BOSTON 1784 FUNDS, 497, 1999-10-05

BOSTON 1784 FUNDS
497, 1999-10-05

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Rule 497(c)
File Nos. 33-58004
811-7474

Fund Information
And Prospectus

[Logo omitted]
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BOSTON
1784
FUNDS

OCTOBER 1, 1999

[PHOTO OF SKYLINE OMITTED]

NOT PART OF THE PROSPECTUS

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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 $30 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

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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 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
BOSTON 1784 INCOME FUND
GUY C. HOLBROOK, 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 RHODE ISLAND TAX-EXEMPT INCOME FUND
WILLIAM S. STACK (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]

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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

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BOSTON 1784 SHORT-TERM INCOME
BOSTON 1784 INCOME
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME
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BOSTON 1784 ASSET ALLOCATION
BOSTON 1784 GROWTH AND INCOME
BOSTON 1784 GROWTH
BOSTON 1784 INTERNATIONAL EQUITY
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[GRAPHIC OF RISK/REWARD PYRAMID OMITTED]

RISK/REWARD
[Graphic of angled upward pointing arrow omitted]

STOCK
FUNDS
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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

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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

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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.

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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:]

INITIAL INVESTMENT ANNUAL CONTRIBUTION $5,000 26-YEAR RESULT
$50,000 [ARROW GRAPHIC OMITTED] $1,747,003
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STOCKS BONDS CASH EQUIVALENTS
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1/73 $ 25,000.00 $ 15,000.00 $ 10,000.00
1/79 49,240.78 29,544.47 19,696.31
1/86 159,717.04 95,830.22 63,886.81
1/93 383,318.51 229,991.11 153,327.41
1/99 873,501.63 524,100.98 349,400.65
- -----------------------------------------------------------------------------

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 1999 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

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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 $30 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]

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BOSTON 1784 FUNDS
MAKING INVESTING ECONOMICAL AND CONVENIENT
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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]

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TERMS YOU NEED TO KNOW
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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 a
company rather than 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 month 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 (10/99)

BOSTON 1784 FUNDSSM

MONEY MARKET FUNDS
[bullet] BOSTON 1784 TAX-FREE MONEY MARKET FUND
[bullet] BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
[bullet] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
[bullet] BOSTON 1784 PRIME MONEY MARKET FUND
[bullet] BOSTON 1784 INSTITUTIONAL PRIME MONEY
MARKET FUND

BOND FUNDS
[bullet] BOSTON 1784 SHORT-TERM INCOME FUND
[bullet] BOSTON 1784 INCOME FUND
[bullet] BOSTON 1784 U.S. GOVERNMENT MEDIUM-
TERM INCOME FUND

TAX-EXEMPT INCOME FUNDS
[bullet] BOSTON 1784 TAX-EXEMPT MEDIUM-TERM
INCOME FUND
[bullet] BOSTON 1784 CONNECTICUT TAX-EXEMPT
INCOME FUND
[bullet] BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
[bullet] BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
[bullet] BOSTON 1784 RHODE ISLAND TAX-EXEMPT
INCOME FUND

STOCK FUNDS
[bullet] BOSTON 1784 ASSET ALLOCATION FUND
[bullet] BOSTON 1784 GROWTH AND INCOME FUND
[bullet] BOSTON 1784 GROWTH FUND
[bullet] BOSTON 1784 INTERNATIONAL EQUITY FUND

Prospectus

[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.

October 1, 1999

<PAGE>

TABLE OF CONTENTS

BOSTON 1784 MONEY MARKET FUNDS................................1

BOSTON 1784 BOND FUNDS........................................8

BOSTON 1784 TAX-EXEMPT INCOME FUNDS..........................15

BOSTON 1784 STOCK FUNDS......................................24

SHAREHOLDER SERVICES.........................................31

HOW TO REACH THE FUNDS.........................31
TYPES OF ACCOUNTS..............................31
HOW TO OPEN AN ACCOUNT.........................31
HOW TO PURCHASE SHARES.........................31
HOW TO SELL SHARES.............................32
SHAREHOLDER SERVICES AND POLICIES..............34

PRICING OF FUND SHARES.......................................35

DISTRIBUTIONS................................................35

FEDERAL TAX CONSIDERATIONS...................................36

MORE ABOUT BOSTON 1784 FUNDS.................................37

MONEY MARKET FUNDS.............................37
BOND FUNDS.....................................38
TAX-EXEMPT FUNDS...............................40
STOCK FUNDS....................................42

MANAGEMENT...................................................45

DISTRIBUTION ARRANGEMENTS....................................47

FINANCIAL HIGHLIGHTS.........................................48

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 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.

[COMPASS GRAPHIC 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.
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.

[Chess piece graphic omitted]

WHAT ARE THE FUNDS' MAIN INVESTMENT STRATEGIES?

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

<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 obligations.

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 obligations.

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.

[Road Sign Graphic 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 affect your investment
adversely are described below. Please note that there are many other factors
that could affect your investment adversely 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 or the performance of the Fund 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

<PAGE>

BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)

[FLAG GRAPHIC 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 money 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 Graphic Omitted]
Plot points are as follow:
1994 2.71%
1995 3.75%
1996 3.25%
1997 3.33%
1998 3.15%

The total return for the six months ended June 30, 1999 was 1.44%.

- ------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1998)
- ------------------------------------------------------------------------------

QUARTER ENDING
Highest 0.96% June 30, 1995
Lowest 0.58% March 31, 1994

- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- ------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Tax-Free Money Market Fund 3.15% 3.24% 3.16%

IBC/Financial Data 2.92% 2.92% 2.82%*
Stockbroker & General
Purpose Tax-Free Average
- ------------------------------------------------------------------------------
*(since 5/31/93)

- ------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
- ------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follow:

1994 3.72%
1995 5.43%
1996 4.82%
1997 4.96%
1998 4.86%

The total return for the six months ended June 30, 1999 was 2.09%.

QUARTER ENDING
Highest 1.38% June 30, 1995
Lowest 0.64% March 31, 1994

- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- ------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
U.S. Treasury Money Market Fund 4.86% 4.76% 4.54%

IBC/Financial Data U.S. 4.90% 4.70% 4.48%*
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 Graphic Omitted]
Plot points are as follow:

1994 4.04%
1995 5.69%
1996 5.14%
1997 5.30%
1998 5.20%

The total return for the six months ended June 30, 1999 was 2.26%.

QUARTER ENDING
Highest 1.43% June 30, 1995
Lowest 0.76% March 31, 1994

IBC/Financial Data Government- 5.10% 4.98% 4.76%*
Only Institutional-Only Average
- ------------------------------------------------------------------------------
*(since 5/31/93)

- ------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
- ------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follows
1992 3.48%
1993 2.72%
1994 3.75%
1995 5.49%
1996 5.02%
1997 5.14%
1998 5.06%

The total return for the six months ended June 30, 1999 was 2.19%.

- ------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1992-1998)
- ------------------------------------------------------------------------------

QUARTER ENDING
Highest 1.39% June 30, 1995
Lowest 0.66% March 31, 1994

IBC/Financial Data 4.96% 4.79% 4.34%*
First Tier Money
Market Average
- --------------------------------------------------------------------------------
*(since 5/31/91)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS

5
<PAGE>

BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
INSTITUTIONAL PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follow:
1998 5.40%

The total return for the six months ended June 30, 1999 was 2.35%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1998)
- --------------------------------------------------------------------------------

QUARTER ENDING
Highest 1.35% September 30, 1998
Lowest 1.27% December 31, 1998

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 11/5/97)
Institutional Prime 5.40% 5.43%
Money Market Fund

IBC/Financial Data First Tier 5.33% 5.35%*
Institutional Only Average
- --------------------------------------------------------------------------------
*(since 10/31/97)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS

6
<PAGE>

[CALCULATOR GRAPHIC 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

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
<TABLE>
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>
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 .11% .32% .11% .33% .15%

Total Annual Fund Operating Expenses .51% .72%* .31% .73%* .35%*

- ----------------------------------------------------------------------------------------------------------------------------------
*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 .30%

- ----------------------------------------------------------------------------------------------------------------------------------
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 $ 52 $ 74 $ 32 $ 75 $ 36

3 years 164 230 100 233 113

5 years 285 401 174 406 197

10 years 640 894 393 906 443
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

PROSPECTUS

7
<PAGE>

BOSTON 1784 BOND FUNDS

SHORT-TERM INCOME FUND
INCOME FUND
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND

THIS 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.

[COMPASS GRAPHIC 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.

[CHESS GRAPHIC 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

8
<PAGE>

The Fund is permitted to invest in bonds with any maturity. However, 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.

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 is permitted to invest in bonds with any maturity. However, 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 is permitted to invest in bonds with any maturity. However, the Fund's
average weighted maturity is normally expected to be from 3 to 10 years.

[Road Sign graphic 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 affect your investment
adversely 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 that could affect your investment adversely 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 usually 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.
Changes in interest rates will also affect the amount of income a Fund
receives. A decline in interest rates may lead to a decline in the Fund's
income.

[bullet] CREDIT RISK: It is possible that some of the issuers will not make
payments (default) on debt securities held by a Fund, or there could be
defaults on repurchase agreements held by a Fund. A default will hurt a Fund's
performance. 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 make it more difficult for the Fund to sell
the bond.

[bullet] PREPAYMENT AND EXTENSION RISK: The issuers of securities held by a Fund
may be able to call a bond or prepay principal, particularly during periods of
declining interest rates. In that case, a Fund may not be able to reinvest
the proceeds at attractive rates. The Fund would also lose the benefit of
falling interest rates on the price of the repaid bond. 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] 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.

PROSPECTUS
9
<PAGE>

BOSTON 1784 BOND FUNDS (CONTINUED)

Mortgage-backed securities are particularly exposed to prepayment and
extension risk and it may be very difficult for a Fund to predict accurately
the maturity of the securities it holds.

[bullet] PORTFOLIO SELECTION: The portfolio managers may not pick securities for
a Fund that perform well because they are unable to predict accurately the
direction of interest rates or the maturity of certain debt obligations, or
to assess accurately credit quality or other factors. In that case, you may
lose money or your investment in the Fund may not do as well as other similar
investments.

[bullet] ZERO COUPON SECURITIES: The Funds may invest in zero coupon securities
or STRIPS, which are the separately traded interest and principal component
parts of government debt obligations. 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] 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

10
<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.

Do not invest in these Funds if you are not prepared to accept volatility of a
Fund's share price and possible losses.

None of the Bond Funds alone provides a balanced investment plan.

PROSPECTUS

11
<PAGE>

BOSTON 1784 BOND FUNDS (CONTINUED)

[FLAG GRAPHIC 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 Graphic Omitted]

Plot points are as follow:

1995 11.36%
1996 4.25%
1997 6.30%
1998 6.31%

The total return for the six months ended June 30, 1999 was 1.12%.

- -------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1998)
- -------------------------------------------------------------------------------
QUARTER ENDING
Highest 3.31% June 30, 1995
Lowest -0.27% March 31, 1996

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Short-Term Income Fund 6.31% 6.39%

Lehman Mutual Fund 7.64% 7.28%*
1-5 Year Government/Corporate
Bond Index
- -------------------------------------------------------------------------------
*(since 6/30/94)

- -------------------------------------------------------------------------------
INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1995 17.98%
1996 2.60%
1997 7.85%
1998 7.69%
The total return for the six months ended June 30, 1999 was -2.57%.

QUARTER ENDING
Highest 6.34% June 30, 1995
Lowest -2.42% March 31, 1996

Lehman Aggregate 8.67% 9.05%*
Bond Index
- -------------------------------------------------------------------------------
*(since 6/30/94)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
12
<PAGE>

- -------------------------------------------------------------------------------
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:

1994 -3.78%
1995 15.89%
1996 1.98%
1997 8.08%
1998 7.95%

The total return for the six months ended June 30, 1999 was -1.95%.

- -------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1994-1998)
- -------------------------------------------------------------------------------
QUARTER ENDING
Highest 5.51% June 30, 1995
Lowest -2.93% March 31, 1994

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
U.S. Government Medium- 7.95% 5.82% 5.88%
Term Income Fund

Lehman Intermediate 8.47% 6.45% 6.45%*
Government Bond Index
- -------------------------------------------------------------------------------
*(since 5/31/93)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
13
<PAGE>

BOSTON 1784 BOND FUNDS (CONTINUED)
[CALCULATOR GRAPHIC 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

- -------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- -------------------------------------------------------------------------------

U.S. GOVERNMENT
SHORT-TERM INCOME MEDIUM-TERM
INCOME FUND FUND INCOME FUND

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%*

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
- ------------------------------------------------------------------------------

PROSPECTUS
14
<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 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.

[COMPASS GRAPHIC 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,
with a secondary goal of preserving capital.

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, with a secondary goal of preserving
capital.

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, with a secondary goal of preserving capital.

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.

[chess piece graphic 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
15
<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 Fund is permitted to invest in bonds with any
maturity. However, the Fund's average weighted maturity 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 Fund is permitted to invest in bonds
with any maturity. However, the Fund's average weighted maturity 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.

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.

PROSPECTUS

16
<PAGE>

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.

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.

[Road Sign Graphic 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 affect your
investment adversely 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 that could affect your investment adversely 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. Changes in interest rates
will also affect the amount of income a Fund receives. A decline in interest
rates may lead to a decline in the Fund's income.

[bullet] CREDIT RISK: Although the Funds invest primarily in investment grade
securities, these securities have some credit risk. It is possible that some of
the issuers will not make payments (default) on the municipal or other debt
securities held by the Fund or there could be defaults on repurchase agreements
held by a Fund. A default will hurt a Fund's performance. 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 make it more difficult for the Fund to sell the bond.

[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 the possibility that interest on municipal securities held by a
Fund could be declared taxable, political or legislative changes, and
uncertainties related to the rights of investors in the securities. In addition,
municipalities may be more susceptible to Year 2000 computer problems than other
issuers.

[bullet] PREPAYMENT AND EXTENSION RISK: The issuers of securities held by a Fund
may be able to call a bond or prepay principal, particularly during periods of
declining interest rates. In that case, a Fund may not be able to reinvest the
proceeds at attractive rates. The Fund would also lose the benefit of falling
interest rates on the price of the repaid bond. 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.

PROSPECTUS

17
<PAGE>

BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)

[bullet] PORTFOLIO SELECTION: The portfolio managers may not pick securities
that perform well because they are unable to predict accurately the direction of
interest rates or the maturity of certain debt obligations, or to assess
accurately credit quality or other factors. In that case, you may lose money or
your investment in the Fund may not do as well as other similar investments.

[bullet]FUTURES AND OPTIONS ON FUTURES: Although the Tax-Exempt Income Funds may
use futures and options on futures for hedging purposes only, the hedging
strategy may not be successful if the portfolio manager is unable to predict
accurately 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.

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
18
<PAGE>

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 yield than is available from shorter-term tax-exempt
securities or money market funds.

CONNECTICUT TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR CONNECTICUT INVESTORS
WHO ARE:
[bullet]seeking current income that is exempt from federal
income tax and Connecticut personal income tax;
[bullet] seeking a higher yield than is available from shorter-term
tax-exempt securities or money market funds.

FLORIDA TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR FLORIDA 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 yield than is available
from shorter-term tax-exempt securities or money market funds.

MASSACHUSETTS TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR MASSACHUSETTS INVESTORS
WHO ARE:
[bullet]seeking current income that is exempt from federal income tax and
Massachusetts personal income tax;
[bullet]seeking a higher yield than is available from shorter-term tax-exempt
securities or money market funds.

RHODE ISLAND TAX-EXEMPT INCOME FUND
THIS TAX-EXEMPT INCOME FUND MAY BE APPROPRIATE FOR
RHODE ISLAND 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 a higher yield than is available from
shorter-term tax-exempt securities or money market funds.

Do not invest in these Funds if you are not prepared to
accept volatility of a Fund's share price and possible
losses.

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
19
<PAGE>

BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)
[FLAG GRAPHIC OMITTED]

HOW HAVE THE FUNDS PERFORMED?

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 Graphic Omitted]
Plot points are as follow:
1994 -3.02%
1995 14.31%
1996 4.20%
1997 9.10%
1998 6.41%

The total return for the six months ended June 30, 1999 was -1.77%.

QUARTER ENDING
Highest 5.39% March 31, 1995
Lowest -4.20% March 31, 1994

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Tax-Exempt Medium-Term 6.41% 6.05% 6.63%
Income Fund

Lehman 7-Year 6.23% 5.80% 6.28%*
Municipal Bond Index
- -------------------------------------------------------------------------------
*(since 5/31/93)

- -------------------------------------------------------------------------------
CONNECTICUT TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follow:

1995 14.66%
1996 3.63%
1997 8.53%
1998 6.67%

The total return for the six months ended June 30, 1999 was -1.78%.

QUARTER ENDING
Highest 5.91% March 31, 1995
Lowest -1.25% March 31, 1996

Lehman 7-Year 6.23% 6.92%*
Municipal Bond Index
- -------------------------------------------------------------------------------
*(since 7/31/94)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS

20
<PAGE>

- -------------------------------------------------------------------------------
FLORIDA TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN

(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1998 6.37%

The total return for the six months ended June 30, 1999 was -1.85%.

- -------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1998)
- -------------------------------------------------------------------------------

QUARTER ENDING
Highest 3.06% September 30, 1998
Lowest 0.75% December 31, 1998
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 6/30/97)
Florida Tax-Exempt Income 6.37% 7.82%
Fund

Lehman 7-Year 6.23% 7.49%
Municipal Bond Index
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MASSACHUSETTS TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN

(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1994 -5.45%
1995 13.73%
1996 3.32%
1997 8.89%
1998 5.91%

The total return for the six months ended June 30, 1999 was -1.25%.

QUARTER ENDING
Highest 5.45% March 31, 1995
Lowest -5.15% March 31, 1994

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Massachusetts Tax-Exempt 5.91% 5.08% 5.84%
Income Fund

Lehman 7-Year 6.23% 5.80% 6.28%*
Municipal Bond Index
- -------------------------------------------------------------------------------
*(since 5/31/93)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS

21
<PAGE>

BOSTON 1784 TAX-EXEMPT INCOME FUNDS (CONTINUED)

- -------------------------------------------------------------------------------
RHODE ISLAND TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1995 14.13%
1996 4.65%
1997 8.28%
1998 5.68%

The total return for the six months ended June 30, 1999 was -1.16%.

QUARTER ENDING
Highest 5.66% March 31, 1995
Lowest -0.98% March 31, 1996

Lehman 7-Year 6.23% 6.92%*
Municipal Bond Index
- -------------------------------------------------------------------------------
*(since 7/31/94)

PROSPECTUS
22
<PAGE>

[CALCULATOR GRAPHIC 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>

- -----------------------------------------------------------------------------------------------------------------------------------
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>
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

Management Fees .74% .74% .74% .74% .74%

Distribution (12b-1) Fees .25% .25% .25% .25% .25%

Other Expenses .12% .13% .15% .13% .14%

Total Annual Fund Operating Expenses 1.11%* 1.12%* 1.14%* 1.12%* 1.13%*

- -----------------------------------------------------------------------------------------------------------------------------------
*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%

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 $ 113 $ 114 $ 116 $ 114 $ 115

3 years 353 356 362 356 359

5 years 612 617 628 617 622

10 years 1,352 1,363 1,386 1,363 1,375
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

PROSPECTUS

23
<PAGE>

BOSTON 1784 STOCK FUNDS

ASSET ALLOCATION FUND
GROWTH AND INCOME FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND

THIS 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.

[COMPASS GRAPHIC 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.

[CHESS PIECE GRAPHIC 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 portfolio managers believe 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. Also, as

PROSPECTUS

24
<PAGE>

stock markets have risen in recent years, dividend yields have fallen, making it
more difficult for the Fund to produce any significant income while principally
seeking growth of capital.

When investing in foreign companies, the Fund may 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 portfolio managers believe 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.

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.

[Road Sign 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 affect your investment
adversely 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 that could affect your investment adversely 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] PORTFOLIO SELECTION: The portfolio managers may not pick stocks that
outperform the market or that do as well as the market. In that case, you may
lose money or your investment may not do as well as other similar
investments.

[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 assets by a Fund or the issuers of securities, and political
or social instability.

PROSPECTUS
25
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)

[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.

[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. Rapid increases in
money supply may result in speculative investing, contributing to volatility.
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 affect adversely the value of the Fund. In addition, some
foreign currency values may be volatile, and there is the possibility of
governmental controls on currency exchanges or intervention in currency markets.

[bullet] Foreign markets and securities may be particularly vulnerable to Year
2000 computer problems.

[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. Changes in interest rates
will also affect the amount of income a Fund receives. A decline in interest
rates may lead to a decline in the Fund's income.

[bullet] CREDIT RISK: It is possible that some issuers will not make payments
(default) on debt obligations held by a Fund. A default will hurt a Fund's
performance. 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 make it more difficult for the Fund to sell the bond.

[bullet] PREPAYMENT AND EXTENSION RISK: The issuers of securities held by a Fund
may be able to call a bond or prepay principal, particularly during periods of
declining interest rates. In that case, a Fund may not be able to reinvest the
proceeds at attractive rates. The Fund would also lose the benefit of falling
interest rates on the price of the repaid bond. 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. Mortgage-backed securities
are particularly exposed to prepayment and extension risk.

[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

26
<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.

GROWTH AND INCOME FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:

[bullet] seeking long-term growth.

GROWTH FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM INVESTORS WHO ARE:

[bullet] seeking long-term growth;

[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 long-term growth;

[bullet] looking for exposure in the international markets and able to tolerate
the additional risks associated with these markets;

[bullet] not seeking income.

Do not invest in these Funds if you are not prepared to accept volatility of a
Fund's share price and substantial losses.

None of the Stock Funds alone (except the Asset Allocation Fund) provides a
balanced investment plan.

PROSPECTUS

27
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)

[FLAG GRAPHIC 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 Graphic Omitted]

Plot points are as follows
1994 -0.65%
1995 29.55%
1996 10.48%
1997 20.74%
1998 12.28%

The total return for the six months ended June 30, 1999 was 4.68%.

QUARTER ENDING
Highest 10.79% June 30, 1997
Lowest -5.12% September 30, 1998

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Asset Allocation Fund 12.28% 14.03% 12.92%

S&P 500 Composite Index 28.60% 24.05% 22.38%*

Lehman Aggregate Bond 8.67% 7.27% 7.33%*
Index
- -------------------------------------------------------------------------------

*(since 5/31/93)
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 Graphic Omitted]

Plot points are as follow:
1994 -0.18%
1995 30.56%
1996 23.63%
1997 19.66%
1998 22.70%

The total return for the six months ended June 30, 1999 was 1.76%.

QUARTER ENDING
Highest 17.32% December 31, 1998
Lowest -12.79% September 30, 1998

- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
Growth and Income Fund 22.70% 18.79% 18.27%

S&P 500 Composite Index 28.60% 24.05% 22.38%*
- -------------------------------------------------------------------------------
*(since 5/31/93)

PROSPECTUS
28
<PAGE>

- -------------------------------------------------------------------------------
GROWTH FUND
- -------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1997 13.92%
1998 1.36%

The total return for the six months ended June 30, 1999 was 6.92%.

- ------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1997-1998)
- ------------------------------------------------------------------------------

QUARTER ENDING
Highest 25.00% December 31, 1998
Lowest -22.74% September 30, 1998

- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- ------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 3/28/96)
Growth Fund 1.36% 11.67%

Russell 2000 Index -2.55% 10.68%*
- ------------------------------------------------------------------------------
*(since 3/31/96)

- ------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:
1995 13.34%
1996 13.68%
1997 -0.92%
1998 12.45%

The total return for the six months ended June 30, 1999 was 4.72%.

- ------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1998)
- ------------------------------------------------------------------------------

QUARTER ENDING
Highest 16.75% December 31, 1998
Lowest -16.34% September 30, 1998

- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- ------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 1/3/95)
International Equity Fund 12.45% 9.45%

Morgan Stanley MSCI EAFE Index 20.00% 9.55%*
- ------------------------------------------------------------------------------
*(since 12/31/94)

PROSPECTUS

29
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)

[CALCULATOR GRAPHIC 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>

- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET GROWTH AND GROWTH INTERNATIONAL
ALLOCATION FUND INCOME FUND FUND EQUITY FUND

<S> <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 .22% .15% .19% .20%

Total Annual Fund Operating Expenses 1.21%* 1.14%* 1.18%* 1.45%*

- -----------------------------------------------------------------------------------------------------------------------------------
*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 .96%
GROWTH AND INCOME FUND .89%
GROWTH FUND .93%
INTERNATIONAL EQUITY FUND 1.20%

- -----------------------------------------------------------------------------------------------------------------------------------
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 $ 123 $ 116 $ 120 $ 148

3 years 384 362 375 459

5 years 665 628 649 792

10 years 1,466 1,386 1,432 1,735
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

PROSPECTUS

30
<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 6 p.m.
(Eastern time).

BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524

BY EXPRESS OR Boston 1784 Funds
OVERNIGHT SERVICE 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. Please note, however, that any transaction that requires a signature
guarantee will require the guaranteed signature of each account owner.

[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 Indinvidual 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 EXPRESS OR Boston 1784 Funds
OVERNIGHT SERVICE 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 continuously 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 or NAV, is calculated
every business day. The Funds' 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 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

PROSPECTUS

31
<PAGE>

SHAREHOLDER SERVICES (CONTINUED)

"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 designated 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. See "Telephone Transactions" below for more information on
this option.

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.
Once the money has been wired, please call 1-800-BKB-1784 to purchase your
shares.

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 designated 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, and a Fund
will do so when it believes that a purchase is part of a market-timing strategy.

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 at the next NAV calculated after your order is received in good
order. Please note, however, that your redemption proceeds may be delayed for up
to ten business days after a purchase. This is to assure that money from the
purchase of shares being redeemed has been received and collected. If your
redemption request is over $100,000, you will need a signature guarantee (see
page 33).

PROSPECTUS

32
<PAGE>

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.

SELLING BY MAIL

To redeem all or part of your shares by mail, please send your request in
writing to one of the addresses listed 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 your account:

[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 exactly as the name(s) appears on the account. Please note that
when a signature guarantee is required, the guaranteed signature of each account
owner must be provided.

[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 one is 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.

SELLING BY TELEPHONE
If you have selected this option, you may make redemptions 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 for more information on this option.

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

BY CHECK Redemption proceeds will be sent to the shareholder(s) on our
records at the address on our records within seven days after a
valid redemption request is received.

BY WIRE If you have selected this option, your redemption proceeds will
be wired directly into your designated bank account, normally on
the next business day after 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 selected this option, your redemption proceeds will
TRANSFER be transferred electronically to your designated 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.

The Funds may also require signature guarantees for other redemptions. A
signature guarantee assures that a signature is

PROSPECTUS

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SHAREHOLDER SERVICES (CONTINUED)

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 your 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, and the Funds may refuse any telephone transaction for
any reason. It may be difficult to reach the Funds by telephone during periods
of unusual market activity and, in that case, you should consider sending in
your request by regular or express mail service.

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 number(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.

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PRICING OF FUND SHARES

Each Fund's net asset value per share or NAV is calculated on each day the New
York Stock Exchange is open, except for Columbus Day and Veteran's Day. The NAV
is the value of a single share of a Fund.

BOND FUNDS, TAX-EXEMPT INCOME FUNDS AND STOCK FUNDS
Each Fund's 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 a Fund does not price its shares.
Therefore, the NAV of a Fund 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.

PROSPECTUS
35
<PAGE>

FEDERAL TAX CONSIDERATIONS

Your investment in a Fund will have tax consequences that you should consider.
Some of the more common federal tax consequences are described here, but you
should consult your tax adviser about state and local taxes and your own
particular situation.

TAXES ON DISTRIBUTIONS
You will generally have to pay federal income tax on all Fund distributions
except 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 a Fund.
Distributions that are derived from net long-term capital gains generally will
be taxed as long-term capital gains. The rate of tax generally will depend on
how long the Fund held the securities on which it realized the gains. All other
distributions, including distributions from 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). Generally, you 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, generally you 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 the
Tax-Free Money Market Fund, interest on your loan will not be deductible.

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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MORE ABOUT BOSTON 1784 FUNDS

- -------------------------------------------------------------------------------
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------
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. A Fund is not required to use all of the
strategies and techniques or invest in all of the types of securities described
in this Prospectus or in the Statement of Additional Information.

WHAT ARE MONEY MARKET INSTRUMENTS?
A MONEY MARKET INSTRUMENT is a short-term IOU issued by banks or other U.S.
corporations, or the U.S. government or state or local governments. Money
market instruments have maturity dates of 13 months or less. Money market
instruments may include certificates of deposit, bankers' acceptances,
variable rate demand notes, fixed-term obligations, commercial paper,
asset-backed commercial paper and repurchase agreements.

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 issuers 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 and repurchase
agreements, 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.

PROSPECTUS
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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, and GUY C. HOLBROOK, Fund
Manager, have been co-managers of the Tax-Free Money Market Fund since 1998. Mr.
Thompson, who has more than 28 years of experience in investment management,
research analysis and securities trading, has been Director of Fund Management
at BankBoston since 1985. Mr. Holbrook, who has ten years of investment
management experience, was a Research Analyst and Bond Trader at Scudder Kemper
Investments from 1992 to 1998. He joined BankBoston as a Fund Manager in 1998.

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 seven 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 eight 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 12 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. A Fund is not required to use all of the strategies and techniques
or invest in all of the types of securities described in this Prospectus or 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 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.

PROSPECTUS
38
<PAGE>

when distributed. Active trading may also increase the amount of mark-ups and
fees that the Fund pays to broker-dealers when it buys and sells securities. The
"Financial Highlights" section of this Prospectus shows each Fund's historical
portfolio turnover rate.

WHAT 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 MAE," "FANNIE MAE"
and "FREDDIE MAC."

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 that were
investment grade when purchased by a Fund but have since been down-graded, and
securities that are not investment grade at the time of purchase but that the
portfolio managers believe will be up-graded 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- and asset-
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.

PROSPECTUS
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<PAGE>

MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)

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 12 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, and CARL W. PAPPO, Fund Manager, have
been co-managers of the U.S. Government Medium-Term Income Fund and the Income
Fund since April 1999. Mr. Wright, who has more than seven 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. He has been the manager of the U.S. Government Medium-Term Income Fund and
a manager of the Income Fund since September 1995. 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.

- -------------------------------------------------------------------------------
TAX-EXEMPT INCOME FUNDS
- -------------------------------------------------------------------------------
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. A Fund is not required to use all of the
strategies and techniques or invest in all of the types of securities described
in this Prospectus or 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

PROSPECTUS
40
<PAGE>

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.

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 managers seek to maximize current income while achieving a competitive
total rate of return. 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 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

The 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,
the securities are 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 Funds. 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 28 years of experience in investment management,
research analysis and securities trading, has been the Director of Fund
Management at BankBoston since 1985.

GUY C. HOLBROOK, Fund Manager, has been a co-manager of the Tax-Exempt
Medium-Term Income Fund, Connecticut Tax-Exempt Income Fund
and Rhode Island Tax-Exempt Income Fund since April 1999. Mr. Holbrook, who
has ten years of

PROSPECTUS

41
<PAGE>

MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)

investment management experience, was a Research Analyst and Bond Trader at
Scudder Kemper Investments from 1992 to 1998. He joined BankBoston as a Fund
Manager in 1998.

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 16 years 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.

- -------------------------------------------------------------------------------
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. A Fund is not required to use all of the strategies and techniques
or invest in all of the types of securities described in this Prospectus or 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 U.S. dollar-denominated high quality money
market and short-term instruments. Because 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, they 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. In addition to common stock,
the Fund's equity securities may include 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 likely 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 may also invest 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.

PROSPECTUS

42
<PAGE>

The Fund will use short-term debt and money market instruments, including
short-term U.S. government and corporate obligations, commercial paper, bank
obligations and repurchase agreements, in varying degrees as a risk management
tool.

GROWTH AND INCOME FUND
AND GROWTH FUND
The GROWTH AND INCOME FUND and the GROWTH FUND invest primarily in common stock
(including depositary receipts) of U.S. and foreign issuers. Typically, it is
expected that 80-90% or more of the Funds' assets will be invested in these
securities, although the Funds may invest up to 35% of their assets in other
securities such as convertible and non-convertible debt securities, preferred
stock, warrants, and money market instruments.

The GROWTH AND INCOME FUND emphasizes the stock of U.S. companies with market
capitalizations of at least $1 billion. The portfolio managers may also select
stocks in smaller U.S. companies, and may invest up to 25% of the Fund's assets
in securities of foreign companies, including smaller companies and companies in
developing markets. The portfolio managers look for high quality growth
companies with strong potential for revenue and earnings increases.

The GROWTH FUND emphasizes securities of U.S. companies with a market
capitalization of at least $250 million that the portfolio managers believe have
above-average growth potential. The Fund also may invest in securities of
smaller, lesser-known companies and may invest up to 25% of its assets in
securities of foreign companies, including companies in developing countries.
While some of the Fund's investments may pay dividends, current income is not a
consideration when selecting investments.

The portfolio managers of the GROWTH AND INCOME FUND and GROWTH FUND use a
"bottom-up" approach when selecting securities for the Funds. They look for
companies that they believe are in dynamic high growth sectors of the world
economy, and that are thought to have dominant or strong competitive positions
within their sectors. They also look for companies thought to have quality
management and that are expected to have strong earnings growth potential. When
looking for companies with a higher growth rate than the general market, the
Funds may invest in securities with a higher price-earnings ratio than the
general market. However, if the anticipated growth does not occur, the prices of
securities of these companies can fall significantly.

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. If a Fund does use hedging transactions, it 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.

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. However, the Fund is not restricted in the percentage of its
assets that it may invest in one particular country or region, and from time to
time it may invest a substantial portion of its assets in one or more countries
or regions. 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. If the Fund does use
hedging transactions, it 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

43
<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 the Fund may be
higher than those of investment companies investing only in U.S. securities.

PORTFOLIO MANAGERS OF THE
BOSTON 1784 STOCK FUNDS
EMMETT M. WRIGHT, Senior Fund Manager, and MICHAEL PELOSI, Senior Fund Manager,
have been co-managers of the Asset Allocation Fund since October 1997. Mr.
Wright, who has more than seven 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 16 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 eleven 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
WILLIAM S. STACK, a Director at Kleinwort Benson Investment Management Americas
Inc., currently co-manage the International Equity Fund. Mr. Ide, who has more
than 20 years experience in investment management and research analysis, has
been with BankBoston since early 1993. He has been a co-manager of the
International Equity Fund since 1995. From 1983 to 1993, Mr. Ide was a Senior
Vice President with the Private Client Group of Boston Safe Deposit and Trust
Company. Mr. Stack, who has more than 25 years of experience managing domestic
and international equities, has been with Kleinwort since 1996. He is also a
Senior Managing Director of Dresdner RCM Global Investors LLC (an affiliate of
Kleinwort), with which he has been associated since 1994 and is a member of its
Board of Directors.

PROSPECTUS

44
<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, 1999, BankBoston's Private Bank was responsible for the investment
management of approximately $30 billion of individual, institutional, endowment
and corporate assets, including nearly $9.8 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.

On March 14, 1999, BankBoston Corporation, the parent company of BankBoston, and
Fleet Financial Group, Inc. entered into an Agreement and Plan of Merger under
which BankBoston Corporation will be merged with Fleet Financial Group, subject
to certain conditions. After the merger, which is expected to be effective by
the last quarter of 1999, BankBoston will be a subsidiary of the merged company.

Kleinwort Benson Investment Management Americas Inc. ("Kleinwort") serves as
co-investment adviser to the International Equity Fund with BankBoston.
Investment decisions are joint. Kleinwort, 4 Embarcadero Center, San Francisco,
California 94111, is a U.S.-based investment adviser which is indirectly owned
by 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 $68 billion of assets.

MANAGEMENT FEES
The following chart shows the investment management fees paid by each Fund
during the last fiscal year.

- -------------------------------------------------------------------------------
MANAGEMENT FEES PAID
(expressed as a percentage of average net assets)
- -------------------------------------------------------------------------------

Tax-Free Money Market Fund .40%
U.S. Treasury Money Market Fund .33
Institutional U.S. Treasury Money Market Fund .20
Prime Money Market Fund .32
Institutional Prime Money Market Fund .15
Short-Term Income Fund .50
Income Fund .68
U.S. Government Medium-Term Income Fund .67
Tax-Exempt Medium-Term Income Fund .68
Connecticut Tax-Exempt Income Fund .67
Florida Tax-Exempt Income Fund .65
Massachusetts Tax-Exempt Income Fund .67
Rhode Island Tax-Exempt Income Fund .66
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 tables.

PROSPECTUS

45
<PAGE>

MANAGEMENT (CONTINUED)

YEAR 2000
Boston 1784 Funds have been working to prepare for the Year 2000 transition and
have taken steps to provide seamless processing for all systems and applications
utilized by the Funds' service providers. We have sought and received assurances
from each service provider that their computer systems have been remediated for
Year 2000. We are continuing to monitor the progress of these service providers
with respect to the testing of modified systems, and have sought and received
assurances that such testing confirms Year 2000 readiness.

While we have received such assurances, the Funds and their shareholders may
experience losses if these assurances prove to be incorrect. Losses could also
arise as a result of Year 2000 computer difficulties experienced by third
parties, such as banks and broker-dealers or securities exchanges with which the
Funds do business.

An additional Year 2000 consideration is the readiness of the companies in which
Boston 1784 Funds have invested. The Year 2000, like any other market influence,
could quite possibly impact Fund performance adversely. Boston 1784 Funds'
portfolio managers consider the Year 2000 transition, like any other factor, in
making investment decisions.

It is important to understand that Boston 1784 Funds cannot warrant or guarantee
the Year 2000 readiness of any third party.

PROSPECTUS
46
<PAGE>
DISTRIBUTION ARRANGEMENTS

Boston 1784 Funds do not charge any sales loads, deferred sales loads or other
fees when you purchase 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

47
<PAGE>

FINANCIAL HIGHLIGHTS

THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND A FUND'S
FINANCIAL PERFORMANCE FOR THE PAST 5 YEARS (OR, IF SHORTER, THE PERIOD OF THE
FUND'S OPERATIONS). CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE
FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR
WOULD HAVE EARNED (OR LOST) ON AN INVESTMENT IN EACH FUND (ASSUMING REINVESTMENT
OF ALL DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS, WHOSE REPORT, ALONG WITH
THE FUNDS' FINANCIAL STATEMENTS, ARE INCLUDED IN THE FUNDS' ANNUAL REPORTS,
WHICH ARE AVAILABLE UPON REQUEST.
<TABLE>

- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
NET NET NET RATIO RATIO OF RATIO OF NET
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET EXPENSES TO INCOME TO
VALUE NET FROM NET VALUE END OF EXPENSES INCOME AVERAGE NET AVERAGE NET
BEGIN- INVEST- INVEST- END OF TO TO ASSETS ASSETS
NING MENT MENT OF TOTAL PERIOD AVERAGE AVERAGE (EXCLUDING) (EXCLUDING
OF PERIOD INCOME INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- -----------------------------------------------------------------------------------------------------------------------------------

BOSTON 1784 TAX-FREE MONEY MARKET FUND
For the year ended
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
May 31, 1999 $1.00 0.03 (0.03) $1.00 3.01% $ 969,380 0.51% 2.97% 0.51% 2.97%
For the year ended
May 31, 1998 $1.00 0.03 (0.03) $1.00 3.33% $1,007,724 0.53% 3.28% 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% 0.56% 3.15%
For the year ended
May 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $ 549,628 0.54% 3.49% 0.60% 3.43%
For the year ended
May 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $ 539,412 0.50% 3.28% 0.61% 3.17%

- -----------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. TREASURY MONEY MARKET FUND
For the year ended
May 31, 1999 $1.00 0.04 (0.04) $1.00 4.55% $ 390,775 0.65% 4.45% 0.72% 4.38%
For the year ended
May 31, 1998 $1.00 0.05 (0.05) $1.00 5.02% $ 372,657 0.65% 4.91% 0.70% 4.86%
For the year ended
May 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $ 390,294 0.64% 4.76% 0.72% 4.68%
For the year ended
May 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64% 5.02% 0.75% 4.91%
For the year ended
May 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60% 5.13% 0.92% 4.81%

- -----------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
For the year ended
May 31,1999 $1.00 0.05 (0.05) $1.00 4.90% $4,346,037 0.31% 4.79% 0.31% 4.79%
For the year ended
May 31,1998 $1.00 0.05 (0.05) $1.00 5.36% $4,285,801 0.33% 5.24% 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% 0.34% 5.04%
For the year ended
May 31,1996 $1.00 0.05 (0.05) $1.00 5.45% $ 644,733 0.32% 5.29% 0.39% 5.22%
For the year ended
May 31,1995 $1.00 0.05 (0.05) $1.00 5.05% $ 395,585 0.30% 5.12% 0.41% 5.01%

- -----------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 PRIME MONEY MARKET FUND
For the year ended
May 31, 1999 $1.00 0.05 (0.05) $1.00 4.78% $ 165,178 0.65% 4.66% 0.73% 4.58%
For the year ended
May 31, 1998 $1.00 0.05 (0.05) $1.00 5.16% $ 127,588 0.65% 5.05% 0.70% 5.00%
For the period ended
May 31, 1997 (1) $1.00 0.02 (0.02) $1.00 2.07%* $ 123,099 0.65% 4.98% 0.75% 4.88%
For the year ended
December 31, 1996 (2) $1.00 0.05 (0.05) $1.00 5.02% $ 93,229 0.66% 4.85% 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% 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% 0.69% 3.60%

- -----------------------------------------------------------------------------------------------------------------------------------
<FN>

* Return is for the period indicated and has not been annualized.
(1) 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.
(2) 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.
(3) The Institutional Prime Money Market Fund commenced operations on November 5, 1997.
All ratios for the period, including total return, have been annualized.

</FN>
</TABLE>

PROSPECTUS

48
<PAGE>

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)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND
For the year ended May 31, 1999 $10.09 0.54 (0.07) (0.54) -- $10.02 4.70% $176,032
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, 1999 $10.25 0.55 (0.26) (0.55) (0.06) $ 9.93 2.83% $343,196
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, 1999 $ 9.60 0.51 (0.15) (0.51) -- $ 9.45 3.73% $276,781
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
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

RATIO RATIO OF
RATIO OF OF EXPENSES NET INCOME
RATIO OF NET TO AVERAGE TO AVERAGE
EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOSTON 1784 SHORT-TERM INCOME FUND
For the year ended May 31, 1999 0.64% 5.30% 0.89% 5.05% 36.57%
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, 1999 0.80% 5.37% 1.11% 5.06% 64.34%
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, 1999 0.80% 5.25% 1.12% 4.93% 47.85%
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%
- ----------------------------------------------------------------------------------------------------------

<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.

</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)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1999 $10.52 0.45 (0.01) (0.45) (0.18) $10.33 4.24% $356,995
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 year ended May 31, 1995 $ 9.90 0.48 0.24 (0.48) -- $10.14 7.58% $176,345

- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
For the year ended May 31, 1999 $10.81 0.48 (0.08) (0.48) (0.06) $10.67 3.72% $187,725
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 (1) $10.00 0.45 0.27 (0.45) -- $10.27 7.45%* $ 61,369
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
For the year ended May 31, 1999 $10.30 0.44 (0.04) (0.44) (0.14) $10.12 3.88% $ 68,796
For the period ended May 31, 1998 (2) $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, 1999 $10.42 0.45 (0.03) (0.45) -- $10.39 4.10% $267,871
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 year ended May 31, 1995 $ 9.81 0.47 0.09 (0.47) -- $ 9.90 6.00% $ 82,058

</TABLE>

- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
For the year ended May 31, 1999 0.80% 4.37% 1.12% 4.05% 19.10%
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 (1) 0.52% 5.44% 1.40% 4.56% 35.56%
- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
For the year ended May 31, 1999 0.80% 4.25% 1.14% 3.91% 10.88%
For the period ended May 31, 1998 (2) 0.80% 4.59% 1.19% 4.20% 21.35%
- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
For the year ended May 31, 1999 0.80% 4.32% 1.12% 4.00% 9.32%
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 year ended May 31, 1995 0.80% 4.93% 1.35% 4.38% 34.59%

</TABLE>

PROSPECTUS

<PAGE>

<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, 1999 $10.62 0.47 (0.04) (0.47) (0.08) $10.50 4.11% $102,073
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 (3) $10.00 0.45 0.13 (0.45) -- $10.13 6.09%* $ 32,495
- ------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

* Returns are for the period indicated and have not been annualized.
(1) The Connecticut Tax-Exempt Income Fund commenced operations on August 1, 1994.
All ratios for the period have been annualized.
(2) The Florida Tax-Exempt Income Fund commenced operations on June 30, 1997.
All ratios for the period have been annualized.
(3) The Rhode Island Tax-Exempt Income Fund commenced operations on August 1, 1994.
All ratios for the period have been annualized.
</FN>
</TABLE>

For the year ended May 31, 1999 $21.72 0.02 0.97 (0.04) (0.50) $22.17 4.65% $549,416
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 year ended May 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09% $229,200
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND

For the year ended May 31, 1999 $12.93 (0.08) (0.41) -- (0.38) $12.06 (3.54)% $185,476
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 period ended May 31, 1996 (1) $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, 1999 $13.69 -- (0.66) (0.03) (0.08) $12.92 (4.85)% $389,753
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 (2) $10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%* $148,439
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<S> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 0.96% 2.57% 1.21% 2.32% 49.78%
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 year ended May 31, 1995 1.25% 2.88% 2.51% 1.62% 67.23%
- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND

For the year ended May 31, 1999 0.89% 0.12% 1.14% (0.13)% 50.15%
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 year ended May 31, 1995 0.94% 1.05% 1.23% 0.76% 38.94%
- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND

For the year ended May 31, 1999 0.93% (0.39)% 1.18% (0.64)% 61.02%
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 period ended May 31, 1996 (1) 0.20% 1.75% 1.73% 0.22% 0.00%
- ----------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND

For the year ended May 31, 1999 1.20% 0.06% 1.45% (0.19)% 115.83%
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 (2) 0.89% 2.06% 1.70% 1.25% 11.03%
- ----------------------------------------------------------------------------------------------------------

<FN>
* Returns are for the period indicated and have not been annualized.
(1) The Growth Fund commenced operations on March 28, 1996. All ratios for the period have
been annualized.
(2) The International Equity Fund commenced operations on January 3, 1995. All ratios for the
period have been annualized.

</FN>
</TABLE>

PROSPECTUS

50
<PAGE>

NOTES

PROSPECTUS

51
<PAGE>

NOTES

PROSPECTUS

52
<PAGE>

NOTES

PROSPECTUS

53
<PAGE>
Rule 497(c)
File Nos. 33-58004
811-7474

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
REPORTS, 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
REPORTS 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.

================================================================================

[LOGO OMITTED]

BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
www.boston1784funds.com

FILE NO. 811-7474 MF-0135

BOSTON 1784 FUNDSSM
FUNDS AVAILABLE THROUGH YOUR RETIREMENT PLAN

MONEY MARKET FUNDS
[BULLET] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND

BOND FUNDS
[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND
[BULLET] BOSTON 1784 INCOME FUND
[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-
TERM INCOME FUND

STOCK FUNDS
[BULLET] BOSTON 1784 ASSET ALLOCATION FUND
[BULLET] BOSTON 1784 GROWTH AND INCOME FUND
[BULLET] BOSTON 1784 GROWTH FUND
[BULLET] BOSTON 1784 INTERNATIONAL EQUITY FUND

PROSPECTUS

[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.

October 1, 1999

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
BOSTON 1784 MONEY MARKET FUNDS...............................................1

BOSTON 1784 BOND FUNDS.......................................................4

BOSTON 1784 STOCK FUNDS.....................................................10

INVESTING THROUGH YOUR RETIREMENT PLAN .....................................17

PRICING OF FUND SHARES......................................................18

DISTRIBUTIONS...............................................................18

FEDERAL TAX CONSIDERATIONS..................................................19

MORE ABOUT BOSTON 1784 FUNDS................................................20

Money Market Funds............................................20
Bond Funds....................................................21
Stock Funds...................................................22

MANAGEMENT..................................................................25

DISTRIBUTION ARRANGEMENTS...................................................26

FINANCIAL HIGHLIGHTS........................................................27

PROSPECTUS

<PAGE>

BOSTON 1784 MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND

THIS SUMMARY BRIEFLY DESCRIBES BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY
MARKET FUND AND THE PRINCIPAL RISKS OF INVESTING IN THE FUND. FOR FURTHER
INFORMATION ON THIS FUND, PLEASE READ THE SECTION ENTITLED MORE ABOUT BOSTON
1784 FUNDS.

[Compass graphic omitted]

WHAT ARE THE FUND'S GOALS?

The Fund's goals are to preserve the principal value of a shareholder's
investment and maintain a high degree of liquidity while providing current
income.

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. 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.

[Chess piece graphic omitted]

WHAT ARE THE FUND'S MAIN
INVESTMENT STRATEGIES?

The Fund invests primarily in short-term U.S. government obligations, including
Treasury securities, U.S. government agency securities and repurchase agreements
secured by U.S. government obligations.

[Road Sign graphic omitted]

WHAT ARE THE MAIN RISKS OF
INVESTING IN THE FUND?

The principal risks of investing in the Fund and the circumstances reasonably
likely, in the opinion of the Adviser, to affect your investment adversely are
described below. Please note that there are many other factors that could affect
your investment adversely and that could prevent the Fund from achieving its
objectives, which are not described here. The principal risks are:

[bullet] The rate of income will vary from day to day depending
on short-term interest rates.

[bullet] It is possible that a major change in interest rates or a default
on a security or a repurchase agreement held by the Fund could
cause the value of your investment or the performance of the Fund
to decline.

[bullet] The Fund may invest up to 5% of its total assets in zero coupon
securities called STRIPS, which are the separately traded interest
and principal component parts of U.S. Treasury securities. The
interest-only component is extremely sensitive to the rate of
principal payments on the underlying obligation. The market value of
the principal-only component generally is unusually volatile in
response to changes in interest rates.

[bullet] An investment in the Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency.

[bullet] Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in
the Fund.

PROSPECTUS

1
<PAGE>

Boston 1784 Money Market Funds (CONTINUED)
- --------------------------------------------------------------------------------
WHO MAY WANT TO INVEST?

THIS MONEY MARKET FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN INVESTORS WHO:

[bullet] are investing for a short period of time;

[bullet] want the added safety of U.S. government securities.

The Fund does not provide a balanced investment plan.

[Flag graphic omitted]

HOW HAS THE FUND PERFORMED?

The chart and table below give an indication of the Fund's risks
and performance. The chart shows changes in the Fund's performance
from year to year. The table shows how the Fund's average annual
returns for the periods indicated compare to those of a broad
measure of money market performance.

WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S
PERFORMANCE IN PAST YEARS IS NOT NECESSARILY AN INDICATION OF HOW
THE FUND WILL DO IN THE FUTURE.

- --------------------------------------------------------------------------------
INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follows:

1994 4.04%
1995 5.69%
1996 5.14%
1997 5.30%
1998 5.20%

The total return for the six months ended June 30, 1999 was 2.26%.

QUARTER ENDING
Highest 1.43% June 30, 1995
Lowest 0.76% March 31, 1994

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Institutional U.S. Treasury 5.20% 5.07% 4.87%
Money Market Fund

IBC/Financial Data Government- 5.10% 4.98% 4.76%*
Only Institutional-Only Average
- --------------------------------------------------------------------------------
*(since 5/31/93)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
2
<PAGE>

- --------------------------------------------------------------------------------
[calculator graphic omitted]

WHAT ARE THE FEES AND EXPENSES OF THE FUND?

THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND

Maximum Deferred Sales Charge (Load) None

Maximum Sales Charge (Load) None
Imposed on Reinvested Dividends

Redemption Fee None

Exchange Fee None

Distribution (12b-1) Fees None

Other Expenses .11%

Total Annual Fund Operating Expenses .31%

- --------------------------------------------------------------------------------
EXAMPLE
- --------------------------------------------------------------------------------
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN BOSTON
1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND TO THE COST OF INVESTING IN
OTHER MUTUAL FUNDS. THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR
THE TIME PERIODS INDICATED AND THEN SELL ALL OF YOUR SHARES AT THE END OF THOSE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR
AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME AS SHOWN IN THE TABLE
ABOVE. ALTHOUGH YOUR ACTUAL COSTS AND THE RETURN ON YOUR INVESTMENT MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
- --------------------------------------------------------------------------------
1 year $ 32

3 years 100

5 years 174

10 years 393
- --------------------------------------------------------------------------------

PROSPECTUS
3
<PAGE>

BOSTON 1784 BOND FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND
INCOME FUND
U.S. GOVERNMENT MEDIUM-TERM INCOME FUND

[compass graphic 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.

[chess piece graphic omitted]

WHAT ARE THE FUNDS' MAIN
INVESTMENT STRATEGIES?

PROSPECTUS

4
<PAGE>

- --------------------------------------------------------------------------------
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.

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.

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.

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 is permitted to invest in bonds with any maturity. However, the Fund's
average weighted maturity is normally expected to be between 7 and 30 years.

U.S. government obligations generally have less credit risk than other debt
obligations.

The Fund is permitted to invest in bonds with any maturity. However, the Fund's
average weighted maturity is normally expected to be from 3 to 10 years.

[Road Sign Graphic Omitted]

WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 BOND FUNDS?

[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 usually 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. Changes in interest
rates will also affect the amount of income a Fund receives. A
decline in interest rates may lead to a decline in the Fund's
income.

[bullet] CREDIT RISK: It is possible that some of the issuers will not make
payments (default) on debt securities held by a Fund, or there
could be defaults on repurchase agreements held by a Fund. A default
will hurt a Fund's performance. 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 make it more difficult for the Fund to sell the bond.

[bullet] PREPAYMENT AND EXTENSION RISK: The issuers of securities held by a
Fund may be able to call a bond or prepay principal, particularly
during periods of declining interest rates. In that case, a Fund
may not be able to reinvest the proceeds at attractive rates. The
Fund would also lose the benefit of falling interest rates on the
price of the repaid bond. 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.

PROSPECTUS

5
<PAGE>

BOSTON 1784 BOND FUNDS (CONTINUED)
- --------------------------------------------------------------------------------

[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. Mortgage-backed securities are particularly exposed
to prepayment and extension risk and it may be very difficult for a
Fund to predict accurately the maturity of the securities it holds.

[bullet] PORTFOLIO SELECTION: The portfolio managers may not pick securities
that perform well because they are unable to predict accurately the
direction of interest rates or the maturity of certain debt
obligations or to assess accurately credit quality or other factors.
In that case, you may lose money or your investment in the Fund may
not do as well as other similar investments.

[bullet] ZERO COUPON SECURITIES: The Funds may invest in zero coupon
securities or STRIPS, which are the separately traded interest and
principal component parts of government debt obligations. 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] FOREIGN SECURITIES: Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk and exposure to currency fluctuations.

[bullet] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency.

WHO MAY WANT TO INVEST?

SHORT-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN INVESTORS
WHO ARE:
[bullet] seeking income;
[bullet] seeking a higher yield than a 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 RETIREMENT PLAN INVESTORS
WHO ARE:
[bullet] seeking a higher level of income than is available from
shorter-term securities;
[bullet] able to tolerate the greater price fluctuations
associated with longer-term securities and higher levels
of income.

U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
THIS BOND FUND MAY BE APPROPRIATE FOR RETIREMENT PLAN INVESTORS
WHO ARE:
[bullet] seeking higher levels of income than is available from
shorter-term securities or money market funds;
[bullet] seeking the added measure of protection against credit
risk provided by U.S. government securities;
[bullet] able to tolerate the fluctuations in price associated
with medium-term securities.

Do not invest in these Funds if you are not prepared to accept
volatility of a Fund's share price and possible losses.

None of the Bond Funds alone provides a balanced investment plan.

PROSPECTUS

6
<PAGE>
- --------------------------------------------------------------------------------
[Flag Graphic Omitted]

HOW HAVE THE FUNDS PERFORMED?

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 Graphic Omitted]

Plot points are as follows:

1995 11.36%
1996 4.25%
1997 6.30%
1998 6.31%

The total return for the six months ended June 30, 1999 was 1.12%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1995-1998)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 3.31% June 30, 1995
Lowest -0.27% March 31, 1996

- --------------------------------------------------------------------------------
Average Annual Total Returns
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 7/1/94)
Short-Term Income Fund 6.31% 6.39%

Lehman Mutual Fund 7.64% 7.28%*
1-5 Year Government/Corporate
Bond Index
- --------------------------------------------------------------------------------
*(Since 6/30/94)

- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:

1995 17.98%
1996 2.60%
1997 7.85%
1998 7.69%

The total return for the six months ended June 30, 1999 was -2.57%.

QUARTER ENDING
Highest 6.34% June 30, 1995
Lowest -2.42% March 31, 1996

Lehman Aggregate 8.67% 9.05%*
Bond Index
- --------------------------------------------------------------------------------
*(Since 6/30/94)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS

7
<PAGE>

BOSTON 1784 BOND FUNDS (CONTINUED)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
U.S. Government Medium-Term Income Fund
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]

Plot points are as follow:

1994 -3.78%
1995 15.89%
1996 1.98%
1997 8.08%
1998 7.95%

The total return for the six months ended June 30, 1999 was -1.95%.

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
U.S. Government Medium-Term 7.95% 5.82% 5.88%
Income Fund

Lehman Intermediate 8.47% 6.45% 6.45%*
Government Bond Index
- --------------------------------------------------------------------------------
*(Since 5/31/93)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
8
<PAGE>

- --------------------------------------------------------------------------------
[calculator graphic 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

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from your investment)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT
SHORT-TERM INCOME MEDIUM-TERM
INCOME FUND FUND INCOME FUND

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

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
- ------------------------------------------------------------------------

PROSPECTUS

9
<PAGE>

BOSTON 1784 STOCK FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
GROWTH AND INCOME FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND

[compass graphic omitted]

WHAT ARE THE FUNDS' GOALS?

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.
[chess piece graphic 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.

GROWTH AND INCOME FUND
The Growth and Income Fund invests primarily in the common stock of established
U.S. and foreign companies where the portfolio managers believe there is
opportunity for growth.

PROSPECTUS
10
<PAGE>
- --------------------------------------------------------------------------------
fallen, making it more difficult for the Fund to produce any significant income
while principally seeking growth of capital.

When investing in foreign companies, the Fund may invest in smaller companies
and companies located in developing countries.

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 portfolio managers believe have above-average growth
potential.

When investing in foreign companies, the Fund may also invest in smaller
companies and in companies located in developing countries.

[Road Sign Graphic Omitted]

WHAT ARE THE MAIN RISKS
OF INVESTING IN BOSTON 1784 STOCK FUNDS?

[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] PORTFOLIO SELECTION: The portfolio managers may not pick stocks that
outperform the market or that do as well as the market. In that
case, you may lose money or your investment may not do as well as
other similar investments.

[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 assets by a Fund
or the issuers of securities, and political or social
instability.

[bullet] Enforcing legal rights may be difficult, costly and slow
in foreign countries, and there may be special
PROSPECTUS
11
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
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.

[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. Rapid increases in money supply may result in speculative
investing, contributing to volatility. 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 affect
adversely the value of the Fund. In addition, some foreign currency
values may be volatile, and there is the possibility of governmental
controls on currency exchanges or intervention in currency markets.

[bullet] Foreign markets and securities may be particularly vulnerable to
Year 2000 computer problems.

[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. Changes in interest rates will also affect the amount of
income a Fund receives. A decline in interest rates may lead to a
decline in the Fund's income.

[bullet] CREDIT RISK: It is possible that some issuers will not make payments
(default) on debt obligations held by a Fund. A default will hurt a
Fund's performance. 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 make it more difficult for the Fund to sell
the bond.

[bullet] PREPAYMENT AND EXTENSION RISK: The issuers of securities held by a
Fund may be able to call a bond or prepay principal, particularly
during periods of declining interest rates. In that case, a Fund
may not be able to reinvest the proceeds at attractive rates. The
Fund would also lose the benefit of falling interest rates on the
price of the repaid bond. 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. Mortgage-backed securities
are particularly exposed to prepayment and extension risk.

[bullet] SPECIAL CHARACTERISTICS OF CONVERTIBLE SECURITIES: Convertible
securities are subject to the market risk of stocks, while also
subject to interest rate risk and the credit risk of the issuers.
Call provisions may allow the issuer to repay the debt before it
matures.

[bullet] An investment in a Fund is not a deposit of BankBoston and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency.

PROSPECTUS

12
<PAGE>

WHO MAY WANT TO INVEST?

ASSET ALLOCATION FUND
THE ASSET ALLOCATION FUND MAY BE APPROPRIATE FOR LONG-TERM
RETIREMENT PLAN INVESTORS WHO ARE:

[bullet] seeking a balanced investment program;

[bullet] seeking protection against inflation.

GROWTH AND INCOME FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM RETIREMENT PLAN
INVESTORS WHO ARE:

[bullet] seeking long-term growth.

GROWTH FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM RETIREMENT PLAN
INVESTORS WHO ARE:

[bullet] seeking long-term growth;

[bullet] able to tolerate the additional risks of investing in
smaller companies;

[bullet] not seeking income.

INTERNATIONAL EQUITY FUND
THIS STOCK FUND MAY BE APPROPRIATE FOR LONG-TERM RETIREMENT PLAN
INVESTORS WHO ARE:

[bullet] seeking long-term growth;

[bullet] looking for exposure in the international markets and able
to tolerate the additional risks associated with these
markets;

[bullet] not seeking income.

Do not invest in these Funds if you are not prepared to accept
volatility of a Fund's share price and substantial losses.

None of the Stock Funds alone (except the Asset Allocation Fund)
provides a balanced investment plan.

PROSPECTUS
13
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
[Flag graphic omitted]

HOW HAVE THE FUNDS PERFORMED?

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 Graphic Omitted]

Plot points are as follows:

1994 -0.65%
1995 29.55%
1996 10.48%
1997 20.74%
1998 12.28%

The total return for the six months ended June 30, 1999 was 4.68%.

QUARTER ENDING
Highest 10.79% June 30, 1997
Lowest -5.12% September, 30, 1998

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Asset Allocation Fund 12.28% 14.03% 12.92%

S&P 500 Composite Index 28.60% 24.05% 22.38%*

Lehman Aggregate Bond 8.67% 7.27% 7.33%*
Index
- --------------------------------------------------------------------------------
*(since 5/31/93)

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 Graphic Omitted]

Plot points are as follow:

1994 -0.18%
1995 30.56%
1996 23.63%
1997 19.66%
1998 22.70%

The total return for the six months ended June 30, 1999 was 1.76%.

AVERAGE ANNUAL TOTAL RETURNS
(through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
Growth and Income Fund 22.70% 18.79% 18.27%

S&P 500 Composite Index 28.60% 24.05% 22.38%*
- --------------------------------------------------------------------------------
*(since 5/31/93)

PROSPECTUS
14
<PAGE>

- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follow:

1997 13.92%
1998 1.36%

The total return for the six months ended June 30, 1999 was 6.92%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN
(Quarterly 1997-1998)
- --------------------------------------------------------------------------------

QUARTER ENDING
Highest 25.00% December 31, 1998
Lowest -22.74% September 30, 1998

Russell 2000 Index -2.55% 10.68%*
- --------------------------------------------------------------------------------
*(since 3/31/96)

- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[Bar Graphic Omitted]
Plot points are as follow:

1995 13.34%
1996 13.68%
1997 -0.92%
1998 12.45%

The total return for the six months ended June 30, 1999 was 4.72%.

QUARTER ENDING
Highest 16.75% December 31, 1998
Lowest -16.34% September 30, 1998

nternational Equity Fund 12.45% 9.45%

Morgan Stanley MSCI EAFE Index 20.00% 9.55%*
- --------------------------------------------------------------------------------
*(since 12/31/94)

PROSPECTUS

15
<PAGE>

BOSTON 1784 STOCK FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
[calculator graphic 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 .22% .15% .19% .20%

Total Annual Fund Operating Expenses 1.21%* 1.14%* 1.18%* 1.45%*
</TABLE>

- --------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because 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 .96%
GROWTH AND INCOME FUND .89%
GROWTH FUND .93%
INTERNATIONAL EQUITY FUND 1.20%

- --------------------------------------------------------------------------------
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 $ 123 $ 116 $ 120 $ 148

3 years 384 362 375 459

5 years 665 628 649 792

10 years 1,466 1,386 1,432 1,735
- -------------------------------------------------------------------------

PROSPECTUS
16
<PAGE>

INVESTING THROUGH YOUR RETIREMENT PLAN
- --------------------------------------------------------------------------------
You may invest in Boston 1784 Funds through your employer-sponsored defined
contribution plan. These plans are designed to help you save for retirement.
You should contact your employer for information about the features and
benefits of your plan, or if you have questions about:

[BULLET] HOW TO INVEST IN A FUND

[BULLET] HOW TO CHANGE THE AMOUNT OF MONEY THAT YOU INVEST IN A FUND ON A
REGULAR BASIS

[BULLET] HOW TO WITHDRAW YOUR MONEY FROM A FUND AND INVEST IN OTHER
INVESTMENT OPTIONS

[BULLET] WHEN YOU WILL RECEIVE STATEMENTS OF YOUR ACCOUNT

[BULLET] HOW MUCH MONEY YOU MAY CONTRIBUTE TO YOUR PLAN

[BULLET] HOW TO INCREASE OR DECREASE THE AMOUNT OF MONEY THAT YOU ARE
CONTRIBUTING TO YOUR PLAN

[BULLET] HOW TO MAKE WITHDRAWALS FROM YOUR PLAN

[BULLET] HOW TO STOP MAKING CONTRIBUTIONS TO YOUR PLAN

[BULLET] WHAT HAPPENS TO YOUR INVESTMENTS IF YOU LEAVE YOUR CURRENT
EMPLOYMENT

[BULLET] WHAT ACCESS YOU MAY HAVE TO THE MONEY YOU HAVE INVESTED IN THE PLAN
IN THE EVENT OF FINANCIAL HARDSHIPS OR EMERGENCIES

[BULLET] WHETHER YOU MAY BE ABLE TO TAKE OUT A LOAN FROM YOUR INVESTMENTS
IN THE PLAN

PROSPECTUS

17
<PAGE>

PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
Each Fund's net asset value per share or NAV is calculated on each day the New
York Stock Exchange is open, except for Columbus Day and Veteran's Day. The NAV
is the value of a single share of a Fund.

BOND FUNDS AND STOCK FUNDS
Each Fund's 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.

MONEY MARKET FUNDS
The Institutional U.S. Treasury Money Market Fund calculates NAV at 3:00 p.m.
Eastern time (12 noon on days when the financial markets close early). In
determining the Fund's NAV, securities are valued at amortized cost, which is
approximately equal to market value.

DISTRIBUTIONS
- --------------------------------------------------------------------------------
When you invest in a Fund through a defined contribution plan, your share of a
Fund's net income and gains on its investments is added to your account. Each
Fund passes substantially all of its earnings along to its investors as
distributions. When a Fund earns dividends from stocks and interest from bonds
and other debt securities and distributes these earnings to shareholders, it is
called a DIVIDEND DISTRIBUTION. A Fund realizes capital gains when it sells
securities for a higher price than it paid. When these gains are distributed to
shareholders, it is called a CAPITAL GAIN DISTRIBUTION. Dividend distributions
may be made several times a year, while capital gain distributions are generally
made annually. Your distributions from a Fund will be automatically reinvested
in additional shares of the Fund and will be added to your account shortly after
your plan receives the distributions.

MONEY MARKET FUNDS
The Fund declares dividend distributions each day, and pays distributions
monthly. You will not receive a dividend for the day on which you sell shares.

BOND FUNDS
The Funds declare dividend distributions each day, and pays distributions
monthly.

STOCK FUNDS
The Asset Allocation Fund and Growth and Income Fund pay dividend distributions,
if any, quarterly, generally on the last day of March, June, September and
December.

The Growth Fund pays dividend distributions, if any, semi-annually, generally on
the last day of June and December.

The International Equity Fund pays dividend distributions, if any, annually,
generally on the last day of December.

PROSPECTUS
18
<PAGE>

FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
Your investment in a Fund will have tax consequences that you should consider.
Some of the more common federal tax consequences are described here, but you
should consult your tax adviser about state and local taxes and your own
particular situation.

So long as your employer's plan remains exempt from federal income tax, you will
not have to pay federal income tax on Fund distributions or on any gain you
realize on the sale or exchange of Fund shares until you withdraw those amounts
from your plan. You will generally have to pay federal income taxes at ordinary
income tax rates on distributions the plan makes to you, including in some
circumstances a 10% penalty tax on distributions before age 59 1/2. You should
consult your plan's administrator for further information regarding the tax
status of your plan distributions.

PROSPECTUS
19
<PAGE>

More About Boston 1784 Funds

- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
[bullet] BOSTON 1784 INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND

PRINCIPAL INVESTMENT STRATEGIES

The principal investment strategies of the Fund are described below. These are
the strategies that, in the opinion of the Adviser, are most likely to be
important in trying to achieve the Fund's investment objective. Of course,
there can be no assurance that the Fund will achieve its investment objective.
Please note that the Fund may also use strategies and invest in securities that
are not described below, but which are described in the Statement of Additional
Information. A Fund is not required to use all of the strategies and techniques
or invest in all of the types of securities described in this Prospectus or in
the Statement of Additional Information.

WHAT ARE MONEY MARKET INSTRUMENTS?
A MONEY MARKET INSTRUMENT is a short-term IOU issued by banks or other U.S.
corporations, or the U.S. government or state or local governments. Money
market instruments have maturity dates of 13 months or less. Money market
instruments may include certificates of deposit, bankers' acceptances, variable
rate demand notes, fixed-term obligations, commercial paper, asset-backed
commercial paper and repurchase agreements.

The Fund has specific investment policies and procedures designed to maintain a
constant net asset value of $1.00 per share. The Fund complies with industry
regulations that apply to money market funds. These regulations require that the
Fund's investments mature or be deemed to mature within 397 days from the date
purchased and that the average maturity of the Fund's investments (on a
dollar-weighted basis) be 90 days or less. In addition, all of the Fund's
investments must be in U.S. dollar-denominated high quality securities which
have been determined by the Adviser to present minimal credit risks. Investments
in high quality, short-term securities such as money market instruments may, in
many circumstances, result in a lower yield than would be available from
investments in securities with a lower quality or a longer term.

The Fund invests primarily in money market instruments issued by the U.S.
Treasury, including bills, notes and bonds, and repurchase agreements secured by
U.S. Treasury securities. Under normal circumstances, at least 65% of the Fund's
assets are invested in these securities. The Fund invests the rest of its assets
in U.S. government obligations issued by agencies or instrumentalities,
including mortgage-backed securities.

When selecting securities for the Fund, the portfolio managers use a "top-down"
approach, looking first at general economic factors and market conditions, then
at individual securities. The portfolio managers look for value while adhering
to the credit and other restrictions on money market funds.

ALTHOUGH THE FUND INVESTS IN U.S. GOVERNMENT OBLIGATIONS, AN INVESTMENT IN THE
FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.

WHAT ARE U.S. GOVERNMENT OBLIGATIONS?
U.S. GOVERNMENT OBLIGATIONS or securities are bonds or other debt obligations
issued by, or whose principal and interest are guaranteed by, the U.S.
government or one of its agencies or instrumentalities. U.S. Treasury securities
and some obligations of U.S. government agencies and instrumentalities are
supported by the "full faith and credit" of the United States. Some U.S.
government obligations are backed by the right of the issuer to borrow from the
U.S. Treasury, and others only by the credit of the issuing agency or
instrumentality. U.S. government obligations generally have less credit risk
than other debt obligations.

PORTFOLIO MANAGERS OF THE FUND
EMMETT M. WRIGHT, Senior Fund Manager, has been the manager of the Fund since it
began operations. Mr. Wright, who has more than seven years of investment
management and research analysis experience, was an Associate Fund Manager at
BankBoston from 1993 to 1994 and has been a Fund Manager at BankBoston since
1994.

LISA W. LEBOEUF, Fund Manager, has been a co-manager of the Fund since January
1997. Ms. LeBoeuf, who has eight years experience in investment management, has
been with BankBoston since 1978.

PROSPECTUS
20
<PAGE>

- --------------------------------------------------------------------------------
Bond Funds
- --------------------------------------------------------------------------------
Boston 1784 Funds currently offer three Bond Funds:

[BULLET] BOSTON 1784 SHORT-TERM INCOME FUND

[BULLET] BOSTON 1784 INCOME FUND

[BULLET] BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND

PRINCIPAL INVESTMENT STRATEGIES

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 instruments and other short-term securities. These investments may result
in a lower yield than would be available from investments with a lower quality
or longer term and may prevent a Fund from achieving its investment objective.

Each Fund is actively managed and the portfolio managers may trade securities
frequently, resulting, from time to time, in an annual portfolio turnover rate
of over 100%. Trading securities may produce capital gains, which are taxable to
shareholders when distributed. Active trading may also increase the amount of
mark-ups and fees that the Fund pays to broker-dealers when it buys and sells
securities. The "Financial Highlights" section of this Prospectus shows each
Fund's historical portfolio turnover rate.

WHAT IS A "TOP-DOWN" APPROACH?
Managers of mutual funds use different styles when selecting securities to
purchase. When using a "TOP-DOWN" approach, the portfolio manager looks first at
broad market factors and, on the basis of those market factors, chooses certain
sectors or industries within the overall market. The manager then looks at
individual companies within those sectors or industries.

WHAT ARE MORTGAGE-BACKED SECURITIES?
Home mortgage loans are typically grouped together into "POOLS" by banks and
other lending institutions, and interests in these pools are then sold to
investors, allowing the bank or other lending institution to have more money
available to loan to home buyers. When homeowners make interest and principal
payments, these payments are passed on to the investors in the pool. Most of
these pools are guaranteed by U.S. government agencies or by government
sponsored private corporations -- familiarly called "GINNIE MAE," "FANNIE MAE"
and "FREDDIE MAC."

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.

PROSPECTUS

21
<PAGE>

MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
The portfolio managers of the SHORT-TERM INCOME FUND and INCOME FUND use a
"top-down" approach to select securities. They review economic outlook,
inflation expectation and interest rates to help identify sector weightings and
define maturity and duration selection before choosing individual securities.
The portfolio managers look at the diversification of the portfolios, and the
marketability and liquidity of the individual securities they select. Although
the Funds are actively managed, the portfolio managers attempt to manage the
Funds so as to minimize capital gains distributions.

The Income Fund's average weighted maturity is expected to be from seven to
thirty years under normal circumstances. While longer-term securities tend to
have higher yields than short-term securities, their prices tend to fluctuate
more as a result of interest rate changes and other factors.

U.S. GOVERNMENT MEDIUM-TERM
INCOME FUND
The U.S. GOVERNMENT MEDIUM-TERM INCOME FUND invests primarily in U.S. government
obligations and repurchase agreements secured by U.S. government obligations.
Under normal circumstances, at least 65% of the Fund's assets are invested in
these securities.

The Fund invests in both U.S. Treasury obligations and obligations such as
mortgage-backed securities issued or guaranteed by the U.S. government or its
agencies. The Fund also invests in non-government agency mortgage- and
asset-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.

The Fund's average weighted maturity is normally expected to be from three to
ten years.

PORTFOLIO MANAGERS OF BOSTON 1784
BOND FUNDS

MARY K. WERLER, Senior Fund Manager, has been the manager of the Short-Term
Income Fund since the Fund began operations in July 1994. Ms. Werler, who has
more than 12 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.

- --------------------------------------------------------------------------------
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

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. Because 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, they may prevent a Fund from achieving its investment
objective.

PROSPECTUS
22
<PAGE>

- --------------------------------------------------------------------------------
Each of the Stock Funds is actively managed, although the portfolio managers
attempt to minimize portfolio turnover. However, from time to time, a Fund's
annual portfolio turnover rate may exceed 100%. The sale of securities may
produce capital gains, which, when distributed, are taxable to shareholders.
Active trading may also increase the amount of commissions or mark-ups the Fund
pays to broker-dealers when the Fund buys and sells securities. The "Financial
Highlights" section of this Prospectus shows each Fund's historical portfolio
turnover rate.

PROSPECTUS
23
<PAGE>

More About Boston 1784 Funds (CONTINUED)
- --------------------------------------------------------------------------------
WHAT IS A "BOTTOM-UP" APPROACH?
When portfolio managers use a "BOTTOM-UP" approach,
they look primarily at individual companies against the
context of broader market factors.

INTERNATIONAL EQUITY FUND
The INTERNATIONAL EQUITY FUND invests primarily in equity securities of foreign
issuers, including securities of issuers in developing countries.

PROSPECTUS

24
<PAGE>

MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BankBoston is the investment adviser of each Fund and, subject to policies set
by the Trustees, makes investment decisions. BankBoston is the successor to a
bank chartered in 1784 and offers a wide range of banking and investment
services to customers throughout the world. BankBoston has been providing asset
management services since 1890. The Private Bank Division of BankBoston is the
investment management group within BankBoston that advises the Funds. As of July
31, 1999, BankBoston's Private Bank was responsible for the investment
management of approximately $30 billion of individual, institutional, endowment
and corporate assets, including $9.8 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.

MANAGEMENT FEES
The following chart shows the investment management fees paid by each Fund
during the last fiscal year.

- --------------------------------------------------------------------------------
MANAGEMENT FEES PAID
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Institutional U.S. Treasury Money Market Fund .20%
Short-Term Income Fund .50
Income Fund .68
U.S. Government Medium-Term Income Fund .67
Asset Allocation Fund .74
Growth and Income Fund .74
Growth Fund .74
International Equity Fund 1.00

It is important to understand that Boston 1784 Funds cannot warrant or guarantee
the Year 2000 readiness of any third party.

PROSPECTUS
25
<PAGE>

Distribution Arrangements
- --------------------------------------------------------------------------------

Boston 1784 Funds do not charge any sales loads, deferred sales loads or other
fees when you purchase shares.

Each Fund, other than the Institutional U.S. Treasury Money Market Fund, has
adopted a plan under rule 12b-1. The plan allows a Fund to use part of the
Fund's assets (up to .25% of its average daily net assets) for the sale and
distribution of its shares, including advertising, marketing and other
promotional activities. Because these fees are paid out of Fund assets, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges. The Funds' Distributor currently
waives these fees on a voluntary basis. This fee waiver may be terminated in
whole or in part at any time.

PROSPECTUS
26

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand a Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in each Fund (assuming reinvestment
of all distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Funds' financial statements, are included in the Funds' Annual Reports,
which are available upon request.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $1.00 0.05 (0.05) $1.00 4.90% $4,346,037 0.31%
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.36% $4,285,801 0.33%
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%
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------

NET REALIZED AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET GAINS OR FROM NET FROM VALUE
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN

- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $10.09 0.54 (0.07) (0.54) -- $10.02 4.70%
For the year ended May 31, 1998 $ 9.98 0.57 0.11 (0.57) -- $10.09 6.98%
For the year ended May 31, 1997 $ 9.93 0.58 0.05 (0.58) -- $ 9.98 6.47%
For the year ended May 31, 1996 $10.09 0.60 (0.12) (0.60) (0.04) $ 9.93 4.87%
For the period ended May 31, 1995(1) $10.00 0.56 0.09 (0.56) -- $10.09 6.74%*

- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1999 $10.25 0.55 (0.26) (0.55) (0.06) $ 9.93 2.83%
For the year ended May 31, 1998 $ 9.99 0.61 0.26 (0.61) -- $10.25 8.88%
For the year ended May 31, 1997 $ 9.90 0.63 0.17 (0.63) (0.08) $ 9.99 8.32%
For the year ended May 31, 1996 $10.39 0.65 (0.37) (0.65) (0.12) $ 9.90 2.64%
For the period ended May 31, 1995(1) $10.00 0.62 0.39 (0.62) -- $10.39 10.69%*

- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1999 $ 9.60 0.51 (0.15) (0.51) -- $ 9.45 3.73%
For the year ended May 31, 1998 $ 9.37 0.55 0.23 (0.55) -- $ 9.60 8.56%
For the year ended May 31, 1997 $ 9.31 0.59 0.06 (0.59) -- $ 9.37 7.16%
For the year ended May 31, 1996 $ 9.57 0.61 (0.26) (0.61) -- $ 9.31 3.65%
For the year ended May 31, 1995 $ 9.36 0.58 0.21 (0.58) -- $ 9.57 8.79%
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------
RATIO RATIO OF NET
OF NET RATIO OF INVESTMENT
INVESTMENT EXPENSES TO INCOME TO
INCOME AVERAGE NET AVERAGE NET
TO AVERAGE ASSETS (EXCLUDING ASSETS (EXCLUDING
NET ASSETS WAIVERS) WAIVERS)
- ---------------------------------------------------------------------------------------------------
BOSTON 1784 INSTITUTIONAL U.S. TREASURY MONEY MARKET
<S> <C> <C> <C>
For the year ended May 31, 1999 4.79% 0.31% 4.79%
For the year ended May 31, 1998 5.24% 0.33% 5.24%
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%
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------------------
BOND FUNDS
- --------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET RATIO OF NET RATIO OF INVESTMENT
ASSET EXPENSES INVESTMENT EXPENSES TO INCOME TO
END OF TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
PERIOD NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
(000) ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 SHORT-TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $176,032 0.64% 5.30% 0.89% 5.05% 36.57%
For the year ended May 31, 1998 $197,256 0.64% 5.67% 0.89% 5.42% 83.84%
For the year ended May 31, 1997 $194,033 0.65% 5.78% 0.93% 5.50% 128.11%
For the year ended May 31, 1996 $ 86,383 0.63% 5.87% 1.06% 5.44% 95.06%
For the period ended May 31, 1995(1)$ 52,581 0.48% 6.31% 1.27% 5.52% 84.54%
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INCOME FUND
For the year ended May 31, 1999 $343,196 0.80% 5.37% 1.11% 5.06% 64.34%
For the year ended May 31, 1998 $392,556 0.80% 5.91% 1.11% 5.60% 79.09%
For the year ended May 31, 1997 $334,778 0.80% 6.31% 1.15% 5.96% 78.63%
For the year ended May 31, 1996 $235,022 0.80% 6.17% 1.20% 5.77% 100.51%
For the period ended May 31, 1995(1)$196,515 0.55% 7.01% 1.23% 6.33% 80.53%
- --------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
For the year ended May 31, 1999 $276,781 0.80% 5.25% 1.12% 4.93% 47.85%
For the year ended May 31, 1998 $252,719 0.80% 5.80% 1.12% 5.48% 73.65%
For the year ended May 31, 1997 $209,141 0.79% 6.30% 1.16% 5.93% 98.22%
For the year ended May 31, 1996 $167,494 0.80% 6.23% 1.24% 5.79% 158.66%
For the year ended May 31, 1995 $130,081 0.80% 6.24% 1.27% 5.77% 142.14%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* 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.

PROSPECTUS

27
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
STOCK FUNDS
- ---------------------------------------------------------------------------------------------------------------------------

NET REALIZED AND NET
ASSET NET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAINS OR FROM NET FROM VALUE
BEGINNING INCOME (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ---------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $15.16 0.38 0.48 (0.39) (0.66) $14.97 5.92%
For the year ended May 31, 1998 $13.40 0.37 2.30 (0.38) (0.53) $15.16 20.51%
For the year ended May 31, 1997 $12.31 0.34 1.44 (0.33) (0.36) $13.40 14.89%
For the year ended May 31, 1996 $10.99 0.31 1.61 (0.31) (0.29) $12.31 17.83%
For the year ended May 31, 1995 $ 9.84 0.28 1.15 (0.27) (0.01) $10.99 14.84%
- ---------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1999 $21.72 0.02 0.97 (0.04) (0.50) $22.17 4.65%
For the year ended May 31, 1998 $17.54 0.07 4.55 (0.09) (0.35) $21.72 26.71%
For the year ended May 31, 1997 $15.23 0.12 2.63 (0.11) (0.33) $17.54 18.33%
For the year ended May 31, 1996 $12.16 0.10 3.08 (0.11) (0.00) $15.23 26.32%
For the year ended May 31, 1995 $10.57 0.11 1.67 (0.10) (0.09) $12.16 17.09%
- ---------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1999 $12.93 (0.08) (0.41) -- (0.38) $12.06 (3.54)%
For the year ended May 31, 1998 $12.20 (0.05) 1.59 -- (0.81) $12.93 12.64%
For the year ended May 31, 1997 $11.27 0.02 0.96 (0.05) (0.00) $12.20 8.77%
For the period ended May 31, 1996 (1)$10.00 0.02 1.25 (0.00) (0.00) $11.27 12.70%*
- ---------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1999 $13.69 -- (0.66) (0.03) (0.08) $12.92 (4.85)
For the year ended May 31, 1998 $13.20 (0.02) 0.80 (0.15) (0.14) $13.69 6.19%
For the year ended May 31, 1997 $12.05 0.07 1.23 (0.09) (0.06) $13.20 10.93%
For the year ended May 31, 1996 $10.41 0.11 1.85 (0.27) (0.05) $12.05 19.08%
For the period ended May 31, 1995 (2)$10.00 0.06 0.35 (0.00) (0.00) $10.41 4.73%*
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------
STOCK FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET RATIO OF NET RATIO OF INVESTMENT
ASSETS EXPENSES INVESTMENT EXPENSES TO INCOME TO
END OF TO AVERAGE INCOME AVERAGE NET ASSETS AVERAGE NET PORTFOLIO
PERIOD NET TO AVERAGE (EXCLUDING ASSETS (EXCLUDING TURNOVER
(000) ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 ASSET ALLOCATION FUND
<S> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $ 53,371 0.96% 2.57% 1.21% 2.32% 49.78%
For the year ended May 31, 1998 $ 50,283 0.98% 2.66% 1.23% 2.41% 47.83%
For the year ended May 31, 1997 $ 35,522 1.07% 2.87% 1.37% 2.57% 23.60%
For the year ended May 31, 1996 $ 16,831 1.25% 2.86% 1.90% 2.21% 39.56%
For the year ended May 31, 1995 $ 8,622 1.25% 2.88% 2.51% 1.62% 67.23%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH AND INCOME FUND
For the year ended May 31, 1999 $549,416 0.89% 0.12% 1.14% (0.13)% 50.15%
For the year ended May 31, 1998 $553,997 0.90% 0.36% 1.15% 0.11% 39.03%
For the year ended May 31, 1997 $457,952 0.92% 0.77% 1.19% 0.50% 15.35%
For the year ended May 31, 1996 $303,463 0.94% 0.78% 1.24% 0.48% 39.50%
For the year ended May 31, 1995 $229,200 0.94% 1.05% 1.23% 0.76% 38.94%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 GROWTH FUND
For the year ended May 31, 1999 $185,476 0.93% (0.39)% 1.18% (0.64)% 61.02%
For the year ended May 31, 1998 $257,550 0.91% (0.35%) 1.16% (0.60%) 48.60%
For the year ended May 31, 1997 $261,487 0.77% 0.17% 1.15% (0.21%) 57.46%
For the period ended May 31, 1996 (1) $ 46,026 0.20% 1.75% 1.73% 0.22% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
BOSTON 1784 INTERNATIONAL EQUITY FUND
For the year ended May 31, 1999 $389,753 1.20% 0.06% 1.45% (0.19)% 115.83%
For the year ended May 31, 1998 $469,819 1.24% 0.04% 1.49% (0.21%) 103.47%
For the year ended May 31, 1997 $503,048 1.27% 0.41% 1.52% 0.16% 22.88%
For the year ended May 31, 1996 $362,460 1.13% 0.76% 1.61% 0.28% 15.55%
For the period ended May 31, 1995 (2) $148,439 0.89% 2.06% 1.70% 1.25% 11.03%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Returns are for the period indicated and have not been annualized.
(1) The Growth Fund commenced operations on March 28, 1996. All ratios for
the period have been annualized.
(2) The International Equity Fund commenced operations on January 3, 1995.
All ratios for the period have been annualized.

PROSPECTUS

28
<PAGE>
Rule 497(c)
File Nos. 33-58004
811-7474

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 REPORTS,
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 REPORTS BY
CALLING 1-800-BKB-1784. THE MATERIAL YOU REQUEST WILL BE SENT BY FIRST-CLASS
MAIL, OR OTHER MEANS DESIGNED TO ENSURE EQUALLY PROMPT DELIVERY, WITHIN THREE
BUSINESS DAYS OF RECEIPT OF THE REQUEST.

THE STATEMENT OF ADDITIONAL INFORMATION HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS INCORPORATED INTO THIS PROSPECTUS BY REFERENCE.

INFORMATION ABOUT THE FUNDS (INCLUDING THE STATEMENT OF ADDITIONAL INFORMATION)
CAN BE REVIEWED AND COPIED AT THE SECURITIES AND EXCHANGE COMMISSION'S PUBLIC
REFERENCE ROOM IN WASHINGTON, D.C. INFORMATION ON THE OPERATION OF THE PUBLIC
REFERENCE ROOM MAY BE OBTAINED BY CALLING THE COMMISSION AT 1-800-SEC-0330.
COPIES OF THIS INFORMATION MAY BE OBTAINED, UPON PAYMENT OF A DUPLICATING FEE,
BY WRITING THE PUBLIC REFERENCE SECTION OF THE COMMISSION, WASHINGTON, D.C.
20549-6009.

REPORTS AND OTHER INFORMATION ABOUT THE FUNDS ARE ALSO AVAILABLE ON THE
COMMISSION'S INTERNET SITE AT HTTP://WWW.SEC.GOV.

THIS PROSPECTUS IS INTENDED FOR USE BY RETIREMENT PLAN INVESTORS.

[LOGO OMITTED]

BOSTON 1784 FUNDS
P.O. BOX 8524
BOSTON, MA 02266-8524
1-800-BKB-1784
www.boston1784funds.com

File No. 811-7474

MF-0170

Prospectus
Boston 1784
Money Market 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.

October 1, 1999
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
BOSTON 1784 MONEY MARKET FUNDS...............................................1

SHAREHOLDER SERVICES.........................................................9

HOW TO REACH THE FUNDS.........................................9
TYPES OF ACCOUNTS..............................................9
HOW TO OPEN AN ACCOUNT.........................................9
HOW TO PURCHASE SHARES........................................10
HOW TO SELL SHARES............................................11
SHAREHOLDER SERVICES AND POLICIES.............................13

PRICING OF FUND SHARES......................................................16

DISTRIBUTIONS...............................................................16

FEDERAL TAX CONSIDERATIONS..................................................17

MORE ABOUT BOSTON 1784 MONEY MARKET FUNDS...................................18

MANAGEMENT..................................................................21

DISTRIBUTION ARRANGEMENTS...................................................22

FINANCIAL HIGHLIGHTS........................................................23

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

[ICON OMITTED]
WHAT ARE THE
FUNDS' GOALS?

U.S. TREASURY MONEY MARKET FUND
INSTITUTIONAL U.S. TREASURY
MONEY MARKET FUND
PRIME MONEY MARKET FUND
INSTITUTIONAL PRIME
MONEY MARKET FUND
The Funds' 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 must follow strict rules as to the investment quality,
maturity, diversification and other features of the securities it purchases. 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.

PROSPECTUS
1

<PAGE>
- --------------------------------------------------------------------------------
[CHESS PIECE GRAPHIC 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.

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 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 obligations.

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.

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.

PROSPECTUS
2
<PAGE>

BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
[ROAD SIGN GRAPHIC OMITTED]

WHAT ARE THE MAIN RISKS OF INVESTING
IN BOSTON 1784 MONEY MARKET FUNDS?

[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 or the performance of the Fund 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

3
<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 U.S.
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 U.S.
Treasury money market funds.

None of the Money Market Funds alone provides a balanced investment plan.

PROSPECTUS
4
<PAGE>

BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
- --------------------------------------------------------------------------------
[FLAG GRAPHIC OMITTED]

HOW HAVE THE FUNDS PERFORMED?

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)

[GRAPH OMITTED]
[PLOT POINTS FOLLOW]

2.71% 3.75% 3.25% 3.33% 3.15%
1994 1995 1996 1997 1998

The total return for the six months ended June 30, 1999 was 1.44%.
- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN (Quarterly 1994-1998)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 0.96% June 30, 1995
Lowest 0.58% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Tax-Free Money 3.15% 3.24% 3.16%
Market Fund

IBC/Financial Data 2.92% 2.92% 2.82%*
Stockbroker
& General Purpose
Tax-Free Average
- --------------------------------------------------------------------------------
*(since 5/31/93)

- --------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[GRAPH OMITTED]
[PLOT POINTS FOLLOW]

3.72% 5.43% 4.82% 4.96% 4.86%
1994 1995 1996 1997 1998

The total return for the six months ended June 30, 1999 was 2.09%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN (Quarterly 1994-1998)
- --------------------------------------------------------------------------------
Quarter Ending
Highest 1.38% June 30, 1995
Lowest 0.64% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/7/93)
U.S. Treasury Money 4.86% 4.76% 4.54%
Market Fund

IBC/Financial Data 4.90% 4.70% 4.48%*
U.S. Government
& Agencies Average
- --------------------------------------------------------------------------------
*(since 5/31/93)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
5

<PAGE>

[GRAPH OMITTED]
[PLOT POINTS FOLLOW]
4.04% 5.69% 5.14% 5.30% 5.20%
1994 1995 1996 1997 1998

The total return for the six months ended June 30, 1999 was 2.26%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN (Quarterly 1994-1998)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 1.43% June 30, 1995
Lowest 0.76% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/14/93)
Institutional U.S. 5.20% 5.07% 4.87%
Treasury Money
Market Fund

IBC/Financial Data 5.10% 4.98% 4.76%*
Government-Only
Institutional-
Only Average
- --------------------------------------------------------------------------------
*(since 5/31/93)

- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[GRAPH OMITTED]
[PLOT POINTS FOLLOW]

3.48% 2.72% 3.75% 5.49% 5.02% 5.14% 5.06%
1992 1993 1994 1995 1996 1997 1998

The total return for the six months ended June 30, 1999 was 2.19%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN (Quarterly 1992-1998)
- --------------------------------------------------------------------------------
QUARTER ENDING
Highest 1.39% June 30, 1995
Lowest 0.66% March 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS LIFE OF FUND
(SINCE 6/6/91)
Prime Money 5.06% 4.89% 4.45%
Market Fund

IBC/Financial Data 4.96% 4.79% 4.34%*
First Tier Money
Market Average
- --------------------------------------------------------------------------------
*(since 5/31/91)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
6

<PAGE>

BOSTON 1784 MONEY MARKET FUNDS (CONTINUED)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
INSTITUTIONAL PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
TOTAL RETURN
(per calendar year)

[GRAPH OMITTED]
[PLOT POINT FOLLOWS]

5.40%
1998

The total return for the six months ended June 30, 1999 was 2.35%.

- --------------------------------------------------------------------------------
HIGHEST AND LOWEST RETURN (Quarterly 1998)
- --------------------------------------------------------------------------------

QUARTER ENDING
Highest 1.35% September 30, 1998
Lowest 1.27% December 31, 1998
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1998)
- --------------------------------------------------------------------------------
1 YEAR LIFE OF FUND
(SINCE 11/5/97)

Institutional Prime 5.40% 5.43%
Money Market Fund

IBC/Financial Data First Tier 5.33% 5.35%*
Institutional Only Average
- --------------------------------------------------------------------------------
*(since 10/31/97)

FOR UP-TO-DATE YIELD INFORMATION, PLEASE CALL 1-800-BKB-1784.

PROSPECTUS
7
<PAGE>

[CALCULATOR GRAPHIC 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 .11% .32%* .11% .33% .15%
Total Annual Fund Operating Expenses .51% .72%* .31% .73%* .35%*
</TABLE>

- --------------------------------------------------------------------------------
*Each of these Funds' actual total annual fund operating expenses for the most
recent fiscal year were less than the amount shown above because of 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 .30%
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
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>
1 year $ 52 $ 74 $ 32 $ 75 $ 36
3 years 164 230 100 233 113
5 years 285 401 174 406 197
10 years 640 894 393 906 443
- --------------------------------------------------------------------------------------------------------------
</TABLE>

PROSPECTUS
8
<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 6 p.m. (Eastern time).

BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524

BY EXPRESS OR Boston 1784 Funds
OVERNIGHT SERVICE c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171

[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. Please note, however, that any
transaction that requires a signature guarantee will require the
guaranteed signature of each account owner.

[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.

BY REGULAR MAIL Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524

PROSPECTUS
9
<PAGE>

- --------------------------------------------------------------------------------

BY EXPRESS OR Boston 1784 Funds
OVERNIGHT SERVICE c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171

HOW TO PURCHASE SHARES

Shares of the Funds are sold continuously 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.

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.

ADDITIONAL PURCHASES

If you already have money invested in a Fund, you can invest additional money in
that Fund in the following ways:

BY TELEPHONE. This service allows you to purchase additional shares quickly
and conveniently through

PROSPECTUS
10
<PAGE>

SHAREHOLDER SERVICES (CONTINUED)
- --------------------------------------------------------------------------------
an electronic transfer of money. When you make an additional purchase by
telephone, the Funds will automatically deduct money from your designated
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. See "Telephone Transactions" below for more information on this option.

AUTOMATIC INVESTMENT PROGRAM

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 designated bank account on
the day you purchase shares, they may make additional attempts or
cancel the purchase.

The Funds reserve the right to reject any specific purchase request and a Fund
will do so when it believes that a purchase is part of a market-timing strategy.

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

PROSPECTUS
11
<PAGE>
- --------------------------------------------------------------------------------

shares at the next NAV calculated after your order is received in good order.
Please note, however, that your redemption proceeds may be delayed for up to ten
business days after a purchase. This is to assure that money from the purchase
of shares being redeemed has been received and collected. If your redemption
request is over $100,000, you will need a signature guarantee (see below).

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.

SELLING BY MAIL
To redeem all or part of your shares by mail, please send your request in
writing to one of the addresses listed 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 your account:

[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, exactly as the name(s) appears on
the account. Please note that when a signature guarantee is required,
the guaranteed signature of each account owner must be provided.

[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 one is
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.

SELLING BY TELEPHONE
If you have selected this option, you may make redemptions 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 for more
information on this option.

PROSPECTUS
12
<PAGE>

SHAREHOLDER SERVICES (CONTINUED)

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 a valid redemption request is received.

BY WIRE If you have selected this option, your redemption proceeds
will be wired directly into your designated bank account,
normally on the business day that your redemption request is
received. 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 selected this option, your redemption proceeds will
TRANSFER be transferred electronically to your designated 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.

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.

PROSPECTUS
13
<PAGE>

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 your 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, and the Funds may refuse any telephone transaction for
any reason. It may be difficult to reach the Funds by telephone during periods
of unusual market activity and, in that case, you should consider sending us
your request by regular or express mail service.

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 number(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.

PROSPECTUS

14
<PAGE>

SHAREHOLDER SERVICES (CONTINUED)
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 and
Boston 1784 Prime Money Market 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

15
<PAGE>

PRICING OF FUND SHARES

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 interest from money
market instruments 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.

Your 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 distribution for the day on
which you sell shares.

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.

PROSPECTUS
16
<PAGE>

FEDERAL TAX CONSIDERATIONS

TAXES ON DISTRIBUTIONS

You will generally have to pay federal income tax on all Fund distributions
except certain dividend distributions from 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 a Fund. Distributions that are
derived from net long-term capital gains generally will be taxed as long-term
capital gains. The rate of tax generally will depend on how long the Fund held
the securities on which it realized the gains. All other distributions,
including distributions from short-term capital gains, generally will be taxed
as ordinary income.

The Money Market Funds (other than the Tax-Free Money Market Fund) expect that
their distributions will consist primarily of ordinary income.

TAXES ON DISTRIBUTIONS BY
THE TAX-FREE FUND

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. The Fund may
also make taxable distributions (including all capital gains distributions).
Generally, you are required to report all Fund distributions, including
exempt-interest dividends, on your federal income tax return.

TAXES ON SALES OR EXCHANGES
Generally, a sale of shares of a Fund or an exchange for shares of another Fund
is a taxable event. However, because the Money Market Funds strive to maintain a
$1.00 share price, you generally should not be taxed on a sale or exchange.

LOAN INTEREST

If you borrow money to purchase or hold shares of the Tax-Free Money Market
Fund, interest on your loan will not be deductible.

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.

PROSPECTUS
17
<PAGE>

MORE ABOUT BOSTON 1784 MONEY MARKET FUNDS

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

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.

PROSPECTUS
18
<PAGE>

MORE ABOUT BOSTON 1784 FUNDS (CONTINUED)

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 issuers, 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 and repurchase
agreements,particularly if the after-tax return on those securities is greater
than thereturn on municipal money market instruments. Under normal circum-
stances, 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.

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.

PROSPECTUS
19
<PAGE>

PORTFOLIO MANAGERS OF
BOSTON 1784 MONEY MARKET FUNDS

DAVID H. THOMPSON, Director of Fund Management, and GUY C. HOLBROOK, Fund
Manager, have been co-managers of the Tax-Free Money Market Fund since 1998. Mr.
Thompson, who has more than 28 years of experience in investment management,
research analysis and securities trading, has been Director of Fund Management
at BankBoston since 1985. Mr. Holbrook, who has ten years of investment
management experience, was a Research Analyst and Bond Trader at Scudder Kemper
Investments from 1992 to 1998. He joined BankBoston as a Fund Manager in 1998.

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 eight years experience in investment
management, has been with BankBoston since 1978.

PROSPECTUS
20
<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, 1999, BankBoston's Private Bank was responsible for the investment
management of approximately $30 billion of individual, institutional, endowment
and corporate assets, including $9.8 billion in assets of Boston 1784 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.

MANAGEMENT FEES
The following chart shows the investment management fees paid by each Fund
during the last fiscal year.

Tax-Free Money Market Fund .40%
U.S. Treasury Money Market Fund .33
Institutional U.S. Treasury Money Market Fund .20
Prime Money Market Fund .32
Institutional Prime Money Market Fund .15

YEAR 2000

Boston 1784 Funds have been working to prepare for the Year 2000 transition and
have taken steps to provide seamless processing for all systems and applications
utilized by the Funds' service providers. We have sought and received assurances
from each service provider that their computer systems have been remediated for
Year 2000. We are continuing to monitor the progress of these service providers
with respect to the testing of modified systems, and have sought and received
assurances that such testing confirms Year 2000 readiness.

PROSPECTUS
21
<PAGE>

MANAGEMENT (CONTINUED)

While we have received such assurances, the Funds and their shareholders may
experience losses if these assurances prove to be incorrect. Losses could
also arise as a result of Year 2000 computer difficulties experienced
by third parties, such as banks and broker-dealers or securities exchanges with
which the Funds do business.

It is important to understand that Boston 1784 Funds cannot warrant or guarantee
the Year 2000 readiness of any third party.

DISTRIBUTION ARRANGEMENTS

Boston 1784 Money Market Funds do not charge any sales loads, deferred sales
loads or other fees when you purchase shares and do not have a Rule 12b-1 plan.

PROSPECTUS
22
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand a Fund's
financial performance for the past 5 fiscal 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.

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
- ---------------------------------------------------------------------------------------------------------------------
Boston 1784 Tax-Free Money Market Fund
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended May 31, 1999 $1.00 0.03 (0.03) $1.00 3.01% $ 969,380 0.51%
For the year ended May 31, 1998 $1.00 0.03 (0.03) $1.00 3.33% $1,007,724 0.53%
For the year ended May 31, 1997 $1.00 0.03 (0.03) $1.00 3.22% $ 845,612 0.54%
For the year ended May 31, 1996 $1.00 0.03 (0.03) $1.00 3.55% $ 549,628 0.54%
For the year ended May 31, 1995 $1.00 0.03 (0.03) $1.00 3.29% $ 539,412 0.50%

- ---------------------------------------------------------------------------------------------------------------------
Boston 1784 U.S. Treasury Money Market Fund
For the year ended May 31, 1999 $1.00 0.04 (0.04) $1.00 4.55% $ 390,775 0.65%
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.02% $ 372,657 0.65%
For the year ended May 31, 1997 $1.00 0.05 (0.05) $1.00 4.86% $ 390,294 0.64%
For the year ended May 31, 1996 $1.00 0.05 (0.05) $1.00 5.16% $ 78,999 0.64%
For the year ended May 31, 1995 $1.00 0.05 (0.05) $1.00 4.81% $ 55,068 0.60%

- ---------------------------------------------------------------------------------------------------------------------
Boston 1784 Institutional U.S. Treasury Money Market Fund
For the year ended May 31, 1999 $1.00 0.05 (0.05) $1.00 4.90% $4,346,037 0.31%
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.36% $4,285,801 0.33%
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%

- ---------------------------------------------------------------------------------------------------------------------
Boston 1784 Prime Money Market Fund
For the year ended May 31, 1999 $1.00 0.05 (0.05) $1.00 4.78% $ 165,178 0.65%
For the year ended May 31, 1998 $1.00 0.05 (0.05) $1.00 5.16% $ 127,588 0.65%
For the period ended May 31, 1997(1) $1.00 0.02 (0.02) $1.00 2.07%* $ 123,099 0.65%
For the year ended December 31, 1996(2) $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%

- ---------------------------------------------------------------------------------------------------------------------
Boston 1784 Institutional Prime Money Market Fund
For the year ended May 31, 1999 $1.00 0.05 (0.05) $1.00 5.10% $ 516,901 0.30%
For the period ended May 31, 1998(3) $1.00 0.03 (0.03) $1.00 5.55% $ 302,338 0.27%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

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)
- --------------------------------------------------------------------------------
Boston 1784 Tax-Free Money Market Fund
For the year ended May 31, 1999 2.97% 0.51% 2.97%
For the year ended May 31, 1998 3.28% 0.53% 3.28%
For the year ended May 31, 1997 3.17% 0.56% 3.15%
For the year ended May 31, 1996 3.49% 0.60% 3.43%
For the year ended May 31, 1995 3.28% 0.61% 3.17%
- --------------------------------------------------------------------------------
Boston 1784 U.S. Treasury Money Market Fund
For the year ended May 31, 1999 4.45% 0.72% 4.38%
For the year ended May 31, 1998 4.91% 0.70% 4.86%
For the year ended May 31, 1997 4.76% 0.72% 4.68%
For the year ended May 31, 1996 5.02% 0.75% 4.91%
For the year ended May 31, 1995 5.13% 0.92% 4.81%
- --------------------------------------------------------------------------------
Boston 1784 Institutional U.S. Treasury Money Market Fund
For the year ended May 31, 1999 4.79% 0.31% 4.79%
For the year ended May 31, 1998 5.24% 0.33% 5.24%
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%
- --------------------------------------------------------------------------------
Boston 1784 Prime Money Market Fund
For the year ended May 31, 1999 4.66% 0.73% 4.58%
For the year ended May 31, 1998 5.05% 0.70% 5.00%
For the period ended May 31, 1997(1) 4.98% 0.75% 4.88%
For the year ended December 31, 1996(2) 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%
- --------------------------------------------------------------------------------
Boston 1784 Institutional
Prime Money Market Fund
For the year ended May 31, 1999 4.93% 0.35% 4.88%
For the period ended May 31, 1998(3) 5.36% 0.42% 5.21%
- --------------------------------------------------------------------------------

* Return is for the period indicated and has not been annualized.

(1) 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.

(2) 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.

(3) The Institutional Prime Money Market Fund commenced operations on
November 5, 1997. All ratios for the period, including total return, have
been annualized.

PROSPECTUS

23
<PAGE>

NOTES

PROSPECTUS
24
<PAGE>
NOTES

PROSPECTUS
25
<PAGE>
NOTES

PROSPECTUS
26
<PAGE>
Rule 497(c)
File Nos. 33-58004
811-7474

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
reports, 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
reports 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.

[LOGO OMITTED]

Boston 1784 FundsSM
P.O. Box 8524
Boston, MA 02266-8524
1-800-BKB-1784
www.boston1784funds.com

File No. 811-7474

MF-0166

Statement of
Additional Information
October 1, 1999

BOSTON 1784 FUNDS SM

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 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

This Statement of Additional Information provides information regarding
the activities and operations of the no-load mutual funds listed above, and
should be read in conjunction with the Funds' Prospectuses dated October 1,
1999. You may obtain a Prospectus without charge by calling 1-800-BKB-1784.

Certain financial information which is included in the Annual Reports
to Shareholders of Boston 1784 Funds is incorporated by reference into this
Statement of Additional Information. Copies of the Funds' Annual Reports may be
obtained without charge by calling 1-800-BKB-1784.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS.

<PAGE>

TABLE OF CONTENTS

Page

1. Trust History 2
2. Description of the Trust and its Investments and Risks 2
Classification 2
Investment Strategies and Risks 3
Fund Policies 22
Temporary Defensive Position 26
Portfolio Turnover 26
3. Management 27
Trustees 27
Management Information 27
Compensation 30
4. Control Persons and Principal Holders of Securities 31
Principal Holders 31
5. Investment Advisory and Other Services 32
Investment Advisers 32
ServiceMarks 34
Distributor 34
Administrator 35
Dividend Disbursing Agent and Transfer Agent 36
Custodian 36
Counsel and Independent Accountant 37
6. Brokerage Allocation and Other Practices 37
Brokerage Transactions 37
Brokerage Selection 38
7. Description of Shares; Voting Rights and Liabilities 40
8. Purchase, Redemption and Pricing of Shares 41
Determination of Net Asset Value 41
Purchase and Redemption of Shares 42
Systematic Withdrawal Plan 43
Redemption in Kind 44
9. Taxes 44
Tax Status of the Funds 44
Taxation of Fund Distributions 44
Disposition of Shares 46
Additional Information for Shareholders of the Tax-Exempt Funds 46
Additional Information Relating to Fund Investments 46
Additional Information Relating to Foreign Investments 47
Foreign Shareholders 48
Backup Withholding 48
10. Performance Information 48
Calculation of Yield 48
Calculation of Total Return 50
11. Financial Statements 56

Appendix A: Certain Information concerning Connecticut, Florida,
Massachusetts and Rhode Island
Appendix B: Description of Securities Ratings

Appendix C: Taxable Equivalent Yields

<PAGE>
-2-

1. TRUST HISTORY

BOSTON 1784 FUNDSSM (the "Trust") is an open-end management investment
company established under Massachusetts law as a Massachusetts business trust on
February 5, 1993. 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.

2. DESCRIPTION OF THE TRUST AND ITS INVESTMENTS AND RISKS

CLASSIFICATION

The Declaration of Trust permits the Trust to offer separate
portfolios, or funds, of shares of beneficial interest and different classes of
shares of each fund. Boston 1784 Funds currently has seventeen active series.
Each Fund (other than the state Tax-Exempt Funds) is a diversified mutual fund.

This Statement of Additional Information relates to the following funds of
the Trust (the "Funds"):
MONEY MARKET FUNDS:

BOND FUNDS:

Boston 1784 Short-Term Income Fund
Boston 1784 Income Fund
Boston 1784 U.S. Government Medium-Term Income Fund

TAX-EXEMPT FUNDS:

STOCK FUNDS:

Boston 1784 Asset Allocation Fund
Boston 1784 Growth and Income Fund
Boston 1784 Growth Fund
Boston 1784 International Equity Fund

BankBoston, N.A. ("BankBoston") is the investment adviser of each Fund.
Kleinwort Benson Investment Management Americas, Inc. is the investment adviser
of the International Equity Fund with BankBoston (BankBoston and Kleinwort are
each referred to as an "Adviser"). SEI Investments Distribution Co. is the
distributor of shares of each Fund.

<PAGE>
-3-

As required by law, each of the Trust, BankBoston and the Trust's
administrator and distributor have adopted codes of ethics concerning certain
activities of officers, trustees or directors and employees. Copies of these
codes of ethics have been filed with the Securities and Exchange Commission.

INVESTMENT STRATEGIES AND RISKS

The principal investment policies and strategies of each of the Funds
are described in the Prospectus by which shares of that Fund are offered. Of
course, a Fund's portfolio managers may decide, as a matter of investment
strategy, not to use the investments and investment techniques described below
at any particular time. The permitted investments and investment techniques
described below, in alphabetical order, supplements the information contained in
the Prospectus.

Each Tax-Exempt Fund has a fundamental policy of investing at least 80
percent of its net assets under normal market conditions in obligations issued
by or on behalf of the states, territories and possessions of the United States
and the District of Columbia and their respective political subdivisions,
agencies and instrumentalities, the interest on which, in the opinion of counsel
for the issuer, is exempt from federal income tax and not included as a
preference item under the alternative minimum tax (collectively, "municipal
securities"). A Tax-Exempt Fund may comply with this policy (or with any other
policy of such Fund as to investing in securities the interest on which is
exempt from taxation in a particular state or which are not subject to
intangible personal property taxes of any state) by investing in a partnership,
trust, regulated investment company or other entity which invests in such
municipal securities, in which case the applicable Fund's investment in such
entity shall be deemed an investment in the underlying municipal securities in
the same proportion as such entity's investment in such municipal securities
bears to its net assets.

Appendix A contains information concerning Connecticut, Florida,
Massachusetts and Rhode Island. Each of the Connecticut, Florida, Massachusetts
and Rhode Island Tax-Exempt Income Funds is particularly susceptible to events
affecting issuers in its state.

Appendix B describes the ratings assigned to securities by certain
securities rating organizations.

Appendix C describes the yield investors need to achieve from a taxable
investment to equal the yield from a tax-exempt investment. The taxable
equivalent yields tables do not predict the yield of any Fund.

AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS

Each of the Funds may invest in depositary receipts. American
Depositary Receipts ("ADRs") are securities, typically issued by a U.S.
financial institution, that evidence ownership interests in a security or a pool
of securities issued by a foreign issuer. European Depositary Receipts ("EDRs"),
which are sometimes referred to as Continental Depositary Receipts ("CDRs"), are
securities, typically issued by a non-U.S. financial institution, that evidence
ownership interests in a security or a pool of securities issued by either a
U.S. or foreign issuer. ADRs, EDRs and CDRs may be available for investment
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the security underlying the receipt and a

<PAGE>
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depositary, whereas an unsponsored facility may be established by a depositary
without participation by the issuer of the receipt's underlying security.
Holdings of an unsponsored depositary receipt generally bear all the costs of
the unsponsored facility and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass voting rights
through to the holders of the receipts in respect to the deposited securities.

ASSET-BACKED SECURITIES

Each of the Funds (other than Boston 1784 Institutional U.S. Treasury
Money Market Fund and Boston 1784 U.S. Treasury Money Market Fund) may invest in
asset-backed securities including company receivables, truck and auto loans,
leases, and credit card receivables. These issues may be traded over-the-counter
and typically have a short to intermediate maturity structure depending on the
paydown characteristics of the underlying financial assets which are passed
through to the security holder.

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. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the servicers to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities. The underlying
assets (e.g., loans) are also subject to prepayments which shorten the
securities' weighted average life and may lower their return.

Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
resulting from ultimate default ensures payment through insurance policies or
letters of credit obtained by the issuer or sponsor from third parties. A Fund
will not pay any additional or separate fees for credit support. The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that anticipated or failure of the
credit support could adversely affect the return on an investment in such a
security.

BANK OBLIGATIONS

Bank obligations include certificates of deposit, time deposits
(including Eurodollar time deposits), and bankers' acceptances and other
short-term debt

<PAGE>
-5-

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.

Bank obligations are susceptible to adverse events affecting the
banking industry. Banks are sensitive to changes in money market and general
economic conditions, as well as decisions by regulators that can affect their
profitability.

The Funds (other than Boston 1784 Institutional U.S. Treasury Money
Market Fund and Boston 1784 U.S. Treasury Money Market Fund) are not prohibited
from investing in obligations of banks which are clients of SEI Investments
Company ("SEI"). However, the purchase of shares of the Funds by such banks or
by their customers will not be a consideration in determining which bank
obligations the Funds will purchase.

BANKERS' ACCEPTANCES

Each of the Funds may invest in 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.

CERTIFICATES OF DEPOSIT

Each of the Funds may invest in 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.

COMMERCIAL PAPER

Each of the Funds may invest in 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.

COMMON AND PREFERRED STOCK

Each of the Funds may invest in common and preferred stock. Common
stocks are generally more volatile than other securities. Preferred stocks share
some of the characteristics of both debt and equity investments and are
generally preferred over common stocks with respect to dividends and in
liquidation.

CONVERTIBLE SECURITIES

Each of the Funds may invest in convertible securities. Convertible
securities have characteristics similar to both fixed income and equity
securities. Because of the conversion feature, the market value of convertible
securities tends to move together with the market value of the underlying stock.
The value of convertible securities is also affected by prevailing interest
rates, the credit quality of the issuer, and any call provisions. Convertible
securities include both debt obligations and preferred stock.

<PAGE>
-6-

CURRENCY SWAPS

Each of the Funds may engage in currency swaps. Currency swaps involve
the exchange of rights to make or receive payments in specified currencies.
Currency swaps usually involve the delivery of the entire principal value of one
designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The use of currency swaps is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If the
Adviser or Advisers to a Fund are incorrect in their forecasts of market values
and currency exchange rates, the investment performance of the Fund would be
less favorable than it would have been if this investment technique were not
used.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Each of the Funds may engage in foreign currency exchange transactions.
Since investments in foreign companies usually involve currencies of foreign
countries, the value of the assets of a Fund with investments in foreign
companies as measured in U.S. dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control regulations.
Although such Fund's assets are valued daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. A Fund may conduct its foreign currency exchange transactions
on a spot basis or for settlement on a future date (i.e., a "forward foreign
currency" contract or "forward" contract). A Fund may convert currency on a spot
basis from time to time, and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer. The Funds do not currently intend to speculate in
foreign currency exchange rates or forward contracts.

A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract, agreed upon by the parties at a price set at the time
of the contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no fees
or commissions are charged at any stage for trades.

When a Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign
currency involved in the underlying security transaction, a Fund will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.

When the Adviser or an Adviser to a Fund believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, the Fund may enter into a forward contract to sell, for a fixed amount
of U.S. dollars, the amount of foreign currency approximating the value of some
or all of the Fund's securities denominated in such foreign currency. The
precise matching of the forward

<PAGE>
-7-

contract amounts and the value of the securities involved is not generally
possible since the future value of such securities in foreign currencies changes
as a consequence of market movements in the value of those securities between
the date the forward contract is entered into and the date it matures. The
projection of a short-term hedging strategy is highly uncertain. Under normal
circumstances, consideration of the prospect for currency parities is
incorporated in the longer term investment decisions made with regard to overall
diversification strategies. However, each Adviser to such Funds believes that it
is important to have the flexibility to enter into such forward contracts when
it determines that the best interests of such Funds will be served.

A Fund generally does not enter into a forward contract with a term
greater than one year. At the maturity of a forward contract, the Fund either
sells the security and makes delivery of the foreign currency, or it retains the
security and terminates its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency.

If a Fund retains the security and engages in an offsetting
transaction, the Fund incurs a gain or loss (as described below) to the extent
that there has been movement in forward contract prices. If the Fund engages in
an offsetting transaction, it may subsequently enter into a new forward contract
to sell the foreign currency. Should forward prices decline during the period
between the date the Fund enters into a forward contract for the sale of the
foreign currency and the date it enters into an offsetting contract for the
purchase of foreign currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of the currency it
has agreed to purchase. Should forward prices increase, the Fund will suffer a
loss to the extent that the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.

It is impossible to forecast with precision the market value of Fund
securities at the expiration of the contract. Accordingly, it may be necessary
for the Fund to purchase additional foreign currency for the Fund on the spot
market (and cause the Fund to bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the Fund is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency received upon the sale of the security
if its market value exceeds the amount of foreign currency the Fund is obligated
to deliver.

The Funds' dealings in foreign currency contracts are limited to the
transactions described above. Of course, no Fund is required to enter into such
transactions with regard to the Fund's foreign currency-denominated securities
and will not do so unless deemed appropriate by the Adviser or an Adviser to
such Fund. It should also be realized that this method of protecting the value
of a Fund's securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. Additionally,
although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase.

FOREIGN SECURITIES

Each of the Funds (other than Boston 1784 Institutional U.S. Treasury
Money Market Fund and Boston 1784 U.S. Treasury Money Market Fund) may invest in
certain

<PAGE>
-8-

obligations or securities of foreign issuers. Boston 1784 International Equity
Fund intends to invest a substantial portion of its assets in securities and
obligations of foreign issuers. Permissible investments include obligations of
foreign branches of U.S. banks and of foreign banks, including certificates of
deposit and time deposits (including Eurodollar time deposits).

Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, the value of securities
denominated in foreign currencies and of dividends and interest paid with
respect to such securities, will fluctuate based on the relative strength of the
U.S. dollar. In addition, there is generally less publicly available information
about foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing and financial reporting
requirements comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of a Fund,
political or financial instability or diplomatic and other developments which
would affect such investments. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
U.S.

It is anticipated that in most cases the best available market for
foreign securities would be on exchanges or in over-the-counter markets located
outside the U.S. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the U.S., and
securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. Foreign security trading practices, including those involving
securities settlement where a Fund's assets may be released prior to receipt of
payment, may expose a Fund to increased risk in the event of a failed trade or
the insolvency of a foreign broker-dealer. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
U.S. and may be non-negotiable. In general, there is less overall governmental
supervision and regulation of foreign securities exchanges, brokers and listed
companies than in the U.S.

The current policy of Boston 1784 International Equity Fund is not to
invest more than 10 percent of its assets in investment companies and investment
trusts which primarily hold foreign securities except that the Fund may invest
all of its investable assets in a diversified, open-end management investment
company having the same investment objective and policies and substantially the
same investment restrictions as those applicable to the Fund (a "Qualifying
Portfolio"). Investments in such entities may entail the risk that the market
value of such investments may be substantially less than

their net asset value and that there would be duplication of investment
management and other fees and expenses.

A Fund may invest in foreign securities that impose restrictions on
transfer within the United States or to United States persons. Although
securities subject to such transfer restrictions may be marketable abroad, they
may be less liquid than foreign securities of the same class that are not
subject to such restrictions.

Foreign issuers of securities or obligations are often subject to
accounting treatment and engage in business practices different from those
respecting domestic issuers of similar securities or obligations. Foreign
branches of U.S. banks and foreign

<PAGE>
-9-

banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.

The Stock Funds, Boston 1784 Income Fund and Boston 1784 Short-Term
Income Fund may invest in securities issued by entities based in developing
countries throughout the world. All of the risks of investing in securities of
foreign issuers are heightened for securities of issuers in developing
countries. Such investments may also entail higher custodial fees and sales
commissions than domestic investments.

FORWARD COMMITMENTS OR PURCHASES ON A WHEN-ISSUED BASIS

Each Fund may invest up to 25 percent of its assets in forward
commitments or commitments to purchase securities 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 the
commitment and delivery and payment normally take place beyond conventional
settlement time after the date of commitment to purchase. The Funds will make
commitments to purchase obligations on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date. The when-issued securities are subject to market fluctuation,
and no interest accrues on the security to the purchaser during this period. The
payment obligation and the interest rate that will be received on the securities
are each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case,
there could be an unrealized loss at the time of delivery.

While awaiting delivery of securities purchased on a when-issued basis,
a Fund will establish a segregated account consisting of cash and liquid
securities equal to the amount of the commitments to purchase securities on such
basis. If the value of these assets declines, the Fund will place additional
assets of the type described in the preceding sentence in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.

FUTURES CONTRACTS

Subject to applicable laws, each of the Funds may enter into bond and
interest rate futures contracts. The Funds intend to use futures contracts only
for bona fide hedging purposes. Futures contracts provide for the future sale by
one party and purchase by another party of a specified amount of a specified
security at a specified future time and at a specified price. A "sale" of a
futures contract entails a contractual obligation to deliver the underlying
securities called for by the contract, and a "purchase" of a futures contract
entails a contractual obligation to acquire such securities, in each case in
accordance with the terms of the contract. Futures contracts must be executed
through a futures commission merchant, or brokerage firm, which is a member of
an appropriate exchange designated as a "contract market" by the Commodity
Futures Trading Commission ("CFTC").

When a Fund purchases or sells a futures contract, the Trust must
allocate assets of that Fund as an initial deposit on the contract. The initial
deposit may be as low as approximately 5 percent or less of the value of the
contract. The futures contract is marked to market daily thereafter and the Fund
may be required to pay or entitled to

<PAGE>
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receive additional "variation margin", based on decrease or increase in the
value of the futures contract.

Futures contracts call for the actual delivery or acquisition of
securities, or in the case of futures contracts based on indices, the making or
acceptance of a cash settlement at a specified future time; however, the
contractual obligation is usually fulfilled before the date specified in the
contract by closing out the futures contract position through the purchase or
sale, on a commodities exchange, of an identical futures contract. Positions in
futures contracts may be closed out only if a liquid secondary market for such
contract is available, and there can be no assurance that such a liquid
secondary market will exist for any particular futures contract.

A Fund's ability to hedge effectively through transactions in futures
contracts depends on, among other factors, its Adviser's or Advisers', as
applicable, judgment as to the expected price movements in the securities
underlying the futures contracts. In addition, it is possible in some
circumstances that a Fund would have to sell securities from its portfolio to
meet "variation margin" requirements at a time when it may be disadvantageous to
do so.

GUARANTEED INVESTMENT CONTRACTS (GIC)

A GIC is a contract between an insurance company and, generally, an
institutional investor that guarantees the investor a specified interest rate
for a specific period and the return of the investor's principal. Each of the
Funds may invest in GICs, but no Fund will invest more than 20% of its total
assets in GICs.

LOAN PARTICIPATIONS

Loan participations are interests in loans which are administered by
the lending bank or agent for a syndicate of lending banks, and sold by the
lending bank or syndicate member. The Funds may only purchase interests in loan
participations issued by a bank in the United States with assets exceeding $1
billion and for which the underlying loan is issued by borrowers in whose
obligations the Funds may invest. Because the intermediary bank does not
guarantee a loan participation in any way, a loan participation is subject to
the credit risk generally associated with the underlying corporate borrower. In
addition, in the event the underlying corporate borrower defaults, a Fund may be
subject to delays, expenses and risks that are greater than those that would
have been involved if the Fund had purchased a direct obligation (such as
commercial paper) of the borrower. Under the terms of a loan participation, the
purchasing Fund may be regarded as a creditor of the intermediary bank so that
the Fund may also be subject to the risk that the issuing bank may become
insolvent.

MONEY MARKET FUNDS

A money market fund is an investment company that limits its
investments to high quality money market instruments with a weighted average
maturity of 90 days or less. Each of the Funds (other than Boston 1784 U.S.
Treasury Money Market Fund, Boston 1784 Institutional U.S. Treasury Money Market
Fund and Boston 1784 Institutional Prime Money Market Fund) may invest in money
market funds, but not more than 5 percent of its assets in any one money market
fund or more than 10 percent of its assets in other investment companies,
including money market funds. When a Fund invests in a money market fund, a
shareholder bears not only his or her

<PAGE>
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proportionate share of the Fund's expenses, but also indirectly his or her share
of the expenses of the money market fund, including management fees.

MORTGAGE "DOLLAR ROLL" TRANSACTIONS

Boston 1784 Short-Term Income Fund and Boston 1784 Income Fund may
enter into mortgage "dollar roll" transactions pursuant to which a Fund sells
mortgage-backed securities for delivery in the future and simultaneously
contracts to repurchase substantially similar securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the mortgage-backed securities. The Fund is compensated for the lost interest by
the difference between the current sales price and the lower price for the
future purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. The Fund may also be
compensated by receipt of a commitment fee.

In a mortgage dollar roll, the Fund takes the risk that the market
price of the mortgage-backed security will drop below the future purchase price.
To the extent the Fund invests the proceeds from the sale of the mortgage-backed
security in other portfolio securities, the Fund is engaging in a form of
leverage which could have the effect of magnifying the Fund's gains or losses.

MORTGAGE-BACKED SECURITIES

Each of the Funds may invest in mortgage-backed securities, which are
securities representing interests in pools of mortgage loans. Interests in pools
of mortgage-related securities differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by prepayments of principal resulting from the sale,
refinancing or foreclosure of the underlying property, net of fees or costs
which may be incurred. The market value and interest yield of these instruments
can vary due to market interest rate fluctuations and early prepayments of
underlying mortgages.

The principal governmental issuers or guarantors of mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage
Corporation ("FHLMC"). Obligations of GNMA are backed by the full faith and
credit of the United States Government while obligations of FNMA and FHLMC
are supported by the respective agency only.

Each of the Funds (other than the Money Market Funds) may also invest
in mortgage-backed securities not issued by government issuers which are rated
in one of the three top categories by Standard and Poor's Rating Services
("S&P"), Moody's Investors Service, Inc. ("Moody's") or Fitch IBCA, Inc. ("Fitch
IBCA"), or, if not rated by S&P, Moody's or Fitch IBCA, of comparable quality as
determined by the Adviser or Advisers to the Fund.

Two principal types of mortgage-backed securities are collateralized
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities

<PAGE>
-12-

formed for the purpose of holding a fixed pool of mortgages secured by an
interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.

CMOs are securities collateralized by mortgages, mortgage pass-through
certificates, mortgage pay-through bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and mortgage-backed bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single family detached
properties). Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence.

Investors purchasing such CMOs in the shortest maturities receive or
are credited with their pro rata portion of the scheduled payments of interest
and principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligations is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-through certificates to be prepaid prior to
their stated maturity. Although some of the mortgages underlying CMOs may be
supported by various types of insurance, and some CMOs may be backed by GNMA
certificates or other mortgage pass-through certificates issued or guaranteed by
U.S. Government agencies or instrumentalities, the CMOs themselves are not
generally guaranteed.

Even if the U.S. government or one of its agencies guarantees principal
and interest payments of a mortgage-backed security, the market price of a
mortgage-backed security is not insured and may be subject to market volatility.
When interest rates decline, mortgage-backed securities experience higher rates
of prepayment because the underlying mortgages are refinanced to take advantage
of the lower rates. The prices of mortgage-backed securities may not increase as
much as prices of other debt obligations when interest rates decline, and
mortgage-backed securities may not be an effective means of locking in a
particular interest rate. In addition, any premium paid for a mortgage-backed
security may be lost when it is prepaid. When interest rates go up,
mortgage-backed securities experience lower rates of prepayment. This has the
effect of lengthening the expected maturity of a mortgage-backed security. As a
result, prices of mortgage-backed securities may decrease more than prices of
other debt obligations when interest rates go up.

OPTIONS

Each of the Stock Funds, Tax-Exempt Funds and Bond Funds may write
covered call options from time to time on its assets as determined by the
Adviser or Advisers to such Fund to be appropriate in seeking to achieve such
Fund's investment objective, provided that the aggregate value of such options
may not exceed 10 percent of such Fund's net assets as of the time such Fund
enters into such options. The Stock Funds, Boston 1784 Short-Term Income Fund
and Boston 1784 Income Fund may write covered call options, for hedging purposes
and in order to generate additional income. The Tax-Exempt Funds and Boston 1784
U.S. Government Medium-Term Income Fund may write covered call options, for
hedging purposes only and will not engage in option writing strategies for
speculative purposes.

The purchaser of a call option has the right to buy, and the writer (in
this case a Fund) of a call option has the obligation to sell, an underlying
security at a specified exercise price during a specified option period. The
advantage to a Fund of writing

<PAGE>
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covered calls is that the Fund receives a premium for writing the call, which is
additional income. However, if the security rises in value and the call is
exercised, the Fund may not participate fully in the market appreciation of the
security.

During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold,
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time at which the writer effects a closing purchase
transaction.

A closing purchase transaction is one in which a Fund, when obligated
as a writer of an option, terminates its obligation by purchasing an option of
the same series as the option previously written. A closing purchase transaction
cannot be effected with respect to an option once the Fund writing the option
has received an exercise notice for such option. Closing purchase transactions
will ordinarily be effected to realize a profit on an outstanding call option,
to prevent an underlying security from being called, to permit the sale of the
underlying security or to enable a Fund to write another call option on the
underlying security with either a different exercise price or different
expiration date or both. The Fund may realize a net gain or loss from a closing
purchase transaction depending upon whether the net amount of the original
premium received on the call option is more or less than the cost of effecting
the closing purchase transaction. Any loss incurred in a closing purchase
transaction may be partially or entirely offset by the premium received from a
sale of a different call option on the same underlying security. Such a loss may
also be wholly or partially offset by unrealized appreciation in the market
value of the underlying security. Conversely, a gain resulting from a closing
purchase transaction could be offset in whole or in part by a decline in the
market value of the underlying security.

If a call option expires unexercised, a Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid, even though, in economic terms, such gains may be offset by depreciation
in the market value of the underlying security during the option period. If a
call option is exercised, the Fund will realize a gain or loss from the sale of
the underlying security equal to the difference between (a)the Fund's tax basis
in the underlying security and (b)the proceeds of the sale of the security,
plus the amount of the premium on the option, less the commission paid.

The market value of a call option generally reflects the market price
of the underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.

Each of the Stock Funds, Tax-Exempt Funds and Bond Funds will write
call options only on a covered basis, which means that the Fund will own the
underlying security subject to a call option at all times during the option
period. Unless a closing purchase transaction is effected, the Fund would be
required to continue to hold a security which it might otherwise wish to sell,
or deliver a security it would want to hold. Options written by a Fund will
normally have expiration dates between one and nine months from the date
written. The exercise price of a call option may be below, equal to or above the
current market value of the underlying security at the time the option is
written.

<PAGE>
-14-

A Fund may also purchase put and call options. Put options are
purchased to hedge against a decline in the value of securities held in the
Fund's portfolio. If such a decline occurs, the put options will permit the Fund
to sell the securities underlying such options at the exercise price, or to
close out the options at a profit. The premium paid for a put or a call option
plus any transaction costs will reduce the benefit, if any, realized by the Fund
upon exercise of the option, and, unless the price of the underlying security
rises or declines sufficiently, the option may expire worthless to the Fund. In
addition, in the event that the price of the security in connection with which
an option was purchased moves in a direction favorable to the Fund, the benefits
realized by the Fund as a result of such favorable movement will be reduced by
the amount of the premium paid for the option and related transaction costs.

OPTIONS ON FUTURES CONTRACTS

The Funds may, subject to any applicable laws, purchase and write
options on futures contracts for hedging purposes only. The holder of a call
option on a futures contract has the right to purchase the futures contract, and
the holder of a put option on a futures contract has the right to sell the
futures contract, in either case at a fixed exercise price up to a stated
expiration date or, in the case of certain options, on a stated date. Options on
futures contracts, like futures contracts, are traded on contract markets.

The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities deliverable on exercise
of the futures contract. A Fund will receive an option premium when it writes
the call, and, if the price of the futures contract at expiration of the option
is below the option exercise price, the Fund will retain the full amount of this
option premium, which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. Similarly, the writing of a put
option on a futures contract constitutes a partial hedge against increasing
prices of the securities deliverable upon exercise of the futures contract. If a
Fund writes an option on a futures contract and that option is exercised, the
Fund may incur a loss, which loss will be reduced by the amount of the option
premium received, less related transaction costs. A Fund's ability to hedge
effectively through transactions in options on futures contracts depends on,
among other factors, the degree of correlation between changes in the value of
securities held by the Fund and changes in the value of its futures positions.
This correlation cannot be expected to be exact, and the Fund bears a risk that
the value of the futures contract being hedged will not move in the same amount,
or even in the same direction, as the hedging instrument. Thus it may be
possible for a Fund to incur a loss on both the hedging instrument and the
futures contract being hedged.

The ability of a Fund to engage in options and futures strategies
depends also upon the availability of a liquid market for such instruments;
there can be no assurance that such a liquid market will exist for such
instruments.

OPTIONS ON STOCK INDICES

The Stock Funds may engage in transactions involving options on stock
indices. A stock index assigns relative values to the common stocks included in
the index, and the index fluctuates with changes in the market values of the
underlying common stocks. The Funds will not engage in transactions in options
on stock indices for speculative purposes but only to protect appreciation
attained, to offset capital losses and to take advantage of the liquidity
available in the option markets. The

<PAGE>
-15-

aggregate premium paid on all options on stock indices will not exceed 5 percent
of a Fund's total assets.

Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
option premium received, to make delivery of this amount. Gain or loss to a Fund
on transactions in stock index options will depend on price movements in the
stock market generally (or in a particular industry or segment of the market)
rather than price movements of individual securities.

As with stock options, a Fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
exchange or it may let the option expire unexercised.

A stock index fluctuates with changes in the market values of the
stock included in the index. Some stock index options are based on a broad
market index such as the Standard & Poor's 500 or the New York Stock Exchange
Composite Index, or a narrower market index such as the Standard & Poor's 100.
Indices are also based on an industry or market segment such as the AMEX Oil and
Gas Index or the Computer and Business Equipment Index. Options on stock indices
are currently traded on the following exchanges, among others: The Chicago Board
Options Exchange, New York Stock Exchange and American Stock Exchange.

A Fund's ability to hedge effectively all or a portion of its securities through
transactions in options on stock indices depends on the degree to which price
movements in the underlying index correlate with price movements in the
securities held by the Fund. Since the Fund will not duplicate all of the
components of an index, the correlation will not be exact. Consequently, the
Fund bears the risk that the prices of the securities being hedged will not move
in the same amount as the hedging instrument. It is also possible that there may
be a negative correlation between the index or other securities underlying the
hedging instrument and the hedged securities which would result in a loss on
both such securities and the hedging instrument.

Positions in stock index options may be closed out only on an
exchange which provides a secondary market. There can be no assurance that a
liquid secondary market will exist for any particular stock index option. Thus,
it may not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Fund's ability to effectively hedge
its securities. The Fund will enter into an option position only if there
appears to the Adviser or an Adviser of such Fund, at the time of investment, to
be a liquid secondary market for such options.

<PAGE>
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OTHER INVESTMENT COMPANIES

Subject to applicable statutory and regulatory limitations, assets of
each Fund may be invested in shares of other investment companies and foreign
investment trusts. Each Fund may invest up to 5% of its assets in closed-end
investment companies that primarily hold securities of non-U.S. issuers. A
Fund's purchase of investment company securities may result in the duplication
of fees and expenses.

RECEIPTS

Each of the Funds may invest in 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.

REPURCHASE AGREEMENTS

Each of the Funds may invest in repurchase agreements collateralized by
securities in which that Fund may otherwise invest. Repurchase agreements are
agreements by which a Fund obtains a security and simultaneously commits to
return the security to the seller (a primary securities dealer recognized by the
Federal Reserve Bank of New York or a national member bank as defined in Section
3(d)(1) of the Federal Deposit Insurance Act, as amended) at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days (usually not more than seven) from the date of purchase. The resale
price reflects the purchase price plus an agreed upon market rate of interest
which is unrelated to the coupon rate or maturity of the underlying security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
security. Pursuant to an exemptive order from the Securities and Exchange
Commission, the Funds' may enter into repurchase agreements on a pooled basis.

Repurchase agreements are considered to be loans by a Fund for purposes
of its investment limitations. The repurchase agreements entered into by the
Funds will provide that the underlying security at all times shall have a value
at least equal to 100 percent of the resale price stated in the agreement; the
Adviser or an Adviser to each Fund will monitor compliance with this
requirement. Under all repurchase agreements entered into by any Fund, the
underlying collateral must be held by the Fund's Custodian or sub-custodian.
However, if the seller under a repurchase agreement defaults, the Fund investing
in that repurchase agreement could realize a loss on the sale of the underlying
security to the extent that the proceeds of the sale (including accrued
interest) are less than the resale price provided in the repurchase agreement
(including interest). In addition, even though the Bankruptcy Code provides
protection for most repurchase agreements, if the seller should be involved in
bankruptcy or insolvency proceedings, a Fund may face delays and incur costs in
selling the underlying security or may suffer a loss of principal and interest.

<PAGE>
-17-

RESTRICTED SECURITIES

Restricted securities are securities that may not be sold to the public
without registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. Boston 1784 Prime Money Market Fund, Boston 1784
Institutional Prime Money Market Fund, each Stock Fund and each Bond Fund may
invest up to 20 percent of its total assets in restricted securities provided it
is determined by the Adviser or an Adviser to that Fund that at the time of
investment such securities are not illiquid (generally, an illiquid security is
one that cannot be disposed of within seven days in the ordinary course of
business at its full value), based on guidelines which are the responsibility of
and are periodically reviewed by the Board of Trustees. Under these guidelines,
the Adviser or an Adviser will consider the frequency of trades and quotes for
the security, the number of dealers in, and potential purchasers for, the
securities, dealer undertakings to make a market in the security, and the nature
of the security and of the marketplace trades. In purchasing such restricted
securities, the intention of the Adviser or an Adviser is to rely upon the
exemption from registration provided by Rule 144A promulgated under the 1933
Act. Restricted securities not determined to be liquid may be purchased subject
to each Fund's limitation on all illiquid securities (15 percent of net assets
for each Stock, Bond and Tax-Exempt Fund and 10 percent for each Money Market
Fund).

A Fund 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.

REVERSE REPURCHASE AGREEMENTS

Each of the Funds may enter into 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. In the event of the bankruptcy of the other party to a reverse
repurchase agreement, a Fund could experience delays in recovering the
securities sold. To the extent that, in the meantime, the value of the
securities sold has increased, the Fund could experience a loss.

SECURITIES LENDING

Each Fund may lend securities pursuant to agreements requiring that the
loans be continuously secured by cash, securities of the U.S. government or its
agencies, or any combination of cash and such securities, as collateral equal to
100% of the market value at all times of the securities lent. Such loans will
not be made if, as a result, the aggregate amount of all outstanding securities
loans for the Fund exceed one-third of a Fund's total assets. A Fund will
continue to receive interest or dividends on the securities lent while
simultaneously earning interest on the investment of the cash collateral in U.S.
government securities. However, a Fund will normally pay a rebate to

<PAGE>
-18-

the borrowers and related expenses from the interest earned on invested
collateral. If a Fund receives securities as collateral for the loan, the Fund
will receive a fee from the borrower. There may be risks of delay in receiving
additional collateral or risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by the Adviser or
an Adviser to a Fund to be of good standing and when, in the judgment of the
Adviser, the consideration which can be earned currently from such securities
loans justifies the attendant risk. Any loan may be terminated by either party
upon reasonable notice to the other party. When a loan is terminated, the Fund
must return the collateral received, and the liquidation of any investments made
with cash collateral may result in a loss to the Fund. A Fund may use the
Distributor or a broker/dealer affiliate of an Adviser as a borrower or lending
agent in these transactions.

SECURITIES RATED BAA OR BBB

Each of the Funds may purchase securities rated Baa by Moody's or BBB
by Standard & Poor's which may have poor protection of payment of principal and
interest. These securities are often considered to be speculative and involve
greater risk of default or price changes than securities assigned a higher
quality rating due to changes in the issuer's creditworthiness. The market
prices of these securities may fluctuate more than higher-rated securities and
may decline significantly in periods of general economic difficulty that may
follow periods of rising interest rates.

STRIPS

Each of the Funds may invest in Separately Traded Interest and
Principal Securities ("STRIPS"), which are component parts of U.S. Treasury
Securities traded through the Federal Reserve Book-Entry System. The Adviser or
an Adviser to a Fund will purchase only those STRIPS that it determines or they
determine are liquid or, if illiquid, do not violate such Fund's investment
policy concerning investments in illiquid securities. Consistent with Rule 2a-7,
BankBoston, as the Adviser to the Money Market Funds, will purchase for Money
Market Funds only those STRIPS that have a remaining maturity of 397 days or
less. No Money Market Fund may invest more than 5 percent of its total assets in
STRIPS. While there is no limitation on the percentage of any other Fund's
assets that may be comprised of STRIPS, the Adviser or Advisers to each Fund
will monitor the level of such holdings to avoid the risk of impairing
shareholders' redemption rights. 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.

TAX-EXEMPT SECURITIES

MUNICIPAL NOTES AND BONDS

Boston 1784 Tax-Free Money Market Fund, Boston 1784 Prime Money Market
Fund, Boston 1784 Institutional Prime Money Market Fund, Boston 1784 Short-Term
Income Fund, Boston 1784 Income Fund and each of the Tax-Exempt Funds may invest
in municipal notes, which include but are not limited to general obligation
notes, tax anticipation notes (notes sold to finance working capital needs of
the issuer in anticipation of receiving taxes on a future date), revenue
anticipation notes (notes sold to provide needed cash prior to receipt of
expected non-tax revenues from a specific source), bond anticipation notes,
certificates of indebtedness, demand notes and construction loan notes. A Fund's
investment in any of the notes described above will be

<PAGE>
-19-

limited to those obligations which are rated (i) MIG-2 or VMIG-2 or better at
the time of investment by Moody's, (ii) SP-2 or better at the time of investment
by S&P, or (iii) F-2 or better at the time of investment by Fitch IBCA, or
which, if not rated by Moody's, S&P or Fitch IBCA, are of at least comparable
quality, as determined by the Adviser to the Fund. Municipal bonds, in which
these same Funds may invest, must be rated AA or better by S&P or Fitch IBCA
(BBB or better for the Tax-Exempt Funds, Short Term Income Fund and Income Fund)
or Aa or better by Moody's (Baa or better for the Tax-Exempt Funds, Short Term
Income Fund and Income Fund) at the time of investment or, if not rated by
Moody's, S&P or Fitch IBCA, must be determined by the Adviser to the Funds to
have essentially the same characteristics and quality as bonds having the above
ratings. Bonds rated BBB by S&P or Fitch IBCA or Baa by Moody's may have
speculative characteristics. The Adviser to these Funds may purchase industrial
development and pollution control bonds for these Funds if the interest paid
thereon is exempt from federal income tax. These bonds are issued by or on
behalf of public authorities to raise money to finance various
privately-operated facilities for business and manufacturing, housing, sports,
and pollution control. These bonds may also be used to finance public facilities
such as airports, mass transit systems, ports, and parking. The payment of the
principal and interest on such bonds 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 so financed as security for such payment.

Municipal securities also include participations in municipal leases.
These are undivided interests in a portion of an obligation in the form of a
lease or installment purchase issued by a 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. Leases and
installment purchase or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "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. In light of these concerns, the Trust has
adopted and follows procedures for determining whether municipal lease
securities purchased by a Fund are liquid and for monitoring the liquidity of
municipal lease securities held in the Fund's portfolio. The procedures require
that a number of factors be used in evaluating the liquidity of a municipal
lease security, including the frequency of trades and quotes for the security,
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers, the willingness of dealers to undertake to make a
market in the security, the nature of the marketplace in which the security
trades, the credit quality of the security, and other factors which the Adviser
to the Fund may deem relevant.

TAX-EXEMPT COMMERCIAL PAPER in which a Tax-Exempt Fund, Boston 1784
Tax-Free Money Market, Boston 1784 Prime Money Market Fund and Boston 1784
Institutional Prime Money Market Fund may invest will be limited to investments
in obligations which are rated at least A-2 by S&P, Prime-2 by Moody's, or F-2
by Fitch IBCA, at the time of investment or which are of comparable quality as
determined by the Adviser to the Fund.

<PAGE>
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Each of the Tax-Exempt Funds, Boston 1784 Tax-Free Money Market Fund,
Boston 1784 Prime Money Market Fund and Boston 1784 Institutional Prime Money
Market Fund may invest in FLOATING RATE NOTES. Investments in such floating rate
instruments will normally involve industrial development or revenue (now known
as "private activity") bonds which provide that the rate of interest is set as a
specific percentage of a designated base rate (such as the prime rate) at a
major commercial bank, and that a Fund can demand payment of the obligation at
all times or at stipulated dates on short notice (not to exceed 30 days) at par
plus accrued interest. For purposes of determining the maturity of these
obligations, the Fund may use the longer of (a) the period required before the
Fund is entitled to prepayment under such obligations or (b) the period
remaining until the next interest rate adjustment date. Such obligations are
frequently secured by letters of credit or other credit support arrangements
provided by banks. The quality of the underlying credit or of the bank, as the
case may be, must in the Fund Adviser's opinion be equivalent to the long-term
bond or commercial paper ratings on securities in which the Fund may invest. The
Adviser to the Fund will monitor the earning power, cash flow and liquidity
ratios of the issuers of floating rate instruments and the ability of an issuer
of a demand instrument to pay principal and interest on demand. The Adviser to
the Fund may also purchase other types of tax-exempt instruments for these Funds
as long as they are of a quality equivalent to the bonds or commercial paper in
which these Funds may invest.

STANDBY COMMITMENTS

Funds investing in municipal securities may acquire such securities
subject to a "standby commitment". The Adviser to these Funds has the authority
to purchase for these Funds securities at a price which would result in a yield
to maturity lower than that generally offered by the seller at the time of
purchase when they can simultaneously acquire the right to sell the securities
back to the seller, the issuer, or a third party (the "writer") at an
agreed-upon price at any time during a stated period or on a certain date. Such
a right is generally denoted as a "standby commitment" or a "put". The purpose
of engaging in transactions involving puts is to maintain flexibility and
liquidity to permit the Fund to meet redemptions and remain as fully invested as
possible in municipal securities. The Funds reserve their right to engage in put
transactions. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. Each Fund would limit
its put transactions to institutions which the Adviser to such Fund believes
present minimum credit risks. Each Adviser would use its best efforts initially
to determine and to continue to monitor the financial strength of the sellers of
the options by evaluating their financial statements and such other information
as is available in the marketplace. It may, however, be difficult to monitor the
financial strength of the writers because adequate current financial information
may not be available. In the event that any writer is unable to honor a put for
financial reasons, the Fund would be a general creditor (i.e., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular provisions
of the contract between the Fund and the writer may excuse the writer from
repurchasing the securities; for example, a change in the published rating of
the underlying municipal securities or any similar event that has an adverse
effect on the issuer's credit or a provision in the contract that the put will
not be exercised except in certain special cases, for example, to maintain fund
liquidity. The Fund could, however, at any time sell the underlying security in
the open market or wait until the security matures, at which time it should
realize the full par value of the security.

Municipal securities purchased subject to a put may be sold to third
persons at any time, even though the put is outstanding, but the put itself,
unless it is an integral

<PAGE>
-21-

part of the security as originally issued, may not be marketable or otherwise
assignable. Therefore, the put would have value only to the Fund. Sale of the
securities to third parties or lapse of time with the put unexercised may
terminate the right to put the securities. Prior to the expiration of any put
option, the Fund could seek to negotiate terms for the extension of such an
option. If such a renewal cannot be negotiated on terms satisfactory to the
Fund, the Fund could, of course, sell the security. The maturity of the
underlying security will generally be different from that of the put. There will
be no limit to the percentage of Fund securities that a Fund may purchase
subject to puts but the amount paid directly or indirectly for puts which are
not integral parts of a security as originally issued held in a Fund will not
exceed 1/2 of 1 percent of the value of the total assets of such Fund calculated
immediately after any such put is acquired.

For the purpose of determining the "maturity" of securities purchased
subject to an option to put, and for the purpose of determining the
dollar-weighted average maturity of a Fund including such securities, "maturity"
will be considered to be the first date on which the Fund has the right to
demand payment from the writer of the put although the final maturity of the
security is later than such date.

TIME DEPOSITS

Each of the Funds may invest in 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.

VARIABLE AMOUNT MASTER DEMAND NOTES

Each Fund (other than Boston 1784 Institutional U.S. Treasury Money
Market Fund and Boston 1784 U.S. Treasury Money Market Fund) may invest in
variable amount master demand notes which may or may not be backed by bank
letters of credit. These notes permit the investment of fluctuating amounts at
varying market rates of interest pursuant to direct arrangements between the
Trust, as lender, on behalf of a Fund and the borrower. Such notes provide that
the interest rate on the amount outstanding varies on a daily, weekly or monthly
basis depending upon a stated short-term interest rate index. Both the lender
and the borrower have the right to reduce the amount of outstanding indebtedness
at any time. There is no secondary market for the notes. It is not generally
contemplated that such instruments will be traded.

WARRANTS

A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the corporation's capital
stock at a set price for a specified period of time. Each of the Stock Funds may
invest up to 5% of its net assets in warrants. Included in this limitation, but
not to exceed 2% of the Fund's net assets, may be warrants not listed on the New
York Stock Exchange or American Stock Exchange. The Short-Term Income Fund and
Income Fund may each invest in warrants in an amount not exceeding 2% of its net
assets, except that this limitation does not apply to warrants acquired in units
or attached to securities. Such warrants may not be listed on the New York Stock
Exchange or American Stock Exchange.

<PAGE>
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ZERO COUPON SECURITIES

Each of the Funds may invest in 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.

FUND POLICIES

FUNDAMENTAL POLICIES

The following are fundamental policies of each of the Funds and may not
be changed with respect to any Fund without approval by holders of a majority of
the outstanding voting securities of that Fund, which as used in this Statement
of Additional Information means the vote of the lesser of (i) 67 percent or more
of the outstanding voting securities of the Fund present at a meeting at which
the holders of more than 50 percent of the outstanding voting securities of the
Fund are present or represented by proxy, or (ii) more than 50 percent of the
outstanding voting securities of the Fund. The term "voting securities" as used
in this paragraph has the same meaning as in the Investment Company Act of 1940,
as amended (the "1940 Act").

1. A Fund may not purchase any securities which would cause more than 25
percent of the total assets of the Fund to be invested in the securities of
one or more issuers conducting their principal business activities in the
same industry. This limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements involving such securities and,
for each of the Money Market Funds, to investments in obligations issued by
domestic banks, foreign branches of domestic banks and U.S. branches of
foreign banks, to the extent that a Fund may under the 1940 Act, reserve
freedom of action to concentrate its investments in such securities, and in
the case of Boston 1784 Tax-Free Money Market Fund, tax-exempt securities
issued by governments or political subdivisions of governments. Each of the
Money Market Funds has reserved its freedom of action to concentrate its
investments in government securities and bank instruments described in the
foregoing sentence. This limitation also does not apply to an investment of
all of the investable assets of each of Boston 1784 Prime Money Market
Fund, Boston 1784 Institutional Prime Money Market Fund, Boston 1784
Florida Tax-Exempt Income Fund, Boston 1784 Growth Fund and Boston 1784
International Equity Fund in a diversified, open-end management investment
company having the same investment objective and policies and substantially
the same investment restrictions as those applicable to such Fund (in each
case, a "Qualifying Portfolio"). For purposes of this limitation, (i)
utility companies will be divided according to their services; for example,
gas, gas transmission, electric and telephone will each be considered a
separate industry; (ii) financial service companies will be classified
according to the end users of their services; for example, automobile
finance, bank finance and diversified finance will each be considered a
separate industry; (iii) supranational entities will be considered to be a
separate industry; and (iv) loan

<PAGE>
-23-

participations are considered to be issued by both the issuing bank and the
underlying corporate borrower.

2. A Fund may not make loans, except that a Fund may (a) purchase or hold debt
instruments in accordance with its investment objective and policies; (b)
enter into repurchase agreements; and (c) engage in securities lending as
described in the Prospectuses and in this Statement of Additional
Information.

3. A Fund may not acquire more than 10 percent of the voting securities of any
one issuer (except securities issued or guaranteed by the United States,
its agencies or instrumentalities and repurchase agreements involving such
securities) or invest more than 5 percent of the total assets of the Fund
in the securities of an issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase
agreements involving such securities); provided, that (a) the foregoing
limitation shall not apply to Boston 1784 Massachusetts Tax-Exempt Income
Fund, Boston 1784 Connecticut Tax-Exempt Income Fund, Boston 1784 Rhode
Island Tax-Exempt Income Fund or Boston 1784 Florida Tax-Exempt Income
Fund; (b) the foregoing limitation shall not apply to 25 percent of the
total assets of each of the Stock Funds, Bond Funds, Boston 1784 Tax-Exempt
Medium-Term Income Fund, Boston 1784 Tax-Free Money Market Fund, Boston
1784 Prime Money Market Fund or Boston 1784 Institutional Prime Money
Market Fund; and (c) the foregoing limitation does not apply to an
investment of all of the investable assets of Boston 1784 Prime Money
Market Fund, Boston 1784 Institutional Prime Money Market Fund, Boston 1784
Florida Tax-Exempt Income Fund, Boston 1784 Growth Fund, or Boston 1784
International Equity Fund in a Qualifying Portfolio.

4. A Fund may not invest in companies for the purpose of exercising control.

5. A Fund may not borrow, except that a Fund may borrow money from banks and
may enter into reverse repurchase agreements, in either case in an amount
not to exceed 33-1/3 percent of that Fund's total assets and then only as a
temporary measure for extraordinary or emergency purposes (which may
include the need to meet shareholder redemption requests). This borrowing
provision is included solely to facilitate the orderly sale of Fund
securities to accommodate heavy redemption requests if they should occur
and is not for investment purposes. A Fund will not purchase any securities
for its portfolio at any time at which its borrowings equal or exceed 5
percent of its total assets (taken at market value), and any interest paid
on such borrowings will reduce income.

6. In the case of Boston 1784 Asset Allocation Fund, Boston 1784 Growth and
Income Fund, Money Market Funds (other than Boston 1784 Prime Money Market
Fund and Boston 1784 Institutional Prime Money Market Fund), Boston 1784
U.S. Government Medium-Term Income Fund, Boston 1784 Tax-Exempt Medium-Term
Income Fund and Boston 1784 Massachusetts Tax-Exempt Income Fund, such a
Fund may not pledge, mortgage or hypothecate assets except to secure
temporary borrowings permitted by (5) above in aggregate amounts not to
exceed 10 percent of total assets taken at current value at the time of the
incurrence of such loan, except as permitted with respect to securities
lending.

7. A Fund may not purchase or sell real estate, including real estate limited
partnership interests, commodities and commodities contracts, but excluding

<PAGE>
-24-

interests in a pool of securities that are secured by interests in real
estate. However, subject to its permitted investments, any Fund may invest
in companies which invest in real estate commodities or commodities
contracts. Each of the Funds may invest in futures contracts and options
thereon to the extent described in the Prospectuses and elsewhere in this
Statement of Additional Information.

8. A Fund may not make short sales of securities, maintain a short position or
purchase securities on margin, except that the Trust may obtain short-term
credits as necessary for the clearance of security transactions.

9. A Fund may not act as an underwriter of securities of other issuers, except
as it may be deemed an underwriter under federal securities laws in selling
a security held by the Fund.

10. A Fund may not purchase securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations thereunder. Under
these rules and regulations, each of the Funds is prohibited, subject to
certain exceptions, from acquiring the securities of other investment
companies if, as a result of such acquisition, (a) such Fund owns more than
3 percent of the total voting stock of the company; (b) securities issued
by any one investment company represent more than 5 percent of the total
assets of such Fund; or (c) securities (other than treasury stock) issued
by all investment companies represent more than 10 percent of the total
assets of such Fund, provided, that with respect to the Boston 1784 Prime
Money Market Fund, Boston 1784 Institutional Prime Money Market Fund,
Boston 1784 Florida Tax-Exempt Income Fund, Boston 1784 Growth Fund and
Boston 1784 International Equity Fund, the limitations do not apply to an
investment of all of the investable assets of such Fund in a Qualifying
Portfolio. These investment companies typically incur fees that are
separate from those fees incurred directly by a Fund. A Fund's purchase of
such investment company securities results in the layering of expenses,
such that shareholders would indirectly bear a proportionate share of the
operating expenses of such investment companies, including advisory fees.

The Funds have obtained an exemptive order from the Securities and Exchange
Commission which permits the Funds (other than the Money Market Funds) to
purchase shares of one or more affiliated investment companies that are
money market funds, subject to certain conditions contained in the
application for such exemptive order.

It is the position of the Securities and Exchange Commission's Staff that
certain non-governmental issuers of CMOs and REMICs constitute investment
companies pursuant to the 1940 Act and either (a) investments in such
instruments are subject to the limitations set forth above or (b) the
issuers of such instruments have received orders from the Securities and
Exchange Commission exempting such instruments from the definition of
investment company.

11. A Fund may not issue senior securities (as defined in the 1940 Act) except
in connection with permitted borrowings as described above or as permitted
by rule, regulation or order of the Securities and Exchange Commission.

<PAGE>
-25-

12. A Fund may not write or purchase puts, calls, or other options or
combinations thereof, except that each Fund may write covered call options
with respect to any or all of the securities it holds, subject to any
limitations described in the Prospectuses or elsewhere in this Statement of
Additional Information and each Fund may purchase and sell other options as
described in the Prospectuses and this statement of Additional Information.

NON-FUNDAMENTAL POLICIES

The following policies are not fundamental and may be changed with
respect to any Fund without approval by the shareholders of that Fund:

No Fund may invest in warrants, except that (i) each of the Stock Funds
may invest in warrants in an amount not exceeding 5 percent of the Fund's net
assets as valued at the lower of cost or market value; included in these
amounts, but not to exceed 2 percent of the Fund's net assets, may be warrants
not listed on the New York Stock Exchange or American Stock Exchange; and (ii)
Boston 1784 Short-Term Income Fund and Boston 1784 Income Fund may each invest
in warrants in an amount not exceeding 2 percent of its net assets; this
limitation does not apply to warrants acquired in units or attached to
securities. Such warrants may not be listed on the New York Stock Exchange or
American Stock Exchange.

No Fund may invest in illiquid securities in an amount exceeding, in
the aggregate, 15 percent of that Fund's net assets (10 percent for Money Market
Funds), provided that this limitation does not apply to an investment of all of
the investable assets of the Boston 1784 Prime Money Market Fund, Boston 1784
Institutional Prime Money Market Fund, Boston 1784 Florida Tax-Exempt Income
Fund, Boston 1784 Growth Fund, or Boston 1784 International Equity Fund in a
Qualifying Portfolio. The foregoing limitation does not apply to restricted
securities, including those issued pursuant to Rule 144A under the 1933 Act, if
it is determined by or under procedures established by the Board of Trustees of
the Trust that, based on trading markets for the specific restricted security in
question, such security is not illiquid.

No Fund may purchase or retain securities of an issuer if, to the
knowledge of the Trust, an officer, trustee, partner or director of the Trust or
any investment adviser of the Trust owns beneficially more than 1/2 of 1 percent
of the shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1 percent of such shares or
securities together own more than 5 percent of such shares or securities.

No Fund may invest in interests in oil, gas or other mineral
exploration or development programs. No Fund may invest in oil, gas or mineral
leases.

No Fund may purchase securities of any company which has (with
predecessors) a record of less than 3 years continuing operations if as a result
more than 5 percent of total assets (taken at fair market value) of the Fund
would be invested in such securities, except that the foregoing limitation shall
not apply to (a) obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; (b) municipal securities which are rated by at
least one nationally-recognized bond rating service; or (c) an investment of all
of the investable assets of the Boston 1784 Prime Money Market Fund, Boston 1784
Institutional Prime Money Market Fund, Boston 1784 Florida Tax-Exempt Income
Fund, Boston 1784 Growth Fund, or Boston 1784 International Equity Fund in a
Qualifying Portfolio.

<PAGE>
-26-

The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess occurs or exists
immediately after and as a result of a purchase of such security.

TEMPORARY DEFENSIVE POSITION

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.

PORTFOLIO TURNOVER

Set forth below are the portfolio turnover rates for each of the Funds
(with the exception of the money market funds) for the fiscal years indicated. A
rate of 100% indicates that the equivalent of all of the Fund's assets have been
sold and reinvested in a year. The amount of brokerage commissions will tend to
increase as the level of portfolio activity increases. High portfolio turnover
may result in the realization of substantial net capital gains or losses which
will be required to be distributed to shareholders. To the extent net short term
capital gains are realized, any distributions resulting from such gains will be
treated as ordinary dividend income for federal income tax purposes.

- --------------------------------------------------------------------------------

Portfolio Turnover Portfolio Turnover
Fund Rates 1998 Rates 1999
- --------------------------------------------------------------------------------

Boston 1784 Short-Term Income Fund
83.84% 36.57%

Boston 1784 Income Fund 79.09% 64.34%

Boston 1784 U.S. Government
Medium-Term Income Fund 73.65% 47.85%

Boston 1784 Tax-Exempt Medium
Term Income Fund 34.06% 68.58%

Boston 1784 Connecticut Tax-
Exempt Income Fund 16.81% 19.10%

Boston 1784 Florida Tax-Exempt
Income Fund 21.35% 10.88%

Boston 1784 Massachusetts Tax-
Exempt Fund 6.45% 9.32%

Boston 1784 Rhode Island Tax-
Exempt Income Fund 13.79% 12.44%
- --------------------------------------------------------------------------------

Boston 1784 Asset Allocation Fund 47.83% 49.78%

<PAGE>
-27-

Boston 1784 Growth and Income
Fund 39.03% 50.15%

Boston 1784 Growth Fund 48.60% 61.02%

Boston 1784 International Equity
Fund 103.47% 115.83%
- --------------------------------------------------------------------------------

3. MANAGEMENT

TRUSTEES

The management and affairs of the Trust are supervised by the Trustees
under the laws of the Commonwealth of Massachusetts. Subject to the provisions
of the Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility.

MANAGEMENT INFORMATION

The Trustees and executive officers of the Trust and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. An asterisk indicates a Trustee who may be
deemed to be an "interested person" (as defined in the 1940 Act) of the Trust.
<TABLE>
<CAPTION>

- --------------------------------------------- ----------------- --------------------------------------------
<S> <C> <C>
Position(s)
Held with Trust Principal Occupation(s) During Past 5 Years
Name, Address, and Age
- --------------------------------------------- ----------------- --------------------------------------------
DAVID H. CARTER Trustee Main Board Director, Touche Remnant & Co.
(date of birth March 21, 1933) (investment advisor), 1982-1988; Managing
Tockenham Farm Director, Bearbull (UK) Ltd., London
Wootton Bassett (investment advisor), 1988-January 1993.
Wiltshire, SN47PB
England
- --------------------------------------------- ----------------- --------------------------------------------
TARRANT CUTLER Trustee Trustee and Secretary, Northeast Hospital
(date of birth June 12, 1926) Corp. (since 1965); Senior Executive Vice
5 Masconomo Street President, Massachusetts Financial
Manchester, Massachusetts 01944 Services Company, retired in 1991.

<PAGE>
-28-

- --------------------------------------------- ----------------- --------------------------------------------
KENNETH A. FROOT Trustee Andre R. Jakurski Professor of Business
(date of birth July 5, 1957) Administration, since 1999, Director of
Harvard University Graduate School of Research, since 1996, and The Industrial
Business Bank of Japan Professor of Finance and
Boston, Massachusetts 02163 Director of Research, Harvard University
Graduate School of Business, 1993-1999;
Thomas Henry Carroll-Ford Visiting
Professor of Business Administration,
Harvard University Graduate School
of Business, 1991-1993; Associate
Professor of Management with Tenure, Sloan
School of Management, Massachusetts
Institute of Technology, 1991-1992; Ford
International Development Chair, Sloan
School, 1987-1990; Research Associate,
National Bureau of Economic Research,
1990-present.
- --------------------------------------------- ----------------- --------------------------------------------
SARA L. JOHNSON Trustee North American Research Director (since
(date of birth November 16, 1951) 1998), Chief Regional Economist (since
30 Eaton Court 1995), Principal (1992-1998) and Director
Wellesley Hills, Massachusetts 02181 of Regional Forecasting (1992-1995),
Standard & Poor's DRI (formerly
DRI/McGraw-Hill); formerly, Trustee
of BayFunds.
- --------------------------------------------- ----------------- --------------------------------------------
KATHRYN FLACKE MUNCIL Trustee Chief Financial Officer, since 1993,
(date of birth November 30, 1958) Treasurer and Secretary, since 1994, Fort
c/o Fort William Henry Corporation William Henry Corporation; Treasurer and
48 Canada Street Secretary, Adirondack Lakeview
Lake George, New York 12845 Corporation, since 1994; Treasurer,
Spaulding Investment Company (real
estate development, investment and
property management), 1985-1993.
- --------------------------------------------- ----------------- --------------------------------------------
*ROBERT A. NESHER President, Mr. Nesher currently performs various
(date of birth August 17, 1946) Chief Executive services on behalf of SEI for which he is
1 Freedom Valley Drive, Oaks, Pennsylvania Officer & compensated. Director and Executive Vice
19456 Trustee President of SEI 1986 to July 1994.
Director and Executive Vice President of
the Administrator and Distributor 1981 to
July 1994.

<PAGE>
-29-
- --------------------------------------------- ----------------- --------------------------------------------
ALVIN J. SILK Trustee Co-Chairman, Marketing Area and Lincoln
(date of birth December 31, 1935) Filene Professor of Business
Graduate School of Business Administration Administration, Graduate School of
Harvard University Business Administration, Harvard
Soldiers Field Road University (1988-present); formerly,
Boston, Massachusetts 02163 Trustee of BayFunds; formerly, Erwin H.
Schell Professor of Management, Sloan School
of Management, Massachusetts Institute of
Technology; formerly, Director, BayBank
Systems, Inc.; Trustee, Marketing Science
Institute; Director, Reed and Barton, Inc.
- --------------------------------------------- ----------------- --------------------------------------------
TODD CIPPERMAN Vice President Vice President and Assistant Secretary of
(date of birth February 14, 1966) & Assistant SEI, the Administrator and the Distributor
1 Freedom Valley Drive Secretary since 1995. Associate, Dewey Ballantine
Oaks, Pennsylvania 19456 (law firm)(1994-1995). Associate, Winston
& Strawn (law firm) (1991-1994).
- --------------------------------------------- ----------------- --------------------------------------------
ROGER P. JOSEPH Secretary Partner, Bingham Dana LLP, counsel to the
(date of birth October 3, 1951) Trust, since 1983.
150 Federal Street, Boston, Massachusetts
02110
- --------------------------------------------- ----------------- --------------------------------------------
CHRISTOPHER F. SALFI Controller Director, Funds Accounting, SEI Mutual
(date of birth November 28, 1963) Fund Services, since 1998; Fund Accounting
1 Freedom Valley Drive Manager, SEI, 1994-1997; Investment
Oaks, Pennsylvania 19456 Accounting Manager, PFPC, 1993-1994; FPS
Services, Inc., 1986-1993.
- --------------------------------------------- ----------------- --------------------------------------------
KEVIN P. ROBINS Vice President General Counsel to and Senior Vice
(date of birth April 15, 1961) & Assistant President of SEI, the Administrator and
1 Freedom Valley Drive Secretary the Distributor, since 1994. Vice
Oaks, Pennsylvania 19456 President of SEI, the Administrator and
the Distributor, from 1991 to 1994. Vice
President of SEI, the Administrator and the
Distributor, from 1992 to 1994. Associate,
Morgan, Lewis & Bockius (law firm) prior
to 1992.
- --------------------------------------------- ----------------- --------------------------------------------
JAMES R. FOGGO Vice President Vice President and Assistant Secretary of
(date of birth June 30, 1964) & Assistant the Administrator and the Distributor
1 Freedom Valley Drive Secretary since 1998. Associate, Paul Weiss,
Oaks, Pennsylvania 19456 Rifkind, Wharton & Garrison (law firm),
1998. Associate, Baker & McKenzie
(law firm), 1995-1998. Associate, Battle
& Fowler, LLP (law firm), 1992-1995.
Operations Manager, The Shareholder
Services Group, Inc., 1986-1990.

<PAGE>
-30-
- --------------------------------------------- ----------------- --------------------------------------------
KATHY HELIG Vice President Treasurer of SEI since 1997; Vice
(date of birth December 21, 1958) & Assistant President of SEI since 1991; Director of
1 Freedom Valley Drive Secretary Taxes of SEI, 1987-1991. Tax Manager,
Oaks, Pennsylvania 19456 Arthur Anderson L.L.P. prior to 1987.
- --------------------------------------------- ----------------- --------------------------------------------
LYNDA J. STRIGEL Vice President Vice President and Assistant Secretary of
(date of birth October 30, 1948) & Assistant the Administrator and the Distributor
1 Freedom Valley Drive Secretary since 1998. Senior Asset Management
Oaks, Pennsylvania 19456 Counsel, Barnett Banks, Inc., 1997-1998.
Partner, Groom and Nordberg, Chartered,
1996-1997. Associate General Counsel,
Riggs Bank, N.A., 1991-1995.
- --------------------------------------------- ----------------- --------------------------------------------
LYDIA A. GARVALIS Vice President Vice President and Assistant Secretary of
(date of birth June 5, 1964) & Assistant the Administrator and the Distributor
1 Freedom Valley Drive Secretary since 1998. Assistant General Counsel and
Oaks, Pennsylvania 19456 Director of Arbitration, Philadelphia
Stock Exchange, 1989-1998.
- --------------------------------------------- ----------------- --------------------------------------------
</TABLE>

COMPENSATION

The following table sets forth certain information regarding the
compensation of the Trust's Trustees for the fiscal year ended May 31, 1999.

- --------------------------- -------------------- ---------------------- --------------------- ---------------------
Pension or Total Compensation
Retirement Benefits Estimated Annual from the Trust and
Aggregate Accrued as Part of Benefits Upon the Funds Paid to
Compensation from Fund Expenses Retirement Trustee
Name of Trustee the Trust
- --------------------------- -------------------- ---------------------- --------------------- ---------------------

<S> <C> <C> <C> <C>
David H. Carter $29,000 $0 $0 $29,000
Tarrant Cutler $29,000 0 0 $29,000
Kenneth A. Froot $29,000 0 0 $29,000
Sara L. Johnson $29,000 0 0 $29,000
Kathryn F. Muncil $29,000 0 0 $29,000
Robert A. Nesher $0 0 0 $0
Alvin J. Silk $29,000 0 0 $29,000
</TABLE>

The Officers of the Trust receive no compensation from the Trust for
serving in such capacity. Compensation of officers and Trustees of the Trust who
are employed by the Administrator is paid by the Administrator.

The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers as described below under "Trustee and Shareholder
Liability--Limitation of Trustees' Liability".

<PAGE>
-31-

4. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

PRINCIPAL HOLDERS

As of September 1, 1999, all Trustees and officers of the Trust as a
group owned less than 1% percent of each Fund's outstanding shares. The Trust
pays the fees for unaffiliated Trustees.

As of September 1, 1999, Bidders Edge, Inc., 131 Middlesex Turnpike,
Burlington, MA 01803-4431, owned of record 5.16% of the outstanding shares of
Boston 1784 Institutional Prime Money Market Fund.

As of September 1, 1999, Charles Schwab & Co., Inc., 101 Montgomery
Street, San Francisco, CA 94104-4122, owned of record 5.27% of the outstanding
shares of Boston 1784 Connecticut Tax-Exempt Income Fund.

As of September 1, 1999, CP Clare Operation, 78 Cherry Hill Drive,
Beverly, MA 01702, owned of record 5.25% of the outstanding shares of Boston
1784 Institutional Prime Money Market Fund.

As of September 1, 1999, Engage Technologies Inc., 100 Brickstone
Square, Andover, MA 01830-1428, owned of record 14.97% of the outstanding shares
of Boston 1784 Institutional Prime Money Market Fund.

As of September 1, 1999, Fleet National Bank, as Trustee for Alliances
Trust, P.O. Box 92800, Rochester, NY 14692-8900, owned of record 7.40% of the
outstanding shares of Boston 1784 Short-Term Income Fund.

As of September 1, 1999, State Street Bank & Trust, as Trustee for
BankBoston Thrift Incentive (401k) Plan, 105 Rosemont Road, Westwood, MA
02090-2318, owned of record the following percentages of the outstanding shares
of the following Funds:

Boston 1784 Asset Allocation Fund - 30.40%
Boston 1784 Growth and Income Fund - 13.39%
Boston 1784 Growth Fund - 12.82%
Boston 1784 Short-Term Income Fund - 38.80%

As of September 1, 1999, National Financial Services Corp., P.O. Box
3908 Church Street Station, New York, NY 10008-3908, owned of record the
following percentages of the outstanding shares of the following Funds:

Boston 1784 Tax-Free Money Market Fund - 5.11%
Boston 1784 U.S. Treasury Money Market Fund - 19.67%
Boston 1784 Prime Money Market Fund - 16.35%
Boston 1784 Short-Term Income Fund - 5.96%
Boston 1784 Massachusetts Tax-Exempt Income Fund - 15.07%
Boston 1784 Rhode Island Tax-Exempt Income Fund - 7.70%
Boston 1784 Connecticut Tax-Exempt Income Fund - 7.93%
Boston 1784 Asset Allocation Fund - 25.44%
Boston 1784 Growth and Income Fund - 10.73%
Boston 1784 Growth Fund - 12.82%

<PAGE>
-32-

As of September 1, 1999, BankBoston, N.A., 100 Federal Street, Boston,
Massachusetts 02110, and its affiliates, owned of record the following
percentages of the outstanding shares of the following Funds:

Boston 1784 Tax-Free Money Market Fund - 81.58%
Boston 1784 Institutional U.S. Treasury Money Market Fund - 62.18%
Boston 1784 Institutional Prime Money Market Fund - 14.82%
Boston 1784 Tax-Exempt Medium-Term Income Fund - 88.27%
Boston 1784 Massachusetts Tax-Exempt Income Fund - 68.49%
Boston 1784 Rhode Island Tax-Exempt Income Fund - 82.48%
Boston 1784 Connecticut Tax-Exempt Income Fund - 77.76%
Boston 1784 Florida Tax-Exempt Income Fund - 97.88%
Boston 1784 U.S. Government Medium-Term Income Fund - 90.31%
Boston 1784 Short-Term Income Fund - 31.93%
Boston 1784 Income Fund - 86.25%
Boston 1784 Asset Allocation Fund - 32.44%
Boston 1784 Growth and Income Fund - 55.08%
Boston 1784 Growth Fund - 63.54%
Boston 1784 International Equity Fund - 89.00%

5. INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISERS

The Trust has entered into separate advisory agreements (each, an
"Advisory Agreement") with BankBoston, a wholly-owned subsidiary of BankBoston
Corporation, and, for Boston 1784 International Equity Fund, with Kleinwort
Benson Investment Management Americas Inc. ("Kleinwort"), the U.S.-registered
investment management subsidiary of the London-based Kleinwort Group plc, a
merchant banking group, which in turn is a subsidiary of Dresdner Bank A.G.

The Advisory Agreement with BankBoston for the Funds other than Boston
1784 International Equity Fund is dated as of June 1, 1993 and the Advisory
Agreement with BankBoston for Boston 1784 International Equity Fund is dated as
of November 28, 1994. The Advisory Agreement with Kleinwort for Boston 1784
International Equity Fund is dated as of October 27, 1995. BankBoston and
Kleinwort are referred to in this Statement of Additional Information,
collectively, as the "Advisers" and each, individually, as an "Adviser."

BankBoston is entitled to receive investment advisory fees, which are
accrued daily and payable monthly, of .40% of each Money Market Fund's average
daily net assets (.20% for the Institutional U.S. Treasury Money Market Fund and
the Institutional Prime Money Market Fund), .74% of each Bond and each
Tax-Exempt Fund's average daily net assets (.50% for the Short-Term Income Fund)
and .74% of each Stock Fund's average daily net assets (other than the
International Equity Fund).

For the International Equity Fund, BankBoston and Kleinwort each are
entitled to receive an investment advisory fee of .50% of the Fund's average net
assets, for a total of 1.00% of the Fund's average daily net assets. This fee is
higher than the fee paid by most investment companies in general.

<PAGE>
-33-

BankBoston has agreed to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of each 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.

For the fiscal years ended May 31, 1997, 1998 and 1999, the Trust paid
the following fees (after fee waivers) on behalf of the Funds:
<TABLE>
<CAPTION>

- ----------------------------------------------- --------------------- --------------------- ---------------------
BankBoston BankBoston BankBoston
Investment Investment Investment
Fund Advisory Fees Advisory Fees Advisory Fees
1997 1998 1999
(thousands) (thousands) (thousands)
- ----------------------------------------------- --------------------- --------------------- ---------------------

<S> <C> <C> <C>
Boston 1784 Tax-Free Money Market Fund $2,663 $3,896 $4,228
Boston 1784 U.S. Treasury Money Market
Fund 879 1,286 1,297
Boston 1784 Institutional U.S. Treasury
Money Market Fund 3,052 6,468 8,329
Boston 1784 Institutional Prime Money
Market Fund N/A (1) 46 760
Boston 1784 Prime Money Market Fund 142(2) 430 509
Boston 1784 Short-Term Income Fund 708 960 929
Boston 1784 Income Fund 1,829 2,483 2,536
Boston 1784 U.S. Government Medium
Term Income Fund 1,199 1,571 1,829
Boston 1784 Tax-Exempt Medium-Term
Income Fund 1,387 1,877 2,241
Boston 1784 Connecticut Tax-Exempt
Income Fund 573 764 1,139
Boston 1784 Florida Tax-Exempt Income
Fund N/A(1) 267 380
Boston 1784 Massachusetts Tax-Exempt
Fund 768 1,162 1,574
Boston 1784 Rhode Island Tax-Exempt
Income Fund 280 407 583
Boston 1784 Asset Allocation Fund 177 318 382
Boston 1784 Growth and Income Fund 2,650 3,785 4,117
Boston 1784 Growth Fund 1,050 2,110 1,455
Boston 1784 International Equity Fund 2,111 2,404 2,179
- ----------------------------------------------- --------------------- --------------------- ---------------------
Total $19,468 29,274 34,467
- ----------------------------------------------- --------------------- --------------------- ---------------------

<FN>
(1) The Boston 1784 Institutional Prime Money Market Fund and Boston 1784 Florida Tax-Exempt Income Fund had no operations
during the periods indicated.
(2) The Prime Money Market Fund changed its fiscal year from December 31 to May 31. The investment advisory fee of $142,000
reflects payments made by the Fund for the period from January 1, 1997 to May 31, 1997.
</FN>
</TABLE>

The foregoing table does not reflect contributions to the Funds made by
BankBoston in order to assist the Funds in maintaining competitive expense
ratios.

For the fiscal year ended May 31, 1996, the Trust paid $1,222,419 to
Kleinwort under the Advisory Agreement to which Kleinwort is a party, with
respect to Boston 1784 International Equity Fund. For the fiscal years ended May
31, 1997, 1998 and 1999, respectively, the Trust paid $2,111,000, $2,404,000 and
$2,179,000 to Kleinwort under the same Advisory Agreement.

<PAGE>
-34-

The continuance of each Advisory Agreement, after the first two years,
must be specifically approved at least annually (i) by the vote of the Trustees,
and (ii) by the vote of a majority of the Trustees who are neither parties to
the Advisory Agreement nor "interested persons" of any party thereto, cast in
person at a meeting called for the purpose of voting on such approval. Each
Advisory Agreement will terminate automatically in the event of its assignment,
and is terminable at any time without penalty by the Trustees of the Trust or
with respect to any Fund, by a majority of the outstanding shares of that Fund,
on not less than 30 nor more than 60 days' written notice to the applicable
Adviser, or by the applicable Adviser on 90 days' written notice to the Trust.

Each Advisory Agreement provides that neither the Adviser nor its
personnel shall be liable (1) for any error of judgment or mistake of law; (2)
for any loss arising out of any investment; or (3) for any act or omission in
the execution of security transactions for the Trust or any Fund, except that
the Adviser and its personnel shall not be protected against any liability to
the Trust, any Fund or its Shareholders by reason of willful misfeasance, bad
faith or gross negligence on its or their part in the performance of its or
their duties or from reckless disregard of its or their obligations or duties
thereunder.

SERVICEMARKS

The servicemark BOSTON 1784 FUNDSSM is a registered servicemark of, and
this servicemark and the "eagle" logo are used by permission of, BankBoston. In
the event that the Advisory Agreements with BankBoston are terminated, the Trust
has agreed to discontinue use of the servicemark and logo.

DISTRIBUTOR

SEI Investments Distribution Co. (formerly known as SEI Financial
Services Company) (the "Distributor"), a wholly-owned subsidiary of SEI, and the
Trust are parties to a distribution agreement ("Distribution Agreement"), dated
as of June 1, 1993 and amended and restated as of October 27, 1995. The
Distributor has its principal business offices at 1 Freedom Valley Drive, Oaks,
Pennsylvania 19456.

The Trust has adopted a distribution plan dated as of June 1, 1993,
with respect to each of the Stock Funds, the Bond Funds and the Tax-Exempt Funds
and separate distribution plans dated as of September 14, 1995 with respect to
Class C and Class D shares of Boston 1784 U.S. Treasury Money Market Fund. Each
of these plans ("Plans") has been adopted pursuant to Rule 12b-1 under the 1940
Act. The Distributor receives no compensation for distribution of shares of
Boston 1784 Tax-Free Money Market Fund, Boston 1784 Prime Money Market Fund,
Boston 1784 Institutional Prime Money Market Fund or Boston 1784 Institutional
U.S. Treasury Money Market Fund, or for the distribution of Class A Shares of
Boston 1784 U.S. Treasury Money Market Fund.

The Distribution Agreement and the Plans provide that the Trust will
pay the Distributor a fee, calculated daily and paid monthly, at an annual rate
of (i) 0.25% of the average daily net assets of each of the Stock Funds, the
Bond Funds and the Tax-Exempt Funds; (ii) 0.25% of the average daily net assets
of the Class C shares of Boston 1784 U.S. Treasury Money Market Fund; and (iii)
0.75% of the average daily net assets of the Class D shares of Boston 1784 U.S.
Treasury Money Market Fund. The Distributor can use these fees to compensate
broker/dealers and service providers

<PAGE>
-35-

(including each Adviser and its affiliates) which provide administrative and/or
distribution services to holders of these shares or their customers who
beneficially own these shares. No fees have been paid to the Distributor under
the Plans or the Distribution Agreement since the Funds' inception.

The Distribution Agreement is renewable annually and may be terminated
by the Distributor, by the Trustees of the Trust who are not interested persons
and have no financial interest in the Plans or any related agreement ("Qualified
Trustees"), or, with respect to any particular Fund or class of shares, by a
majority vote of the outstanding shares of such Fund or such class of shares, as
applicable, for which the Distribution Agreement is in effect upon not more than
60 days' written notice by either party.

The Trust has adopted each of the Plans in accordance with the
provisions of Rule 12b-1 under the 1940 Act, which regulates circumstances under
which an investment company may, directly or indirectly, bear expenses relating
to the distribution of its shares. Continuance of each of the Plans must be
approved annually by a majority of the Trustees of the Trust and by a majority
of the Qualified Trustees. Continuance of the Plan with respect to each of the
Stock Funds, the Bond Funds, and the Tax-Exempt Funds was approved by the
Trustees in March, 1999. Each of the Plans requires that quarterly written
reports of money spent under such Plan and of the purposes of such expenditures
be furnished to and reviewed by the Trustees. Expenditures may include (1) the
cost of prospectuses, reports to Shareholders, sales literature and other
materials for potential investors; (2) advertising; (3) expenses incurred in
connection with the promotion and sale of the Trust's shares, including the
Distributor's expenses for travel, communication, and compensation and benefits
for sales personnel; and (4) any other expenses reasonably incurred in
connection with the distribution and marketing of the shares subject to approval
of a majority of the Qualified Trustees. No Plan may be amended to materially
increase the amount which may be spent under the Plan without approval by a
majority of the outstanding shares of the Funds or the class of shares which are
subject to such Plan. All material amendments of the Plans require approval by a
majority of the Trustees of the Trust and of the Qualified Trustees.

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.

ADMINISTRATOR

The Trust and SEI Investments Mutual Funds Services (formerly known as
SEI Fund Resources) (the "Administrator") are parties to an administration
agreement (the "Administration Agreement"). The Administration Agreement
provides that the Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which the Administration Agreement relates, except a loss that
results from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations under the Administration Agreement. The
Administration Agreement's term expired on November 22, 1998, but, by its terms,
it continues indefinitely thereafter unless terminated.

<PAGE>
-36-

Under the Agreement, the Administrator provides administrative and fund
accounting services to the Funds, including regulatory reporting, office
facilities, and equipment and personnel. The Administrator 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 Funds' combined average daily net assets
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. The Administrator may
retain sub-administrators, including BankBoston, whose fees would be paid by the
Administrator.

For the fiscal year ended May 31, 1996, the Trust paid $2,440,000 to
the Administrator under the Administration Agreement. For the fiscal years ended
May 31, 1997, 1998 and 1999, respectively, the Trust paid $3,912,000, $5,426,000
and $6,142,000 to the Administrator under the existing Administration Agreement.

SEI Investments Mutual Funds Services (formerly known as SEI Fund
Resources) is a Delaware business trust whose sole beneficiary is SEI
Investments Management Corporation (formerly known as SEI Financial Management
Corporation). SEI Investments Management Corporation, a wholly-owned subsidiary
of SEI Investments Company ("SEI"), was organized as a Delaware corporation in
1969 and has its principal business offices at 1 Freedom Valley Drive, Oaks,
Pennsylvania 19456. Alfred P. West, Jr., Carmen V. Romeo, and Henry H. Greer
constitute the Board of Directors of the Administrator. Mr. West is the Chairman
of the Board and Chief Executive Officer of the Administrator. Mr. West serves
as the Chairman of the Board of Directors, and Chief Executive Officer of SEI.
SEI and its subsidiaries are leading providers of funds evaluation services,
trust accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The Administrator and
its affiliates also serve as administrator to the following other mutual funds:
SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Managed Trust,
The Advisors' Inner Circle Fund, The Pillar Funds, CUFund, STI Classic Funds,
First American Funds, Inc., First American Investment Funds, Inc., The Arbor
Fund, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Achievement
Funds Trust, Bishop Street Funds, STI Classic Variable Trust, Huntington Funds,
TIP Funds, TIP Institutional Funds, ARK Funds, SEI Asset Allocation Trust, SEI
Institutional Investments Trust, First American Strategy Funds, Inc., HighMark
Funds, Expedition Funds, Oak Associates Funds, the Armada Funds, the Nevis Fund,
Inc., UAM Funds Inc. II, Alpha Select Funds, and CNI Charter Funds.

DIVIDEND DISBURSING 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.
CUSTODIAN

Prior to September 30, 1998, BankBoston, N.A., acted as custodian of
the Funds' assets pursuant to a Custodian Agreement dated as of June 1, 1993
between BankBoston, N.A. and the Trust. On September 30, 1998, BankBoston
assigned its rights and obligations under the Custodian Agreement to Investors
Bank & Trust Company. Investors Bank & Trust Company (the "Custodian"), Hancock
Towers, 200 Clarendon Street, 16th Floor, Boston, Massachusetts 02116, acts as
custodian of the Funds' assets. The Custodian's responsibilities include holding
and administering the

<PAGE>
-37-

Funds' cash and securities, handling the receipt and delivery of securities,
furnishing a statement of all transactions and entries for the account of each
Fund, and furnishing the Funds with such other reports covering securities held
by it or under its control as may be agreed upon from time to time. The
Custodian and its agents (including foreign sub-custodians) may make
arrangements with Depository Trust Company and other foreign or domestic
depositories or clearing agencies, including the Federal Reserve Bank and any
foreign depository or clearing agency, whereby certain securities may be
deposited for the purpose of allowing transactions to be made by bookkeeping
entry without physical delivery of such securities, subject to such restrictions
as may be agreed upon by the Custodian and the Funds. Fund securities may be
held by a sub-custodian bank approved by the Trustees. The Custodian does not
determine the investment policies of the Funds or decide which securities the
Funds will buy or sell. For its services, the Custodian will receive such
compensation as may from time to time be agreed upon by it and the Trust.

COUNSEL AND INDEPENDENT ACCOUNTANTS

Bingham Dana LLP, 150 Federal Street, Boston Massachusetts 02110, is
counsel for each Fund. PricewaterhouseCoopers LLP, 2400 Eleven Penn Center,
Philadelphia, Pennsylvania 19103, serves as independent auditor for each Fund
providing audit and accounting services including: (i) examination of the annual
financial statements, (ii) assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission, and (iii)
preparation of annual income tax returns.

6. BROKERAGE ALLOCATION AND OTHER PRACTICES

BROKERAGE TRANSACTIONS

Specific decisions to purchase or sell securities for a Fund are made
by a portfolio manager who is an employee of BankBoston, and who is appointed
and supervised by the senior officers of BankBoston, or in the case of Boston
1784 International Equity Fund, by portfolio managers who are employees of
BankBoston or of Kleinwort, and who are appointed and supervised by the senior
officers of BankBoston or by senior officers of Kleinwort. A portfolio manager
may serve other clients of either of the Advisers or of an affiliate of either
of the Advisers in a similar capacity.

Subject to policies established by the Trustees, the Adviser to the
Funds (Kleinwort, in the case of the International Equity Fund) is responsible
for placing the orders to execute transactions for such Fund. In placing orders,
it is the policy of the Trust for each Adviser to seek to obtain the best net
results taking into account such factors as price (including the applicable
dealer spread), the size, type and difficulty of the transaction involved, the
firm's general execution and operational facilities, and the firm's risk in
positioning the securities involved. While each Adviser seeks reasonably
competitive spreads or commissions, the Trust will not necessarily be paying the
lowest spread or commission available.

The money market securities in which the Funds invest are traded
primarily in the over-the-counter market. Bonds and debentures are usually
traded over-the-counter, but may be traded on an exchange. Where possible, each
Adviser will deal directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer.
Money market securities are generally traded on a

<PAGE>
-38-

net basis and do not normally involve either brokerage commissions or transfer
taxes. The cost of executing transactions for the Funds will primarily consist
of dealer spreads and underwriting commissions.

For the fiscal years ended May 31, 1997, 1998 and 1999, the Trust paid
the following aggregate amount of brokerage commissions on behalf of the Funds:
<TABLE>
<CAPTION>

- ----------------------------------------------- ------------------- -------------------- -------------------
Brokerage Brokerage Brokerage
Fund Commissions 1997 Commissions 1998 Commissions 1999
- ----------------------------------------------- ------------------- -------------------- -------------------
- ----------------------------------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C>
Boston 1784 Asset Allocation Fund $ 17,370.50 $ 17,061.84 $ 20,763.79
- ----------------------------------------------- ------------------- -------------------- -------------------
Boston 1784 Growth and Income Fund 152,899.49 344,969.84 520,659.52
- ----------------------------------------------- ------------------- -------------------- -------------------
Boston 1784 Growth Fund 163,410.76 227,975.43 199,395.50
- ----------------------------------------------- ------------------- -------------------- -------------------
Boston 1784 International Equity Fund 823,922.21 1,969,530.48 2,316,848.43
- ----------------------------------------------- ------------------- -------------------- -------------------
Total $1,157,602.96 $2,559,537.59 $3,057,667.24
- ----------------------------------------------- ------------------- -------------------- -------------------
</TABLE>

BROKERAGE SELECTION

Each Adviser selects brokers or dealers to execute transactions for the
purchase or sale of securities for the Funds on the basis of the Adviser's
judgment of their professional capability to provide the service. The primary
consideration is to have brokers or dealers execute transactions at the best
price and execution. Best price and execution refers to many factors, including
the price paid or received for a security, the commission charged, the
promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit obtained by
the account on the transaction. Each Adviser's determination of what are
reasonably competitive rates is based upon the professional knowledge of the
Adviser's portfolio managers as to rates paid and charged for similar
transactions throughout the securities industry. In some instances, a Fund pays
a minimal share transaction cost when the transaction presents no difficulty.
Some trades are made on a net basis where a Fund either buys securities directly
from the dealer or sells them to the dealer. In these instances, there is no
direct commission charged but there is a spread (the difference between the buy
and sell price) which is the equivalent of a commission.

Each Adviser may allocate, out of all commission business generated by
the funds and accounts under its management, brokerage business to brokers or
dealers who provide brokerage and research services. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software used in security
analyses; and providing fund performance evaluation and technical market
analyses. Such services are used by that Adviser in connection with its
investment decision-making process with respect to one or more portfolios under
its management and may not be used exclusively with respect to the fund or
account generating the brokerage.

<PAGE>
-39-

Not all brokerage and research services are useful or of value in advising any
particular Fund.

As provided in the Securities Exchange Act of 1934 (the "1934 Act"),
higher commissions may be paid to broker/dealers who provide brokerage and
research services than to broker/dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed to
broker/dealers who provide such brokerage and research services, the commissions
paid to such broker/dealers are not, in general, expected to be higher than
commissions that would be paid to broker/dealers not providing such services.
Further, in general, any such commissions are reasonable in relation to the
value of the brokerage and research services provided.

BankBoston may place a combined order for two or more Funds (or for a
Fund and another account under BankBoston's management) engaged in the purchase
or sale of the same security if, in BankBoston's judgment, joint execution is in
the best interest of each participant and will result in best price and
execution. Transactions involving commingled orders are allocated in a manner
deemed equitable to each Fund or account. It is believed that the ability of the
Funds to participate in volume transactions is generally beneficial. Although it
is recognized that the joint execution of orders could adversely affect the
price or volume of the security that a particular Fund may obtain, it is the
opinion of BankBoston and the Board of Trustees of the Trust that the advantages
of combined orders outweigh the possible disadvantages of separate transactions.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best price and execution, an
Adviser may place orders for a Fund with broker/dealers who have agreed to
defray certain Trust expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of shares of the Trust as a factor
in the selection of brokers and dealers to execute Fund transactions.

It is expected that an Adviser may execute brokerage or other agency
transactions through the Distributor, any Adviser or an affiliate of any
Adviser, for a commission in conformity with the 1940 Act, the 1934 Act, rules
promulgated by the Securities and Exchange Commission and such policies as the
Board of Trustees of the Trust may determine. Under these provisions, the
Distributor or such Adviser or an affiliate of such Adviser is permitted to
receive and retain compensation for effecting transactions for a Fund on an
exchange if a written contract is in effect with the Trust expressly permitting
the Distributor or such Adviser or an affiliate of such Adviser to receive and
retain such compensation. These rules further require that commissions paid to
the Distributor, any Adviser, or any such affiliate of any Adviser by the Trust
for such exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." In addition, an
Adviser may direct commission business to one or more designated broker/dealers
in connection with such broker/dealer's provision of services to the Trust or
the Funds or payment of certain Trust expenses, such as custody, pricing and
professional fees. The Trustees, including those who are not "interested
persons" of the Trust, have adopted procedures for evaluating the reasonableness
of commissions paid to the Distributor, the Adviser and affiliates of any
Adviser and will review these procedures periodically.

<PAGE>
-40-

7. DESCRIPTION OF SHARES; VOTING RIGHTS AND LIABILITIES

The Trust's Declaration of Trust permits the Trust to offer separate
portfolios, or funds, of shares of beneficial interest (with no par value). The
Declaration of Trust authorizes the issuance of an unlimited number of shares of
each series and authorizes the division of shares of each series into classes.
Each share of each series represents an equal proportionate interest in that
series, with each other share of the same class. Shareholders of each series are
entitled, upon liquidation or dissolution, to a pro rata share in the net assets
of that series that are available for distribution to shareholders, except to
the extent of different expenses borne by different classes. Shareholders have
no preemptive right or other right to receive, purchase or subscribe for any
additional shares or other securities issued by the Trust. Currently, the Trust
has seventeen active series of shares, each of which is a Fund. Boston 1784 U.S.
Treasury Money Market Fund has three classes of shares authorized: Class A,
Class C and Class D. Class A shares are described in the prospectus for the
Boston 1784 U.S. Treasury Money Market Fund. Class C and D shares have been
authorized but are not currently being offered. All consideration received by
the Trust for shares of any series and all assets in which such consideration is
invested belong to that series and are subject to the liabilities related
thereto. Share certificates will not be issued.

Shares of each series of the Trust are entitled to vote separately to
approve advisory agreements or changes in investment policies, but shares of all
series of the Trust vote together in the election or selection of Trustees and
accountants.

The Declaration of Trust may be amended as authorized by vote of
shareholders of the Trust. Matters not affecting all series or classes of shares
shall be voted on only by the shares of the series or classes affected. Shares
of the Trust may be voted in person or by proxy, and any action taken by
shareholders may be taken without a meeting by written consent of a majority of
shareholders entitled to vote on the matter.

The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Declaration of Trust also provides that the Trust may maintain
appropriate insurance (e.g., fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, 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.

The Declaration of Trust provides that the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, investment adviser or administrator, principal underwriter or
custodian, nor shall any Trustee be responsible for the act or omission of any
other Trustee, and no Trustee shall be liable to the Trust or any Shareholder.
The Declaration of Trust also provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with actual or threatened litigation in which they may be

<PAGE>
-41-

involved because of their offices with the Trust unless it is determined, in the
manner provided in the Declaration of Trust, that they have not acted in good
faith in the reasonable belief that their actions were in the best interests of
the Trust. However, nothing in the Declaration of Trust shall protect or
indemnify a Trustee against any liability for his or her willful misfeasance,
bad faith, gross negligence or reckless disregard of his or her duties.

8. PURCHASE, REDEMPTION AND PRICING OF SHARES

DETERMINATION OF NET ASSET VALUE

The net asset value of the shares of each Fund (including shares of
each class of Boston 1784 U.S. Treasury Money Market Fund) is determined on each
day on which both the New York Stock Exchange is open, except for Columbus Day
and Veterans' Day ("Business Days"). This determination is made once during each
such day, as of 12:00 noon Eastern Time ("ET") with respect to shares of Boston
1784 Prime Money Market Fund and Boston 1784 Tax-Free Money Market Fund, as of
3:00 p.m. ET with respect to the Boston 1784 U.S. Treasury Money Market Fund,
Boston 1784 Institutional U.S. Treasury Money Market Fund and Boston 1784
Institutional Prime Money Market Fund (noon when the New York Stock Exchange
closes early), and as of 4:00 p.m. ET with respect to each other Fund. The New
York Stock Exchange is normally closed on the following national holidays: New
Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas. Net asset value per
share of each Fund is calculated by adding the value of securities and other
assets of that Fund, subtracting liabilities and dividing by the number of its
outstanding shares. Net asset value per share of each class of Boston 1784 U.S.
Treasury Money Market Fund is calculated by adding the value of securities and
other assets attributable to that class, subtracting liabilities attributable to
that class and dividing by the number of outstanding shares of that class.

Securities of the Money Market Funds will be valued by the amortized
cost method, which involves valuing a security at its cost on the date of
purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which a security's value, as determined by this method, is higher or
lower than the price a Fund would receive if it sold the instrument. During
periods of declining interest rates, the daily yield of these Funds may tend to
be higher than a like computation made by a company with identical investments
utilizing a method of valuation based upon market prices and estimates of market
prices for all of its fund securities. Thus, if the use of amortized cost by a
Fund resulted in a lower aggregate fund value on a particular day, a prospective
investor in that Fund would be able to obtain a somewhat higher yield than would
result from investment in a company utilizing solely market values, and existing
investors in the Fund would experience a lower yield. The converse would apply
in a period of rising interest rates.

The use by the Money Market Funds of amortized cost and the maintenance
by these Funds of a net asset value at $1.00 are permitted by Rule 2a-7 under
the 1940 Act, provided that certain conditions are met. The regulations also
require the Trustees to establish procedures which are reasonably designed to
stabilize the net asset value per share at $1.00 for these Funds. Such
procedures include the

<PAGE>
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determination of the extent of deviation, if any, of these Funds' current net
asset value per share calculated using available market quotations from these
Funds' amortized cost prices per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to shareholders of these Funds, the Trustees are required
to take such corrective action as they deem appropriate to eliminate or reduce
such dilution or unfair results to the extent reasonably practicable. Such
actions may include the sale of Fund instruments prior to maturity to realize
capital gains or losses or to shorten average fund maturity; withholding
dividends; redeeming shares in kind; or establishing a net asset value per share
by using available market quotations. In addition, if any of these Funds incurs
a significant loss or liability, the Trustees have the authority to reduce pro
rata the number of shares of that Fund in the account of each shareholder of
such Fund and to offset each such shareholder's pro rata portion of such loss or
liability from that shareholder's accrued but unpaid dividends or from future
dividends of the affected Fund.

In valuing each of the Stock, Bond and Tax-Exempt Funds' assets, bonds
and other fixed income securities are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the Board of
Trustees of the Trust. In making such valuations, the pricing services may
employ methodologies that utilize actual market transactions, broker-dealer
supplied valuations or other electronic data processing techniques. Equity
securities listed on a domestic securities exchange for which quotations are
readily available, including securities traded over the counter, are valued, by
a pricing service, at the last quoted sale price on the principal exchange on
which they are traded on the valuation date, or, if there is no such reported
sale on the valuation date, at the most recent quoted bid price. Equity
securities which are primarily traded on a foreign exchange are generally
valued, by a pricing service, at the preceding closing value on the exchange.
Securities for which market quotations are not readily available are valued at
their fair value as determined in good faith by the Board of Trustees of the
Trust, or pursuant to procedures adopted by the Board subject to review by the
Board of the resulting valuations.

PURCHASE AND REDEMPTION OF SHARES

Shares of the Fund 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. Shares are purchased at net asset value the next
time it is calculated after your investment is received and accepted by the
Distributor. The Trust reserves the right to suspend sales of shares of any Fund
for any period during which the New York Stock Exchange, an Adviser, the
Administrator or the Custodian is not open for business.

On any business day, you may redeem all or a portion of your shares.
Your transaction will be processed at net asset value the next time it is
calculated after your redemption request in good order is received. Your
redemption proceeds may be delayed for up to 10 business days after purchase to
assure that money from the purchase of shares being redeemed has been received
and collected. A redemption is treated as a

<PAGE>
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sale for tax purposes, and could result in taxable gain or loss in a
non-tax-sheltered account.

The Trust reserves the right to suspend the right of redemption and/or
to postpone the date of payment upon redemption for any period on which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the Securities and Exchange Commission by rule or
regulation) as a result of which disposal or valuation of a Fund's securities is
not reasonably practicable, or for such other periods as the Securities and
Exchange Commission has permitted by order.

Purchase and redemption of shares of Boston 1784 U.S. Treasury Money
Market Fund by Connecticut municipalities and other Connecticut municipal
corporations and authorities, pursuant to the provisions of Section 7-400 of the
Connecticut General Statutes, as from time-to-time amended ("Conn. Gen. Stat.
ss. 7-400"), may be made only through the use of (i) a bank, savings bank or
savings and loan association incorporated under the laws of the State of
Connecticut, (ii) a federally chartered bank, savings bank or savings and loan
association having its principal place of business in the State of Connecticut,
or (iii) such other agent as may be permitted by Conn. Gen. Stat. ss. 7-400.

SYSTEMATIC WITHDRAWAL PLAN

A shareholder (other than a shareholder of Boston 1784 Institutional
U.S. Treasury Money Market Fund or Boston 1784 Institutional Prime Money Market
Fund and holders of Class C or Class D shares of Boston 1784 U.S. Treasury Money
Market Fund) may direct the shareholder servicing agent to send him or her
regular monthly, quarterly, semi-annual or annual payments, as designated on the
Account Application and based upon the value of his or her account. Each payment
under a Systematic Withdrawal Plan ("SWP") must be at least $100, except in
certain limited circumstances. Such payments are drawn from the proceeds of the
redemption of shares held in the shareholder's account (which would be a return
of principal and, if reflecting a gain, would be taxable). To the extent that
redemptions for such periodic withdrawals exceed dividend income reinvested in
the account, such redemptions will reduce, and may eventually exhaust, the
number of shares in the shareholder's account. All dividend and capital gain
distributions for an account with a SWP will be reinvested in additional full
and fractional shares of the applicable Fund at the net asset value in effect at
the close of business on the record date for such distributions.

To initiate a SWP, shares having an aggregate value of at least $10,000
must be held on deposit by the shareholder servicing agent. The shareholder, by
written instruction to the shareholder servicing agent, may deposit into the
account additional shares of the applicable Fund, change the payee, or change
the dollar amount of each payment. The shareholder servicing agent may charge
the account for services rendered and expenses incurred beyond those normally
assumed by the applicable Fund with respect to the liquidation of shares.

No charge is currently assessed against the account, but one could be
instituted by the shareholder servicing agent on 60 days' notice in writing to
the shareholder in the event that the applicable Fund ceases to assume the cost
of these services. Any Fund may terminate any SWP for an account if the value of
the account falls below $5,000 as a result of share redemptions (other than as a
result of a SWP) or an exchange of shares of the Fund for shares of another
Fund. Any such plan may be terminated at any time by either the shareholder or
the applicable Fund.

<PAGE>
-44-

REDEMPTION IN KIND

It is currently the Trust's policy to pay for the redemptions of shares
of the Funds in cash. The Trust retains the right, however, subject to the Rule
18f-1 notice described below, to alter this policy to provide for redemptions in
whole or in part by a distribution in kind of securities held by the Funds, in
lieu of cash. Shareholders may incur brokerage charges and tax liabilities on
the sale of any such securities so received in payment of redemptions.

The Trust filed a Notification of Election pursuant to Rule 18f-1 under
the Investment Company Act of 1940 with the Securities and Exchange Commission
which commits the Boston 1784 Massachusetts Tax-Exempt Income Fund, Boston 1784
Connecticut Tax-Exempt Income Fund, Boston 1784 Rhode Island Tax-Exempt Income
Fund and Boston 1784 Tax-Exempt Medium-Term Income Fund to pay in cash all
requests for redemptions by any shareholder of record, limited in amount with
respect to each shareholder during any 90-day period to the lesser of: (i)
$250,000, or (ii) one percent of the net asset value of the Fund at the
beginning of such period.

9. TAXES

TAX STATUS OF THE FUNDS

Each of the Funds is organized as a series of a Massachusetts business
trust and is treated as a separate entity for federal income tax purposes under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Each
Fund has elected to be treated, and intends to qualify each year, as a
"regulated investment company" under Subchapter M by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of the
Fund's gross income, the amount of Fund distributions (as a percentage of both
the Fund's overall income and, in the case of each of the Tax-Exempt Funds and
the Tax-Free Money Market Fund, its tax-exempt income), and the composition of
the Fund's portfolio assets. Because each Fund intends to distribute all of its
net investment income and net realized capital gains to shareholders in
accordance with the timing requirements imposed by the Code, it is not expected
that the Funds will be required to pay any federal income or excise taxes,
although a Fund's foreign-source income may be subject to foreign taxes. If a
Fund should fail to qualify as a "regulated investment company" in any year, the
Fund would incur a regular corporate federal income tax upon its taxable income
and the Fund's distributions would generally be taxable as ordinary dividend
income to its shareholders.

No Fund will be subject to any Massachusetts income or excise taxes as
long as it qualifies as a separate regulated investment company under the Code.

TAXATION OF FUND DISTRIBUTIONS

Distributions -- General. Shareholders of Funds other than the
Tax-Exempt Funds and the Tax-Free Money Market Fund will have to pay federal
income taxes and may be subject to state or local income taxes on the dividends
and capital gain distributions they receive from those Funds. Dividends from
ordinary income and any distributions from net short-term capital gains are
taxable to shareholders as ordinary income for federal income tax purposes,
whether paid in cash or in additional shares. Distributions of net capital gains
(the excess of net long-term capital gains over net short-term capital losses),
whether paid in cash or in additional shares, are taxable to

<PAGE>
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shareholders as long-term capital gains for federal income tax purposes without
regard to the length of time the shareholders have held their shares. Such
capital gains will generally be taxable to shareholders as if the shareholders
had directly realized gains from the same sources from which they were realized
by the Fund. The Money Market Funds are not expected to make any capital gain
distributions.

Because the Funds other than the Stock Funds do not expect to earn any
dividend income, it is expected that none of their distributions will qualify
for the dividends received deduction for corporations. A portion of each Stock
Fund's ordinary income dividends (but none of its capital gain distributions) is
normally eligible for the dividends received deduction for corporations if the
recipient otherwise qualifies for that deduction with respect to its holding of
Fund shares. Availability of the deduction for particular corporate shareholders
is subject to certain limitations, and deducted amounts may be subject to the
alternative minimum tax or result in certain basis adjustments.

Any Fund dividend that is declared in October, November, or December of
a calendar year, that is payable to shareholders of record in such a month, and
that is paid the following January will be treated as if received by the
shareholders on December 31 of the year in which the dividend is declared. Each
Fund will notify shareholders regarding the federal tax status of distributions
after the end of each calendar year.

Distributions of net capital gains and net short-term capital gains
from any Bond Fund or Tax-Exempt Fund, and any distributions from a Stock Fund,
will reduce the distributing Fund's net asset value per share. Shareholders who
buy shares just before the record date for any such distribution may pay the
full price for the shares and then effectively receive a portion of the purchase
price back as a taxable distribution.

Distributions of a Fund that are derived from interest on obligations
of the U.S. Government and certain of its agencies and instrumentalities (but
generally not from capital gains realized upon the disposition of such
obligations) may be exempt from state and local taxes. Each Fund intends to
advise shareholders of the extent, if any, to which their respective
distributions consist of such interest. Shareholders are urged to consult their
tax advisers regarding the possible exclusion of such portion of their dividends
for state and local income tax purposes.

Distributions by the Tax-Exempt Funds and the Tax-Free Money Market
Fund. The portion of each Tax-Exempt Fund's and the Tax-Free Money Market Fund's
distributions of net investment income that is attributable to interest from
tax-exempt securities will be designated by that Fund as an "exempt-interest
dividend" under the Code and will generally be exempt from federal income tax in
the hands of shareholders so long as at least 50% of the total value of the
Fund's assets consists of tax-exempt securities at the close of each quarter of
the Fund's taxable year. However, distributions of tax-exempt interest earned
from certain securities may be treated as an item of tax preference for
shareholders under the federal alternative minimum tax, and all exempt-interest
dividends may increase a corporate shareholder's alternative minimum tax. The
percentage of income designated as tax-exempt will be applied uniformly to all
distributions by the Fund of net investment income made during each fiscal year
of the Fund and may differ from the percentage of distributions consisting of
tax-exempt interest in any particular month. Shareholders are required to report
exempt-interest dividends received from the Fund on their federal income tax
returns. The exemption of

<PAGE>
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exempt-interest dividends for federal income tax purposes does not necessarily
result in exemption under the tax laws of any state or local taxing authority.

Shareholders of the Tax-Exempt Funds and the Tax-Free Money Market Fund
will have to pay federal income taxes and may be subject to state or local
income taxes on the non exempt-interest dividends (including dividends from
earnings from taxable securities and repurchase transactions) and capital gain
distributions they receive from the Funds under rules corresponding to those set
forth in the preceding section.

DISPOSITION OF SHARES

In general, any gain or loss realized upon a taxable disposition of
shares of a Fund by a shareholder that holds such shares as a capital asset will
be treated as long-term capital gain or loss if the shares have been held for
more than twelve months and otherwise as short-term capital gain or loss. In the
case of the Tax-Exempt Funds and the Tax-Free Money Market Fund, any loss
realized upon a disposition of shares in a Fund held for six months or less will
be disallowed to the extent of any exempt-interest dividends received with
respect to those shares. In the case of all the Funds, any loss realized upon
the disposition of shares in the Fund held for six months or less will (if not
disallowed as described in the preceding sentence) be treated as a long-term
capital loss to the extent of any distributions of net capital gain made with
respect to those shares. Any loss realized upon a disposition of shares may also
be disallowed under rules relating to wash sales.

ADDITIONAL INFORMATION FOR SHAREHOLDERS OF THE TAX-EXEMPT FUNDS

Interest on indebtedness incurred by shareholders to purchase or carry
shares of a Tax-Exempt Fund (or of the Tax-Free Money Market Fund) will not be
deductible for federal income tax purposes and may not be deductible for state
income tax purposes. Exempt-interest dividends are taken into account in
calculating the amount of social security and railroad retirement benefits that
may be subject to federal income tax. Entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities financed by
private activity bonds should consult their tax advisers before purchasing
shares of a Tax-Exempt Fund or the Tax-Free Money Market Fund.

ADDITIONAL INFORMATION RELATING TO FUND INVESTMENTS

Except in the case of the Money Market Funds, the Funds' current
dividend and accounting policies will affect the amount, timing, and character
of distributions to shareholders, and may make an economic return of capital
taxable to shareholders. Any investment by a Fund in zero-coupon bonds, certain
stripped securities including STRIPS, and certain securities purchased at a
market discount will cause the Fund to recognize income prior to the receipt of
cash payments with respect to those securities. In order to distribute this
income and avoid a tax on the Fund, a Fund may be required to liquidate
portfolio securities that it might otherwise have continued to hold, potentially
resulting in additional taxable gain or loss to the Fund.

An investment by a Fund in residual interests of a CMO that has elected
to be treated as a REMIC can create complex tax problems, especially if the Fund
has state or local governments or other tax-exempt organizations as
shareholders.

Fund transactions in options, futures contracts, forward contracts,
short sales "against the box," swaps and related transactions will be subject to
special tax rules that

<PAGE>
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may affect the amount, timing, and character of Fund income and distributions to
shareholders. For example, certain positions held by a Fund on the last business
day of each taxable year will be marked to market (treated as if closed out) on
that day, and any gain or loss associated with the positions will be treated as
60% long-term and 40% short-term capital gain or loss. Certain positions held by
a Fund that substantially diminish its risk of loss with respect to other
positions in its portfolio may constitute "straddles," and may be subject to
special tax rules that would cause deferral of Fund losses, adjustments in the
holding periods of Fund securities, and conversion of short-term into long-term
capital losses. Certain tax elections exist for straddles that may alter the
effects of these rules. The Funds will limit their activities in options,
futures contracts, forward contracts, swaps and related transactions to the
extent necessary to meet the requirements of Subchapter M of the Code.

ADDITIONAL INFORMATION RELATING TO FOREIGN INVESTMENTS

Special tax considerations apply with respect to a Fund's foreign
investments. Investment income received by a Fund from sources within foreign
countries may be subject to foreign taxes. The Funds (other than the
International Equity Fund) do not expect to be able to pass through to
shareholders foreign tax credits or deductions with respect to such foreign
taxes. The United States has entered into tax treaties with many foreign
countries that may entitle the Funds to a reduced rate of tax or an exemption
from tax on such income. The Funds intend to qualify for treaty reduced rates
where available. It is not possible, however, to determine a Fund's effective
rate of foreign tax in advance since the amount of the Fund's assets to be
invested within various countries is not known.

If the International Equity Fund holds more than 50% of its assets in
foreign stock and securities at the close of its taxable year, it may elect to
pass through to its shareholders foreign income taxes paid. If it so elects,
shareholders will be required to treat their pro rata portion of the foreign
income taxes paid by the Fund as part of the amounts distributed to them by the
Fund and thus their portion must be included in their gross income for federal
income tax purposes. Shareholders who itemize deductions would be allowed to
claim a deduction or credit (but not both) on their federal income tax returns
for such amounts, subject to certain limitations. Shareholders who do not
itemize deductions would (subject to such limitations) be able to claim a credit
but not a deduction. No deduction will be permitted to individuals in computing
their alternative minimum tax liability. If the Fund does not qualify or elect
to pass through to the Fund's shareholders foreign income taxes paid by it, its
shareholders will not be able to claim any deduction or credit for any part of
the foreign taxes paid by the Fund.

Foreign exchange gains and losses realized by a Fund will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the applicable Fund.
Occasionally, a Fund may invest in stock of foreign issuers deemed to be
"passive foreign investment companies" for U.S. tax purposes. Any Fund making
such an investment may be liable for U.S. income taxes on certain distributions
and realized capital gains from stock of such issuers. Any Fund making such an
investment also may elect to mark to market its investments in "passive foreign
investment companies" on the last day of each taxable year, which may cause the
Fund to recognize ordinary income prior to the receipt of cash payments with
respect to those investments. In order to distribute that income and avoid a tax
on the Fund, such a Fund may be required to liquidate portfolio securities that
it might otherwise have continued to hold.

<PAGE>
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FOREIGN SHAREHOLDERS

Taxable dividends and certain other payments to persons who are not
citizens or residents of the United States or U.S. entities ("Non-U.S. Persons")
are generally subject to U.S. tax withholding at a rate of 30%, although the 30%
rate may be reduced to the extent provided by an applicable tax treaty. The
Funds intend to withhold tax payments at the rate of 30% (or the lower treaty
rate) on taxable dividends and other payments to Non-U.S. Persons that are
subject to such withholding. Any amounts overwithheld may be recovered by such
persons by filing a claim for refund with the U.S. Internal Revenue Service
within the time period appropriate to such claims. Distributions received from
the Funds by Non-U.S. Persons also may be subject to tax under the laws of their
own jurisdictions.

BACKUP WITHHOLDING

Each of the Funds is required in certain circumstances to apply backup
withholding at the rate of 31% on taxable dividends and (except in the case of
the Money Market Funds) redemption proceeds paid to any shareholder (including a
Non-U.S. Person) who does not furnish to the Fund certain information and
certifications or who is otherwise subject to backup withholding. Backup
withholding will not, however, be applied to payments that have been subject to
30% withholding.

The foregoing is only a brief summary of some of the important tax
considerations generally affecting the taxation of shareholders that are subject
to personal income tax. Potential investors, including in particular, investors
who may be subject to other taxes, such as corporate franchise tax, corporate
income tax and taxes of other jurisdictions, should consult their own tax
advisers.

10. PERFORMANCE INFORMATION

CALCULATION OF YIELD

From time to time, the Trust advertises the "current yield" and
"effective yield" (also referred to as "effective compound yield") of the Money
Market Funds. Both yield figures are based on historical earnings and are not
intended to indicate future performance. The "current yield" of a Fund refers to
the income generated by an investment in that Fund over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment.

The current yield of these Funds will be calculated daily based upon the
seven days ending on the date of calculation ("base period"). The yield is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7).

<PAGE>
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Realized and unrealized gains and losses are not included in the calculation of
the yield.

The effective compound yield of these Funds is determined by computing
the net change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:

Effective Yield = (Base Period Return + 1) (365/7) - 1.

The current and the effective yields reflect the reinvestment of net
income earned daily on fund assets.

The yield of the Money Market Funds fluctuates, and the annualization of
a week's dividend is not a representation by the Trust as to what an investment
in a Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments the
Fund invests in, changes in interest rates on money market instruments, changes
in the expenses of the Fund and other factors.

Yields are one basis upon which investors may compare these Funds with
other money market funds. However, yields of other money market funds and other
investment vehicles may not be comparable because of the factors set forth above
and differences in the methods used in valuing fund instruments.

From time to time the Trust may advertise a 30-day yield for each of
the Stock, Tax-Exempt and Bond Funds. These figures will be based on historical
earnings and are not intended to indicate future performance. The yield of these
Funds refers to the annualized net investment income per share generated by an
investment in the Funds over a specified 30-day period. The yield is calculated
by assuming that the income generated by the investment during that 30-day
period is generated over one year and is shown as a percentage of the
investment. In particular, yield will be calculated according to the following
formula:

Yield = 2 [((a-b)/cd + 1)6 - 1]

Where:

a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursement);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of the period.

The Trust may also advertise a tax-equivalent yield for the Tax-Free
Money Market Fund and each of the Tax-Exempt Funds. The tax-equivalent yield is
determined by calculating the rate of return that would have to be achieved on a
fully-taxable investment to produce the after-tax equivalent of a Fund's yield,
assuming certain tax brackets for a shareholder. The tax-equivalent yield
quotation of a Fund will

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be calculated by dividing that portion of the Fund's yield that is tax-exempt by
1 minus a stated income tax rate and adding the quotient to that portion, if
any, of the Fund's yield that is not tax-exempt. The tax-equivalent effective
yield is determined by dividing that portion of the Fund's effective yield that
is tax-exempt by 1 minus a stated income tax rate and adding the quotient to
that portion, if any, of the Fund's effective yield that is not tax-exempt.

CALCULATION OF TOTAL RETURN

From time to time the Trust may advertise total return for a Fund. The
total return of a Fund refers to the average compounded rate of return on a
hypothetical investment for designated time periods (including, but not limited
to, the period from which the Fund commenced operations through the specified
date), and assumes that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula:

P (1 + T)n = ERV
Where:

P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value (as of the end of the
designated time period) of a hypothetical $1,000 payment
made at the beginning of the designated time period.

Total returns calculated for the Florida Tax-Exempt Income Fund for any
period which includes periods prior to the commencement of the Fund's operations
reflect the performance of a common trust fund managed by BankBoston that
contributed all of its assets to the Fund at the Fund's commencement of
operations. The performance of the common trust fund was calculated in
accordance with recommended standards of the Association for Investment
Management and Research. The common trust fund had investment objectives,
policies and practices materially equivalent to those of the Florida Tax-Exempt
Income Fund. All total return percentages for periods prior to the commencement
of operations of the Florida Tax-Exempt Income Fund reflect historical rates of
return of the common trust fund for those periods adjusted to assume that all
current Fund charges, expenses and fees were then deducted. The common trust
fund was neither registered under the 1940 Act (and therefore was not subject to
certain investment restrictions imposed by the 1940 Act) nor subject to the
requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended, as to the nature of of portfolio assets. If the common trust fund had
been registered under the 1940 Act, its investment performance might have been
adversely affected. The prior performance of the common trust fund represents
historical performance for similarly managed accounts and is not indicative of
the corresponding Fund's future performance.

Set forth below is total rate of return information, assuming that
dividends and capital gains distributions, if any, were reinvested, for the
Tax-Exempt, Bond and Stock Funds for the periods indicated.

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REDEEMABLE VALUE OF A
HYPOTHETICAL $1,000
ANNUALIZED TOTAL INVESTMENT AT THE
FUND AND PERIOD RATE OF RETURN END OF THE PERIOD

BOSTON 1784 TAX-EXEMPT
MEDIUM-TERM INCOME FUND

June 14, 1993 (commencement of
operations) to May 31, 1999 6.18% $1,429.57

Five years ended May 31, 1999 6.59% $1,375.75

Three years ended May 31, 1999 7.06% $1,226.98

One year ended May 31, 1999 4.24% $1,042.48

BOSTON 1784 CONNECTICUT
TAX-EXEMPT INCOMEFUND

August 1, 1994 (commencement of
operations) to May 31, 1999 6.58% $1,360.09

One year ended May 31, 1999 3.72% $1,037.21

BOSTON 1784 FLORIDA TAX-
EXEMPT INCOME FUND (1)

January 1, 1991 (date of
initial public investment
in the common trust fund)
to May 31, 1999 6.56% $1,707.05

Five years ended May 31, 1999 5.93% $1,334.02

Three years ended May 31, 1999 6.36% $1,203.19

One year ended May 31, 1999 3.89% $1,038.90

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BOSTON 1784 MASSACHUSETTS
TAX-EXEMPT INCOME FUND

June 14, 1993 (commencement of
operations) to May 31, 1999 5.50% $1,375.84

Five years ended May 31, 1999 5.96% $1,335.46

Three years ended May 31, 1999 6.75% $1,216.59

One year ended May 31, 1999 4.10% $1,041.05

BOSTON 1784 RHODE ISLAND
TAX-EXEMPT INCOME FUND

August 1, 1994 (commencement of
operations) to May 31, 1999 6.34% $1,354.47

One year ended May 31, 1999 4.11% $1,041.09

BOSTON 1784 U.S. GOVERNMENT
MEDIUM-TERM INCOME FUND

June 7, 1993 (commencement of
operations) to May 31, 1999 5.15% $1,349.94

Five years ended May 31, 1999 6.33% $1,359.28

Three years ended May 31, 1999 6.46% $1,206.74

One year ended May 31, 1999 3.73% $1,037.33

BOSTON 1784 SHORT-TERM INCOME FUND

July 1, 1994 (commencement of
operations) to May 31, 1999 6.03% $1,333.39

One year ended May 31, 1999 4.70% $1,046.99

BOSTON 1784 INCOME FUND

July 1, 1994 (commencement of
operations) to May 31, 1999 6.71% $1,375.86

One year ended May 31, 1999 2.83% $1,028.32

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BOSTON 1784 ASSET ALLOCATION FUND

June 14, 1993 (commencement of
operations) to May 31, 1999 12.15% $1,981.40

Five years ended May 31, 1999 14.69% $1,984.34

Three years ended May 31, 1999 13.61% $1,466.46

One year ended May 31, 1999 5.92% $1,059.19

BOSTON 1784 GROWTH AND INCOME FUND

June 7, 1993 (commencement of
operations) to May 31, 1999 16.38% $2,478.59

Five years ended May 31, 1999 18.34% $2,320.72

Three years ended May 31, 1999 16.20% $1,569.01

One year ended May 31, 1999 4.65% $1,046.49

BOSTON 1784 GROWTH FUND

March 28, 1996 (commencement of
operations) to May 31, 1999 9.45% $1,331.97

One year ended May 31, 1999 (3.54)% $ 964.64

BOSTON 1784 INTERNATIONAL EQUITY FUND

January 3, 1995 (commencement of
operations) to May 31, 1999 7.74% $1,397.79

One year ended May 31, 1999 (4.85)% $ 951.50

(1) Without giving effect to fee waivers and reimbursements currently in effect
the annualized total rate of return for Boston 1784 Florida Tax-Exempt Income
Fund for the one, three and five year periods ended May 31, 1999 and for the
period from January 1, 1991 (date of initial public investment in common trust
fund) to May 31, 1999, would have been 3.89%, 6.36%, 5.93% and 6.56%,
respectively.

The annualized yield of each of the Tax-Exempt, Bond and Stock Funds
for the 30-day period ended on May 31, 1999 was as follows: Boston 1784
Short-Term Income Fund 5.21%; Boston 1784 Income Fund 5.66%; Boston 1784 U.S.
Government Medium-

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Term Income Fund 5.17%; Boston 1784 Tax-Exempt Medium-Term Income Fund 4.15%;
Boston 1784 Connecticut Tax-Exempt Income Fund 4.09%; Boston 1784 Massachusetts
Tax-Exempt Income Fund 4.03%; Boston 1784 Rhode Island Tax-Exempt Income Fund
4.21%; Boston 1784 Florida Tax-Exempt Income Fund 4.05%; Boston 1784 Asset
Allocation Fund 2.44%; Boston 1784 Growth and Income Fund 0.43%; and Boston 1784
Growth Fund 0.15%.

The annualized tax-equivalent yield of each of the Tax-Exempt Funds for
the 30-day period ended on May 31, 1999 was as follows: Boston 1784 Tax-Exempt
Medium-Term Income Fund 6.87%; Boston 1784 Connecticut Tax-Exempt Income Fund
7.32%, Boston 1784 Massachusetts Tax-Exempt Income Fund 8.33%; and Boston 1784
Rhode Island Tax-Exempt Income Fund 8.04%; Boston 1784 Florida Tax-Exempt Income
Fund 6.71%.

Set forth below is total rate of return information, assuming that
dividends and capital gains distributions, if any, were reinvested, for the
Money Market Funds for the periods indicated.

REDEEMABLE VALUE OF A
HYPOTHETICAL $1,000
ANNUALIZED TOTAL INVESTMENT AT THE
FUND AND PERIOD RATE OF RETURN END OF THE PERIOD

BOSTON 1784 TAX-FREE MONEY
MARKET FUND

June 14, 1993 (commencement of
operations) to May 31, 1999 3.14% $1,202.27

Five years ended May 31, 1999 3.28% $1,175.19

Three years ended May 31, 1999 3.19% $1,098.72

One year ended May 31, 1999 3.01% $1,030.12

BOSTON 1784 U.S. TREASURY
MONEY MARKET FUND

June 7, 1993 (commencement of
operations) to May 31, 1999 4.52% $1,302.30

Five years ended May 31, 1999 4.88% $1,268.92

Three years ended May 31, 1999 4.81% $1,151.34

One year ended May 31, 1999 4.55% $1,045.46

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BOSTON 1784 INSTITUTIONAL
U.S. TREASURY MONEY MARKET FUND

June 30, 1993 (commencement of
operations) to May 31, 1999 4.85% $1,324.35

Five years ended May 31, 1999 5.19% $1,287.61

Three years ended May 31, 1999 5.14% $1,162.35

One year ended May 31, 1999 4.90% $1,049.02

BOSTON 1784 PRIME MONEY MARKET FUND (1)

August 1, 1991 (date of initial public
investment) to May 31, 1999 4.45% $1,404.14

Five years ended May 31, 1999 5.02% $1,277.44

Three years ended May 31, 1999 4.59% $1,157.26

One year ended May 31, 1999 4.78% $1,047.77

BOSTON 1784 INSTITUTIONAL
PRIME MONEY MARKET FUND

November 5, 1997 (date of initial
public investment) to May 31, 1999 5.26% $1,083.51

One year ended May 31, 1999 5.10% $1,051.00

(1) The Prime Money Market Fund is the successor through a reorganization with
the BayFunds Money Market Portfolio. The BayFunds Money Market Portfolio was a
portfolio of BayFunds, an open-end investment company registered under the 1940
Act and reorganized with the Prime Money Market Fund on December 9, 1996.

The annualized yield and tax-equivalent yield of Boston 1784 Tax-Free
Money Market Fund for the seven-day period ended May 31, 1999 were 3.02% and
5.00%, respectively, and the effective compound annualized yield and
tax-equivalent effective yield of Boston 1784 Tax-Free Money Market Fund for
such period were 3.07% and 5.08%, respectively.

The annualized yield of Boston 1784 U.S. Treasury Money Market Fund for
the seven-day period ended May 31, 1999 was 4.18% and the effective compound
annualized yield of Boston 1784 U.S. Treasury Money Market Fund for such period
was 4.27%.

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The annualized yield of Boston 1784 Institutional U.S. Treasury Money
Market Fund for the seven-day period ended May 31, 1999 was 4.50% and the
effective compound annualized yield of Boston 1784 Institutional U.S.
Treasury Money Market Fund for such period was 4.60%.

The annualized yield of Boston 1784 Prime Money Market Fund for the
seven-day period ended May 31, 1999 was 4.23% and the effective compound
annualized yield of Boston 1784 Prime Money Market Fund for such period was
4.31%.

The annualized yield of Boston 1784 Institutional Prime Money Market
Fund for the seven-day period ended May 31, 1999 was 4.65% and the effective
compound annualized yield of Boston 1784 Institutional Prime Money Market Fund
for such period was 4.76%.

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. In
reports and other communications to shareholders or in advertising and sales
literature, the Funds may also present statistics on current and historical
rates of Money Market Deposits Accounts and Statement Savings prepared by
outside services such as Bank Rate Monitor, Inc. The Funds may also show the
historical performance of other investment vehicles or groups of other mutual
funds, and compare this performance to the historical performance of the Funds,
and may compare tax equivalent yields to taxable yields. Any given "performance"
or performance comparison should not be considered as representative of any
performance in the future. In addition, there may be differences between the
Funds and the various indexes and reporting services which may be quoted by the
Funds.

11. FINANCIAL STATEMENTS

FOR THE PRIME MONEY MARKET FUND

The Statement of Net Assets at May 31, 1999, the Statements of
Operations for the period ended May 31, 1999, the Statements of Changes in Net
Assets for the periods ended May 31, 1998 and May 31, 1999, the Financial
Highlights for the periods ended December 31, 1997, May 31, 1998 and May 31,
1999, the Notes to the Financial Statements and the Report of Independent
Accountants, each of which is included in the Annual Reports to Shareholders of
the Trust (Accession Numbers 0000935069-98-000115 and 0000935069-98-000114), are
incorporated by reference into this Statement of Additional Information and have
been so incorporated in reliance upon the report of PricewaterhouseCoopers LLP,
independent accountants, as experts in accounting and auditing. The Financial
Highlights for the periods ended December 31, 1994, December 31, 1995 and
December 31, 1996 are included in the Annual Reports to Shareholders of the
Trust and are incorporated by reference into this Statement of Additional
Information and have been so incorporated in reliance upon the report of other
independent auditors, given upon the authority of such auditors as experts in
accounting and auditing. A copy of the Annual Report accompanies this Statement
of Additional Information.

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FOR THE REMAINDER OF THE FUNDS

<PAGE>

APPENDIX A

CERTAIN INFORMATION CONCERNING
CONNECTICUT, FLORIDA, MASSACHUSETTS AND RHODE ISLAND

1. CONNECTICUT

SPECIAL CONSIDERATIONS REGARDING INVESTMENTS IN
CONNECTICUT MUNICIPAL SECURITIES

The following is a summary of certain information contained in the
Preliminary Official Statement of Connecticut dated June 15, 1999. The summary
does not purport to be a complete description and is current as of the date of
the corresponding information statement. The Funds are not responsible for the
accuracy or timeliness of this information.

Connecticut municipal securities may fluctuate in value in response to
a variety of factors, including the economic strength of State and local
governments and the availability of federal funding.

ECONOMIC OVERVIEW

Connecticut's economy is diverse. Manufacturing employment has been on
a downward trend since the mid-1980s, while non-manufacturing employment has
recovered most of its losses from its peak in the late 1980s. Manufacturing is
diversified, with transportation equipment (primarily aircraft engines,
helicopters, and submarines) the dominant industry. Connecticut is a leading
producer of aircraft engines and parts, submarines, and helicopters. The largest
employers in these industries are United Technologies Corporation, including its
Pratt and Whitney Aircraft Division, with headquarters in East Hartford, and
Sikorsky Aircraft Division in Stratford, as well as General Dynamics
Corporation's Electric Boat Division in Groton.

During the past ten years, Connecticut's manufacturing employment was
at its highest in 1988 at over 372,230 workers. Since that year, employment in
manufacturing has been on a downward trend, declining 25.8 percent or a loss of
96,030 jobs by 1997 from 1988 levels. A number of factors, such as the
overvalued dollar of the mid 1980s, heightened foreign competition, a sharp
decrease in defense spending, and improved productivity played a significant
role in affecting the overall level of manufacturing employment. However, in
1997, total manufacturing jobs in Connecticut registered a gain of 1,400 jobs or
0.5% over 1996.

Over the past several decades the non-manufacturing sector of the
State's economy has risen in economic importance, from just over 50 percent of
total State employment in 1950 to approximately 83 percent by 1997. This trend
has decreased the State's dependence on manufacturing. The State's
non-manufacturing sector expanded by 2.4 percent in 1997 as compared to 2.0
percent in 1996 and 1.9 percent in 1995. This trend, which began in 1993,
reversed three years of decline starting in 1990. During the 1990's,
Connecticut's growth in non-manufacturing employment has lagged that of the New
England region and the nation as a whole.

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The non-manufacturing sector is comprised of industries that typically
provide a service. The four major industries in terms of employment are:
services, retail and wholesale trade, state and local government, as well as
finance, insurance and real estate ("FIRE"), which collectively comprise about
90 percent of employment in the non-manufacturing sector.

After enjoying an extraordinary boom during the mid-1980s, Connecticut,
as well as the rest of the Northeast, experienced an economic slowdown before
the onset of the national recession which occurred at the beginning of the
1990s. Reflecting the downturn, the unemployment rate in the State rose from a
low of 3 percent in 1988 to just above the national average of 7.5 percent
during 1992.

FISCAL CONDITION IN RECENT YEARS

The State finances most of its operation through its General Fund. The
major components of General Fund revenues are State taxes, including the
personal income tax, the sales and use tax, and the corporation business tax.
Miscellaneous fees, receipts, transfers, and unrestricted Federal grants account
for most of the other General Fund revenue. A cumulative budgetary-basis deficit
in the General Fund as of June 30, 1991 in the amount of $965,711,525 was funded
by the issuance of General Obligation Economic Recovery Notes. In fiscal year
1996-97 an appropriation was made to pay when due the remaining debt service due
on the Economic Recovery Notes. The final payment is due in fiscal year 1998-99.

GENERAL FUND BUDGETS 1997-98, AND 1998-99

1997-1998 OPERATING RESULTS

Per Section 3-115 of the Connecticut General Statutes and Article IV,
Section 24 of the State Constitution, the State's official budgetary basis
fiscal position for the fiscal year ended June 30, 1998 is reported by the
Comptroller. This report indicates 1997-98 fiscal year General Fund expenditures
of $9,829.3 million, General Fund revenues of $10,142.2 million and a surplus of
$312.9 million, (excluding Restricted Federal and Other Grants).

Per Section 4-30a of the Connecticut General Statutes, any
unappropriated surplus, up to five percent of General Fund expenditures, shall
be deposited into the Budget Reserve Fund. After the transfer of $161.7 million
which is required to meet the five percent of General Fund expenditures, the
balance of $151.2 million will be used pursuant to Article XXVIII of the
Amendments to the Constitution of Connecticut to reduce bonded indebtedness.

1998-1999 OPERATIONS

Per Section 3-115 of the Connecticut General Statutes, the State's
fiscal position is reported monthly by the Comptroller. This report compares
revenues already received and the expenditures already made to estimated
expenditures to be made during the balance of the fiscal year. This report
estimates 1998-99 fiscal year General Fund expenditures of $9,993.5 million,
General Fund revenues of $10,164.2 million and an estimated operating surplus of
$170.7 million, as a result of an increase in estimated revenues that more than
offset the increase in estimated expenditures. Estimated revenues have been
revised upward by $172.2 million from the enacted budget plan.

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Per Section 4-30a of the Connecticut General Statutes, any
unappropriated surplus, up to five percent of General Fund expenditures, shall
be deposited into the Budget Reserve Fund. After transferring the amount which
is required to meet the five percent of General Fund expenditures, the balance
will be used pursuant to Article XXVIII of the Amendments to the Constitution of
Connecticut to reduce bonded indebtedness.

COMPONENTS OF REVENUE

PERSONAL INCOME TAX

Beginning with the income year commencing on or after January 1, 1991,
the State imposed a personal income tax on the income of residents of the State
(including resident trusts and estates), part-year residents and certain
non-residents who have taxable income derived from or connected with sources
within Connecticut. For tax years commencing on or after January 1, 1992, the
tax imposed is at the rate of 4.5 percent on Connecticut taxable income.
Depending on federal income tax filing status and Connecticut adjusted gross
income, personal exemptions ranging from $12,000 to $24,000 are available to
taxpayers. In addition, tax credits ranging from 1 percent to 75 percent of a
taxpayer's Connecticut tax liability are also available depending upon federal
income tax filing status and Connecticut adjusted gross income. Such exemptions
and tax credits are phased out at certain higher income levels. Neither the
personal exemption nor the tax credit described above is available to a trust or
an estate. Legislation enacted in 1995 effected a graduated rate structure
beginning in tax year 1996. Under this revised structure, the top rate remains
at 4.5 percent with a rate of 3 percent on the first $4,500 of taxable income
for joint filers and the first $2,250 for single filers. For tax year 1997, the
3 percent rate is expanded to the first $9,000 of taxable income for joint
filers and the first $4,500 for single filers. Legislation enacted during the
1997 session expands the amount of taxable income subject to the lower 3 percent
rate. By tax year 1999, the first $20,000 of taxable income for a joint filer
and the first $10,000 of taxable income for a single filer will be taxed at the
3 percent rate. In addition, the maximum $100 income tax credit for property
taxes paid will be expanded to a maximum of $350 per filer. Taxpayers also are
subject to the Connecticut minimum tax based on their liability, if any, for
payment of the federal alternative minimum tax. Legislation enacted in 1998
provided for rebates from $50 to $150 to certain taxpayers filing income tax
returns for the taxable year commencing January 1, 1997, and who have paid
property tax which first came due and was paid in such income year.

SALES AND USE TAX

The Sales Tax is imposed, subject to certain limitations, on the gross
receipts from certain transactions within the State of persons engaged in
business in the State, including (a) sales at retail of tangible personal
property, (b) the rendering of certain services, (c) the leasing or rental of
tangible personal property, (d) the producing, fabricating, processing,
printing, or imprinting of tangible personal property to special order or with
materials furnished by the consumer, (e) the furnishing, preparing or serving of
food, meals, or drinks, and (f) the transfer of occupancy of hotel or lodging
house rooms for a period not exceeding thirty consecutive calendar days. The Use
Tax is
imposed on the consideration paid for certain services or purchases or rentals
of tangible personal property used within the State pursuant to a transaction
not subject to the Sales Tax. A separate rate of 12 percent is charged on the
occupancy of hotel rooms. Effective October 1, 1991, the tax rate for the Sales
and Use Taxes was reduced from

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eight percent to six percent. Various exemptions from the Sales and Use Taxes
are provided, based on the nature, use or price of the property or services
involved or the identity of the purchaser. Tax returns and accompanying payments
with respect to revenues from these taxes are generally due monthly on or before
the last day of the month next succeeding the taxable month.

CORPORATION BUSINESS TAX

The Corporation Business Tax is imposed on any corporation, joint stock
company or association, any dissolved corporation that continues to conduct
business, any electric distribution company or fiduciary of any of the foregoing
which carries on or has the right to carry on business within the State or owns
or leases property or maintains an office within the State or is a general
partner in a partnership or a limited partner in a limited partnership, except
an investment partnership, that does business, owns or leases property or
maintains an office within the State. Section 12-214, as amended, provides for
certain financial services companies to be exempt from this tax. For income
years commencing on or after January 1, 1999, this exemption extends to domestic
insurance companies. The Corporation Business Tax provides for three methods of
computation. The taxpayer's liability is the greatest amount computed under any
of the three methods.

The first method of computation is a tax measured by the net income of
a taxpayer (the "Income-Base Tax"). Net income, except as applied to insurance
companies means federal gross income with limited variations less certain
deductions, most of which correspond to the deductions allowed under the
Internal Revenue Code of 1986, as amended from time to time. In the case of life
insurance companies subject to the Corporation Business Tax, net income means
life insurance company taxable income, as determined for federal income tax
purposes, with certain adjustments. The Income-Base Tax had been levied at the
rate of 10.5 percent until January 1, 1998 when it was decreased to 9.5 percent.
Legislation enacted in 1993 and subsequent years instituted a phase down in the
corporation tax rate so that by the income year commencing on or after January
1, 2000 the corporate rate will be 7.5 percent. The second method of computing
the Corporation Business Tax, from which the domestic insurance companies are
exempted, is an alternative tax on capital. This alternative tax is determined
either as a specific maximum dollar amount or at a flat rate on a defined base,
usually related in whole or in part to its capital stock and balance sheet
surplus, profit and deficit. The third method of computing the Corporation
Business Tax is the minimum tax which is a flat $250. Corporations must compute
their tax under all three methods and pay the tax under the highest computation.

OTHER TAXES

Other tax revenues are derived from the inheritance taxes, taxes on
gross receipts of hospitals and public service corporations, taxes on net direct
premiums of insurance companies, taxes on oil companies, cigarette and alcoholic
beverage excise taxes, real estate conveyance taxes, taxes on admissions, dues
and cabarets and other miscellaneous tax sources.

FEDERAL GRANTS

Federal grants in aid are normally conditioned to some degree,
depending upon the particular program being funded, on resources provided by the
State. More than 99 percent of unrestricted federal grant revenue is expenditure
driven. The largest federal

<PAGE>
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grants in fiscal 1998 were made for the purposes of
providing medical assistance payments to the indigent and Aid to Families with
Dependent Children. The State also receives certain restricted federal grants
which are not reflected in annual appropriations but which nonetheless are
accounted for in the General Fund. In addition, the State receives certain
federal grants which are not accounted for in the General Fund but are allocated
to the Transportation Fund, various Capital Project Funds and other funds.

OTHER NON-TAX REVENUES

Other non-tax revenues are derived from special revenue transfers;
Indian gaming payments; licenses, permits and fees; sales of commodities and
services; rents, fines and escheats; investment income; and other miscellaneous
revenue sources.

YEAR 2000 READINESS

CONNECTICUT'S CURRENT STATE OF READINESS

The State has coordinated a review of its Year 2000 exposures through
its Department of Information Technology ("DOIT"). To date, DOIT has assessed
approximately 1360 computer systems (of the State's approximately 15000 systems)
of which 770 have been categorized as mission critical. As of October 31, 1998,
63% of the programs in mission critical systems requiring remediation had been
converted, and 27% of the testing cycles required to validate compliance in
mission critical systems had been completed. A target date of March 31, 1999 has
been established for completion of remediation and testing activities for
mission critical systems, however, some agency project plans anticipate
completion dates in the second and third quarters.

The State Legislature approved $15.0 million in bonding in 1997-98 for
equipment and related costs of the Year 2000 issue. An additional $80 million
was appropriated to DOIT as part of the 1998-1999 Midterm Budget Adjustments.

The State presently believes that, with modifications to existing
software and converting to new software, the Year 2000 problem will not pose
significant operations problems for the State's computer systems as so modified
or converted. While the State expects its Year 2000 plan to be completed on a
timely basis, there is a risk that the plan will not be completed on time and
that there may not be enough time to adequately test all computer systems for
Year 2000 problems. There is a related risk that testing does not satisfactorily
reveal all Year 2000 software or hardware problems. Also, there can be no
assurance that the systems of other companies on which the State's systems or
service commitments may rely will be completed in a timely fashion. If the
necessary remediations are not completed in a timely fashion, the Year 2000
problem may have a material impact on the operations of the State.

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LITIGATION

The State of Connecticut, its officers and employees, are defendants in
numerous lawsuits. The ultimate disposition of and final consequences of these
lawsuits are not presently determinable. The Attorney General's Office has
reviewed the status of pending lawsuits and reports that it is the opinion of
the Attorney General that such pending litigation will not be determined so as
to result, individually or in the aggregate, in a final judgment against the
State which would materially adversely affect its financial position, except
that in the cases described below the fiscal impact of an adverse decision might
be significant but is not determinable at this time.

The cases described in this section generally do not include any
individual case where the fiscal impact of an adverse judgment is expected to be
less than $15 million, but adverse judgments in a number of such cases could, in
the aggregate and in certain circumstances, have a significant impact.

CONNECTICUT CRIMINAL DEFENSE LAWYERS ASSOCIATION V. FORST is an action
brought in 1989 in Federal District Court alleging a pervasive campaign by the
State and various State Police officials of illegal electronic surveillance,
wiretapping and bugging for a number of years at Connecticut State Police
facilities. The plaintiffs seek compensatory damages, punitive damages, as well
as other damages and costs and attorneys' fees, as well as temporary and
permanent injunctive relief. In November 1991, the court issued an order which
will allow the plaintiffs to represent a class of all persons who participated
in wire or oral communications to, from, or within State Police facilities
between January 1, 1974 and November 9, 1989 and whose communications were
intercepted, recorded and/or used by the defendants in violation of the law.
This class includes a sub-class of the Connecticut State Police Union, current
and former Connecticut State Police officers who are not defendants in this or
any consolidated case, and other persons acting on behalf of the State Police
who participated in oral or wire communications to, from or within State Police
facilities between such dates.

SHEFF V. O'NEILL is a Superior Court action brought in 1989 on behalf
of black and Hispanic school children in the Hartford school district. The
plaintiffs sought a declaratory judgment that the public schools in the greater
Hartford metropolitan area are segregated de facto by race and ethnicity and are
inherently unequal to their detriment. They also sought injunctive relief
against state officials to provide them with an "integrated education". On April
12, 1995, the Superior Court entered judgment for the State. On July 9, 1996,
the State Supreme Court reversed the Superior Court judgment and remanded the
case with direction to render a declaratory judgment in favor of the plaintiffs.
The Court directed the legislature to develop appropriate measures to remedy the
racial and ethnic segregation in the Hartford public schools. The Supreme Court
also directed the Superior Court to retain jurisdiction of this matter. The 1997
General Assembly enacted P.A. 97-290, An Act Enhancing Educational Choices and
Opportunities in response to the Supreme Court decision. In response to a motion
filed by the plaintiffs, the Superior Court recently ordered the State to show
cause as to whether there has been compliance with the Supreme Court's ruling.

THE CONNECTICUT TRAUMATIC BRAIN INJURY ASSOCIATION, INC. V. HOGAN is a
Federal District Court civil rights action brought in 1990 on behalf of all
persons with retardation or traumatic brain injury who have been, or may be,
placed in Norwich, Fairfield Hills or Connecticut Valley Hospitals. The
plaintiffs claim that the treatment and training they need is unavailable in
state hospitals for the mentally ill and that placement in those hospitals
violates their constitutional rights. The plaintiffs seek

<PAGE>
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relief which would require that the plaintiff classmembers be transferred to
community residential settings with appropriate support services. This case has
been settled as to all persons with mental retardation by their eventual
discharge from Norwich and Fairfield Hills Hospital. The case is still
proceeding as to those persons with traumatic brain injury and the class of
plaintiffs has been expanded to include persons with acquired brain injury who
are in the custody of the Department of Mental Health and Addiction Services.
The Court in 1998 expanded the class of plaintiffs to include persons who are or
have been in the custody of the Department of Mental Health and Addiction
Services at any time during the pendency of the case without reference to a
particular facility.

JOHNSON V. ROWLAND is a Superior Court action brought in 1998 in the
name of several public school students and the Connecticut municipalities in
which the students reside, seeking declaratory judgment that the State's current
system of financing public education through local property taxes and State
payments to municipalities determined under a Statutory Education Cost Sharing
("ECS") formula violates the Connecticut Constitution. Additionally, the suit
seeks various injunctive orders requiring the State to, among other things,
cease implementation of the present system, modify the ECS formula and fund the
ECS formula at the level contemplated in the original 1988 public act which
established the ECS.

Several suits have been filed since 1977 in the Federal District Court
and the Connecticut Superior Court on behalf of alleged INDIAN TRIBES in various
parts of the State, claiming monetary recovery as well as ownership to land in
issue. Some of these suits have been settled or dismissed. The plaintiff group
in the remaining suits is the alleged Golden Hill Paugussett Tribe and the lands
involved are generally located in Bridgeport, Trumbull, Orange, Shelton and
Seymour. There may be additional suits filed by other alleged Indian Tribes
claiming ownership of land located in the State of Connecticut but to which the
State is not a party. One such claim involves the alleged Schaghticoke Indian
Tribe claiming privately and town held lands in the Town of Kent.

2. FLORIDA

SPECIAL CONSIDERATIONS REGARDING INVESTMENTS IN
FLORIDA MUNICIPAL SECURITIES

The following is a summary of certain information contained in the
Official Statement Relating to $306,910,000 State of Florida State Board of
Education, Public Education Capital Outlay Refunding Bonds, 1999 Series A, dated
August 20, 1999. The summary does not purport to be a complete description and
is current as of the date of the statement. The Funds are not responsible for
the accuracy or timeliness of this information.

NATIONAL AND STATE ECONOMIC OUTLOOK

The national economic forecast indicates slower growth during the next
two fiscal years. Real GDP is expected to increase 3.3 percent in 1998-99 and
2.2 percent in 1999-00. Real private fixed non-residential business investment
is anticipated to expand 7.9 percent in 1988-99 and 4.5 percent next year, while
real consumption should increase 4.4 percent this year and 2.6 percent next
year. Underlying the official national economic forecast are key assumptions
regarding fiscal policy, monetary policy, and prices. On the monetary side, the
Federal Reserve is expected to undertake a series of interest rate

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-8-

cuts to avoid financial turmoil and recession in the U.S. Inflation, as measured
by the Consumer Price Index, is expected to remain under control, averaging 1.9
percent in 1998-99 and 2.3 percent in 1999-00. The federal budget surplus (NAPA
basis) is forecasted to be $87.4 billion in 1998-99 and $77.5 billion the next
year.

In other areas of the U.S. economy, construction activity will begin to
soften in 1998-99 and continue to decrease slightly in 1998-99. Housing starts
should reach 1.6 million units this year and 1.5 million next year. The stock
market, as measured by the S&P Index, is expected to increase 16.4 percent in
1998-99 and 9.2 percent in 1999-00. Total employment will expand 1.1 percent in
1998-99 and 1.4% percent the next year. The unemployment rate is expected to
average 4.5 percent this year and 4.6 percent next year.

While the Florida economy will also slow, it is expected to continue
outperforming the U.S. The Florida economy is also forecasted to grow more
slowly in 1999-00 than in 1998-99. Real personal income in Florida is forecasted
to increase 4.9% in 1998-99 and 3.5% in 1999-00. During this time, real personal
income per capita will grow 3.1% and 1.8%.

Total nonfarm jobs are expected to increase 3.4% in 1998-99, and 2.9%
in 1999-00, reaching almost 7.0 million. Trade and services account for more
than half of all nonfarm jobs. Service jobs are forecasted to grow 5.5% in
1998-99, and 4.4% in 1999-00. Trade jobs will grow 2.8% the first year and 2.8%
the next year. Florida's unemployment rate is expected to be 4.5% in 1998-99 and
4.7% in 1999-00.

An important element of Florida's economic outlook is the construction
sector. Florida's single and multi-family private housing starts are projected
to reach a combined total of 144,000 units in 1998-99 and 143,000 units the
following year. Multi-family starts have been slow to recover from the early
90's recession, but they are showing strength with an expected 46,500 starts in
1998-99, and 46,300 starts in 1999-00. Single family starts are forecasted to be
97,600 in 1998-99, and 96,700 starts in 1999-00. Total construction expenditures
will increase 8.6 percent and 2.5 percent during the two years.

Tourist arrivals are forecasted to increase 2.0 percent in 1998-99 and
1.7 percent the following year. Air tourists will increase 3.2 percent and 3.9
percent, while auto tourists will increase 0.6 percent and -1.0 percent, during
this time. By the end of 1998-99, 49.7 million domestic and international
tourists are expected to visit the State. In 1999-00 tourist visits should reach
50.6 million.

FLORIDA FINANCIAL OUTLOOK

For fiscal year 1998-99, the estimated General Revenue plus Working
Capital and Budget Stabilization funds available total $19,463.7 million, a 5.1
percent increase over 1997-98. The $17,692.4 million in Estimated Revenues
represent a 4.4 percent increase over the analogous figure in 1997-98. With
combined General Revenue, Working Capital Fund, and Budget Stabilization Fund
appropriations at $18,185.0 million, including a $100.9 million transfer to the
Budget Stabilization Fund, unencumbered reserves at the end of 1998-99 are
estimated at $1,379.6 million.

For fiscal year 1999-00, the estimated General Revenues plus Working
Capital and Budget Stabilization funds available total $19,923.7 million, a 2.4
percent increase

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over 1998-99. The $18,386.1 million in Estimated Revenues represent a 3.9
percent increase over the analogous figure in 1998-99.

REVENUES AND EXPENDITURES

Financial operations of the State of Florida covering all receipts and
expenditures are maintained through the use of four fund types: the General
Revenue Fund, Trust Funds, the Working Capital Fund, and the Budget
Stabilization Fund.

In fiscal year 1996-97, an estimated 67 percent of total direct
revenues to these funds were derived from State taxes and fees. Federal funds
and other special revenues accounted for the remaining revenues. Major sources
of tax revenues to the General Revenue Fund are the sales and use tax, corporate
income tax, intangible personal property tax, beverage tax, and estate tax which
amounted to 68 percent, 8 percent, 4 percent, 3 percent and 3 percent,
respectively, of total General Revenue funds available.

State expenditures are categorized for budget and appropriation
purposes by the type of fund and spending unit, which are further subdivided by
line item. In fiscal year 1996-97, appropriations from the General Revenue Fund
for education, health and welfare, and public safety amounted to approximately
53 percent, 26 percent, and 14 percent, respectively, of total General Revenue
funds available.

SALES AND USE TAX

The largest single source of tax receipts in Florida is the sales and
use tax. The sales tax is 6 percent of the sales price of tangible personal
property sold at retail in the State. The use tax is also 6 percent of the cost
price of tangible personal property when the same is not sold but is used, or
stored for use in the State. The use tax also applies to the use in the State of
tangible personal property purchased outside Florida which would have been
subject to the sales tax if purchased from a Florida dealer.

All receipts of the sales and use tax, with the exception of the tax on
gasoline and special fuels, are credited to either the General Revenue Fund, the
Solid Waste Management Trust Fund, or counties and cities. For the State fiscal
year which ended June 30, 1997, total receipts from this source were $12,089
million, an increase of 5.5 percent from the prior fiscal year.

MOTOR FUEL TAX

The second largest source of State tax receipts, including those
distributed to local governments, is the tax on motor fuels. Preliminary data
show collections from this source in State fiscal year ending June 30, 1997 were
$2,012 million. However, these revenues are almost entirely dedicated trust
funds for specific purposes and are not included in the State General Revenue
Fund.

ALCOHOLIC BEVERAGE TAX

Florida's alcoholic beverage tax is an excise tax on beer, wine, and
liquor. The tax is one of the State's major tax sources, with revenues totaling
$447.2 million in State

fiscal year ending June 30, 1997. Two percent of collections are deposited into
the Alcoholic Beverage and Tobacco Trust Fund, while the remainder of revenues
are deposited into the General Revenue Fund.

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The 1990 Legislature established a surcharge on alcoholic beverages.
This charge is levied on alcoholic beverages sold for consumption on premises.
The surcharge is ten cents per ounce of liquor, ten cents per four ounces of
wine, and four cents per twelve ounces of beer. In fiscal year 1996-97, a total
of $106.6 million was collected. Of these collections, the Children and
Adolescent Substance Abuse Trust Fund receives 9.8 percent, while the remainder
is deposited to the credit of the General Revenue Fund.

CORPORATE INCOME TAX

Pursuant to an amendment to Article VII, Section 5, of the State
Constitution, the Legislature of the State of Florida adopted, effective January
1, 1972, the "Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations, and other artificial entities for the
privilege of conducting business, deriving income, or existing within the State.
This tax does not apply to natural persons who engage in a trade or business or
profession under their own or any fictitious name, whether individually as
proprietorships or in partnerships with others, estates of decedents or
incompetents, or testamentary trusts.

All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year which ended June 30, 1997, receipts from this
source were $1,362.3 million, an increase of 17.2 percent from fiscal year
1995-96.

DOCUMENTARY STAMP TAX

Deeds and other documents relating to realty are taxed at 70 cents per
$100 of consideration, while Corporate shares, bonds, certificates of
indebtedness, promissory notes, wage assignments, and retail charge accounts are
taxed at 35 cents per $100 of face value, or actual value if issued without face
value. Documentary stamp tax collections totaled $844.2 million during fiscal
year 1996-97, posting a 8.9 percent increase from the previous fiscal year.

GROSS RECEIPTS TAX

The tax rate is 2.5 percent of the gross receipts of providers of
electric, natural gas, and telecommunications services.

All gross receipts utilities tax collections are credited to the Public
Education Capital Outlay and Debt Service Trust Fund. In fiscal year 1996-97,
gross receipts utilities tax collections totaled $575.7 million, an increase of
6.0 percent over the previous fiscal year.

INTANGIBLE PERSONAL PROPERTY TAX

This tax is levied on two distinct bases. First, stocks, bonds,
including bonds secured by liens on Florida realty, notes, governmental lease
holds, interests in limited partnerships registered with the Securities and
Exchange Commission, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2 mills.
Second, there is a non-recurring 2 mill tax on mortgages and other obligations
secured by liens on Florida realty.

The Department of Revenue uses part of the proceeds for administrative
costs. Of the remaining tax proceeds, 33.5 percent is distributed to the County
Revenue Sharing Trust Fund and 66.5 percent is distributed to the General
Revenue Fund.

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In fiscal year 1996-97 total intangible personal property tax
collections were $952.4 million, a 6.3 percent increase from the prior year.

ESTATE TAX

An estate tax is imposed on the estate for the privilege of
transferring property at death. The tax on estates of resident decedents is
equal to the amount allowable as a credit against federal estate tax for state
death taxes paid, less any amount paid to other states. Thus, the Florida estate
tax on resident decedents will not increase the total tax liability of the
estate. The tax on estates of nonresident decedents is equal to the amount
allowable as a credit against federal estate tax for state death taxes paid
multiplied by the ratio of the value of the property taxable in Florida over the
value of the entire gross estate.

All receipts of the estate tax are credited to the General Revenue
Fund. For the fiscal year which ended June 30, 1997, receipts from this source
were $546.9 million, an increase of 30 percent from fiscal year 1995-96.

LOTTERY

In November 1986 the voters of the State of Florida approved a
constitutional amendment that allows State operated lotteries. Section 15,
Article X of the Florida Constitution provides for State lotteries, with the
proceeds being dedicated exclusively to education. The 1987 Legislature passed
Chapter 24, Florida Statutes, creating the Department of the Lottery to operate
the State Lottery and setting forth the allocation of the revenues. Of the
revenues generated by the Lottery, 50 percent is to be returned to the public as
prizes; at least 38 percent is to be deposited in the Educational Enhancement
Trust Fund (for public education); and no more than 12 percent can be spent on
the administrative cost of operating the lottery.

Fiscal year 1996-97 produced gross revenues of $2.09 billion of which
education received approximately $792.3 million.

YEAR 2000

The Governor's Office of Planning and Budgeting, the Senate and the
House of Representatives created a Year 2000 Task Force in 1997 to provide
direction to State agencies for addressing potential year 2000 date change
problems. The Year 2000 Task Force, which meets monthly, is comprised of
representatives of the Governor's Office of Planning and Budgeting, the
Department of Management Services and the Department of Banking and Finance. The
Task Force also includes ex-officio representatives from the Senate and the
House of Representatives.

The Year 2000 Task Force has established a monthly progress reporting
system to monitor remediation in all State agencies, with a special emphasis on
top priority systems and agencies where the impact of potential difficulties is
the highest, based on the number of citizens affected, projected failure date,
if any, and cost to renovate. The top priority systems include systems relating
to sales taxes, central accounting, intangibles taxes and payroll. At the end of
June 1999, agency progress reports showed that Florida had completed 99.8% of
the total agency work estimated to be required to remediate Year 2000 date
calculations in State-developed or contracted systems and that the top priority
systems had 98.8% of the required work completed. Remediation

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of the State's computer systems is expected to cost from $75 to $90 million. The
State has allocated $81 million in State funds and has received an additional
$12 million in federal grants for this purpose. Approximately $11 million
remains on hand as of this date. Most State agencies expect to complete the
remediation of all their computer systems by June, 1999; however, six agencies
(the Departments of Community Affairs, Highway Safety and Motor Vehicles, Law
Enforcement, Education, Elder Affairs, and the Executive Office of the Governor)
expect to complete remediation between July and October, 1999.

The State has adopted a two-part contingency process for its agencies,
based upon critical milestones and dates. The object is for an agency to design
a contingency plan outline, but not to expend resources on a detailed plan until
failure is imminent. A statewide reserve fund has been established to address
unanticipated remediation or testing issues.

The State Legislature has enacted legislation (Chapter 98-331, Laws of
Florida) applying the State's sovereign immunity provision to State and local
government entities in the event of Year 2000 computer system failures, and
granting the Governor the power to transfer State resources if necessary to
address Year 2000 problems in State agencies.

LITIGATION

Due to its size and broad range of activities, the State is involved in
numerous routine legal actions. The departments involved believe that the
results of such litigation pending or anticipated will not materially affect the
State of Florida's financial position.

COASTAL PETROLEUM V. STATE OF FLORIDA, CASE NO. 90-3195, 2ND JUDICIAL
CIRCUIT. This is an inverse condemnation case claiming that the action of the
Trustees and Legislature constitute a taking of Coastal's leases for which
compensation is due. The Circuit judge granted the State's motion for summary
judgment, finding that as a matter of law, the State had not deprived Coastal of
any royalty rights. Coastal appealed to the First District Court of Appeals, but
the case was remanded to Circuit Court for trial. On August 6, 1996, final
judgment was made in favor of the State. Although Coastal filed for review by
the Supreme Court, the Supreme Court denied review and the petition for
certiorari.

FLORIDA DEPARTMENT OF TRANSPORTATION V. 745 PROPERTY INVESTMENTS, CSX
TRANSPORTATION, INC. AND CONTINENTAL EQUITIES, CASE NO. 94-17739 CA 27, DADE
COUNTY CIRCUIT COURT. This case involves the Florida Department of
Transportation (FDOT) and CSX Transportation, Inc. FDOT filed an action against
the adjoining property owners seeking a declaratory judgment from the Dade
County Circuit Court that the Department is not the owner of the property that
is subject to a claim by the U.S. Environmental Protection Agency (EPA).
Although the Court dismissed the case, the EPA could file a claim against the
FDOT for clean-up costs. These costs could exceed $25 million.

JENKINS V. FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
CASE NO. 79-102-CIV-J-16, UNITED STATES DISTRICT COURT. This is a class action
suit on behalf of clients of residential placement for the developmentally
disabled seeking refunds for services where children were entitled to free
education under the Education for Handicapped Act. The Department had been
collecting maintenance fees from parents

<PAGE>
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of the placed children and various third parties such as SSI and Social
Security. The district court ruled in favor of the plaintiffs and ordered
repayment of the maintenance fees. The Department repaid the $217,694 in
maintenance fees paid by the parents; however, amounts estimated at $21.6 due to
various third parties have not been paid since the affected parties have not
been identified.

NATHAN M. HAMEROFF, M.D. ET AL. V. AGENCY FOR HEALTH CARE
ADMINISTRATION, ET AL., CASE NO. 95-5936, LEON COUNTY CIRCUIT COURT. The
plaintiffs challenge the constitutionality of the Public Medical Assistance
Trust Fund (PMATF) annual assessment on net operating revenue of free-standing
out-patient facilities offering sophisticated radiology services. A trial has
not been scheduled. If the State is unsuccessful in its actions, the potential
refund liability could amount to approximately $70 million.

BARNETT BANK V. DEPARTMENT OF REVENUE, CASE NO. 97-02375, 4TH JUDICIAL
CIRCUIT, involves the issue of whether Florida's refund statute for dealer
repossessions authorizes the Department to grant a refund to a financial
institution as the assignee of numerous security agreements governing the sale
of automobiles and other property sold by dealers. The question turns on whether
the Legislature intended the statute only to provide a refund or credit to the
dealer who actually sold the tangible personal property and collected and
remitted the tax or intended that right to be assignable. Several banks have
applied for refunds; the potential refund to financial institutions exceeds
$30,000,000 annually.

TOWER ENVIRONMENTAL V. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION,
CASE NO. 98-01312, HILLSBOROUGH COUNTY CIRCUIT COURT. Tower Environmental has
sued the State of Florida and the Department of Environmental Protection (DEP)
for $60 million alleging that both the State and DEP "breached" contracts with
them by first "freezing" the processing of reimbursement applications and then
the termination of the petroleum reimbursement process. Alternatively, Tower
claims that these actions constitute torts or impairment of contractual
obligations. Tower also alleges that the termination of reimbursement claims
pursuant to Section 376.3071, F.S., is a breach of contract. In addition to
damages, Tower seeks recovery of attorneys fees and costs. If attorneys fees and
costs are awarded, the potential liability could be as high as $60 million.

PETER AND ROY GERACI V. FLORIDA DEPARTMENT OF TRANSPORTATION, CASE NO.
98-3904, HILLSBOROUGH COUNTY, 13TH JUDICIAL CIRCUIT. The Plaintiffs claim that
the Florida Department of Transportation has been responsible for construction
of roads and attendant drainage facilities in Hillsborough County and, as a
result of its construction, has caused the Plaintiffs' property to become
subjected to flooding, thereby amounting to an uncompensated taking. On December
15, 1998, the Court granted the State's Motion for More Definite Statement as to
certain portions of the Plaintiffs' complaint. If the State is unsuccessful in
its actions, potential losses could exceed $40 million.

BARNETT BANKS, INC. V. FLORIDA DEPARTMENT OF REVENUE, CASE NO. 98-4104,
1ST DISTRICT COURT OF APPEALS. In this case, the taxpayer has challenged the
imposition of interest on additional amounts of corporate income tax due as a
result of Federal audit adjustments reported to Florida. The Department's
historical position is that interest is due from the due date of the return
until payment of the additional amount of tax is made. The taxpayer contends
that interest should be accrued from the date the Federal audit adjustments were
due to be reported to Florida. A Final Order was issued adopting the position
asserted by the Department; however, the taxpayer has filed an

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appeal of the Final Order. Based on the best available information, the
potential exposure for refunds or lost revenue is in the range of $12 to $20
million per year.

3. MASSACHUSETTS

SPECIAL CONSIDERATIONS REGARDING INVESTMENTS
IN MASSACHUSETTS MUNICIPAL SECURITIES

The following is a summary of certain information contained in the
Information Statement of the Commonwealth of Massachusetts dated February 16,
1999, as supplemented August 21, 1998. The summary does not purport to be a
complete description and is current as of the date of the corresponding
information statement. The Funds are not responsible for the accuracy or
timeliness of this information.

The ability of the Commonwealth to meet its obligations will be
affected by future social, environmental and economic conditions, among other
things, as well as by questions of legislative policy and the financial
conditions of the Commonwealth. Many of these conditions are not within the
control of the Commonwealth.

1999 FISCAL YEAR

Acting Governor Cellucci approved the fiscal 1999 budget on July 30,
1998. The Governor vetoed or reduced appropriations totaling approximately
$100.9 million. On July 31, 1998, the Legislature overrode several of those
vetoes, restoring approximately $63.1 million in spending. After accounting for
the value of vetoes and subsequent overrides, the budget provided for total
appropriations of approximately $19.5 billion. Governor Cellucci has approved
four fiscal 1999 supplemental appropriation bills totaling approximately $51
million, $41.1 million of which have funded collective bargaining costs. On
January 27, 1999, Governor Cellucci filed a supplemental budget totaling
approximately $190.1 million. The supplemental recommendation includes
approximately $22.8 million for ongoing operations and programs and
approximately $167.3 million for one-time expenditures, including $50 million
for local road and bridge work and $15 million for Year 2000 compliance. The
Executive Office for Administration and Finance projects total fiscal 1999
spending of $21.151 billion, a 6.0% increase over total fiscal 1998 spending.

The fiscal 1999 appropriation for pension funding is approximately
$965.3 million. This amount is consistent with the amount requested by the
Acting Governor, but is approximately $93.9 million less than the amount
required by the initial 20-year pension funding schedule developed at the time
the fiscal 1998 budget was enacted.

The fiscal 1999 budget is based on a consensus tax revenue forecast of
$14.4 billion, as agreed by both houses of the Legislature and the Secretary of
Administration and Finance in May, 1998. The tax cuts incorporated into the
budget, valued by the Department of Revenue at $990 million in fiscal 1999, had
the effect of reducing the consensus forecast to $13.41 billion. Tax collections
in January, 1999 totaled $1.565 billion, an increase of $144.1 million, or
10.1%, over January, 1998. Year-to-date tax collections through January, 1999
totaled $8.251 billion, an increase of $685.9 million, or 9.1%, over the same
period in fiscal 1998. On August 19, 1998 the Executive Office for
Administration and Finance raised the fiscal 1999 tax estimate by $200 million
to $13.61 billion. The year-to-date benchmark range through January, based on
the $13.61 annual

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estimate, was $7.969 billion to $8.146 billion. The fiscal 1999 tax estimate was
raised again, to $14.0 billion, in the Governor's budget submission filed on
January 27, 1999.

The Commonwealth assesses a fringe reimbursement charge against most
payroll spending not financed by the General Fund. This fringe assessment
reimburses the General Fund for the costs of employee health and retirement
benefits. The Commonwealth had a federally approved fringe rate of 30% in fiscal
1999. Charging the 30% rate in fiscal 1999 would result in a credit to the
federal government that would need to be reconciled in future years with sizable
fringe reductions. To avoid this future credit with the federal government the
Commonwealth is lowering the fringe rate to approximately 17% for federal
accounts (and 24% for all other accounts) in fiscal 1999. This change is
estimated to reduce fiscal 1999 Interfund Transfers from Non-Budgeted Funds and
Other Sources revenue by approximately $58.2 million.

CASH FLOW. The most recent cash flow projections for fiscal 1999 were
released by the State Treasurer and the Secretary of Administration and Finance
on October 29, 1998. The forecast for fiscal 1999 is based on the fiscal 1999
budget signed by Acting Governor Cellucci on July 30, 1998, and includes the
values of legislative veto overrides. Projections are based on revenue and
spending estimates prepared by the Executive Office for Administration and
Finance and incorporate actual results through July, 1998 and monthly
projections through June, 1999.

Fiscal 1998 ended with a cash balance of approximately $1.579 billion,
without regard to any fiscal 1998 activity that occurred after June 30, 1998 and
excluding the balance in the StabilizationFund. The ending balance does reflect
that $234.0 million was transferred to the Stabilization Fund in June, 1998 on
account of fiscal 1997.

Fiscal 1999 is projected to end with a cash balance of $975.9 million,
without regard to any fiscal 1999 activity that occurs after June 30, 1999 and
excluding the balance in the StabilizationFund. The statement projects that $150
million will be transferred to the Stabilization Fund in June, 1999 on account
of fiscal 1998, based on the Comptroller's certifications at the time the
statement was being prepared. The Comptroller has since certified that an
additional $167.4 million will be required to be transferred. The cash flow
statement projects the issuance during fiscal 1999 of $1.250 billion of general
obligation bonds (of which $250 million are for fiscal 1998 expenditures) and
$315 million of grant anticipation notes. The statement projects the receipt of
$597 million from the Massachusetts Turnpike Authority and the Massachusetts
Port Authority in fiscal 1999 on account of the Central Artery/Ted Williams
Tunnel project, and the issuance during fiscal 1999 of $306 million of
Commonwealth notes in anticipation of future payments from such authorities for
the project.

Neither the issuance of transit notes nor the issuance of commercial
paper for operating purposes is forecast for fiscal 1999.

The ending cash balance projected for fiscal 1999 is likely to differ
from the ending balances for the Commonwealth's budgeted operating funds for
such year because of timing differences and the effect of non-budget items.

The next cash flow statement for the Commonwealth is due to be
released on February 25, 1999.

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2000 FISCAL YEAR

On January 27, 1999, Governor Cellucci filed his fiscal 2000 budget
recommendations with the House of Representatives. The proposal calls for
budgeted expenditures of approximately $20.391 billion and total fiscal 2000
spending of $20.556 billion after adjusting for shifts to and from off-budget
accounts. The proposed fiscal 2000 spending level represents a $405.2 million,
or 2.0%, increase over projected total fiscal 1999 expenditures of $20.151
billion. Budgeted revenues for fiscal 2000 are projected to be $20.241 billion,
or $20.332 billion after adjusting to shifts to and from off budget accounts.
This represents a $632.8 million, or 3.2%, increase over the $19.699 billion
forecast for fiscal 1999. The Governor's proposal projects a fiscal 2000 ending
balance in the budgeted funds of approximately $1.625 billion, including a
StabilizationFund balance of approximately $1.390 billion.

The Governor's budget recommendation is based on a tax revenue
estimate of $14.459 billion, an increase of $459 million, or 3.3%, over fiscal
1999 projected tax revenues of $14.0 billion. The projection incorporates $226
million in income tax cuts proposed by the Governor which would reduce the tax
rate on personal income from 5.95% to 5% over three years.

The proposed budget assumes non-tax revenues of $5.782 billion, or
$5.873 billion when adjusted for the shifts to and from off-budget accounts,
which represents an 'increase of $173.9 million from fiscal 1999. Of the three
classes of non-tax revenue, federal reimbursements, including those for
Medicaid, and block grants for Temporary Assistance to Needy Families and Child
Care programs most affect the Commonwealth's budgetary considerations. These
payments are projected to total $3.489 billion in fiscal 2000, or $3.560 billion
after the impact of shifts to and from off-budget accounts is removed. This
level of federal payments represents an increase of $132.7 million, or 3.9%,
from fiscal 1999, the result primarily of changes in federal reimbursement for
Medicaid programs. Fiscal 2000 departmental revenues of $1.270 billion, or
$1.271 billion after adjusting for shifts to and from off-budget accounts,
represent a decrease of approximately $14.2 million from fiscal 1999
projections, due primarily to the implementation of free, lifetime driver
licensing and vehicle registration and a decrease of $10 million due to a
cyclical drop in licensing fees at the Division of Insurance. Consolidated
transfers, the third category of non-tax revenue, consist primarily of state
lottery profits which are distributed to cities and towns. Consolidated
transfers are projected to increase by $55.4 million from fiscal 1999 levels.
Lottery profits are expected to remain constant in fiscal 2000.

The Governor's budget proposal generally provides for maintaining
current levels of service for most state programs but recommends increased
spending for certain priority areas, including a $251.4 million increase in
funding for the Department of Education, $238.2 million in additional local aid
to cities and towns, $132 million for Medicaid program medical inflation funded
through the proposed Health Care and Community Services Trust Fund, $132 million
for the expansion of the MassHealth program and $34 million in additional local
aid funded by the State Lottery. The Governor has recommended appropriations of
approximately $910 million for pension funding, predicated on the assumption
that a revised pension funding schedule will call for smaller payments than are
called for by the current schedule.

Under the Governor's proposed fiscal 2000 budget, the Commonwealth is
expected to spend approximately $1.015 billion on public assistance programs.
Under the federal welfare reform law, Massachusetts will receive $460.6 million
from the

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Temporary Assistance for Needy Families (TANF) federal block grant,
$459.4 million from the annual fiscal year grant and $1.2 million from prior
year unspent grant funds. Of this total, the Commonwealth is expected to spend
$247.2 million at the Department of Transitional Assistance, $75.5 million at
the Office of Child Care Services and transfer $91.9 million to the federal
Child Care Development Fund and $45.9 million to the Social Services Block
Grant. In addition, the Commonwealth expects to receive $81.7 million from the
Child Care Development Fund block grant and $42.7 million from the Social
Services block grant.

Beginning in fiscal 2000, the Governor proposes the establishment of a
new trust, the Health Care and Community Services Trust Fund, to which would be
credited all payments received by the Commonwealth pursuant to the national
litigation settlement with the tobacco industry, as well as federal
reimbursements and other fees or revenues related to expenditures from the fund,
investment earnings, grants and allocated appropriations. The tobacco settlement
was approved by the Massachusetts Superior Court on December 3, 1998. Amounts
credited to the Fund would be made available for expenditure without further
appropriation for the purpose of health care and community services programs and
the enhancement of related information technology services, administrative
services and program evaluation. The Fund would be administered by the Secretary
of Administration and Finance, in consultation with the Secretary of Health and
Human Services, the Secretary of Elder Affairs and the State Treasurer, and he
could make expenditures on his own authority. The Commonwealth expects annual
payments from the tobacco settlement to begin in fiscal 1999, resulting in a
Trust Fund balance of over $360 million by the end of fiscal 2000. Under the
Governor's fiscal 2000 budget recommendations, approximately $201 million would
be expended from the fund in fiscal 2000, resulting in approximately $80 million
in federal reimbursements allocated to the fund. The proposed fiscal 2000
expenditures include approximately $132.2 million to support traditional
Medicaid inflation costs and a $70 million transfer to the Children's and
Seniors' Health Care Assistance Fund to support the existing Health Care Reform
Program. Governor Cellucci's fiscal 2000 budget recommends budgeted Medicaid
spending of $4.034 billion by the Department of Medical Assistance. This level
of spending represents an increase of $141.4 million, or $3.6%, from fiscal
1999, due in part to the Governor's proposal to shift the costs associated with
traditional Medicaid inflation to the Health Care and Community Services Trust
Fund.

The Governor's fiscal 2000 budget recommendations are now being
evaluated by the House Committee on Ways and Means, the first legislative step
in the process of approving a budget for fiscal 2000.

LOCAL GOVERNMENT

Below the level of state government are 9 county governments
responsible for various functions, principally the operation of houses of
correction and registries of deeds. There are 14 counties in Massachusetts, but
county government has been abolished in five of them and is scheduled to
terminate in two others. In his fiscal 2000 budget, Governor Cellucci
recommended the elimination of two additional county governments during the next
two fiscal years. Under legislation enacted in 1996, Franklin County government
terminated on July 1, 1997 in favor of a regional council of governments.
Legislation approved by Governor Weld on July 11, 1997 abolished Middlesex
County government on that date and provided for the abolition of county
government in Hampden and Worcester Counties on July 1, 1998. On August 13,
1998, Acting Governor Cellucci approved legislation abolishing county government
in Hampshire, Essex and Berkshire Counties as of January 1, 1999, July 1, 1999
and July

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1, 2000, respectively. Under the 1997 legislation, virtually all functions,
duties and responsibilities of the affected counties are transferred to the
Commonwealth. As of the date of abolition of an affected county's government,
all valid liabilities and debts of such county which are in force immediately
before such date become obligations of the Commonwealth, and all assets and
revenues of such county become assets and revenues of the Commonwealth. The
Secretary of Administration and Finance is directed to establish an amortization
schedule to recover the Commonwealth's costs from the cities and towns within
each such country over a period not to exceed 25 years. The Secretary of
Administration and Finance is charged with compiling an inventory and providing
for the valuation of all property of all counties in the Commonwealth for the
purposes of considering the abolition of county government and the transfer of
its functions, assets and liabilities to the Commonwealth, and is required to
file a report by February 1, 1999, which report has been delayed. The
legislation approved August 13, 1998 directs the Secretary of Administration and
Finance to analyze, in consultation with the Public Employee Retirement
Administration Commission, the potential cost to the Commonwealth of
transferring current and retired county employees to the state retirement
system. This report was provided to the Legislature in January, 1999.

COMMONWEALTH REVENUES

In order to fund its programs and services, the Commonwealth collects a
variety of taxes and receives revenues from other non-tax sources, including the
federal government and various fees, fines, court revenues, assessments,
reimbursements, interest earnings and transfers from its non-budgeted funds. In
fiscal 1998, approximately 70.8 percent of the Commonwealth's annual budgeted
revenues were derived from state taxes. In addition, the federal government
provided approximately 16.6 percent of such revenues, with the remaining 12.6
percent provided from departmental revenues and transfers from non-budgeted
funds.

The major components of State taxes are the income tax, which accounted
for approximately 55.8 percent of total tax revenues in fiscal 1997, the sales
and use tax, which accounted for approximately 22.4 percent, and the business
corporations tax, which accounted for approximately 7.5 percent. Other tax and
excise sources accounted for the remaining 14.3 percent of total fiscal 1997 tax
revenues.

INCOME TAX. The Commonwealth assesses personal income taxes at flat
rates, according to classes of income, after specified deductions and
exemptions. A rate of 5.95 percent is applied to income from employment,
professions, trades, businesses, rents, royalties, taxable pensions and
annuities and interest from Massachusetts banks; a rate of 12% is applied to
other interest (although interest on obligations of the United States and of the
Commonwealth and its political subdivisions is exempt) and dividends; and, as of
January 1, 1996, a rate ranging from 12 percent on capital gains from the sale
of assets held for one year and less to 0 percent on capital gains from the sale
of certain assets held more than six years. Effective January 1, 1999, the rate
applied to interest income, other than interest income from Massachusetts banks,
and dividends will be reduced from its current rate of 12% to 5.9%.

On July 21, 1998, Acting Governor Cellucci approved legislation
reducing the rate of tax on "Part A" income (interest and dividends) from 12% to
5.95%, effective January 1, 1999. The fiscal 1999 cost is estimated to be $117
million; the fully annualized cost is estimated to be $239 million. The
legislation also phased in a doubling of the personal exemptions applicable to
the "Part B" ("earned") income tax, effective January 1, 1998, with an estimated
fiscal 1999 cost of $600 million (which

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includes costs for January 1, 1998 to June 30, 1998) and an estimated fully
annualized cost of $492 million. In addition, the legislation conformed state
tax law to federal law with respect to Roth and educational IRS's, deferred
compensation, capital gains on the sale of a personal residence, travel and
entertainment deductions and the definition of short-term capital gains. The
estimated aggregate fiscal 1999 cost of these additional changes is less than $5
million, and the estimated aggregate annualized cost, excluding the Roth IRA, is
also less than $5 million. The full impact of the Roth IRA change will only be
felt as those now contributing to Roth IRA's withdraw their investments, over a
period starting more than 20 years from now. The amount of tax cut due to the
Roth IRA change depends on many factors, including the amounts invested, rates
of return earned on those investments and the period over which the earnings are
withdrawn. No definite estimate is currently available for events so far into
the future.

In December 1994, the Governor approved legislation modifying the
capital gains tax by phasing out the tax for assets held longer than six years
and increasing the no-tax status threshold for personal income tax purposes. The
capital gains tax charge did not become effective until January 1, 1996.
Accordingly, it is estimated by the Executive Office for Administration and
Finance to have decreased fiscal 1996 revenues by $21 million, 1997 revenues by
$60 million, and fiscal 1998 revenues by approximately $98 million. It is
expected to decrease fiscal 1999 tax revenues by $135 million. The no-tax status
change is estimated to have reduced fiscal 1995 tax revenues by approximately
$5.5 million and subsequent years tax revenues by $13.3 million.

As part of the fiscal 1997 budget the Legislature established a tax
deduction for the amount by which tuition payments to two- or four-year
colleges, net of financial aid, exceed 25 percent of the taxpayer's adjusted
gross income. The Department of Revenue estimates that this deduction resulted
in no revenue reduction in fiscal 1997 and will result in an approximately $14
million reduction on an annualized basis thereafter.

The fiscal 1998 budget contained three tax cuts with an aggregate
fiscal 1998 cost estimated by the Department of Revenue to be $60.9 million--an
increase in the child dependent deduction from $600 to $1,200 for children up to
age 12 ($15.3 million), a tax credit of up to $6,000 over four years for septic
tank improvements ($17 million) and an earned income tax credit amounting to 10
percent of the federal credit ($28.6 million). The fiscal 1999 impact of these
tax cuts is expected to be $15.3 million, $18 million and $30 million,
respectively.

On November 6, 1997, Acting Governor Cellucci approved legislation
exempting military pensions from the state income tax, effective January 1,
1998. The Department of Revenue estimates that this exemption will result in a
fiscal 1998 revenue reduction of $25.0 million and an approximately $18 million
reduction on an annualized basis thereafter.

On August 10, 1998, Acting Governor Cellucci also approved legislation
providing for the transfer of $200 million to the Tax Reduction Fund as of June
30, 1998. The legislation directs the Commissioner of Revenue to increase 1998
tax year personal exemptions so as to reduce aggregate taxes by the balance in
the Tax Reduction Fund as of December 31, 1998, including any interest earned on
the fund's balances. The Executive Office for Administration and Finance
estimates that by December 31, 1998 the Tax Reduction Fund will have a balance
of approximately $210 million. The personal exemption increases authorized under
this legislation are for the 1998 tax year only. In subsequent years, personal
exemptions will revert to their statutorily authorized levels.

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On January 11, 1999, Governor Cellucci filed legislation that would
reduce personal income tax rates (for both Part A and Part B income) from 5.95%
to 5% over three calendar years beginning on January 1, 2000. The rate would be
5.6% for the 2000 taxable year, 5.3% for the 2001 taxable year and 5% for the
2002 taxable year and thereafter. The Executive Office for Administration and
Finance estimates that the static revenue impact of these changes would be a
reduction of personal income tax collections of approximately $226 million in
fiscal. 2000, approximately $667 million in fiscal 2001, approximately $1.120
billion in fiscal 2002 and approximately $1.390 billion in fiscal 2003, at which
time the rate reduction would be fully implemented.

SALES AND USE TAX. The Commonwealth imposes a 5 percent sales tax on
retail sales of certain tangible properties (including retail sales of meals)
transacted in the Commonwealth and a corresponding 5 percent use tax on the
storage, use or other consumption of like tangible properties brought into the
Commonwealth. However, food, clothing, prescribed medicine, materials and
produce used in food production, machinery, materials, tools and fuel used in
certain industries, and property subject to other excises (except for
cigarettes) are exempt from sales taxation. The sales and use tax is also
applied to sales of electricity, gas and steam for certain nonresidential use
and to nonresidential and most residential use of telecommunications services.

On October 20, 1997, Acting Governor Cellucci announced that the
Department of Revenue will issue regulations changing the payment for
approximately 15,000 sales, meals and room occupancy taxpayers that pay over
$25,000 in tax per year. Under the new simplified rules, beginning January 1,
1998, these taxpayers are required to file a tax return and make a tax payment
on the 20th of each month for taxable sales made during the preceding month.
Under the old rules, affected taxpayers were required to forward tax payments on
the 27th of each month for taxable sales made from the 23rd of the preceding
month to the 22nd of the current month, as well as file a quarterly tax return.
While these new regulations will not affect the amount of tax owed, the
Department of Revenue estimates that the Commonwealth realized a reduction in
fiscal 1998 revenues of $120 million to $160 million, which has been
incorporated into the January 16, 1998 revenue estimates. This reduction will be
a one-time event.

BUSINESS CORPORATIONS TAX. Business corporations doing business in the
Commonwealth, other than banks, trust companies, insurance companies, railroads,
public utilities and safe deposit companies, are subject to an excise that has a
property measure and an income measure. The value of Massachusetts tangible
property (not taxed locally) or net worth allocated to the Commonwealth is taxed
at $2.60 per $1,000 of value. The net income allocated to Massachusetts, which
is based on net income for federal taxes, is taxed at 9.5 percent. The minimum
tax is $456. Both rates and the minimum tax include a 14 percent surtax. The
reduction in fiscal 1996 tax revenues from business corporations compared to
fiscal 1995 was due primarily to an estimated $49 million reduction resulting
from the application of the "single sales factor" apportionment formula,
described below. The fiscal 1997 tax revenue collections reflected an additional
$44 million reduction for the full-year impact of the "single sales"
apportionment formula and a $10 million reduction due to the impact of
legislation enacted in August 1996, which, effective January 1, 1997, changed
the computation of the sales factor for certain mutual fund companies.

On November 28, 1995 the Governor approved legislation establishing a
"single sales factor" apportionment formula for the business corporations tax.
The new formula, when fully implemented, will calculate a firm's taxable income
as its net income times the percentage of its total sales that are in
Massachusetts, as opposed to the prior

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formula that took other factors, such as payroll and property into account. The
new formula was made effective as of January 1, 1996 to certain federal defense
contractors and phased in over five years for manufacturing firms generally. The
Department of Revenue estimated that the revision reduced revenues by $44
million in fiscal 1996, by $90 million in fiscal 1997 and by $110 million in
fiscal 1998. If the new formula were fully effective for all covered businesses,
the Department estimates that the annual revenue reduction would be $100 million
to $150 million.

On August 8, 1996, the Governor approved legislation making two changes
in the apportionment formula for the business corporations tax payable by
certain mutual fund service corporations. Effective January 1, 1997, the
legislation changed the computation of the sales factor; instead of sourcing
sales from the state where the seller bears the cost of performing the services
relating to the sale, the corporations will source sales to the state of
domicile of the ultimate consumer of the service. Effective July 1, 1997, the
legislation changed the prior three-factor formula to a single sales factor
formula, just as the November 1995 legislation had done for certain federal
defense contractors and, over time, for manufacturing firms. Under the new law,
affected corporations are required to increase their numbers of employees by 5
percent per year for five years, subject to exceptions for adverse economic
conditions affecting the stock market or the amount of assets under their
management. The Department of Revenue estimates that the changes resulted in a
revenue reduction of approximately $10 million in fiscal 1997 and will result in
revenue reductions of $39 million to $53 million on an annualized basis
thereafter, starting in fiscal 1998. These estimates do not take into account
any increased economic activity stimulated by the tax cuts.

On August 9, 1996, the Governor signed legislation providing a tax
credit to shippers that pay federal harbor maintenance taxes on cargo passing
through Massachusetts ports. The Department of Revenue estimates that there was
no impact on revenues in fiscal 1997 as a result of this tax credit and the
annualized revenue loss will be approximately $3 million to $4 million,
beginning in fiscal 1998.

BANK TAX. Commercial and savings banks are subject to an excise tax of
12.54 percent. On July 27, 1995, the Governor approved legislation that will
reduce the rate over several years to 10.5 percent, the same effective rate
charged to other corporations. The Department of Revenue estimates that the tax
cut, when fully implemented in fiscal 2000, will result in an annual $39 million
revenue loss, including the effect of provisions in the proposed legislation
that would apply the tax to out-of-state banks and other financial institutions
that are not currently taxed and that would lead to an estimated $18 million
annual gain.

INSURANCE TAXES. Life insurance companies are subject to a 2% tax on
gross premiums; domestic companies also pay a 14% tax on net investment income.
Property and casualty insurance companies are subject to a 2% tax on gross
premiums, plus a 14% surcharge for an effective tax rate of 2.28%; domestic
companies also pay a 1% tax rate on gross investment income. On April 30, 1998,
the House of Representatives approved legislation that would over five years
eliminate the 14% surcharge for property and casualty insurers and the tax on
investment income for both types of domestic insurers. On August 10, 1998,
Acting Governor Cellucci approved legislation that will reduce insurance company
taxes over five years in essentially the manner provided in the legislation
approved by the House of Representatives on April 30, 1998, though the enacted
legislation, unlike the House bill, does not eliminate the 14% surcharge on the
gross premium income of property and casualty insurers. The estimated fiscal
1999 cost

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of these changes is $5 million, and the estimated fully phased-in aggregate
annual value of these tax reductions is $48 million.

OTHER TAXES. Other tax revenues are derived by the Commonwealth from
motor fuels excise taxes, cigarette and alcoholic beverage excise taxes, estate
and deed excises and other tax sources.

On July 24, 1996, the Legislature overrode the Governor's veto of
legislation imposing a 25(cent)-per-pack tax increase on cigarettes, as well as
a 25 percent increase in the tax on smokeless tobacco and a 15 percent tax on
cigars and smoking tobacco, all effective October 1, 1996. The Department of
Revenue estimates that these changes resulted in approximately $74 million in
additional tax revenue for fiscal 1997 and will result in $80 million to $90
million in additional revenue in fiscal 1998. The Department estimates that by
fiscal 2000, when demand for cigarettes will have fully adjusted to the higher
tobacco product prices expected to result from the increased tax, additional
revenues will range from $73 million to $83 million.

In 1992, legislation was enacted by the voters which increased the
tobacco excise tax by 1.25(cent) per cigarette (25(cent) per pack of 20
cigarettes) and 25 percent of the wholesale price of smokeless tobacco,
effective January 1, 1993. Under the legislation, the revenues raised by this
excise tax were to be credited to the Health Protection Fund and expended,
subject to appropriation by the Legislature, to pay for health programs and
education relating to tobacco use. Total revenues deposited in the Health
Protection Fund in fiscal 1993 and fiscal 1994 were $59.5 million and $116.4
million and have been $114 million on an annualized basis since fiscal 1995.

The Commonwealth is authorized to issue special obligation highway
bonds secured by a pledge of all or a portion of the Highway Fund, including
revenues derived from all or a portion of the motor fuels excise tax. The
portion of the motor fuel tax currently pledged to special obligation bonds is
estimated to be approximately $187 million in fiscal 1999. An additional portion
of the motor fuel excise tax, estimated to be approximately $273 million in
fiscal 1999, is subject to a contingent pledge relating to grant anticipation
notes issued in connection with the Central Artery/Ted Williams Tunnel project,
and will be available only if federal highway spending and debt service coverage
levels for the notes fall below specified levels. Additional special obligation
bonds may be issued in the future secured by all or additional portions of the
motor fuels excise tax.

On November 17, 1997, the legislature overrode Acting Governor
Cellucci's veto to enact legislation the Commonwealth to issue special
obligation convention center bonds secured by a pledge of certain taxes related
to tourism and conventions, including a 2.75 percent convention center financing
fee imposed by the legislation on hotel room occupancy in four Massachusetts
cities.

ESTATE TAX REVISIONS. The fiscal 1993 budget included legislation which
gradually phased down the current Massachusetts estate tax until it became a
"sponge tax" in 1997. The "sponge tax" is based on the maximum amount of the
credit for the State taxes allowed for federal estate tax purposes. The estate
was phased out by means of annual increases in the basic exemption from the
original $200,000 level. The exemption was increased to $300,000 for 1993,
$400,000 for 1994, $500,000 for 1995 and $600,000 for 1996. In addition, the
legislation included a full marital deduction starting July 1, 1994. The marital
deduction was limited to 50 percent of the Massachusetts adjusted gross estate
until June 30, 1995. The statistic fiscal impact of the phase-out of

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the estate tax is estimated to have been approximately $25 million in fiscal
1994, approximately $73 million in fiscal 1995, approximately $112 million in
fiscal 1996 and approximately $139 million in fiscal 1997 and is projected to be
approximately $253 million in fiscal 1998.

FEDERAL AND OTHER NON-TAX REVENUES

Federal revenue is collected through reimbursements for the federal
share of entitlement programs such as Medicaid and, beginning in federal fiscal
year 1997, through block grants for programs such as Transitional Assistance to
Needy Families ("TANF"), formerly Aid to Families with Dependent Children
("AFDC"). The amount of federal revenue to be received is determined by state
expenditures for these programs. The Commonwealth receives reimbursement for
approximately 50 percent of its spending for Medicaid programs. Block grant
funding for TANF is received quarterly and its contingent upon a maintenance of
effort spending level determined annually by the federal government.

Departmental and other non-tax revenues are derived from licenses,
registrations and reimbursements and assessments for services. In fiscal 1996, a
revenue maximization pilot project undertaken by the Comptroller and the
Executive office for Administration and Finance yielded almost $39.9 million in
additional federal reimbursement revenues, net of agency and vendor incentive
payments, at the Department of Mental Health, Department of Mental Retardation,
Department of Social Services and Division of Medical Assistance. In fiscal
1997, $41.3 million in additional non-tax revenues resulted in net revenues of
$39.1 million deposited into the General Fund. In fiscal 1998, $37.4 million in
additional non-tax revenues resulted in $30.9 million of net revenues for the
General Fund. In fiscal 1999, an estimated $22.3 million in additional non-tax
revenue will result in an estimated $17.1 million of net revenue for the General
Fund.

The Commonwealth began in fiscal 1997 to phase in a one-time (rather
than annual) passenger vehicle registration fee of $30 and a reduction in the
passenger vehicle operating license renewal fee from the rate of $33.75 to $2,
effective May 1, 2001. The Executive Office for Administration and Finance
estimates that these changes had no effect on fiscal 1997 revenues and reduced
fiscal 1998 revenues by $13.8 million. When all drivers become eligible for free
registration renewals in fiscal 1999, revenues are projected to decline by
approximately $55 million. Revenue reductions due to lifetime licenses will not
begin until fiscal 2001, when they will total approximately $11.3 million. In
fiscal 2001, when all drivers become eligible for free license renewals, the
revenue reduction is estimated to be approximately $45 million. (The
Commonwealth is still maintaining the requirement that all parking tickets,
moving violation citations, excise taxes and insurance premiums be paid before
license and registration renewals are processed, in order to ensure that cities
and towns do not lose revenue from the change to lifetime licenses and
registration.) In May 1997, the Legislature enacted legislation that would
restore registration, license and permit fees credited to the Highway Fund to
the rates in effect on January 1, 1996 if federal aid to the Central Artery/Ted
Williams Tunnel project falls below $550 million in any fiscal year during the
next six years. Governor Weld vetoed this provision. Under the state
constitution, his veto can be overridden by a two-thirds vote of each house of
the Legislature; neither house has acted on the veto.

For the budgeted operating funds, interfund transfers include transfers
of profits from the State Lottery and Arts Lottery Funds and reimbursements for
the budgeted

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costs of the State Lottery Commission, which accounted for $667.3 million,
$709.5 million, $727.5 million, $770.2 million and $848.4 million in fiscal 1994
through 1998, respectively and which are expected to account for
$809.3 million in fiscal 1999.

In 1994, the voters in the statewide general election approved an
initiative petition, effective December 8, 1994, that would slightly increase
the portion of gasoline tax revenue credited to the Highway Fund, one of the
Commonwealth's three major budgeted finds, prohibit the transfer of money from
the Highway Fund to other funds for non-highway purposes and exclude the Highway
Fund balance from the computation of the "consolidated net surplus" for purposes
of state finance laws. The initiative petition also provided that no more than
15 percent of gasoline tax revenues could be used for mass transportation
purposes, such as expenditures related to the Massachusetts Bay Transportation
Authority. This law is not a constitutional amendment and is subject to
amendment or repeal by the Legislature, which may also, notwithstanding the
terms of the initiative petition, appropriate moneys from the Highway Fund in
such amounts and for such purposes as it determines, subject only to a
constitutional restriction that such moneys be used for motor vehicle, highway,
or mass transportation purposes. The Legislature has twice postponed the
effective date of the provision that would exclude the Highway Fund balance from
the computation of the "consolidated net surplus". The most recent postponement
changed the effective date of the provision to July 1, 2000.

On August 9, 1996, the Governor approved legislation, authorizing the
State Lottery Commission to participate with other states in a
multi-jurisdictional lottery. Beginning September, 1996, the Commission joined
with the states of Illinois, Georgia, Maryland, Michigan and Virginia in a
multi-state game that is estimated to generate an additional $30 million per
year in net lottery revenues.

LIMITATIONS ON TAX REVENUES

Chapter 62F, which was enacted by the voters in November, 1986,
establishes a State tax revenue growth limit for each fiscal year equal to the
average positive rate of growth in total wages and salaries in the Commonwealth,
as reported by the federal government, during the three calendar years
immediately preceding the end of such fiscal year. Chapter 62F also requires
that allowable state tax revenues be reduced by the aggregate amount received by
local governmental units from any newly authorized or increased local option
taxes or excises. Any excess in State tax revenue collections for a given fiscal
year over the prescribed limit, as determined by the State Auditor, is to be
applied as a credit against the then current personal income tax liability of
all taxpayers in the Commonwealth in proportion to the personal income tax
liability of all taxpayers in the Commonwealth for the immediately preceding tax
year. The law does not exclude principal and interest payments on Commonwealth
debt obligations from the scope of its tax limit. However, the preamble
contained in Chapter 62F provides that "although not specifically required by
anything contained in this chapter, it is assumed that from allowable State tax
revenues as defined herein the Commonwealth will give priority attention to the
funding of state financial assistance to local governmental units, obligations
under the state governmental pensions systems, and payment of principal and
interest on debt and other obligations of the Commonwealth."

Tax revenues in fiscal 1994 through fiscal 1998 were lower than the
limit set by Chapter 62F and the Executive Office for Administration and Finance
currently estimates that State tax revenues in fiscal 1998 will not reach such
limit.

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YEAR 2000

In June 1997, the Executive Office for Administration and Finance
established a Year 2000 Program Management Office within its Information
Technology Division. The purpose of the office is to ensure accurate monitoring
of the Commonwealth's progress in achieving "year 2000 compliance", i.e.,
remediating or replacing and redeploying affected systems, as well as to
identify risk areas and risk mitigation activities and serve as a resource for
all state agencies and departments. The program management office has asked
agencies to identify "mission critical" and "essential" systems. Mission
critical systems are those which directly affect the health, safety or
livelihood of citizens, which directly affect state revenues or whose loss would
severely jeopardize agency delivery of services. Essential systems are those
whose loss would cause a disruption of some agency services but would not
prevent the agency from delivering primary services. The most recent report
issued by the program management office on February 3, 1999 for the
October-December 1998 quarter indicates that the office is currently monitoring
year 2000 compliance efforts for 170 state agencies, including independent
agencies and constitutional offices. The office assigns a quarterly status code
- - green (low risk), yellow (medium risk) or red (significantly high risk) - to
agencies based on information collected from telephone and personal interviews.
The criteria for the status codes becomes increasingly more stringent each
quarter; the status codes for the most recent quarter are based on the
likelihood for achieving year 2000 compliance with respect to mission critical
systems by January 31, 1999 and with respect to essential systems by May 31,
1999. Of the 170 state agencies rated for the October-December 1998 quarter, 107
were rated green, 21 were rated yellow and 42 were rated red. Those agencies
have identified 298 mission critical systems and 219 essential systems; between
57% and 69% of the Mission Critical Systems and between 85% and 90% of the
Essential Systems were likely to meet the May 31, 1999 target date. The report
notes that while agency projects are becoming more stable, more management
attention was needed for schedule slippage from quarter to quarter to address
problems as the remaining time diminishes. The report also notes that the number
of mission critical systems in the red category has risen from 67 to 92, and is
too high. The report also notes that year 2000 exposure for "embedded systems,"
particularly devices used for control systems remains an area of concern, but
the percentage of affected assets is not as high as was originally estimated.
Agencies with significant exposure in this area made good progress in the
October-December, 1998 quarter. This exposure affects only a few agencies, but
the impact of failures would be significant, e.g., switches and signals for the
MBTA, a variety of systems at Logan Airport for the Port Authority, toll
collection and ticket systems for the Turnpike Authority, water and sewer
management and treatment systems for the Massachusetts Water Resources Authority
and traffic signals for the Massachusetts Highway Department.

Legislation approved by the Acting Governor on August 10, 1998
appropriated $20.4 million for expenditure by the Information Technology
Division to achieve Year 2000 compliance for the six Executive Offices and other
departments which report directly to the Governor. This amount has been fully
designated, and no longer includes a reserve for unanticipated projects. On
January 27, 1999, the Governor filed a supplemental budget which included an
additional $15 million for Year 2000 compliance. The Secretary of Administration
and Finance is to report quarterly to the Legislature on the progress being made
to address the year 2000 compliance efforts, and to assess the sufficiency of
funding levels.

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LITIGATION

There are pending in state and federal courts within the Commonwealth
and in the Supreme Court of the United States various suits in which the
Commonwealth is a party. In the opinion of the Attorney General, no litigation
is pending or, to his knowledge, threatened which is likely to result, either
individually or in the aggregate, in final judgments against the Commonwealth
that would affect materially its financial condition.

COMMONWEALTH PROGRAMS AND SERVICES. From time to time actions are
brought against the Commonwealth by the recipients of governmental services,
particularly recipients of human services benefits, seeking expanded levels of
services and benefits and by the providers of such services challenging the
Commonwealth's reimbursement rates and methodologies. To the extent that such
actions result in judgments requiring the Commonwealth to provide expanded
services or benefits or pay increased rates, additional operating and capital
expenditures might be needed to implement such judgments. In June 1993, in an
action challenging the Commonwealth's funding of public primary and secondary
education systems on both federal and state constitutional grounds, WEBBY V.
DUKAKIS (now known as MCDUFFY V. ROBERTSON, Supreme Judicial Court for Suffolk
County No. 90-128), the Supreme Judicial Court ruled that the Massachusetts
Constitution imposes an enforceable duty on the Commonwealth to provide adequate
public education for all children in the Commonwealth and that the Commonwealth
was not at that time fulfilling this constitutional duty. However, the court
also ruled that the Legislature and the Governor were to determine the necessary
response to satisfy the Commonwealth's constitutional duty, although a single
justice of the court could retain jurisdiction to determine whether, within a
reasonable time, appropriate legislative action had been taken. Comprehensive
education reform legislation was approved by the Legislature and the Governor
later in June 1993. On May 10, 1995, the plaintiffs filed a motion for further
relief, arguing that the 1993 legislation did not provide sufficiently for
public education and that its timetable was too slow. It cannot be determined at
this time what further action, if any, the plaintiffs in McDuffy may take or
whether the court will order any further relief.

LOPEZ V. BOARD OF EDUCATION ET AL. (Supreme Judicial Court for Suffolk
County No. 98-584). Plaintiff students in certain school districts on Cape Cod
invoked the decision of the Supreme Judicial Court in MCDUFFY, supra, and
challenged the constitutionality of the school financing formula contained in
the education reform act. The plaintiffs seek declaratory relief, additional
appropriations and damages. The court dismissed the Senate, the House of
Representatives and the State Treasurer as defendants in the case, but permitted
plaintiffs to amend their complaint, upon motion, to add the Commonwealth as a
defendant.

Challenges by residents of five state schools for the retarded in RICCI
V. MURPHY (U.S. District Court C.A. No. 72-469-T) resulted in a consent decree
in the 1970's which required the Commonwealth to upgrade and rehabilitate the
facilities in question and to provide services and community placements in
western Massachusetts. The District Court issued orders in October 1986 leading
to termination of active judicial supervision. On May 25, 1993, the District
Court entered a final order vacating and replacing all consent decrees and court
orders. In their place, the final order requires lifelong provisions for
individualized services to class members and contains requirements regarding
staffing, maintenance of effort (including funding) and other matters.

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ROLLAND V. CELLUCCI (U.S. District Court C.A. No. 98-32208 KPN) is a
class action by mentally retarded nursing home patients seeking community
placements and services. The Commonwealth's motion to dismiss and plaintiff's
motion for class certification are currently pending.

In BEAULIEU V. BELMONT (U.S. District Court No. 95-12382GAO), the
plaintiffs are former residents of the Fernald School, a facility of the
Department of Mental Retardation. They allege that in the 1950's they were fed
radioactive isotopes without their informed consent. They claim violations of
their civil rights, battery, invasion of privacy, loss of consortium and
misrepresentation. The amount of potential liability is estimated to be $25
million.

Both COMMONWEALTH OF MASSACHUSETTS V. RUGGLES CENTER JOINT VENTURE
(Suffolk Superior Court No. 47-1764-A) and RUGGLES CENTER, LLC V. BEACON
CONSTRUCTION CORPORATION (Suffolk Superior Court No. 96-0637-E) involve an
indoor air quality dispute regarding the former headquarters of the Registry of
Motor Vehicles at Ruggles Center in Boston. In 1997, the Commonwealth commenced
suit against the former building owners, Ruggles Center Joint Venture (RCJV), as
well as the general contractor, the architect, the mechanical engineer and the
manufacturer of the fireproofing, to recover losses associated with the indoor
air quality (IAQ) problems, including the costs of relocating the agency and
workers' compensation payments paid to employees. RCJV has filed a counterclaim
against the Commonwealth alleging breach of lease, breach of covenant of good
faith and fair dealing and negligence. RCJV claims that it fulfilled all of its
obligations under the lease and its amendment and that the Commonwealth
wrongfully terminated these agreements, and that the Commonwealth's negligence,
or that of its contractors, cause the IAQ problems. RCJV seeks to recover the
costs associated with its efforts to remedy the IAQ problems, additional rent
payments under the lease, and the value of RCJV's equity in the project had the
lease not been terminated. In the second and related case, the building owner
has sued the general contractor to recover on the performance bond. Many second,
third and fourth parties have been impleaded. The Registry of Motor Vehicles and
the Division of Capital Planning and Operations have been named as fourth-party
defendants by the manufacturer of the fireproofing, United States Mineral
Products Co., Inc., which has asserted a claim for indemnification. These cases
have been consolidated for discovery. Total potential liability to the
Commonwealth in each case is approximately $25 million.

DIBIASE V. COMMISSIONER OF INSURANCE (Suffolk Superior Court No.
96-4241-A) is a putative class action suit in which the plaintiffs seek to
invalidate most of Chapter 178A of the Massachusetts General Laws, which is the
savings bank life insurance statute. The suit alleges that the statute's
conversion of the former savings bank life insurance system established by
former Chapter 178 of the Massachusetts General Laws deprived policyholders
under the old system of more than $60 million in "surplus" and $11 million in
the former General Insurance Guaranty Fund, the proceeds of both of which
assertedly belonged to them. The defendants have moved to dismiss on statute of
limitations grounds, and the plaintiffs have cross-moved for partial summary
judgment on a claim of alleged procedural due process violations. On October 16,
1997, the Court dismissed the case on statute-of-limitations grounds. The
plaintiff appealed. On February 1, 1999, the Supreme Judicial Court affirmed the
judgment of the Superior Court.

In RAMOS V. MCINTIRE (Suffolk Superior Court No. 98-2154), plaintiffs
allege that the Department of Transitional Assistance violated stated and
federal law, including the American with Disabilities Act, by failing to
accommodate welfare recipients with

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learning disabilities in its Employment Services Program. The court has denied,
without prejudice, plaintiffs' motions for class certification and injunctive
relief. If the case remains limited to the two existing plaintiffs, potential
liability will likely be under $50,000. However, if the Court at some point
allows a motion for class certification, potential liability could increase to
$33.5 million.

PERRY V. BULLEN and RUDOW V. BULLEN (Supreme Judicial Court No. 7760)
challenge decisions of the Division of Medical Assistance, which denied
deductions for court-ordered attorney and guardian fees in the calculation of
Medicaid benefits for two nursing home residents. DMA argues that federal law
does not permit such deductions. The Superior Court held that the costs of
guardianship are deductible because they are "necessary medical expenses." DMA
has appealed. The Supreme Judicial Court has granted direct appellate review.
While the appeal involves only two nursing home residents, the reasoning of the
Superior Court, if extended to other Medicaid recipients, may require the
additional expenditure of up to $56 million per year.

ENVIRONMENTAL MATTERS. The Commonwealth is engaged in various lawsuits
concerning environmental and related laws, including an action brought by the
U.S. Environmental Protection Agency alleging violations of the Clean Water Act
and seeking to enforce the clean-up of Boston Harbor. UNITED STATES V.
METROPOLITAN DISTRICT COMMISSION (U.S. District Court C.A. No. 85-0489-MA). See
also CONSERVATION LAW FOUNDATION V. METROPOLITAN DISTRICT COMMISSION (U.S.
District Court C.A. No. 83-1614-MA). The Massachusetts Water Resources Authority
(MWRA), successor in liability to the Metropolitan District Commission (MDC),
has assumed primary responsibility for developing and implementing a
court-approved plan and timetable for the construction of the treatment
facilities necessary to achieve compliance with the federal requirements. The
MWRA currently projects that the total cost of construction of the waste water
facilities required under the court's order, not including combined sewer
outflow (CSO) costs, will be approximately $3.142 billion in current dollars,
with approximately $601 million to be spent after June 30, 1997. With CSO costs,
the MWRA anticipates spending approximately $901 million after that date. Under
the Clean Water Act, the Commonwealth may be liable for any cost of complying
with any judgment in these or any other Clean Water Act cases to the extent the
MWRA or a municipality is prevented by state law from raising revenues necessary
to comply with such a judgment.

On February 12, 1998, the U.S. Department of Justice filed a complaint
in federal district court seeking to compel the MWRA to build a water filtration
plant for the metropolitan Boston water supply and, together with the MDC, to
take certain watershed protection measures. UNITED STATES V. MWRA (U.S. District
Court C.A. No. 98-10267). The MWRA Board of Directors has voted to apply to the
state Department of Environmental Protection for a ruling that it not be
required to filter water; a decision by DEP is expected by the end of 1998. The
federal district court has issued a scheduling order under which it will decide
in March, 1999 whether the Safe Water Drinking Act compels the MWRA to build a
filtration system or whether the MWRA can demonstrate that its data entitles it
to avoid building such a system. It is too early to predict what remedy the
court will order if it decides adversely to the MWRA.

TAXES AND OTHER REVENUES. In THE FIRST NATIONAL BANK OF BOSTON V.
COMMISSIONER OF REVENUE (Appellate Tax Board No. F232249), The First National
Bank of Boston challenges the constitutionality of the former version of the
Commonwealth's bank excise tax. In 1992, several pre-1992 petitions filed by the
bank, which raised the same issues, were settled prior to a board decision. The
bank has now filed claims with

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respect to 1993 and 1994. The bank claims that the tax violated the Commerce
Clause of the United States Constitution by including its worldwide income
without appointment. The Department of Revenue estimates that the amount of
abatement, including interest, sought by the First National Bank of Boston,
could total $135 million.

In addition, there are several tax cases pending that could result in
significant refunds if taxpayers prevail. It is the policy of the Attorney
General and the Commissioner of Revenue to defend such actions vigorously on
behalf of the Commonwealth, and the descriptions that follow are not intended to
imply that the Commissioner has conceded any liability whatsoever.

On March 22, 1995, the Supreme Judicial Court issued its opinion in
PERINI CORPORATION V. COMMISSIONER OF REVENUE (Supreme Judicial Court No. 6657).
The court held that certain deductions from the net worth measure of the
Massachusetts corporate excise tax violate the Commerce Clause of the United
States Constitution. The court remanded the case for entry of a declaration and
further proceedings, if necessary, to determine other appropriate remedies. On
October 2, 1995, the United State Supreme Court denied the Commonwealth's
petition for a writ of certiorari. The Supreme Judicial Court, on April 30,
1996, entered a partial final judgment implementing its decision for tax years
ending prior to January 1, 1995. The Department of Revenue estimates that tax
revenues in the amount of $40 million to $55 million may be abated as a result
of the partial final judgment. On May 13, 1996, the Court entered an order for
judgment and memorandum concerning relief for tax years ending on or after
January 1, 1996. A final judgment was entered on June 6, 1996. The Department of
Revenue has paid approximately $17 million to date in abatements in accordance
with the judgment. To date, the total amount for abatements requested, including
those that have been paid, and that are in the process of being evaluated, is
$35 million.

Approximately $80 million in taxes and interest in the aggregate are at
issue in several other cases pending before the Appellate Tax Board or on appeal
to the Appeals Court of the Supreme Judicial Court.

EMINENT DOMAIN. In SPAULDING REHABILITATION HOSPITAL CORPORATION V.
MASSACHUSETTS HIGHWAY DEPARTMENT (Suffolk Superior Court. No. 95-4360C), the
Spaulding Rehabilitation Hospital filed an action to enforce an agreement to
acquire its property by eminent domain, in connection with the Ted Williams
Tunnel/Central Artery project. On March 13, 1998, the Superior Court entered
judgment for the Commonwealth dismissing the complaint. The plaintiff has
appealed the Superior Court's judgment.

THOMAS RICH V. COMMONWEALTH OF MASSACHUSETTS (Norfolk Superior Court
No. 94-2319) and SHEA V. COMMONWEALTH (Norfolk Superior Court No. 97-1070-B) are
eminent domain cases concerning property in the city of Quincy. The Commonwealth
faces a potential liability of $30 million. The cost of remediation of
contaminated soil will also be an issue.

Pursuant to a verdict on the Trilling Way parcel in P&P REALTY CO.,
INC. V. DEPARTMENT OF PUBLIC WORKS (Suffolk Superior Court No. 92-2081), the
Commonwealth will pay $6 million. On November 30, 1998, the case settled for
approximately $15.8 million.

P.A. LANDERS V. MASSACHUSETTS HIGHWAY DEPARTMENT and MAYFLOWER V.
MASSACHUSETTS HIGHWAY DEPARTMENT (Plymouth Superior Court Nos. 45-922-A and 46-

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923-B). These are eminent domain claims involving the Route 44 project in
Plymouth. Potential liability is $30 million. The pro tanto was $3.5 million.

MASSACHUSETTS PORT AUTHORITY, BIRD ISLAND LTD. PARTNERSHIP AND HILTON
HOTELS V. COMMONWEALTH OF MASSACHUSETTS (Suffolk Superior Court Nos. 96-4803-C,
94-6966, 94-2830-E, 94-2831-F, 94-5745-B, 94-5744-A and 96-6789-E) are eminent
domain cases concerning a land acquisition in East Boston for the Central
Artery/Ted Williams Tunnel project6. On January 15, 1998, the case was settled
for $24.8 million.

4. RHODE ISLAND

SPECIAL CONSIDERATIONS REGARDING INVESTMENTS IN
RHODE ISLAND MUNICIPAL SECURITIES

The following is a summary of certain information contained in the
Information Statement of the State of Rhode Island and Providence Plantations
dated October 1, 1998. The summary does not purport to be a complete description
and is current as of the date of the information statement. The Funds are not
responsible for the accuracy or timeliness of this information.

Rhode Island municipal securities may fluctuate in value in response to
a variety of factors, including the economic strength of State and local
governments and the availability of federal funding.

ECONOMIC FORECAST

The Revenue Estimating Conference incorporates a range of economic
forecasts and economic information in making revenue estimates. During its May
1998 meeting, forecasts were presented by Data Resources, Inc. (DRI), Regional
Financial Associates (RFA), and The New England Economic Project (NEEP). Current
employment and labor force trends were also presented by the Department of Labor
and Training.

RFA, DRI, and NEEP all forecast that economic growth will continue
throughout fiscal year 1999, albeit at a more moderate pace.

EMPLOYMENT

There was some disparity among the economists with respect to the
employment forecast. In fiscal year 1998, growth was anticipated in the range of
1.6 percent to 1.9 percent, and in fiscal year 1999, growth is expected to fall
in the range of 1.0 percent to 1.4 percent. The disparity may be partially
explained by problems in data sampling.

Benchmark revisions for fiscal year 1997 resulted in annual employment
growth of 1.7 percent, versus the preliminary figure 1.0 percent. RFA revised
its 1998 nonfarm employment growth from 0.6 percent in November, to 1.9 percent
in May.

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PERSONAL INCOME

Personal income growth rates vary from 4.8 percent to 5.1 percent in
fiscal year 1998, and 4.1 percent to 5.5 percent in fiscal year 1999. Personal
income tax receipts have increased dramatically due to continued strength in
financial markets.

WAGE AND SALARY INCOME

A fairly wide range of forecasts was present in wage and salary growth
estimates, from 5.2 percent to 6.1 percent in fiscal year 1998, and 4.7 percent
to 6.4 percent in fiscal year 1999. This disparity also contributes to the
differential in estimated personal income growth. The more optimistic outlook
may reflect the theory that high wage earners are realizing greater salary
gains, as well as larger and more frequent bonuses. The dramatic rise in wage
and salary income since 1996 further indicates that Rhode Island is increasingly
creating higher paying jobs. This is further evidenced by the shift away from
low-paying manufacturing employment toward higher paying services employment.

GENERAL FUND REVENUES AND EXPENDITURES

The State draws nearly all of its revenue from a series of non-property
related taxes and excises, principally the personal income tax and general
retail sales and use tax, from federal assistance payments and grants-in-aid and
from earnings and receipts from certain State-operated programs and facilities.
The State additionally derives revenue from a variety of special purpose fees
and charges that must be used for specific purposes as required by State law.

MAJOR SOURCES OF STATE REVENUE

TAX REVENUES. Approximately 67.6 percent of all taxes and departmental
receipts in fiscal year 1997 were derived from the Rhode Island personal income
tax and the sales and use tax. They constituted 60.8 percent of all general
revenues.

PERSONAL INCOME TAX. State law provides for a personal income tax on
residents and non-residents (including estates and trusts) equal to a percentage
of the federal income tax liability attributable to the taxpayer's Rhode Island
income. Effective with the passage of Chapter 6 of the 1991 Rhode Island Public
Laws, the State rate became 27.5 percent of the taxpayer's federal income tax
liability for the period January 1, 1991 and thereafter. However, Article 30 of
the 1993 Appropriations Act provided for a second tier rate of 32.0 percent on
the amount of a taxpayer's federal tax liability which is in excess of fifteen
thousand dollars. This provision remained in effect through tax year 1993,
although the Tax Administrator, using his authority to adjust rates (as
described below), modified the second tier rates in October 1993. This was done
to offset the effects of changes in federal tax law contained in the Omnibus
Budget Reconciliation Act of 1993 (H.R. 2264).

A resident's Rhode Island taxable income is equal to his or her federal
income, subject to specified modifications. A non-resident's Rhode Island income
is equal to such non-resident's income less deductions (including such
taxpayer's share of the income and deductions of any partnership, trust, estate,
electing small business corporations, or domestic international sales
corporation), subject to specified modifications which are included in computing
his or her federal adjusted gross income and are derived from or

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connected with any property located or deemed to be located in the State and any
income producing activity or occupation carried on in the State. Although the
law provides for certain adjustments to be made to federal taxable income to
arrive at the Rhode Island income of residents and non-residents, the Rhode
Island personal income tax essentially "piggy-backs" federal income tax law and
thus is affected by any modifications to the federal tax base. The fiscal year
1997 Appropriations Act, however, provided that new federal credits enacted
after January 1, 1996 shall not be allowed as a deduction when computing the
state tax. Current law allows the Tax Administrator to modify income tax rates
as necessary when the Assembly is not in session to adjust for federal tax law
changes to ensure maintenance of the revenue base upon which appropriations are
made. The fiscal year 1998 Appropriations Act reduced the personal income tax
rate from 27.5 percent of federal liability to 27.0 percent, effective January
1, 1998, and from 27.0 percent to 26.5 percent effective January 1, 1999. It
also increased the Investment Tax Credit from 4.0 percent to 10.0 percent, and
increased the Research and Development Tax Credit from 5.0 percent to 22.5
percent effective January 1, 1998. The Rhode Island personal income tax
accounted for approximately 34.3 percent of the State's fiscal year 1997 general
revenues.

SALES AND USE TAX. The State assesses a tax on all retail sales,
subject to certain exceptions, and on hotel and other public accommodation
rentals, as well as upon the storage, use or other consumption of tangible
personal property in the State. The sales and use tax is imposed upon the
retailer at the rate of 7.0 percent of the gross receipts from taxable sales.
Included as major exemptions from the tax are: (a) food (excluding food sold by
restaurants, drive-ins or other eating places) for human consumption off the
premises of the retailer; (b) clothing; (c) medicines sold on prescription; (d)
fuel used in the heating of homes and residential premises; (e) domestic water
usage; (f) gasoline and other motor fuels otherwise specifically taxed; (g)
sales of tangible property and public utility services when the property or
service becomes a component part of a manufactured product for resale, or when
the property or service is consumed directly in the process of manufacturing or
processing products for resale and such consumption occurs within one year from
the date such property is first used in such production; (h) tools, dies and
molds and machinery and equipment (including replacement parts thereof) used
directly and exclusively in an industrial plant in the actual manufacture,
conversion or processing of tangible personal property to be sold; (i) sales of
air and water pollution control equipment for installation pursuant to an order
by the State Director of Environmental Management; and (j) sales of boats or
vessels.

The fiscal year 1991 Reissuance of Appropriations Act, Article 4,
provided that the sales tax rate would remain at 7.0 percent for the period
commencing July 1, 1990. In addition, subject to annual appropriation by the
General Assembly, the Rhode Island Depositors Economic Protection Corporation
Act dedicated one-half cent of the total levy per dollar to "...be utilized to
pay the debt service of the corporation and otherwise effectuate the purposes of
the corporation" effective July 1, 1991. Legislation enacted by the 1992
Assembly increased the dedication under the Rhode Island Depositors Economic
Protection Corporation Act from one-half to six-tenths of one cent, exclusive of
any receipts resulting from any expansion of the coverage in sale and use taxes
through legislation enacted subsequent to February 1, 1992.

The sales and use tax accounted for approximately 26.5 percent of the
State's fiscal year 1997 general revenues.

BUSINESS CORPORATION TAX. The business corporation tax is imposed on
corporations deriving income from sources within the State or engaging in
activities for

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the purpose of profit or gain. Article 20 of the 1990 Budget as
amended set a rate of 9.0 percent effective July 1, 1989. In addition, Chapter
27 of the Rhode Island Public Laws of 1990 requires that two installments of the
Business Corporation Tax shall be paid in advance, based upon the estimated tax
declared for taxable years ending December 31, 1990 or thereafter. Passage of
the fiscal year 1991 Reissuance of Appropriations Act provided for a surtax of
11.0 percent on the amount otherwise due for corporations whose taxable year
ends on or after March 31, 1991 and before January 1, 1993.

The Corporation tax was amended in 1993 to change the carry-back,
carry-forward provisions from 3 years back, 15 years forward to 5 years forward.
In addition, the minimum business or franchise tax was raised from $100 to $250.
Two reductions to the business corporation tax were enacted as part of the
fiscal year 1994 Budget; the first repealed the 11.0 percent surtax for
corporations whose taxable years begin on or after January 1, 1994 (an extension
to January 1, 1997 was enacted in 1993), and the second doubled the Investment
Tax Credit from two to four percent for investments made beginning January 1,
1994. The fiscal year 1998 Appropriation Act modified taxes due under the
Business Corporations Tax by providing for enhanced credits. Specifically, the
budget provided for an increase in the Investment Tax Credit from 4.0 percent to
10.0 percent for machinery and equipment expenditures and increased the Research
and Development Tax Credit for qualified research expenses from 5.0 percent to
22.5 percent, both effective January 1, 1998.

Corporations dealing in securities on their own behalf, whose gross
receipts from such activities amount to at least 90.0 percent of their total
gross receipts, have been exempt from the net worth computation but are required
to pay the 9.0 percent income tax. Regulated investment companies and real
estate investment trusts and personal holding companies pay a tax at the rate of
10(cent) per $100 of gross income or $100, whichever is greater. Such corporate
security dealers, investment companies, investment trusts and personal holding
companies are allowed to deduct from net income 50.0 percent of the excess of
capital gains over capital losses realized during the taxable year when
computing the tax.

HEALTH CARE PROVIDER ASSESSMENT. The 1992 Legislature enacted a health
care provider assessment on residential facilities for the mentally retarded in
the fiscal year 1992 Supplemental Budget Bill. This was a medicaid provider
specific tax levy of 25.0 percent on gross revenues on community residences for
the mentally retarded. That assessment fell within the guidelines of the federal
legislation enacted in November of 1991 concerning medicaid provider specific
taxes. In mid-September 1994, the levy dropped to 6.0 percent because of new
federal limitations on reimbursements for this tax.

The Legislature also enacted a 2.75 percent tax on gross revenues for
nursing homes and a 1.50 percent tax on gross revenues from free-standing
medicaid facilities not associated with hospitals as part of the fiscal year
1993 budget. This tax was scheduled to end September 30, 1995; however, the
fiscal year 1996 Appropriations Act extended the tax on nursing facilities to
September 30, 1997 and raised the rate to 3.75 percent effective October 1,
1995. The fiscal year 1998 Budget provided for elimination of the previously
enacted sunset date and made the tax permanent.

TAXES ON PUBLIC SERVICE CORPORATIONS. A tax ranging from 1.25 percent
to 8.0 percent of gross earnings is assessed annually against any corporation
enumerated in Title 44, Chapter 13 of the General Laws, incorporated under the
laws of the State or doing business in Rhode Island. In the case of corporations
whose principal business is

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manufacturing, selling or distributing currents of electricity, the rate of tax
imposed is 4.0 percent. For those corporations manufacturing, selling or
distributing illuminating or heating gas, the rate of tax imposed is 3.0 percent
of gross earnings. Corporations providing telecommunications services were
assessed at the rate of 6.0 percent, until July 1, 1997, at which time the rate
was reduced to 5.0 percent. However, 100.0 percent of the amounts paid by a
corporation to another corporation for connecting fees, switching charges and
carrier access charges are excluded from the gross earnings of the paying
company. The minimum tax payable is $100. The tangible personal property within
the State of telegraph, cable, and telephone corporations used exclusively for
the corporate business, is exempt from taxation, subject to certain exceptions.

Article 14 of the fiscal year 1995 Appropriations Act prescribed a
phase out of the portion of the public service corporations tax imposed on
energy used in manufacturing effective July 1, 1994. The tax on electricity was
lowered one percent for four years, and was fully eliminated on July 1, 1997.
The tax on natural gas was lowered one percent per year for the next three
years, and was fully eliminated on July 1, 1996. The article contained
provisions to ensure that the tax savings would be passed on directly to
manufacturers.

TAX ON INSURANCE COMPANIES. Each insurance company transacting business
in Rhode Island must file a return each year on or before March 1 and pay a tax
of 2.0 percent of its gross premiums. These are premiums on insurance contracts
written during the preceding calendar year on Rhode Island businesses. The same
tax applies to an out-of-state insurance company, but the tax cannot be less
than that which would be levied by the State or foreign country on a similar
Rhode Island insurance company or its agent doing business to the same extent
there. Effective December 31, 1989, premiums from marine insurance issued in
Rhode Island became exempt from the tax on gross premiums. The fiscal year 1998
Appropriations Act provided for an increase in the investment tax credit for
insurance companies from 4.0 percent to 10.0 percent for machinery and equipment
expenditures effective January 1, 1998.

Insurance and surety companies are exempt from the business corporation
tax and annual franchise tax, but they are subject to provisions concerning any
estimated taxes which may be due. Through the provisions of Article 33 of the
fiscal year 1990 Appropriations Act, surplus line brokers were included under
the statutes relative to estimated taxes.

TAX ON BANKING INSTITUTIONS-EXCISE TAX. For the privilege of existing
as a banking institution during any part of the year, each State bank, trust
company, or loan and investment company in the State must annually pay an excise
tax measured by (1) 9.0 percent of its net income of the preceding year, or (2)
$2.50 per $10,000 or a fraction thereof of its authorized capital stock as of
the last day of the preceding calendar year. The tax payable is the higher of
the two. A national bank within the State must only pay the excise tax measured
by option (1) above. The minimum tax payable is $100. Mutual savings banks and
building and loan associations are subject to tax, effective January 1, 1998.
The fiscal year 1998 Appropriations Act provided for an increase in the
investment tax credit for banking institutions from 4.0 percent to 10.0 percent
for machinery and equipment expenditures effective January 1, 1998.

TAX ON BANKING INSTITUTIONS-INTEREST BEARING DEPOSITS. Chapter 410 of
the Public Laws of 1986 established current tax rates on banking institutions.
For institutions with over $150 million in deposits, the rate was

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.0695(cent) on each one hundred dollars ($100) of deposits. For institutions
with $150 million or less in deposits, the rate was .0625(cent) on each one
hundred dollars ($100). Under Article 29 of the fiscal year 1993 Appropriations
Act, the tax rates applied to credit unions were set equal to those levied on
other banking institutions and the tax is applied to average daily deposits held
for the full calendar year for all types of banking institutions. Article 34 of
the fiscal year 1996 Appropriations Act reduces the rates on banking
institutions with over $150 million in deposits to .0348 cents on each one
hundred dollars of deposits and .0313 cents on each one hundred dollars of
deposits for those institutions with less than $150 million in deposits for the
1997 calendar year. The rate was set to zero beginning January 1, 1998 and
thereafter. The deposits base includes all but that percentage equivalent to
total assets as are invested in obligations of the United States and excludes
those deposits of a branch or office located outside the State of Rhode Island
or those of an international banking facility of any banking institution. The
fiscal year 1996 Appropriations Act eliminated certain exclusions relative to
the tax on credit unions effective January 1, 1996, but did not make changes
relative to the rate of tax.

Chapter 15 of the 1992 Rhode Island Public Laws changed the timing of
the estimated payments. The legislation placed the bank deposit tax on the same
calendar basis as the other business taxes.

ESTATE TAX. For decedents who died before January 1, 1986, a tax was
assessed on each decedent's estate at rates ranging from 2.0 percent to 9.0
percent of the net estate depending on its value. The exemption for all estates
is $25,000, and the marital deduction is $175,000. An orphan's deduction is
allowed similar to the deduction allowed under federal law.

Current law, established under the provisions of the 1991
Appropriations Act, provides for the phasing out of the estate tax, with the
minimum tax set equal to the maximum credit allowable under federal estate tax
law. Rates are equal to 40 percent of the tax otherwise payable for estates of
decedents whose deaths occurred on or after June 1, 1990 and prior to January 1,
1992. For decedents whose deaths occurred on or after January 1, 1992, the
estate tax equaled the maximum credit allowable under federal estate tax law,
providing for the full implementation of the phase out. The time period for
filing a return was reduced from ten to nine months under this legislation.

CIGARETTE TAX. Article 17 of the 1990 Appropriations Act established
rates equal to 18.5 mills per cigarette (37 cents per package of 20) effective
on June 29, 1989. The fiscal year 1994 Budget increased the rate from 18.5 mills
per cigarette to 22.0 mills per cigarette (from 37 cents to 44 cents per package
of 20 cigarettes) and to 56 cents per pack, effective July 1, 1994. The fiscal
year 1996 Appropriations Act increased the tax by five cents to 61 cents per
pack effective July 1, 1995. Article 12 of the fiscal year 1998 Appropriations
Act raised the tax by 10 cents to 71 cents per pack effective July 1, 1997.

GASOLINE TAX. The tax is due and is not refundable on the sale of all
fuels used or suitable for operating internal combustion engines other than fuel
used: (a) for commercial fishing and other marine purposes other than operating
pleasure craft; (b) in engines, tractors, or motor vehicles not registered for
use or used on public highways by lumbermen, water well drillers and farmers;
(c) for the operation of airplanes; (d) by manufacturers who use diesel engine
fuel for the manufacture of power and who use fuels other than gasoline and
diesel engine fuel as industrial raw material; and (e) for municipalities and
sewer commissions using fuel in the operation of vehicles not registered for use
on public highways.

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Chapter 6 of the 1991 Rhode Island Public Laws modified the gasoline
tax floor from 18 cents per gallon to 23 cents per gallon, effective upon
passage. In addition, the minimum tax under the gasoline excise component was
changed from two to three cents per gallon for a total gasoline tax floor of 26
cents per gallon upon passage of the Act.

The fiscal year 1993 Budget increased the dedicated portion of gas tax
receipts to the Highway Reconstruction and Repair account from five cents to
seven cents and from zero to three cents to the Rhode Island Public Transit
Authority (RIPTA). The 1994 Appropriations Act raised the gasoline tax of 28
cents per gallon, an increase of 2 cents. One cent continues to be deposited as
general revenue through June 30, 1998, and the remaining 27 cents were deposited
in the Intermodal Surface Transportation Fund (ISTF). ISTF funds were
distributed to RIPTA (3 cents), Elderly and Handicapped Transportation (1 cent),
and the General Revenue Fund (10 cents), with the remainder used to finance the
Department of Transportation (13 cents). The fiscal year 1996 Appropriations Act
decreased the portion of the tax deposited in General Revenue by one cent (to 9
cents), and reallocated that portion to the Department of Transportation. The
fiscal year 1998 Appropriations Act again modified the distribution of ISTF
receipts. The share of the gasoline tax transferred to the general fund
decreased by 2 cents (to 7 cents), thereby increasing the Department of
Transportation share by 2 cents (to 16 cents). The fiscal year 1999
Appropriations Act requires that the full 28 cents of the gas tax be deposited
in the ISTF, and again modified the distribution. Beginning in fiscal year 1999,
the tax is allocated as follows: Department of Elderly Affairs (1 cent), RIPTA
(5 cents), Department of Transportation (17.5 cents), and Transfer to General
Fund (4.5 cents). In fiscal year 2000 and each year thereafter, the portion
allocated for transfer to the general fund will decrease by one cent and will be
dedicated to the Department of Transportation until the entire gas tax is
dedicated to transportation purposes.

OTHER TAXES. In addition to the above described taxes, the State
imposes various fees, taxes and excises for the registration of domestic and
foreign corporations, the sale of liquor and other alcoholic beverages, the
registration of motor vehicles and the operation of pari-mutuel betting.

DEPARTMENTAL REVENUES. The largest category of departmental earnings is
the group defined as licenses and fees, due largely to the assessment of the
hospital licensing fee, which was intended to be a one year fee that yielded
$77.3 million in fiscal year 1995. The fiscal year 1996 Appropriations Act
extended the fee one year but at a lower rate generating $37.5 million. The
fiscal year 1997 Appropriations Act extended the fee for an additional year at
the same rate of 2.2 percent, yielding $37.5 million. The fiscal year 1998
Appropriations Act also extended the fee for an additional year and imposed a
rate of 2.0 percent, which yielded $37.4 million. The fiscal year 1999
Appropriations Act again extends the fee for one year, at the current rate of
2.0 percent of gross patient receipts.

The second largest category of revenue is sales and services, which
includes disproportionate share revenues. Other departmental revenues include
various miscellaneous receipts such as investment earnings on General Fund
balances.

RESTRICTED RECEIPTS. In fiscal year 1997, the State received a total of
$90.1 million in restricted receipts excluding transfers into the General Fund.
These reflect various specialized fees and charges, interest on certain funds
and accounts maintained by the State and private contributions and grants to
certain State programs. Such receipts are restricted under State law to offset
State expenditures for the program under which such receipts are derived. Of the
total restricted receipts received in fiscal year 1997,

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the most significant revenues reflected the dedication of sales tax revenues to
the Depositors Economic Protection Corporation (DEPCO) totaling $45.9 million in
cash receipts. The fiscal year 1998 Appropriations Act provided for the transfer
of $15.0 million of DEPCO restricted receipts to general revenue. In fiscal year
1999, and thereafter, all monies dedicated to DEPCO will be utilized to
accelerate the defeasance of DEPCO debt.

OTHER SOURCES. The largest component of Other Sources is the transfer
from the State Lottery. The State Lottery Fund was created in 1974 for the
receipt and disbursement of revenues of the State Lottery Commission from sales
of lottery tickets and license fees. The monies in the fund are allocated for:
(1) establishing a prize fund from which payments of the prize are disbursed to
holders of winning lottery tickets, the total of which prize payments equals, as
nearly as practicable, 45 percent of the total revenue accruing from the sale of
lottery tickets; (2) payment of expenses incurred by the Commission in the
operation of State lotteries; and (3) payment to the State's General Fund of all
revenues remaining in the State Lottery Fund, provided that the amount to be
transferred into the General Fund must equal not less than 30 percent of the
total revenue received and accrued from the sale of lottery tickets plus any
other income earned from the lottery. The fiscal year 1996 Appropriations Act
increased the percentage of video lottery terminal receipts which are
transferred to the General Fund and increased the payout to keno game players,
which has increased lottery income. Lottery transfers to the general fund
totaled $100.0 million in fiscal year 1997.

The second largest single component of Other Sources is the gas tax
transfer from the Intermodal Surface Transportation Fund. Gasoline tax
recipients not dedicated for use by transportation agencies become available to
the general fund. This amounted to $37.7 million in fiscal year 1997.

The Unclaimed Property Transfer reflects funds which have escheated to
the State. They include unclaimed items such as bank deposits, funds held by
life insurance companies, deposits and refunds held by utilities, dividends and
property held by courts and public agencies. The escheated funds are deposited
by the General Treasurer in the general fund, with deductions made for
administrative costs. Unclaimed property transfers totaled $5.0 million in
fiscal year 1997.

Other Miscellaneous Sources in fiscal year 1997 totaled $40.8 million.
This includes $15.8 million from DEPCO, $5.5 million from the Underground
Storage Tank Fund, $4.5 million of interest earnings, and $5.0 million of health
insurance settlements. In fiscal year 1998 and fiscal year 1999, $34.8 million
and $20.7 million are estimated.

FEDERAL RECEIPTS. In fiscal year 1997, the State collected receipts of
$922.4 million from the federal government, representing grants-in-aid and
reimbursements to the State for expenditures for various health, welfare and
educational programs and distribution of various restricted or categorical
grants-in-aid.

Federal grants-in-aid reimbursements are normally conditioned to some
degree, depending on the particular program being funded, on matching resources
by the State ranging from a 50 percent matching expenditure to in-kind
contributions. The largest categories of federal grants and reimbursements are
made for medical assistance payments for the indigent (Title XIX) and Temporary
Assistance to Needy Families (TANF). The federal participatory rates for Title
XIX are recalculated annually, and the major determinant in the rate calculation
is the relative wealth of the State. The federal match rate is 53.4 percent as
of October 1, 1997. Effective in fiscal year 1997,

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TANF funds are block grants; state eligibility is conditional on maintenance of
effort expenditure floors.

REVENUE ESTIMATES

Revenue estimates are predicated upon the May Revenue Estimating
conference, as well as changes to general revenues reflected in the fiscal year
1998 budget plan adopted by the Legislature on April 2, 1998 and the fiscal year
1999 Appropriations Act, and other legislation which changes the distribution of
the hotel tax receipts. The Consensus Revenue Estimating Conference is required
by legislation to convene at least twice annually to forecast generally revenues
for the current year and the budget year, based upon current law and collection
trends, as well as the economic forecast.

FISCAL YEAR 1998 REVENUE ESTIMATE

The fiscal year 1998 estimate was revised upward by $64.3 million over
the estimate adopted by the November Revenue Estimating Conference. This is a
revision of 3.4 percent to the November estimate. The estimate includes
adjustments adopted by the Revenue Estimating Conference and changes included in
the fiscal year 1998 budget plan adopted by the Legislature for 1998.

The largest revision was $43.9 million in personal income taxes over
the enacted estimate. The revisions to the enacted estimate were: $22.2 million
increase in estimated payments, $16.9 million increase in final payments, $6.8
million increase in refunds, and a $11.4 million increase in withholding
payments. The Conference adopted estimated payments of $163.7 million, growth of
24.9 percent over fiscal year 1997, reflecting market activity. The 28.5 percent
increase in final payments appears to also reflect that activity. Refunds are
estimated to be 5.8 percent greater than fiscal year 1997. Withholding growth is
estimated at 6.9 percent.

Total general business taxed estimates were $5.4 million less than the
November estimate. Gains in corporate income tax ($1.1 million), Franchise Taxes
($0.4 million), Taxes on insurance companies ($8.6 million), and bank deposits
taxes ($0.2 million), partially offset reductions in Public Utilities Gross
Earnings Taxes ($2.6 million), Taxes on Financial Institutions ($12.6 million),
and the Health Care Provider Tax ($0.5 million).

Estimated sales tax revenues of $527.0 million reflects 7.7 percent
growth over fiscal year 1997 receipts. The estimate is $11.0 million over the
November estimate. Other major changes in the Sales and Use Tax category include
increases in Motor Vehicle Taxes ($1.8 million) and Cigarettes ($0.8 million).

Other adjustments include: an increase of $0.8 million in inheritance
taxes; an upward revision of $6.8 million for departmental earnings; and a $4.0
million decrease to lottery revenues. The lottery estimate change includes a
$2.8 million decrease to the video lottery terminal estimate, a decrease of $1.8
million to the enacted estimate for games, and a $0.6 million increase to the
KENO estimate.

The Legislature's revised budget plan resulted in an adjustment of
negative $0.9 million to fiscal year 1998 departmental revenues.

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FISCAL YEAR 1999 REVENUE ESTIMATE

The largest source of fiscal year 1999 general revenue is the personal
income tax, with estimated receipts of $731.1 million composing 37.1 percent of
the total. While collections in this component have been reduced significantly
by 1997 tax law changes, growth of 1.5 percent is still anticipated. Adjusted
for these changes, fiscal year 1999 growth equals 4.3 percent.

Sales Tax collections are expected to total $548.0 million in fiscal
year 1999. The fiscal year 1999 estimate anticipates 4.0 percent annual growth,
and composes 27.8 percent of total general revenues.

Other sources of "Sales and Use" taxes are expected to vary slightly in
the budget year. Since the Appropriations Act dedicates the full gas tax to
ISTF, the motor fuel tax will realize a loss of $4.5 million, but the gas tax
transfer in "Other Sources" will increase by the same amount subject to other
changes in ISTF allocation. Cigarette Tax collections are expected to realize a
loss of $1.1 million, or negative 1.7 percent, for an annual total of $65.0
million. Motor Vehicle and Alcohol Tax collections are expected to remain at
fiscal year 1998 levels.

The General Business Taxes, which represent 10.5 percent of total
collections, are expected to increase slightly in fiscal year 1999. The Business
Corporations Tax is expected to decline by approximately 2.0 percent as a result
of tax cuts and other adjustments, for a total of $65.6 million in revenues. The
Franchise and Bank Deposits Taxes are expected to remain flat in fiscal year
1999, while the Public Utilities Gross Earnings Tax revenues are expected to
decrease by 1.6 percent, with total collections of $60.0 million. The Financial
Institutions account should rebound in fiscal year 1999, with total revenues
reaching $7.0 million. The Health Care Provider Assessment is expected to
increase by 3.4 percent to $24.0 million, keeping in line with forecast
inflation.

Inheritance and Gift Taxes are expected to decline by $3.0 million
(negative 16.7 percent) in fiscal year 1999. The anticipated loss is
attributable to the Taxpayer Relief Act provisions which will alter the taxable
estate criteria beginning January 1, 1998, and which will likely have the
greatest incremental effect in fiscal year 1999, due to tax return filing
requirements.

The Hospital Licensing Fee enacted by the 1997 General Assembly expires
on June 30, 1998. The fiscal year 1999 Appropriations Act extends the fee, and
includes $37.4 million in fiscal year 1999 General Revenues.

A reduction in "Other Sources" is explained by a smaller portion of the
Gas Tax being transferred to General Revenue, as well as significant reductions
in "Other Miscellaneous Revenues". The fiscal year 1999 Appropriations Act
allocated the full gas tax to the ISTF with 5 cents dedicated to RIPTA, 1 cent
to Elderly Affairs, 17.5 cents to transportation, and the remaining 4.5 cents to
the General Fund.

The fiscal year 1999 Appropriations Act also transfers $4.0 million
from the Resource Recovery Fund to General Revenue.

<PAGE>
-40-

INDEBTEDNESS

Under the State Constitution, the General Assembly has no power to
incur State debts in excess of $50,000 without the consent of the people, except
in the case of war, insurrection or invasion, or to pledge the faith of the
State to the payment of obligations of others without such consent. By judicial
interpretation, the limitation stated above has been judged to include all debts
of the State for which its full faith and credit are pledged, including general
obligation bonds and notes; bonds and notes guaranteed by the State; and debts
or loans insured by agencies of the State, such as the Industrial-Recreational
Building Authority. However, non-binding agreements of the State to appropriate
monies in aid of obligations of a State agency, such as the provisions of law
governing the capital reserve funds of the Port Authority and Economic
Development Corporation, now known as the Rhode Island Economic Development
Corporation, Housing and Mortgage Finance Corporation, or to appropriate monies
to pay rental obligations under State long-term leases, such as the State's
lease agreements with the Convention Center Authority and the Resource Recovery
Corporation, are not subject to this limitation.

DIRECT DEBT. Direct debt is authorized by the voters as general
obligation bonds and notes. As of June 30, 1998, the State had $767.6 million of
bonds outstanding and $276,347,926 of authorized but unissued direct debt. In
July 1998, the State issued an additional $65,720,000 of bonds, resulting in a
balance of authorized but unissued debt of $209,910,479.

GUARANTEED DEBT. Guaranteed debt of the State includes bonds and notes
issued by, or on behalf of certain agencies, commissions, and authorities
created by the General Assembly and charged with enterprise undertakings, for
the payment of which debt the full faith and credit of the State are pledged in
the event that the revenues of such entities may at any time be insufficient.
These include the Blackstone Valley District Commission and the Narragansett Bay
Water Quality Management District Commission. As of June 30, 1997, these
entities had bonds outstanding of $22,657,000 and $1,514,000 of authorized but
unissued debt.

YEAR 2000

The State has taken steps to ensure that internal and mechanical Year
2000 issues, which may arise from State operations, will not materially affect
the State's credit-worthiness and ability to make timely payments of debt
service. The approach of the State has been to raise the awareness of technical
and managerial staff and to provide the assistance necessary to mitigate the
risk to the performance of the State's business.

The State has coordinated the efforts to remediate and mitigate the
impact of the Year 2000 computer issue through the office of the Chief
Information Officer. The "Year 2000 Program Office", which was created in
December 1996, performs this coordination.

The Fiscal Year 1998 budget contained $500,000 for Year 2000
compliance. Approximately half of the funding was extended to departments to
repair and replace critical non-compliant software systems inventoried and
assessed by departments as overseen by the Program Office.

The General Assembly enacted the Governor's requested budget for fiscal
year 1999 of $2.5 million for "Year 2000" technology problems. This budget will
be used to address infrastructure issues and external compliance. Contingency
plans will be

<PAGE>
-41-

necessary for critical operations where compliance cannot be assured. The year
2000 Program Office will accept requests for emergency financial assistance in
any of these areas, provided that the need, agency commitment and feasibility of
the project have been demonstrated. Requests for additional appropriations may
be required as a result of these requests.

The State cannot guarantee that systems of other companies on which
State government systems rely, or that a failure to convert by another company,
or a conversion that is incompatible with the State's systems, would not have a
material adverse effect on the State. Furthermore, the failure of certain
entities beyond the control of the State, such as the federal government or
other sources of revenue, to address the Year 2000 issue could have a material
adverse impact on the operations or finances of the State.

LITIGATION

The State, its officers and employees are defendants in numerous
lawsuits. With respect to any such litigation, State officials are of the
opinion that the lawsuits are not likely to result either individually or in the
aggregate in final judgments against the State which would materially affect its
financial position. However, the following case should be noted. In Case No.
97-329-Appeal CAPITAL PROPERTIES, INC. ("CPI") V. STATE OF RHODE ISLAND, the
Rhode Island Supreme Court issued an order on April 17, 1998 affirming a
judgment in favor of CPI against the State for $6,100,949 plus interest and
costs. With interest, the judgment totals in excess of $11,700,000 with interest
accruing in an amount in excess of $3,500 per day.

The judgment arises out of a condemnation of land of CPI by the State
in 1987. The State contends there are contractual obligations among the State,
CPI and the City of Providence, Rhode Island which relieve the State of the
obligation to pay the judgment in the case. The State's position is that the
City of Providence and the State agreed to bear equally any judgment entered in
favor of CPI, and that CPI moreover agreed it would forego enforcement of any
judgment against the State in exchange for the State's conveyance to CPI of land
designated as "Parcel 9." Parcel 9 has been previously conveyed by the State to
CPI. Accordingly, it is the position of the State that the applicable
contractual provisions preclude enforcement of the judgment against the State.
The appeal was remanded by the Rhode Island Supreme Court to the Superior Court
without prejudice to any party seeking to enforce any contractual obligations
that may be implicated by enforcement of the judgment against the State. CPI
subsequently obtained a Writ of Mandamus from the Superior Court against the
State requiring immediate payment of the judgment. The State has appealed the
issuance of that Writ to the Rhode Island Supreme Court. The State also brought
a suit against CPI and the City of Providence seeking a court order
acknowledging that the State has already paid one-half the judgment to CPI and
that the other half is the responsibility of the City. If the State is forced to
pay one half the judgement, it is the State's position that the City of
Providence is obligated to reimburse the State that amount.

The State intends to oppose vigorously any enforcement of the judgment.
There are, however, no assurances the State will prevail. If the State fails
to prevail, resources of the State will have to be identified to satisfy this
judgment. No monies are currently budgeted to pay the judgment.

<PAGE>
-42-

APPENDIX B

DESCRIPTION OF SECURITIES RATINGS 1

The ratings of Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Rating Services ("S&P"), and Fitch IBCA, Inc. ("Fitch IBCA") represent
their opinions as to the quality of various debt securities, and are not
absolute standards of quality. Debt securities with the same maturity, coupon
and rating may have different yields, while debt securities of the same maturity
and coupon with different ratings may have the same yield. The ratings below are
as described by the rating agencies. Ratings are generally given to securities
at the time of issuance. While the rating agencies may, from time to time,
revise such ratings, they undertake no obligation to do so.

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
FOUR HIGHEST BOND RATINGS

AAA Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally are referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

AA Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower then the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A Bonds which are rated A possess many favorable investments attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

BAA Bonds which are rated Baa are considered as medium grade
obligations, since they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any greater length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.

____________________
1/As described by the rating agencies. Ratings are generally given to
securities at the time of issuance. While the rating agencies may, from time to
time, revise such ratings, they undertake no obligations to do so

<PAGE>
-2-

Note: Those bonds in the Aa, A and Baa categories which Moody's
believes possess the strongest credit attributes are designated by the symbols
Aa1, A1 and Baa1.

DESCRIPTION OF STANDARD & POOR'S RATING SERVICES
FOUR HIGHEST BOND RATINGS

AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA An obligation rated AA differs from the highest rated issues only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is still strong.

A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.

BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

Plus (+) or minus (-): The ratings from AA to BBB may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

DESCRIPTION OF FITCH IBCA, INC.'S
FOUR HIGHEST INTERNATIONAL LONG-TERM CREDIT RATINGS

When assigning ratings, Fitch IBCA considers the historical and
prospective financial condition, quality of management, and the operating
performance of the issuer and of any guarantor, any special features of a
specific issue or guarantee, the issue's relationship to other obligations of
the issuer, as well as developments in the economic and political environment
that might affect the issuer's financial strength and credit quality.

Variable rate demand obligations and other securities which contain a
demand feature will have a dual rating, such as 'AAA/F1+'. The first rating
denotes long-term ability to make principal and interest payments. The second
rating denotes ability to meet a demand feature in full and on time.

AAA Highest credit quality. 'AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.

AA Very high credit quality. 'AA' ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

A High credit quality. 'A' ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

<PAGE>
-3-

BBB Good credit quality. 'BBB' ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the 'AAA' long-term
category.

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES

Moody's ratings for state and municipal short-term obligations are
designated Moody's Investment Grade ("MIG"). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors affecting
the liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk, such
as long-term secular trends, may be less important over the short run.

MIG 1/VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG 2/VMIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

DESCRIPTION OF STANDARD & POOR'S RATING SERVICES
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES

A S&P note rating reflects the liquidity factors and market access
risks unique to notes. Notes maturing in three years or less will likely receive
a note rating. Notes maturing beyond three years most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:

Amortization schedule -- the larger the final maturity
relative to other maturities, the more likely it will be
treated as a note.

Source of payment -- the more dependent the issue is on the
market for its refinancing, the more likely it will be treated
as a note.

Note rating symbols are as follows:

SP-1 Strong capacity to pay principal and interest. Issues determined to possess
very strong characteristics are given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest with some vulnerability
to adverse financial and economic changes over the term of the notes.

DESCRIPTION OF STANDARD & POOR'S RATING SERVICES
RATINGS OF TAX-EXEMPT DEMAND BONDS

S&P assigns "dual" ratings to all debt issues that have a put or demand
feature as part of their structure.

<PAGE>
-4-

The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, "AAA/A-1+"). With short-term demand debt, note rating symbols are used
with the commercial paper rating symbols (for example, "SP-1+/A-1+").

DESCRIPTION OF FITCH IBCA, INC.'S
TWO HIGHEST INTERNATIONAL SHORT-TERM CREDIT RATINGS

A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet financial commitments
in a timely manner.

F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.

F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST SHORT-TERM DEBT RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually short-term senior debt obligations having an original
maturity not in excess of one year.

PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics: (1)
leading market positions in well-established industries; (2) high rates of
return on funds employed; (3) conservative capitalization structure with
moderate reliance on debt and ample asset protection; (4) broad margins in
earnings coverage of fixed financial charges and high internal cash generation;
and (5) well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

DESCRIPTION OF STANDARD & POOR'S RATING SERVICES
TWO HIGHEST COMMERCIAL PAPER RATINGS

A S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.

<PAGE>
-5-

A-1 A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligations is still strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.

A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

<PAGE>

APPENDIX C

TAXABLE EQUIVALENT YIELDS

- --------------------------------------------------------------------------------

These tables show 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 1, 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FEDERAL
Equivalent yields: Tax-exempt versus taxable securities

1999
Federal
Taxable Income Marginal
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Joint Rate 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
- -------------- ----------- -------- ------- -------- -------- -------- -------- ------- -------- -------- --------

$0-25,750 $0-43,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06%` 7.65% 8.24% 8.82% 9.41%

25,751-62,450 43,051-
104,050 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%

62,451- 104,051-
130,250 158,550 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%

130,251- 158,551-
283,150 283,150 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.50%

over 283,150 over 283,150 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25%

- -------------------------------------------------------------------------------------------------------------------
</TABLE>
CONNECTICUT
Equivalent yields: Tax-exempt versus taxable securities

1999
Combined A Connecticut Tax-Exempt Income
Taxable Income* Connecticut Fund Yield of:
- ------------------------- State Federal and Federal ------ ----- ------ ------- --------
Single Joint Rate** Rate TaxBracket*** 4.0% 5.0% 6.0% 7.0% 8.0%
- -------------- ---------- ------ ------- ----------- ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-10,000 $0-20,000 3.00%**** 15.00% 17.55% 4.85% 6.06% 7.28% 8.49% 9.70%

10,001-25,750 20,001-
43,050 4.50% 15.00% 18.83% 4.93% 6.16% 7.39% 8.62% 9.86%

25,751-61,450 43,051-
104,050 4.50% 28.00% 31.24% 5.82% 7.27% 8.73% 10.18% 11.63%

62,451- 104,051-
130,250 158,550 4.50% 31.00% 34.11% 6.07% 7.59% 9.11% 10.62% 12.14%

130,251- 158,551-
283,150 283,150 4.50% 36.00% 38.88% 6.54% 8.18% 9.82% 11.45% 13.09%

over 283,150 over 4.50% 39.60% 42.32% 6.93% 8.67% 10.40% 12.14% 13.87%
283,150
</TABLE>

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income as defined in the Internal
Revenue Code is the same as under the Connecticut Personal Income Tax
law, however, Connecticut taxable income may differ due to differences in
exemptions, itemized deductions and other items.
** The Connecticut credits have not been included in the calculation of the
state rates. A credit between 1% and 75% is automatically allowed for
single taxpayers with a CT adjusted gross income ranging from $12,000 to
$52,500. A credit between 1% and 75% is automatically allowed for married
filing joint taxpayers with CT adjusted gross income ranging from $24,000
to $100,500.
*** For federal tax purposes, these combined rates reflect the applicable
marginal rates for 1999, including indexing for inflation. These rates
include the effect of deducting state taxes on your Federal return.
**** Per changes of 1997 Regular Session and the trailing Special Sessions of
the Connecticut General Assembly.
- -------------------------------------------------------------------------------

<PAGE>
-2-
- -------------------------------------------------------------------------------

FLORIDA
Equivalent yields: Tax-exempt versus taxable securities

<TABLE>
<CAPTION>
1999
Combined
Taxable Income* Florida A Tax-Exempt Income Fund Yield of:
- -------------------------- and Federal -------- -------- -------- ------- -------- -------- -------
Single Joint Tax Bracket** 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0%
- -------------- ----------- ----------- -------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-25,750 $0-43,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06%` 7.65% 8.24%

25,751-62,450 43,051-
104,050 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72%

62,451- 104,051-
130,250 158,550 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14%

130,251- 158,551-
283,150 283,150 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94%

over 283,150 over 283,150 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59%

</TABLE>

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income as defined in the Internal Revenue
Code is the same as under the Florida Personal Income Tax law; however,
Florida taxable income may differ due to differences in exemptions,
itemized deductions and other items.
** For federal tax purposes these combined rates reflect the applicable
marginal rates for 1999, including indexing for inflation. These rates
include the effect of deducting state taxes on your federal return.

- --------------------------------------------------------------------------------

MASSACHUSETTS
Equivalent yields: Tax-exempt versus taxable securities
<TABLE>
<CAPTION>
1999
Combined A Massachusetts Tax-Exempt Income
Taxable Income* Massachusetts Fund Yield of:
- ------------------------- State Federal and Federal ------ ----- ------ ------- --------
Single Joint Rate** Rate TaxBracket*** 4.0% 5.0% 6.0% 7.0% 8.0%
- -------------- ---------- ------ ------- ----------- ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-25,750 $0-43,050 5.95% 15.00% 20.06% 5.00% 6.25% 7.51% 8.76% 10.01%

25,751-62,450 43,051-
104,050 5.95% 28.00% 32.28% 5.91% 7.38% 8.86% 10.34% 11.81%

62,451- 104,051-
130,250 158,550 5.95% 31.00% 35.11% 6.16% 7.70% 9.25% 10.79% 12.33%

130,251- 158,551-
283,150 283,150 5.95% 36.00% 39.81% 6.65% 8.31% 9.97% 11.63% 13.29%

over 283,150 over 283,150 5.95% 39.60% 43.19% 7.04% 8.80% 10.56% 12.32% 14.08%

</TABLE>

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income as defined in the Internal Revenue
Code is the same as under the Massachusetts Personal Income Tax law,
however, Massachusetts taxable income may vary due to differences in
exemptions, itemized deductions, and other items.
** For federal tax purposes, these combined rates reflect the applicable
marginal rates for 1999, including indexing for inflation. These rates
include the effect of deducting state taxes on your Federal return.
*** For tax years beginning on or after 1/1/99 the rate for Part A income
consisting of interest and dividends is reduced from 12% to 5.95%.

- --------------------------------------------------------------------------------

<PAGE>
-3-
- --------------------------------------------------------------------------------
RHODE ISLAND
Equivalent yields: Tax-exempt versus taxable securities

1999
Combined A Rhode Island Tax-Exempt Income
Taxable Income* Rhode Island Fund Yield of:
- ------------------------- State Federal and Federal ------ ----- ------ ------- --------
Single Joint Rate** Rate TaxBracket*** 4.0% 5.0% 6.0% 7.0% 8.0%
- -------------- ---------- ------ ------- ----------- ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-25,750 $0-43,050 26.50% 15.00% 18.98% 4.94% 6.17% 7.41% 8.64% 9.87%

25,751-62,450 43,051-
104,050 26.50% 28.00% 35.42% 6.19% 7.74% 9.29% 10.84% 12.39%

62,451-
130,250 104,051-
158,550 26.50% 31.00% 39.22% 6.58% 8.23% 9.87% 11.52% 13.16%

130,251-
283,150 158,551-
283,150 26.50% 36.00% 45.54% 7.34% 9.18% 11.02% 12.85% 14.69%

over 283,150 over 283,150 26.50% 39.60% 50.09% 8.02% 10.02% 12.02% 14.03% 16.03%

</TABLE>

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income defined in the Internal Revenue
Code is the same as under the Rhode Island Personal Income Tax law,
however, Rhode Island taxable income may differ due to differences in
exemptions, itemized deductions, and other items.
** For federal tax purposes, these combined rates reflect the applicable
marginal rates for 1998, including indexing for inflation. These rates
include the effect of deducting state taxes on your Federal return.

<PAGE>

BOSTON 1784 FUNDS SM

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
BOSTON 1784 SHORT-TERM INCOME FUND
BOSTON 1784 INCOME FUND
BOSTON 1784 U.S. GOVERNMENT MEDIUM-TERM INCOME FUND
BOSTON 1784 TAX-EXEMPT MEDIUM-TERM INCOME FUND
BOSTON 1784 CONNECTICUT TAX-EXEMPT INCOME FUND
BOSTON 1784 FLORIDA TAX-EXEMPT INCOME FUND
BOSTON 1784 MASSACHUSETTS TAX-EXEMPT INCOME FUND
BOSTON 1784 RHODE ISLAND TAX-EXEMPT INCOME FUND
BOSTON 1784 ASSET ALLOCATION FUND
BOSTON 1784 GROWTH AND INCOME FUND
BOSTON 1784 GROWTH FUND
BOSTON 1784 INTERNATIONAL EQUITY FUND

STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 1, 1999

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Boston 1784 FundsSM:
[bullet] are not insured by the FDIC or any other governmental agency;
[bullet] are not guaranteed by BankBoston, N.A. or any of its affiliates;
[bullet] are not deposits or obligations of BankBoston, N.A. or any of
its affiliates; and
[bullet] involve investment risks, including possible loss of principal.
BankBoston, N.A. serves as investment adviser and shareholder servicing agent
for Boston 1784 Funds. Investors Bank and Trust Company serves as
custodian for Boston 1784 Funds. Boston 1784 Funds are distributed
by SEI Investments Distribution Co., a party independent
of BankBoston, N.A. and 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.

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