Each Fund may invest up to 25% of its assets in forward
commitments or commitments to purchase securities on a when-issued basis.
MUNICIPAL SECURITIES
Municipal securities include debt obligations issued by or on behalf of public
authorities to obtain funds to be used for various public facilities, for
refunding outstanding obligations and for general operating expenses. Municipal
securities also include debt obligations issued to obtain funds for lending to
other public institutions and facilities, and certain private activity and
industrial development bonds issued by or on behalf of public authorities to
obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities. Municipal notes include general obligation
notes, tax anticipation notes, revenue anticipation notes, bond anticipation
notes, certificates of indebtedness, demand notes and construction loan notes.
Municipal bonds include general obligation bonds, revenue or special obligation
bonds, private activity, and industrial development bonds. General obligation
bonds are backed by the taxing power of the issuing municipality. Revenue bonds
are backed by the revenues of a project or facility. The payment of principal
and interest on private activity and industrial development bonds generally is
dependent solely on the ability of the facility's user to meet its financial
obligations and the pledge, if any, of real and personal property financed with
the proceeds of these bonds as security for such payment.
Municipal securities also include participations in municipal leases. These are
undivided interests in a portion of a lease or installment purchase issued by
state or local government to acquire equipment or facilities. Municipal leases
frequently have special risks not normally associated with general obligation
bonds or revenue bonds. Many leases include "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Although the
obligations will be secured by the leased equipment or facilities, the
disposition of the property in the event of non-appropriation or foreclosure
might, in some cases, prove difficult.
(CONTINUED)
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<PAGE>
APPENDIX B (CONTINUED)
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STANDBY COMMITMENTS
A security purchased subject to a standby commitment may be sold at a fixed
price prior to maturity and may be sold at any time at market rates. A premium
may be paid for a standby commitment and will have the effect of reducing the
yield otherwise payable on the underlying security. There is no limit to the
percentage of Fund securities that any Fund may purchase subject to a standby
commitment, but the amount paid directly or indirectly for a standby commitment
held by any Fund will not exceed 1/2 of 1% of the value of the total assets of
the Fund.
SECURITIES LENDING
Consistent with applicable regulatory requirements and in order to generate
additional income, each Fund may lend securities to broker-dealers and other
institutional borrowers. Loans must be callable at any time and continuously
secured by collateral (cash or U.S. government securities) in an amount not less
than the market value, determined daily, of the securities loaned. It is
intended that the value of securities loaned by a Fund would not exceed 331/3%
of the Fund's total assets. In the event of the bankruptcy of the other party to
a securities loan, a Fund could experience delays in recovering either the
securities lent or cash. To the extent that, in the meantime, the value of the
securities lent has increased or the value of the securities purchased has
decreased, the Fund could experience a loss. The voting rights of such
securities may pass to the borrower; however, the lending Fund will seek to call
loans, to vote proxies, or otherwise to obtain rights to vote or consent if a
material event affecting the investment is to occur.
RESTRICTED OR ILLIQUID SECURITIES
Securities that may not be sold freely to the public absent registration or
securities for which there is no readily available market are referred to as
restricted or illiquid securities, respectively. Each Fund may invest up to 10%
of its net assets in illiquid securities, including restricted securities that
are illiquid. The absence of a trading market can make it difficult to ascertain
a market value for these investments. Disposing of illiquid securities may
involve time-consuming negotiation and legal expense, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
RULE 144A SECURITIES
The Funds may purchase restricted securities that are not registered for sale to
the general public if it is determined that there is a dealer or institutional
market in the securities. In that case, the securities will not be treated as
illiquid for purposes of the Fund's investment limitation described above. The
Trustees will review these determinations. These securities are known as "Rule
144A securities" because they are traded under SEC Rule 144A among qualified
institutional buyers. Institutional trading in Rule 144A securities is
relatively new and the liquidity of these investments could be impaired if
trading in Rule 144A securities does not develop or if qualified institutional
buyers become, for a time, uninterested in purchasing Rule 144A securities.
ASSET-BACKED SECURITIES
The Funds may invest in corporate asset-backed securities. These securities,
issued by trusts and special purpose corporations, are backed by a pool of
assets, such as credit card or automobile loan receivables, representing the
obligations of a number of different parties. Corporate asset-backed securities
present certain risks. For instance, in the case of credit card receivables,
these securities may not have the benefit of any security interest in the
related collateral.
PROSPECTUS
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<PAGE>
NOTES
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PROSPECTUS
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<PAGE>
NOTES
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PROSPECTUS
26
