N-CSR 1 a2138183zn-csr.txt N-CSR ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response....... 5.0 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-09675 --------------------------------------------- Boston Advisors Trust ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) One Federal Street, Boston, MA 02110 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Michael J. Vogelzang, Chief Executive Officer One Federal Street, Boston, MA 02110 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 800-523-5903 ---------------------------- Date of fiscal year end: 04/30/2004 -------------------------- Date of reporting period: 05/01/03 - 04/30/04 ------------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. FORM N-CSR(2 OF 3) ITEM 1 REPORT TO SHAREHOLDERS. (Annual Report for the period 5/1/03 through 04/30/04 is filed herewith) APRIL 30, 2004 ANNUAL REPORT MICHAEL J. VOGELZANG, CFA, PRESIDENT TODD FINKELSTEIN, CFA, DIRECTOR OF FIXED INCOME The Boston Advisors Funds continue to operate prudently and cautiously in a world full of uncertainty. The war in Iraq and the ongoing threat of terror on U.S. soil occupy our thoughts daily. Notwithstanding our apprehension, our collective confidence continues to improve and the sustainability of U.S. economic growth is no longer in question. In this Annual Report to shareholders we review the domestic investing environment and discuss the nature and characteristics of the portfolios within the Boston Advisors Trust. ECONOMIC AND INVESTING ENVIRONMENTS: Over the past six months there has been mounting evidence that economic strength will be enduring. Macroeconomic indicators that gauge job growth, capacity utilization, and confidence -- underpinnings of an economic expansion -- are improving at an accelerating rate. Unemployment has dipped to a 5.6% rate from a cycle high of 6.3%, while the U.S. is operating at 77% of its capacity, up 3 percentage points from the low. Corporate profits have escalated, up almost 32% for the 12 months ending in March. The Federal Reserve Board recently acknowledged these improvements and has begun to lay the groundwork for tighter monetary policy and higher interest rates. The May 4th Federal Open Market Committee (FOMC) statement noted that "the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. Similarly, the risks to the goal of price stability have moved into balance". This statement underscores the Fed's relief over not slipping back into recession and deflation not gaining a foothold in the U.S. We believe the Central Bank will now take it's foot off the accelerator and gradually increase short-term interest rates. Money fund investors have already begun to benefit from the Fed's rhetoric about raising short-term interest rates. In anticipation of imminent tightening of monetary policy, participants in the short-term markets have begun pushing interest rates higher. Yields on money market funds have begun to rise as maturing cash is reinvested at higher rates. If the Fed raises rates at the pace the market expects, today's 1% target for overnight rates will have doubled by year-end and will increase further through 2005. It is always nice to write about good news. Today's solidly expanding economy coupled with meaningful job growth buoys all our spirits. Higher investment yields on your money market funds are expected to be part of the fallout as this scenario unfolds. PORTFOLIO REVIEWS CASH RESERVES FUND - The Portfolio invests only in high-quality obligors as ranked by nationally recognized statistical rating organizations. Continued emphasis on quality, coupled with broad diversification among issuers and sectors enhances the fund's stability and liquidity. As of April 30th, the portfolio consisted of commercial paper (47%), certificates of deposit (10%), variable rate notes (11%), repurchase agreements (6%), and U.S. government agency obligations (26%). U.S. GOVERNMENT FUND - The Portfolio invests exclusively in short-term U.S. government securities including those guaranteed by its agencies or instrumentalities, and repurchase agreements based upon these securities. As of April 30th 1 the portfolio consisted of U.S. government agency obligations (87% -- of which variable rates were 10%), and repurchase agreements that made up the remaining investments (13%). TAX FREE FUND - The Portfolio invests in high quality short-term municipal obligations as ranked by nationally recognized statistical rating organizations. This high quality, coupled with broad diversification among issuers and sectors, helps provide stability and liquidity. As of April 30th the portfolio consisted of daily and weekly floating rate issues (61%), notes and bonds (30%), commercial paper (5%), and money market funds (4%). NEW YORK MUNICIPAL FUND - The Portfolio invests only in high-quality short-term municipal securities with income exempt from regular federal income tax and from New York State and New York City personal income taxes. As of April 30th the portfolio consisted of daily and weekly floating-rate issues (72%), notes and bonds (10%), commercial paper (15%), and money market funds (3%). 2 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- CASH RESERVES FUND SCHEDULE OF INVESTMENTS - APRIL 30, 2004 --------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST ------------------------------------------------------------------------------------------ ASSET-BACKED COMMERCIAL PAPER -- 10.2% BANKING -- 10.2% Edison Asset Securitization LLC 1.050% 07/07/2004 $30,000,000 $ 29,941,375 Golden Funding Corporation 1.060% 05/19/2004 20,897,000 20,885,925 Lockhart Funding LLC 1.200% 10/01/2004 30,000,000 29,847,000 Starbird Funding Corporation 1.050% 05/12/2004 25,000,000 24,991,979 Thunder Bay Funding, Inc. 1.040% 05/19/2004 25,000,000 24,987,000 -------------- TOTAL ASSET-BACKED COMMERCIAL PAPER 130,653,279 -------------- CERTIFICATES OF DEPOSIT -- 10.4% BANKING -- 8.9% Canadian Imperial Bank of Commerce 1.460% 11/17/2004 22,500,000 22,498,769 Societe Generale NY 1.075% 05/03/2004 35,000,000 35,000,000 Toronto Dominion Bank, Ltd. 1.100% 09/20/2004 26,000,000 26,000,000 Wilmington Trust Co. 1.070% 06/25/2004 31,000,000 31,000,471 -------------- 114,499,240 -------------- BROKERS -- 1.5% Credit Suisse First Boston NY 1.530% 11/22/2004 20,000,000 20,000,000 -------------- TOTAL CERTIFICATES OF DEPOSIT 134,499,240 -------------- COMMERCIAL PAPER -- 37.1% AUTOMOTIVE -- 4.6% American Honda Finance Corporation 1.020% 05/07/2004 24,500,000 24,495,835 Toyota Motor Credit Corporation 1.060% 07/12/2004 35,000,000 34,925,800 -------------- 59,421,635 -------------- BANKING -- 14.0% Abbey National North America 1.020% 05/07/2004 50,000,000 49,991,500 ABN Amro Holding NV 1.060% 07/06/2004 20,000,000 19,961,133 Bank of America Corp. 1.070% 05/05/2004 25,000,000 24,997,028 Dexia Delaware LLC 1.030% 05/18/2004 20,000,000 19,990,271 ING (US) Funding LLC 1.040% 05/05/2004 15,000,000 14,998,266 JP Morgan Chase & Co. 1.050% 07/12/2004 25,000,000 24,947,500 Royal Bank of Scotland 1.020% 05/12/2004 25,000,000 24,992,208 -------------- 179,877,906 -------------- BROKERS -- 1.9% Morgan Stanley 1.030% 05/18/2004 25,000,000 24,987,840 -------------- CANADIAN PROVINCES -- 1.2% Quebec Province 1.350% 01/11/2005 15,000,000 14,856,562 --------------
3 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- CASH RESERVES FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST FINANCIAL SERVICES -- 5.4% Household Finance Corporation 1.070% 05/20/2004 $19,395,000 $ 19,384,046 International Lease Finance Corporation 1.050% 07/08/2004 25,000,000 24,950,417 National Rural Utilities Cooperative Finance Corporation 1.040% 05/25/2004 25,000,000 24,982,667 -------------- 69,317,130 -------------- INDUSTRIAL - DIVERSIFIED -- 2.3% General Electric Capital International Funding 1.050% 06/18/2004 30,000,000 29,958,000 -------------- INDUSTRIAL EQUIPMENT -- 1.9% Caterpillar Financial Services Corporation 1.050% 05/19/2004 25,000,000 24,986,875 -------------- OIL & GAS -- 2.7% Exxon Asset Management Co. 1.020% 05/05/2004 35,000,000 34,996,033 -------------- TELEPHONE SYSTEMS -- 3.1% SBC International, Inc. 1.040% 05/12/2004 10,000,000 9,996,822 Verizon Network Funding 1.020% 05/11/2004 29,229,000 29,220,718 -------------- 39,217,540 -------------- TOTAL COMMERCIAL PAPER 477,619,521 -------------- FIXED RATE U.S. GOVERNMENT AGENCY OBLIGATIONS -- 16.9% Federal Home Loan Bank 1.400% 04/01/2005 33,150,000 33,149,589 Federal Home Loan Bank 1.470% 03/01/2005 12,610,000 12,610,000 Federal Home Loan Bank 1.660% 05/16/2005 26,800,000 26,800,000 Federal Home Loan Mortgage Corporation 1.100% 10/05/2004 25,000,000 24,880,069 Federal Home Loan Mortgage Corporation 1.120% 10/12/2004 25,000,000 24,872,444 Federal Home Loan Mortgage Corporation 1.170% 08/20/2004 8,000,000 8,000,482 Federal National Mortgage Association 1.075% 09/01/2004 25,000,000 24,908,182 Federal National Mortgage Association 1.600% 12/29/2004 30,500,000 30,500,000 Federal National Mortgage Association 6.500% 08/15/2004 30,700,000 31,168,724 -------------- TOTAL FIXED RATE U.S. GOVERNMENT AGENCY OBLIGATIONS 216,889,490 -------------- VARIABLE RATE U.S. GOVERNMENT AGENCY OBLIGATIONS -- 8.5% U.S. GOVERNMENT AGENCY OBLIGATIONS -- 8.5% Federal Home Loan Mortgage Corporation(1) 1.100% 07/07/2004 21,250,000 21,250,000 Federal Home Loan Mortgage Corporation(1) 1.219% 07/21/2004 33,150,000 33,150,000 Federal National Mortgage Association(1) 1.030% 06/09/2004 21,250,000 21,243,290 Federal National Mortgage Association(1) 1.219% 07/21/2004 33,150,000 33,150,000 -------------- TOTAL VARIABLE RATE U.S. GOVERNMENT AGENCY OBLIGATIONS 108,793,290 --------------
4 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- CASH RESERVES FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST VARIABLE RATE NOTES -- 10.9% BANKING -- 2.2% The Bank of New York Company, Inc.(1) 1.090% 05/27/2004 $10,000,000 $ 10,000,000 Wells Fargo & Co.(1) 1.225% 05/10/2004 18,725,000 18,725,827 -------------- 28,725,827 -------------- BROKERS -- 2.3% Goldman Sachs Group, Inc.(1) 1.160% 05/03/2004 25,000,000 25,000,000 Merrill Lynch & Co.(1) 1.225% 05/11/2004 5,000,000 5,000,000 -------------- 30,000,000 -------------- FINANCIAL SERVICES -- 4.2% American Express Credit Corporation(1) 1.070% 05/13/2004 19,000,000 19,000,000 American Express Credit Corporation(1) 1.140% 05/05/2004 11,000,000 11,000,000 Tannehill Capital Co. LLC(1) 1.060% 05/24/2004 23,825,000 23,823,861 -------------- 53,823,861 -------------- TELEPHONE SYSTEMS -- 2.2% SBC Communications, Inc. 4.180% 06/05/2004 12,500,000 12,534,916 Vodafone Group PLC 7.625% 02/15/2005 14,700,000 15,408,784 -------------- 27,943,700 -------------- TOTAL VARIABLE RATE NOTES 140,493,388 -------------- REPURCHASE AGREEMENT -- 5.9% UBS PaineWebber Warburg Repurchase Agreement, collateralized by Federal Home Loan Banks and Fannie Mae Discount Notes, with interest rates ranging from 0.000% to 1.500%, maturity dates ranging from 3/01/05 to 11/15/29 and an aggregate market value of $77,171,298. 1.030% 05/03/2004 75,657,000 75,657,000 -------------- TOTAL INVESTMENTS -- 99.9% (COST $1,284,605,208) 1,284,605,208 NET OTHER ASSETS -- 0.1% 1,089,906 -------------- NET ASSETS -- 100.0% $1,285,695,114 ============== TOTAL COST FOR INCOME TAX PURPOSES $1,284,645,538
NOTES TO SCHEDULE OF INVESTMENTS: (1) The maturity date shown for security is next interest rate reset date. The accompanying notes are an integral part of the financial statements. 5 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- U.S. GOVERNMENT MONEY MARKET FUND SCHEDULE OF INVESTMENTS - APRIL 30, 2004 --------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST ------------------------------------------------------------------------------------------ FIXED RATE U.S. GOVERNMENT AGENCY OBLIGATIONS -- 77.9% Federal Home Loan Bank 1.000% 06/02/2004 $ 3,600,000 $ 3,596,800 Federal Home Loan Bank 1.180% 10/08/2004 5,026,000 4,999,641 Federal Home Loan Bank 1.400% 04/01/2005 4,700,000 4,699,942 Federal Home Loan Bank 1.470% 03/01/2005 1,820,000 1,820,000 Federal Home Loan Bank 1.660% 05/16/2005 3,800,000 3,800,000 Federal Home Loan Mortgage Corporation 0.990% 05/18/2004 4,673,000 4,670,815 Federal Home Loan Mortgage Corporation 1.000% 06/01/2004 6,500,000 6,494,403 Federal Home Loan Mortgage Corporation 1.010% 05/11/2004 3,100,000 3,099,130 Federal Home Loan Mortgage Corporation 1.010% 06/15/2004 4,700,000 4,694,066 Federal Home Loan Mortgage Corporation 1.015% 05/20/2004 11,212,000 11,205,994 Federal Home Loan Mortgage Corporation 1.020% 06/08/2004 2,649,000 2,646,148 Federal Home Loan Mortgage Corporation 1.050% 07/21/2004 3,965,000 3,955,633 Federal Home Loan Mortgage Corporation 1.100% 10/05/2004 8,716,000 8,674,187 Federal Home Loan Mortgage Corporation 1.170% 08/20/2004 4,000,000 4,000,241 Federal Home Loan Mortgage Corporation 5.000% 05/15/2004 5,000,000 5,007,158 Federal National Mortgage Association 0.980% 05/07/2004 3,800,000 3,799,379 Federal National Mortgage Association 0.985% 05/05/2004 6,700,000 6,699,267 Federal National Mortgage Association 0.985% 05/12/2004 3,156,000 3,155,050 Federal National Mortgage Association 1.000% 05/19/2004 7,100,000 7,096,450 Federal National Mortgage Association 1.010% 05/26/2004 2,980,000 2,977,910 Federal National Mortgage Association 1.020% 06/02/2004 10,000,000 9,990,933 Federal National Mortgage Association 1.025% 06/23/2004 3,700,000 3,694,417 Federal National Mortgage Association 1.035% 05/12/2004 7,500,000 7,497,629 Federal National Mortgage Association 1.075% 08/11/2004 4,000,000 3,987,817 Federal National Mortgage Association 1.075% 09/01/2004 5,000,000 4,981,636 Federal National Mortgage Association 1.150% 11/12/2004 4,000,000 3,975,083 Federal National Mortgage Association 1.600% 12/29/2004 4,700,000 4,700,000 Federal National Mortgage Association 6.500% 08/15/2004 4,654,000 4,725,055 ------------ TOTAL FIXED RATE U.S. GOVERNMENT AGENCY OBLIGATIONS 140,644,784 ------------ VARIABLE RATE U.S. GOVERNMENT AGENCY OBLIGATIONS -- 8.6% Federal Home Loan Mortgage Corporation(1) 1.100% 07/07/2004 3,000,000 3,000,000 Federal Home Loan Mortgage Corporation(1) 1.219% 07/21/2004 4,700,000 4,700,000 Federal National Mortgage Association(1) 1.030% 06/09/2004 3,000,000 2,999,053 Federal National Mortgage Association(1) 1.219% 07/21/2004 4,700,000 4,700,000 ------------ TOTAL VARIABLE RATE U.S. GOVERNMENT AGENCY OBLIGATIONS 15,399,053 ------------
6 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- U.S. GOVERNMENT MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST REPURCHASE AGREEMENT -- 13.5% UBS Painewebber Warburg Repurchase Agreement, collateralized by Federal Home Loan Banks with interest rates ranging from 1.500% to 2.150%, maturity dates ranging from 3/1/05 to 9/16/05 and an aggregate market value of $24,849,330. 1.030% 05/03/2004 $24,362,000 $ 24,362,000 ------------ TOTAL INVESTMENTS -- 100.0% (COST $180,405,837) 180,405,837 NET OTHER ASSETS -- 0.0% 88,300 ------------ NET ASSETS -- 100.0% $180,494,137 ============ TOTAL COST FOR INCOME TAX PURPOSES $180,405,837
NOTES TO SCHEDULE OF INVESTMENTS: (1) The maturity date shown for security is next interest rate reset date. The accompanying notes are an integral part of the financial statements. 7 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- TAX FREE MONEY MARKET FUND SCHEDULE OF INVESTMENTS - APRIL 30, 2004 --------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST ----------------------------------------------------------------------------------------- MUNICIPAL INTEREST BEARING COMMERCIAL PAPER -- 5.6% Indiana State Development Finance Authority 1.000% 08/10/2004 $1,000,000 $ 1,000,000 Municipal Electricity Authority of Georgia 0.950% 05/07/2004 1,500,000 1,500,000 Venango, PA, Industrial Development Authority 1.110% 06/09/2004 2,000,000 2,000,000 ----------- TOTAL MUNICIPAL INTEREST BEARING COMMERCIAL PAPER 4,500,000 ----------- FIXED RATE MUNICIPAL OBLIGATIONS -- 30.2% Ames, IA, (Mary Greeley Medical Center) 3.000% 06/15/2004 1,000,000 1,002,257 Arlington, TX, Independent School District 5.750% 02/15/2021 1,480,000 1,532,700 Augusta-Richmond County Coliseum Authority, GA 2.000% 08/01/2004 445,000 446,102 Augusta-Richmond County Coliseum Authority, GA 2.000% 02/01/2005 475,000 478,531 Bexar County, TX Refunding Bonds 4.500% 06/15/2004 1,000,000 1,004,172 Brookline, MA Public Improvements BANs 2.000% 05/13/2004 1,000,000 1,000,325 Brownsburg, IN, 1999 School Building Corp. 3.000% 08/01/2004 230,000 231,091 Chicago Board of Education, (Chicago School Reform) 5.750% 12/01/2004 1,000,000 1,026,400 Delaware Transportation Authority 5.500% 07/01/2004 1,000,000 1,007,431 Denton, TX Recreational Facilities Improvements 5.400% 02/15/2005 250,000 258,115 Deschutes & Jefferson Counties, OR, School District No. 2J 5.500% 06/01/2004 1,160,000 1,164,386 Douglas County, WA, Sewer District No. 1 2.500% 08/01/2004 345,000 346,209 Downtown Savannah Authority, (Capital Improvements) 2.000% 08/01/2004 430,000 430,942 Du Page County, IL, (Stormwater) Public Improvements 4.000% 01/01/2005 1,245,000 1,269,741 Fairbanks North Star Boro, AK School Improvements 8.000% 11/01/2004 675,000 697,996 Fairfax County, VA Public Improvement 4.500% 06/01/2004 500,000 501,504 Grand County, CO, School District No. 2 East Grand 5.000% 12/01/2004 400,000 409,130 Hennepin County, MN Public Improvements 2.500% 12/01/2004 500,000 503,907 Hopkinton, MA Public Improvements 1.500% 07/08/2004 1,115,102 1,116,231 Jackson County, MO, Consolidated School District No. 2 5.000% 03/01/2005 400,000 413,044 Kitsap County, WA, School District No. 303 Bainbridge Island 2.000% 12/01/2004 415,000 417,287 Louisiana State Refunding Bonds 5.300% 08/01/2004 2,000,000 2,020,866 Maine State Turnpike Authority 6.000% 07/01/2011 1,085,000 1,115,742 Maricopa County High School District No 210-Phoenix 7.100% 07/01/2004 250,000 252,420 Milwaukee, WI, Area Technical College District 4.875% 12/01/2004 1,000,000 1,022,437 New Mexico State Highway Commission 5.000% 06/15/2004 300,000 301,479 New York State Dormitory Authority, (Fordham University) 2.000% 07/01/2004 250,000 250,357 Northwest Education Services District No. 189, WA 2.000% 12/01/2004 185,000 185,913 Otsego, MN Sewer & Water Utility Improvements 4.500% 02/01/2005 355,000 363,985
8 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- TAX FREE MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST FIXED RATE MUNICIPAL OBLIGATIONS (CONTINUED) Pierce County, WA, School District No. 10 4.000% 06/01/2004 $1,000,000 $ 1,002,496 Portland, ME Sewer Improvements 4.000% 09/01/2004 425,000 429,013 Santa Fe, NM, Gross Receipts Tax 6.500% 06/01/2004 1,280,000 1,285,929 Snohomish County, WA, School District No. 002 Everett 2.000% 06/01/2004 255,000 255,202 Spokane County, WA, School District No. 356 Central Valley 2.000% 06/01/2004 360,000 360,285 Spokane County, WA, School District No. 356 Central Valley 2.000% 12/01/2004 230,000 231,224 ----------- TOTAL FIXED RATE MUNICIPAL OBLIGATIONS 24,334,849 ----------- DAILY VARIABLE RATE MUNICIPAL OBLIGATIONS -- 10.6% Cuyahoga County, OH Health Facilities Development(1) 1.100% 05/03/2004 1,000,000 1,000,000 Illinois Health Facilities Authority, (Northwestern Memorial Hospital)(1) 1.100% 05/03/2004 1,100,000 1,100,000 Long Island Power Authority, NY(1) 1.080% 05/03/2004 300,000 300,000 Missouri State Health & Educational Facilities Authority, (St. Francis Medical Center)(1) 1.100% 05/03/2004 1,445,000 1,445,000 New York, NY, City Municipal Water Finance Authority(1) 1.090% 05/03/2004 2,500,000 2,500,000 New York, NY, City Transitional Finance Authority(1) 1.080% 05/03/2004 1,200,000 1,200,000 Turlock, CA, Irrigation District(1) 1.070% 05/03/2004 1,000,000 1,000,000 ----------- TOTAL DAILY VARIABLE RATE MUNICIPAL OBLIGATIONS 8,545,000 ----------- WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS -- 50.8% Baltimore, MD, Industrial Development Authority, (Baltimore Capital Acquisition)(1) 1.090% 05/05/2004 1,500,000 1,500,000 California Economic Development Financing Authority, (KQED, Inc.)(1) 1.070% 05/05/2004 800,000 800,000 Collier County, FL, Industrial Development Authority, (Redlands Christian Migrant Association, Inc.)(1) 1.150% 05/06/2004 1,000,000 1,000,000 Delaware Valley, PA, Regional Financial Authority(1) 1.100% 05/05/2004 1,000,000 1,000,000 Durham, NC Public Improvements(1) 1.110% 05/06/2004 1,000,000 1,000,000 Elmhurst, IL, (Joint Commission on Accredation of Healthcare Organizations)(1) 1.080% 05/06/2004 1,130,000 1,130,000 Emporia, VA, Industrial Development Authority, (Toll Virginia II, LP)(1) 1.200% 05/06/2004 950,000 950,000 Florida Housing Finance Agency(1) 1.030% 05/05/2004 1,000,000 1,000,000 Forsyth County, GA, Development Authority, (Selecto Scientific, Inc.)(1) 1.200% 05/06/2004 400,000 400,000 Hampton, VA, Redevelopment & Housing Authority(1) 1.050% 05/05/2004 1,335,000 1,335,000
9 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- TAX FREE MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS (CONTINUED) Harris County, TX, Health Facilities Development Authority, (Gulf Coast Regional Blood Center)(1) 1.130% 05/06/2004 $ 500,000 $ 500,000 Honolulu, HI, City & County Public Improvements(1) 1.120% 05/05/2004 2,000,000 2,000,000 Illinois Educational Facilities Authority, (Columbia College)(1) 1.100% 05/05/2004 1,500,000 1,500,000 Indiana Municipal Power Agency(1) 1.100% 05/05/2004 1,200,000 1,200,000 King County, WA, Sewer(1) 1.090% 05/05/2004 1,500,000 1,500,000 Lehigh County, PA, Industrial Development Authority, (Allegheny Electric Co-op, Inc.)(1) 1.110% 05/05/2004 110,000 110,000 Lincoln Parish, LA, Exempt Facilities, (Willamette Industries, Inc.)(1) 1.120% 05/05/2004 2,500,000 2,500,000 Maricopa County, AZ, Industrial Development Authority, (San Martin Apartments, LP)(1) 1.110% 05/06/2004 950,000 950,000 Metropolitan Atlanta Rapid Transit Authority, GA(1) 1.050% 05/05/2004 1,000,000 1,000,000 Michigan State Strategic Fund, (Grayling Generating Station LP)(1) 1.110% 05/05/2004 860,000 860,000 New Hampshire State Business Finance Authority(1) 1.150% 05/06/2004 1,500,000 1,500,000 New York State Local Government Assistance Corp.(1) 1.060% 05/05/2004 2,300,000 2,300,000 Northeastern Pennsylvania Hospital & Education Authority(1) 1.080% 05/06/2004 1,450,000 1,450,000 Pima County, AZ, Industrial Development Authority, (Tucson Power Co.)(1) 1.100% 05/05/2004 1,500,000 1,500,000 San Antonio, TX, Airport System, (Cessna Aircraft Co. (The))(1) 1.250% 05/06/2004 1,000,000 1,000,000 Seattle, WA, Municipal Light & Power(1) 1.040% 05/05/2004 1,400,000 1,400,000 Seattle, WA, Water System(1) 0.980% 05/05/2004 900,000 900,000 South Louisiana Port Commission, (Occidental Petroleum Corp.)(1) 1.100% 05/05/2004 1,325,000 1,325,000 St. Paul, MN, Housing & Redevelopment Authority, (District Energy of St. Paul)(1) 1.090% 05/05/2004 1,450,000 1,450,000 Valdosta-Lowndes County, GA, Industrial Development Authority, (Reames Cos.)(1) 1.200% 05/06/2004 700,000 700,000 Vancouver, WA, Housing Authority(1) 1.250% 05/06/2004 1,000,000 1,000,000 Washington State Public Power Supply System(1) 1.090% 05/05/2004 2,000,000 2,000,000 Westchester County, NY, Industrial Development Agency, (Levister Redevelopment Co. LLC)(1) 1.080% 05/06/2004 1,500,000 1,500,000
10 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- TAX FREE MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS (CONTINUED) Winder-Barrow Industrial Building Authority, GA, Industrial Development, (Bankhead Highway Investments)(1) 1.200% 05/06/2004 $ 600,000 $ 600,000 ----------- TOTAL WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS 40,860,000 ----------- MONEY MARKET FUND -- 4.0% Merrill Lynch Institutional Tax Exempt Money Market 0.890% 3,205,199 3,205,199 ----------- TOTAL INVESTMENTS -- 101.2% (COST $81,445,048) 81,445,048 NET OTHER ASSETS -- (1.2%) (969,633) ----------- NET ASSETS -- 100.0% $80,475,415 =========== TOTAL COST FOR INCOME TAX PURPOSES $81,445,048
NOTES TO SCHEDULE OF INVESTMENTS: BANs -- Bank anticipation notes. (1) The maturity date shown for security is next interest rate reset date. The accompanying notes are an integral part of the financial statements. 11 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- TAX FREE MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS STATE TABLE - APRIL 30, 2004 (UNAUDITED) --------------------------------------------------------------------------------
STATE (AS A % OF MARKET VALUE OF INVESTMENTS) PERCENTAGE --------------------------------------------------------- Washington................................ 11.8% New York.................................. 9.9% Illinois.................................. 7.4% Louisiana................................. 7.2% Georgia................................... 6.8% Pennsylvania.............................. 5.6% Texas..................................... 5.3% National Tax Exempt Mutual Fund........... 3.9% Virginia.................................. 3.4% Arizona................................... 3.3% Indiana................................... 3.0% Minnesota................................. 2.8% Massachusetts............................. 2.6% Florida................................... 2.5% Florida................................... 2.5% Missouri.................................. 2.3% California................................ 2.2% New Mexico................................ 2.0% Maine..................................... 1.9% Maryland.................................. 1.8% Maryland.................................. 1.8% Oregon.................................... 1.4% Wisconsin................................. 1.3% Delaware.................................. 1.2% Iowa...................................... 1.2% Ohio...................................... 1.2% Ohio...................................... 1.2% Michigan.................................. 1.1% Alaska.................................... 0.9% Colorado.................................. 0.5%
12 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NEW YORK MUNICIPAL MONEY MARKET FUND SCHEDULE OF INVESTMENTS - APRIL 30, 2004 --------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST ----------------------------------------------------------------------------------------- MUNICIPAL INTEREST BEARING COMMERCIAL PAPER -- 15.0% Long Island Power Authority, NY 0.950% 08/04/2004 $2,000,000 $ 2,000,000 Metropolitan, NY, Transportation Authority 1.000% 08/06/2004 4,000,000 4,000,000 Metropolitan, NY, Transportation Authority 1.000% 10/14/2004 2,000,000 2,000,000 New York State Dormitory Authority, (Mount Sinai School of Medicine) 0.920% 05/10/2004 2,300,000 2,300,000 New York State Environmental Quality 0.950% 06/07/2004 5,000,000 5,000,000 New York State Thruway Authority 0.950% 10/12/2004 3,500,000 3,500,000 New York, NY, City Municipal Water Finance Authority 0.950% 07/01/2004 2,000,000 2,000,000 ------------ TOTAL MUNICIPAL INTEREST BEARING COMMERCIAL PAPER 20,800,000 ------------ FIXED RATE MUNICIPAL OBLIGATIONS -- 10.1% Islip, NY Public Improvements 2.000% 11/24/2004 1,000,000 1,004,323 Jericho, NY, Union Free School District 1.150% 06/25/2004 1,400,000 1,400,730 Lindenhurst, NY, Union Free School District 1.500% 06/24/2004 2,000,000 2,001,636 Municipal Assistance Corp. for City New York, NY 6.000% 07/01/2004 1,425,000 1,436,775 New York, NY, City Transitional Finance Authority 5.000% 11/01/2004 5,000,000 5,095,050 Oyster Bay-East Norwich, NY, Central School District 1.500% 06/29/2004 1,000,000 1,000,879 Port Washington, NY, Union Free School District, (School Reconstruction) 2.000% 12/02/2004 2,000,000 2,009,986 ------------ TOTAL FIXED RATE MUNICIPAL OBLIGATIONS 13,949,379 ------------ DAILY VARIABLE RATE MUNICIPAL OBLIGATIONS -- 12.6% Jay Street Development Corp., NY, (Jay Street)(1) 0.980% 05/03/2004 1,700,000 1,700,000 New York State Dormitory Authority, (Cornell University)(1) 1.080% 05/03/2004 1,700,000 1,700,000 New York, NY Housing Improvements(1) 1.050% 05/03/2004 1,450,000 1,450,000 New York, NY, City Municipal Water Finance Authority(1) 1.090% 05/03/2004 1,600,000 1,600,000 New York, NY, City Municipal Water Finance Authority(1) 1.090% 05/03/2004 2,500,000 2,500,000 New York, NY, City Transitional Finance Authority(1) 1.080% 05/03/2004 1,000,000 1,000,000 New York, NY, City Transitional Finance Authority(1) 1.080% 05/03/2004 600,000 600,000 New York, NY, City Transitional Finance Authority(1) 1.080% 05/03/2004 1,700,000 1,700,000 New York, NY, City Transitional Finance Authority(1) 1.080% 05/03/2004 3,050,000 3,050,000 Port Authority, NY/NJ(1) 1.040% 05/03/2004 1,050,000 1,050,000 Port Authority, NY/NJ, (Versatile Structure Obligation)(1) 1.120% 05/03/2004 1,000,000 1,000,000 ------------ TOTAL DAILY VARIABLE RATE MUNICIPAL OBLIGATIONS 17,350,000 ------------
13 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NEW YORK MUNICIPAL MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS -- 62.6% Long Island Power Authority, NY(1) 1.080% 05/05/2004 $4,000,000 $ 4,000,000 Nassau County, NY, Interim Finance Authority(1) 1.050% 05/05/2004 1,900,000 1,900,000 New York State Energy Research & Development Authority, (Long Island Lighting Co.)(1) 1.100% 05/05/2004 5,000,000 5,000,000 New York State Housing Finance Agency(1) 1.070% 05/05/2004 5,000,000 5,000,000 New York State Housing Finance Agency(1) 1.070% 05/05/2004 1,500,000 1,500,000 New York State Housing Finance Agency, (14th Street Associates, LP)(1) 1.130% 05/05/2004 3,000,000 3,000,000 New York State Housing Finance Agency, (42/9 Residential LLC)(1) 1.090% 05/05/2004 2,600,000 2,600,000 New York State Housing Finance Agency, (Kew Gardens Hills/153rd Street Associates)(1) 1.100% 05/05/2004 3,000,000 3,000,000 New York State Housing Finance Agency, (Normandie CT)(1) 1.060% 05/05/2004 3,500,000 3,500,000 New York State Housing Finance Agency, (Tribeca)(1) 1.130% 05/05/2004 2,000,000 2,000,000 New York State Local Government Assistance Corp.(1) 1.060% 05/05/2004 4,900,000 4,900,000 New York State Local Government Assistance Corp.(1) 1.060% 05/05/2004 3,500,000 3,500,000 New York State Local Government Assistance Corp.(1) 1.060% 05/05/2004 1,600,000 1,600,000 New York, NY Public Improvements(1) 1.050% 05/05/2004 2,000,000 2,000,000 New York, NY Public Improvements(1) 1.070% 05/05/2004 1,500,000 1,500,000 New York, NY Public Improvements(1) 1.070% 05/05/2004 2,500,000 2,500,000 New York, NY, City Housing Development Corp., (Clinton 54 LLC)(1) 1.080% 05/05/2004 3,000,000 3,000,000 New York, NY, City Housing Development Corp., (Multiple Obligors)(1) 1.080% 05/05/2004 2,000,000 2,000,000 New York, NY, City Housing Development Corp., (Tribeca Equity Partners, LP)(1) 1.130% 05/05/2004 1,000,000 1,000,000 New York, NY, City Industrial Development Agency, (Planned Parenthood)(1) 1.060% 05/06/2004 5,000,000 5,000,000 New York, NY, City Trust for Cultural Resources(1) 1.060% 05/05/2004 1,785,000 1,785,000 Niagara Falls, NY, Bridge Commission(1) 1.060% 05/05/2004 5,900,000 5,900,000 Oneida County, NY, Industrial Development Agency(1) 1.040% 05/05/2004 4,735,000 4,735,000 Oneida Indian Nation(1) 1.100% 05/05/2004 5,500,000 5,500,000 Onondaga County, NY, Industrial Development Agency, (Solvay Paperboard LLC)(1) 1.180% 05/06/2004 5,000,000 5,000,000 Suffolk County, NY, Water Authority(1) 1.090% 05/05/2004 5,000,000 5,000,000 ------------ TOTAL WEEKLY VARIABLE RATE MUNICIPAL OBLIGATIONS 86,420,000 ------------
14 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NEW YORK MUNICIPAL MONEY MARKET FUND (CONTINUED) SCHEDULE OF INVESTMENTS - APRIL 30, 2004 -------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
SECURITY DESCRIPTION RATE MATURITY PRINCIPAL AMORTIZED COST MONEY MARKET FUND -- 3.3% Dreyfus New York Municipal Cash Management Institutional Money Market Fund 0.870% $4,524,828 $ 4,524,828 ------------ TOTAL INVESTMENTS -- 103.6% (COST $143,044,207) 143,044,207 NET OTHER ASSETS -- (3.6%) (4,986,268) ------------ NET ASSETS -- 100.0% $138,057,939 ============ TOTAL COST FOR INCOME TAX PURPOSES $143,044,207
NOTES TO SCHEDULE OF INVESTMENTS: (1) The maturity date shown for security is next interest rate reset date. The accompanying notes are an integral part of the financial statements. 15 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES AS OF APRIL 30, 2004 --------------------------------------------------------------------------------
BOSTON ADVISORS BOSTON ADVISORS BOSTON ADVISORS BOSTON ADVISORS CASH U.S. GOVERNMENT TAX FREE NEW YORK MUNICIPAL RESERVES FUND MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND --------------- ----------------- ----------------- ------------------ ASSETS Investments in securities, at value (Cost $1,208,948,208, $156,043,837, $81,445,048 and $143,044,207, respectively) $1,208,948,208 $156,043,837 $81,445,048 $143,044,207 Repurchase agreements, at value (Cost $75,657,000, $24,362,000, $0 and $0, respectively) 75,657,000 24,362,000 -- -- Cash 639 663 -- -- Interest receivable 2,175,655 249,071 423,231 235,785 Prepaid expenses 83,836 29,549 21,277 8,452 -------------- ------------ ----------- ------------ TOTAL ASSETS 1,286,865,338 180,685,120 81,889,556 143,288,444 -------------- ------------ ----------- ------------ LIABILITIES Payable for investments purchased -- -- 1,301,035 5,097,133 Dividends payable 169,157 14,965 5,777 22,630 Payable to the Investment Advisor 491,289 85,989 53,130 30,189 Payable to affiliate for Trustees' fees and expenses 1,494 1,494 1,494 1,494 Payable to Distributor 253,591 36,745 15,840 29,024 Payable to Transfer Agent 118,408 16,030 2,590 9,706 Accrued expense and other payables 136,285 35,760 34,275 40,329 -------------- ------------ ----------- ------------ TOTAL LIABILITIES 1,170,224 190,983 1,414,141 5,230,505 -------------- ------------ ----------- ------------ NET ASSETS $1,285,695,114 $180,494,137 $80,475,415 $138,057,939 ============== ============ =========== ============ NET ASSETS CONSIST OF: Paid-in capital 1,285,695,114 180,473,874 80,475,415 138,057,939 Accumulated net investment income 314 20,263 -- -- Accumulated net realized loss on investment transactions (314) -- -- -- -------------- ------------ ----------- ------------ TOTAL NET ASSETS $1,285,695,114 $180,494,137 $80,475,415 $138,057,939 ============== ============ =========== ============ NET ASSETS Class 1 1,257,120,735 180,494,137 80,475,415 138,057,939 Class 2 28,574,379 -- -- -- -------------- ------------ ----------- ------------ TOTAL 1,285,695,114 180,494,137 80,475,415 138,057,939 SHARES OUTSTANDING Class 1 1,257,120,735 180,494,137 80,475,415 138,057,939 Class 2 28,574,379 -- -- -- -------------- ------------ ----------- ------------ TOTAL 1,285,695,114 180,494,137 80,475,415 138,057,939 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE Class 1 $1.00 $1.00 $1.00 $1.00 Class 2 1.00 -- -- --
See Notes to Financial Statements 16 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- STATEMENTS OF OPERATIONS YEAR ENDED APRIL 30, 2004 --------------------------------------------------------------------------------
BOSTON ADVISORS BOSTON ADVISORS BOSTON ADVISORS BOSTON ADVISORS CASH U.S. GOVERNMENT TAX FREE NEW YORK MUNICIPAL RESERVES FUND MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND --------------- ----------------- ----------------- ------------------ INVESTMENT INCOME Interest $15,211,675 $2,165,235 $827,722 $1,391,528 EXPENSES Investment advisor fee 7,113,285 1,050,418 451,137 788,125 Distribution and service fees Class 1 3,162,385 477,463 205,062 358,238 Legal fees 28,033 28,033 28,033 30,132 Printing 114,519 18,813 3,790 9,884 Audit fees 20,981 21,021 21,021 20,570 Custodian and fund accounting expense 442,820 67,200 34,840 100,558 Transfer agency expense 1,435,049 188,955 34,566 115,380 Registration expense 5,545 7,053 5,050 1,003 Insurance expense 80,300 8,945 5,172 9,428 Trustees fees and expense 8,113 8,113 8,113 8,179 Miscellaneous 150 150 151 151 ----------- ---------- -------- ---------- Total expenses 12,411,180 1,876,164 796,935 1,441,648 Reduction of expenses (Notes 3 and 4) (1,727,653) (157,298) (90,231) (510,478) ----------- ---------- -------- ---------- Net expenses 10,683,527 1,718,866 706,704 931,170 ----------- ---------- -------- ---------- Net investment income 4,528,148 446,369 121,018 460,358 ----------- ---------- -------- ---------- NET REALIZED GAINS/LOSSES ON INVESTMENTS Net losses realized on the disposal of investments in violation of restrictions (Note 7) (837) -- -- -- Net increase from payments by affiliates (Note 7) 837 -- -- -- ----------- ---------- -------- ---------- Net realized gain -- -- -- -- ----------- ---------- -------- ---------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,528,148 $ 446,369 $121,018 $ 460,358 =========== ========== ======== ==========
See Notes to Financial Statements 17 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
BOSTON ADVISORS BOSTON ADVISORS CASH U.S. GOVERNMENT RESERVES FUND MONEY MARKET FUND -------------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 30, APRIL 30, APRIL 30, APRIL 30, 2004 2003 2004 2003 --------------- --------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 4,528,148 $ 10,749,981 $ 446,369 $ 1,451,178 --------------- --------------- ------------- ------------- Net increase in net assets resulting from operations 4,528,148 10,749,981 446,369 1,451,178 --------------- --------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income Class 1 (4,378,990) (10,525,024) (446,369) (1,451,178) Class 2 (149,158) (224,957) -- -- --------------- --------------- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (4,528,148) (10,749,981) (446,369) (1,451,178) --------------- --------------- ------------- ------------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (EACH A $1.00 PER SHARE) Proceeds from sale of shares Class 1 4,833,027,671 4,284,616,395 713,467,996 639,218,663 Class 2 47,662,853 43,456,266 -- -- Net Asset Value of shares issued to shareholders in payment of distributions declared Class 1 4,369,618 10,665,082 457,672 1,497,543 Class 2 150,286 226,282 -- -- Cost of shares redeemed Class 1 (4,843,412,819) (4,378,404,786) (723,683,825) (645,276,954) Class 2 (46,269,166) (36,550,260) -- -- --------------- --------------- ------------- ------------- NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS (4,471,557) (75,991,021) (9,758,157) (4,560,748) --------------- --------------- ------------- ------------- NET DECREASE IN NET ASSETS (4,471,557) (75,991,021) (9,758,157) (4,560,748) NET ASSETS At beginning of year 1,290,166,671 1,366,157,692 190,252,294 194,813,042 --------------- --------------- ------------- ------------- At end of year $ 1,285,695,114 $ 1,290,166,671 $ 180,494,137 $ 190,252,294 =============== =============== ============= ============= Accumulated undistributed net investment income included in net assets $ 314 $ 314 $ 20,263 $ 20,263 =============== =============== ============= =============
See Notes to Financial Statements 18 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) --------------------------------------------------------------------------------
BOSTON ADVISORS BOSTON ADVISORS TAX FREE NEW YORK MUNICIPAL MONEY MARKET FUND MONEY MARKET FUND ------------------------------ --------------------------------------- FOR THE YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003 APRIL 30, 2004 APRIL 30, 2003(1) -------------- -------------- -------------- ----------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 121,018 $ 425,383 $ 460,358 $ 719,128 ------------- ------------- ------------- ------------- Net increase in net assets resulting from operations 121,018 425,383 460,358 719,128 ------------- ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income Class 1 (121,018) (425,383) (460,358) (719,128) ------------- ------------- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (121,018) (425,383) (460,358) (719,128) ------------- ------------- ------------- ------------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (EACH A $1.00 PER SHARE) Proceeds from sale of shares Class 1 237,899,013 262,943,995 514,722,265 603,293,770 Net Asset Value of shares issued to shareholders in payment of distributions declared Class 1 125,701 431,793 458,005 665,414 Cost of shares redeemed Class 1 (237,808,912) (268,254,514) (508,146,781) (472,934,734) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS 215,802 (4,878,726) 7,033,489 131,024,450 ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS 215,802 (4,878,726) 7,033,489 131,024,450 NET ASSETS At beginning of year 80,259,613 85,138,339 131,024,450 -- ------------- ------------- ------------- ------------- At end of year $ 80,475,415 $ 80,259,613 $ 138,057,939 $ 131,024,450 ============= ============= ============= ============= Accumulated undistributed net investment income included in net assets $ -- $ -- $ -- $ -- ============= ============= ============= =============
(1) Fund commenced operations on June 11, 2002. See Notes to Financial Statements 19 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - CLASS 1 --------------------------------------------------------------------------------
BOSTON ADVISORS CASH RESERVES FUND --------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003 APRIL 30, 2002 APRIL 30, 2001(1) -------------- -------------- -------------- --------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ---------- ---------- ---------- ---------- INCREASE IN NET ASSETS FROM OPERATIONS Net investment income 0.003 0.008 0.022 0.050 ---------- ---------- ---------- ---------- Net increase from investment operations 0.003 0.008 0.022 0.050 ---------- ---------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.003) (0.008) (0.022) (0.050) ---------- ---------- ---------- ---------- Total distributions (0.003) (0.008) (0.022) (0.050) ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ========== ========== ========== ========== TOTAL RETURN 0.35%(4) 0.81% 2.25% 5.07%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $1,257,121 $1,263,136 $1,346,260 $1,146,333 Ratio of net operating expenses to average net assets 0.83% 0.85% 0.90% 0.90%(3) Ratio of net investment income to average net assets 0.35% 0.81% 2.17% 5.42%(3) Ratio of expense to average net assets prior to waived fees and reimbursed expenses 0.97% 0.99% 0.99% 1.03%(3) Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses 0.21% 0.67% 2.08% 5.29%(3)
(1) For the period from commencement of offering of Class 1 shares, June 5, 2000 to April 30, 2001. (2) Not Annualized. (3) Annualized. (4) The effect of losses resulting from compliance violations and the subadviser reimbursement of such losses were less than 0.01%. See Notes to Financial Statements 20 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - CLASS 2 --------------------------------------------------------------------------------
BOSTON ADVISORS CASH RESERVES FUND --------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003 APRIL 30, 2002 APRIL 30, 2001(1) -------------- -------------- -------------- --------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ------- ------- ------- ------- INCREASE IN NET ASSETS FROM OPERATIONS Net investment income 0.005 0.010 0.025 0.020 ------- ------- ------- ------- Net increase from investment operations 0.005 0.010 0.025 0.020 ------- ------- ------- ------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.005) (0.010) (0.025) (0.020) ------- ------- ------- ------- Total distributions (0.005) (0.010) (0.025) (0.020) ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= TOTAL RETURN 0.53%(4) 1.02% 2.50% 2.01%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $28,574 $27,030 $19,898 $19,003 Ratio of net operating expenses to average net assets 0.65% 0.65% 0.65% 0.66%(3) Ratio of net investment income to average net assets 0.53% 0.99% 2.44% 5.22%(3) Ratio of expense to average net assets prior to waived fees and reimbursed expenses 0.72% 0.75% 0.74% 0.83%(3) Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses 0.46% 0.89% 2.35% 5.05%(3)
(1) For the period from commencement of offering of Class 2 shares, December 13, 2000 to April 30, 2001. (2) Not Annualized. (3) Annualized. (4) The effect of losses resulting from compliance violations and the subadviser reimbursement of such losses were less than 0.01%. See Notes to Financial Statements 21 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - CLASS 1 --------------------------------------------------------------------------------
BOSTON ADVISORS U.S. GOVERNMENT MONEY MARKET FUND --------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003 APRIL 30, 2002 APRIL 30, 2001(1) -------------- -------------- -------------- --------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 -------- -------- -------- -------- INCREASE IN NET ASSETS FROM OPERATIONS Net investment income 0.002 0.007 0.022 0.049 -------- -------- -------- -------- Net increase from investment operations 0.002 0.007 0.022 0.049 -------- -------- -------- -------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.002) (0.007) (0.022) (0.049) -------- -------- -------- -------- Total distributions (0.002) (0.007) (0.022) (0.049) -------- -------- -------- -------- NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ======== ======== ======== ======== TOTAL RETURN 0.23% 0.71% 2.20% 4.98%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $180,494 $190,252 $194,813 $112,373 Ratio of net operating expenses to average net assets 0.90% 0.90% 0.90% 0.90%(3) Ratio of net investment income to average net assets 0.23% 0.72% 2.10% 5.34%(3) Ratio of expense to average net assets prior to waived fees and reimbursed expenses 0.98% 0.98% 1.01% 1.07%(3) Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses 0.15% 0.64% 1.99% 5.17%(3)
(1) For the period from commencement of offering of Class 1 shares, June 5, 2000 to April 30, 2001. (2) Not Annualized. (3) Annualized. See Notes to Financial Statements 22 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - CLASS 1 --------------------------------------------------------------------------------
BOSTON ADVISORS TAX FREE MONEY MARKET FUND --------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003 APRIL 30, 2002 APRIL 30, 2001(1) -------------- -------------- -------------- --------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ------- ------- ------- ------- INCREASE IN NET ASSETS FROM OPERATIONS Net investment income 0.001 0.005 0.013 0.027 ------- ------- ------- ------- Net increase from investment operations 0.001 0.005 0.013 0.027 ------- ------- ------- ------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.001) (0.005) (0.013) (0.027) ------- ------- ------- ------- Total distributions (0.001) (0.005) (0.013) (0.027) ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 ======= ======= ======= ======= TOTAL RETURN 0.15% 0.48% 1.30% 2.77%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $80,475 $80,260 $85,138 $73,525 Ratio of net operating expenses to average net assets 0.86% 0.90% 0.90% 0.90%(3) Ratio of net investment income to average net assets 0.15% 0.46% 1.24% 2.99%(3) Ratio of expense to average net assets prior to waived fees and reimbursed expenses 0.97% 0.98% 1.02% 1.09%(3) Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses 0.04% 0.38% 1.12% 2.80%(3)
(1) For the period from commencement of offering of Class 1 shares, June 5, 2000 to April 30, 2001. (2) Not Annualized. (3) Annualized. See Notes to Financial Statements 23 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - CLASS 1 --------------------------------------------------------------------------------
BOSTON ADVISORS NEW YORK MUNICIPAL MONEY MARKET FUND --------------------------------------- FOR THE FOR THE YEAR ENDED PERIOD ENDED APRIL 30, 2004 APRIL 30, 2003(1) -------------- --------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 -------- -------- INCREASE IN NET ASSETS FROM OPERATIONS Net investment income 0.003 0.005 -------- -------- Net increase from investment operations 0.003 0.005 -------- -------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (0.003) (0.005) -------- -------- Total distributions (0.003) (0.005) -------- -------- NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 ======== ======== TOTAL RETURN 0.33% 0.53%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $138,058 $131,024 Ratio of net operating expenses to average net assets 0.65% 0.65%(3) Ratio of net investment income to average net assets 0.32% 0.60%(3) Ratio of expense to average net assets prior to waived fees and reimbursed expenses 1.01% 1.10%(3) Ratio of net investment income (loss) to average net assets prior to waived fees and reimbursed expenses (0.04)% 0.15%(3)
(1) For the period from commencement of offering of Class 1 shares, June 11, 2002 to April 30, 2003. (2) Not Annualized. (3) Annualized. See Notes to Financial Statements 24 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS APRIL 30, 2004 -------------------------------------------------------------------------------- 1 -- SIGNIFICANT ACCOUNTING POLICIES Boston Advisors Trust (the "Trust") is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended. The Trust was established as a Massachusetts Business Trust on September 30, 1999. The Trust currently offers four Funds: Boston Advisors Cash Reserves Fund (the "Cash Reserves Fund"), Boston Advisors U.S. Government Money Market Fund (the "U.S. Government Money Market Fund"), Boston Advisors Tax Free Money Market Fund (the "Tax Free Money Market Fund"), and Boston Advisors New York Municipal Money Market Fund (the "New York Municipal Money Market Fund"), (each, a "Fund"). Each Fund's investment objective is to seek to preserve capital and maintain liquidity, consistent with seeking maximum current income. Additionally the Tax Free Money Market Fund seeks to generate income that is substantially exempt from federal income taxes and the New York Municipal Money Market Fund seeks to generate income that is substantially exempt from federal income tax and personal income taxes imposed by New York State and New York municipalities. The Cash Reserves Fund issues two classes of shares (Class 1 and Class 2 shares). Class 1 shares have a 12b-1 distribution fee. There are no other class specific expenses for either share class. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. SECURITY VALUATION -- Each Fund values investment securities utilizing the amortized cost valuation method permitted by Rule 2a-7 of the Investment Company Act of 1940, pursuant to which each Fund must comply with certain conditions. This pricing method involves initially valuing a fund security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. B. INCOME -- Interest income is determined on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. C. EXPENSES -- The Trust accounts separately for the assets, liabilities and operations of each Fund. Direct expenses of each Fund are charged to that Fund while general expenses are allocated among the Trust's respective portfolios based on their respective net assets. The investment income and expenses of each Fund (other than class specific expenses) and realized gains and losses on investments of each Fund are allocated to each class of shares based upon their relative net asset value on the date income is earned or expenses and realized gains or losses are incurred. D. REPURCHASE AGREEMENTS -- Each Funds' custodian and other banks acting in a sub-custodian capacity take possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark-to-market basis to determine that the value, including accrued interest, exceeds the repurchase price. In the event of the seller's default of the obligation to repurchase, each Fund has a right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. E. USE OF ESTIMATES -- The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and 25 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) APRIL 30, 2004 -------------------------------------------------------------------------------- assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. F. OTHER -- Investment transactions are accounted for on a trade-date basis. Gains and losses on securities are determined on the basis of identified cost. 2 -- TAXES AND DISTRIBUTIONS TO SHAREHOLDERS Each Fund's policy is to comply with the provisions of the Internal Revenue Code 1986 (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. The net investment income of each Fund is declared as a dividend daily, and paid monthly, to shareholders of record at the close of business on record date. Net realized gains on portfolio securities, if any, are distributed at least annually. Distributions are paid in the form of additional shares of the same Fund or, at the election of the shareholder, in cash. For U.S. Government Money Market Fund and Tax Free Money Market Fund, certain distributions may be paid from net interest earned and designated as tax exempt interest. Such distributions are not includable by shareholders as income subject to federal and/or state taxes, but may be subject to federal alternative minimum tax. 26 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) APRIL 30, 2004 -------------------------------------------------------------------------------- Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. During the year ended April 30, 2004, the tax basis of distributions paid were as follows:
ORDINARY INCOME TAX-EXEMPT INCOME --------------- ----------------- Cash Reserves Fund Class 1 $4,468,044 $ -- Class 2 152,191 -- U.S. Government Money Market Fund 467,449 -- Tax Free Money Market Fund -- 127,996 New York Municipal Money Market Fund -- 471,240
As of April 30, 2004, the components of distributable earnings on a tax basis were as follows: ----------------------------------------------------------------------------------------------------- NEW YORK U. S. GOVERNMENT TAX FREE MUNICIPAL CASH RESERVES MONEY MARKET MONEY MARKET MONEY MARKET FUND FUND FUND FUND ------------- ---------------- ------------ ------------ Undistributed Ordinary Income $169,471 $35,228 $5,777* $22,630* Undistributed Long-Term Gain (Loss) -- -- -- --
* All of the dividends distributed by the Tax Free Money Market Fund and the New York Municipal Money Market Fund were derived from municipal securities which are exempt from state and federal income taxes.
At April 30, 2004, the Funds had capital loss carry forwards to offset future gains, if any, to the extent permitted by the Code, of the following: ----------------------------------------------------------------------------------------------------------- AMOUNT EXPIRATION DATE -------------------- ----------------------------- Cash Reserves Fund $314 2009
3 -- INVESTMENT ADVISER FEE Boston Advisors, Inc. (the "Advisor"), a wholly owned subsidiary of The Advest Group, Inc. ("Advest Group"), serves as the investment advisor to the Funds, providing management, investment advisory and other services. In exchange, the Funds have agreed to pay the Advisor, a monthly advisory fee at an annual rate of 0.55% of each Fund's average daily net assets. For each Fund, the Advisor has agreed to contractually waive its advisory fee and reimburse each Fund for its expenses through September 1, 2004, to the 27 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) APRIL 30, 2004 -------------------------------------------------------------------------------- extent necessary that the total expenses of each Fund do not exceed the percentage of average daily net assets as follows: Cash Reserves Fund Class 1 0.83% Class 2 0.65% U.S. Government Money Market Fund 0.90% Tax Free Money Market Fund 0.90% New York Municipal Money Market Fund 0.65%
The Advisor reserves the right to reduce its fees from time to time on a voluntary basis. Such additional voluntary limitation may be discontinued at any time at the Advisor's discretion. Any such voluntary expense limitation will have the effect of increasing a Fund's return and yield. The Advisor also reserves the right to be reimbursed for management fees waived and fund expenses paid by it during the prior two years to the extent that a Fund's expense ratio falls below any expense limitations. 4 -- DISTRIBUTION PLAN Advest, Inc. ("Advest"), a wholly owned subsidiary of the Advest Group, serves as the distributor to the Funds. The Funds have adopted a Rule 12b-1 distribution plan (the "Plan") authorizing each Fund's Class 1 shares to pay service fees equal to 0.25% of the Class 1 average daily net assets. Advest may pay up to the entire fee under the Plan to its own representatives or to other dealers providing services in connection with the sale of each Fund's shares. To the extent the fee is not paid to others, Advest may retain this fee as compensation for its services and expenses incurred in accordance with the Plan. For the year ended April 30, 2004, the distribution fees earned by Advest from the Cash Reserves Fund, the U.S. Government Money Market Fund, the Tax Free Money Market Fund and the New York Municipal Money Market Fund amounted to $3,162,385, $477,463, $205,062 and $358,238, respectively. Advest reimbursed the New York Municipal Money Market Fund the full amount of the Fund's payment and retained the full amount of each Fund's payment for the remaining funds. 5 -- TRANSFER AGENT FEE Advest Transfer Services, Inc. ("ATS"), a subsidiary of the Advest Group, serves as the Funds' shareholder servicing agent and transfer agent. ATS receives account fees and asset-based fees that vary according to account size and type of account. 6 -- ADMINISTRATION, CUSTODIAN AND FUND ACCOUNTING FEE Investors Bank & Trust Company ("Investors Bank") serves as the Trust's administrator, custodian and fund accounting agent. As compensation for its services, Investors Bank receives out-of-pocket costs, transaction fees, and asset based fees, which are accrued daily and paid monthly. Fees for such services paid to Investors Bank by the Funds are reflected as custodian and fund accounting expense in the statement of operations. 28 BOSTON ADVISORS TRUST ------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) APRIL 30, 2004 -------------------------------------------------------------------------------- 7 -- INVESTMENT SUB-ADVISORY FEE MONY Capital Management, Inc. (the "Subadviser") serves as the subadviser for the Cash Reserves Fund and the U.S. Government Money Market Fund. The Advisor and Subadviser are both wholly-owned subsidiaries of The MONY Group Inc., a diversified financial services company offering insurance, brokerage, asset management and other financial services. The subadvisory relationship with the Funds commenced on December 2, 2002. The Subadvisory Agreement provides that the Advisor will pay the Subadviser a fee equal to 0.03% of each Fund's average daily net assets. The Funds will not pay any fee directly to the Subadviser. The Subadviser made voluntary reimbursements to the Cash Reserves Fund totaling $837 to compensate the Fund for realized losses incurred from the sale of investment securities that violated the Fund's investment restrictions. 8 -- PRINCIPAL SHAREHOLDER One shareholder owns 5.1% of the shares outstanding of the Tax Free Money Market Fund as of April 30, 2004. Investment activities of this shareholder may have a material effect on the Fund. 9 -- MERGER OF THE MONY GROUP, AXA FINANCIAL, INC. AND AIMA ACQUISITION CO. On September 17, 2003, The MONY Group Inc. ("MONY"), AXA Financial, Inc. ("AXA") and AIMA Acquisition Co. entered into an Agreement and Plan of Merger (the "Merger Agreement"), providing for the acquisition of MONY by AXA (the "Merger"). As a result of the Merger, MONY will cease to be a publicly traded company and will become a wholly-owned subsidiary of AXA. AXA is a diversified financial services organization offering a broad spectrum of financial advisory, insurance and investment management products and services. MONY is an indirect parent company of the Advisor and Advest, Inc., the distributor (the "Distributor") of the Funds. The Merger will not affect the daily operations, including the management of the Funds or services provided by the Advisor and Distributor. On May 18, 2004, MONY announced that stockholders of MONY had voted to approve the Merger at a special meeting of stockholders. Consummation of the Merger is subject to a number of contingencies, including regulatory approvals. 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of Boston Advisors Cash Reserves Fund, Boston Advisors U.S. Government Money Market Fund, Boston Advisors Tax Free Money Market Fund, Boston Advisors New York Municipal Money Market Fund, and the Board of Trustees of Boston Advisors Trust: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Boston Advisors Cash Reserves Fund, Boston Advisors U.S. Government Money Market Fund, Boston Advisors Tax Free Money Market Fund, and Boston Advisors New York Municipal Money Market Fund (each a fund of Boston Advisors Trust, hereafter referred to as the "Fund") at April 30, 2004, the results of each of their operations for the year then ended, and the changes in their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the Standards of the Public Company Oversight Board (United States), which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts June 18, 2004 30 SUPPLEMENTAL TAX INFORMATION (UNAUDITED) A total of 20.1% and 84.9% of the dividends distributed by the Boston Advisors Cash Reserves Fund and the Boston Advisors U.S. Government Money Market Fund, respectively, during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax. The detailed analysis of the percentage of investments as follows:
BOSTON ADVISORS BOSTON ADVISORS U.S. GOVERNMENT MONEY CASH RESERVES FUND MARKET FUND ------------------ --------------------- U.S Treasury Obligations 0.0% 0.0% GNMA 0.0% 0.0% FNMA 11.5% 28.8% FHLMC 5.6% 36.0% Other U.S. Government Agency Obligations 3.0% 20.1% Other 79.9% 15.1%
Additionally, 100% of the dividends distributed by the Boston Advisors Tax Free Money Market Fund and the Boston Advisors New York Municipal Money Market Fund during the fiscal year was derived from Municipal securities which are exempt from state income tax. The fund will notify shareholders in January 2005 of amounts for use in preparing 2004 income tax returns. ADDITIONAL INFORMATION (UNAUDITED) On May 20, 2004, the Trust held a joint special meeting of shareholders of the Cash Reserves Fund, U.S. Government Money Market Fund, Tax Free Money Market Fund and New York Municipal Money Market Fund (the "Funds") to: consider for approval a new investment advisory agreement between the Funds and Boston Advisors, Inc. ("Proposal 1"); consider for approval a new subadvisory agreement among the Cash Reserves Fund, U.S. Government Money Market Fund, Boston Advisors, Inc. and MONY Capital Management, Inc. ("Proposal 2"); elect five trustees to serve on the board of trustees of the Funds ("Proposal 3"). The results of the shareholder vote were as follows: PROPOSAL 1 Cash Reserves Fund: For: 1,264,754,019.78 (equal to 97.77% of outstanding shares); Against: 8,723,645.78 (equal to 0.67% of outstanding shares); Abstain: 8,503,541.99 (equal to 0.66% of outstanding shares). U.S. Government Money Market Fund: For: 182,405,779.95 (equal to 99.53% of outstanding shares); Against: 978,618.94 (equal to 0.53% of outstanding shares); Abstain: 1,173,326.57 (equal to 0.64% of outstanding shares). Tax Free Money Market Fund: For: 80,303,645.31 (equal to 98.93% of outstanding shares); Against: 317,237.19 (equal to 0.39% of outstanding shares); Abstain: 324,637.55 (equal to 0.40% of outstanding shares). 31 New York Municipal Money Market Fund: For: 137,794,813.70 (equal to 97.99% of outstanding shares); Against: 734,292.41 (equal to 0.52% of outstanding shares); Abstain: 1,877,044.03 (equal to 1.34% of outstanding shares). PROPOSAL 2 Cash Reserves Fund: For: 1,263,179,473.47 (equal to 97.63% of outstanding shares); Against: 10,197,461.70 (equal to 0.79% of outstanding shares); Abstain: 8,503,541.99 (equal to 0.66% of outstanding shares). U.S. Government Money Market Fund: For: 182,199,397.08 (equal to 99.41% of outstanding shares); Against: 1,162,890.67 (equal to 0.64% of outstanding shares); Abstain: 1,195,459.71 (equal to 0.65% of outstanding shares). PROPOSAL 3 The shareholders of the Funds have voted jointly for each nominee as follows: Mr. Anathan: 1,673,830,862.36 (equal to 98.52% of shares voted); Mr. Botwinick: 1,674,140,509.13 (equal to 98.54% of shares voted); Mr. Chang: 1,674,646,239.18 (equal to 98.57% of shares voted); Mr. Peach: 1,674,733,509.35 (equal to 98.57% of shares voted); Ms. Zuckerwise: 1,674,260,763.87 (equal to 98.55% of shares voted). The votes withheld for each nominee are as follows: Mr. Anathan: 14,059,740.84 (equal to 0.83% of shares voted); Mr. Botwinick: 13,750,094.07 (equal to 0.81% of shares voted); Mr. Chang: 13,244,364.01 (equal to 0.78% of shares voted); Mr. Peach: 13,157,093.85 (equal to 0.77% of shares voted); Ms. Zuckerwise: 13,629,839.32 (equal to 0.80% of shares voted). A description of the policies and procedures that the Trust uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1-800-523-5903; and on the Commission's website at (ii) http://www.sec.gov. 32 TRUSTEES AND OFFICERS (UNAUDITED) The Trust's Board of Trustees provides broad supervision over the affairs of the Trust. The officers of the Trust are responsible for the Trust's operations. The Trustees and executive officers of the Trust are listed below, together with their principal occupations during the past five years. INTERESTED TRUSTEES
NUMBER OF TERM OF PRINCIPAL PORTFOLIOS IN OTHER NAME, OFFICE(1) OCCUPATION(S) TRUST COMPLEX DIRECTORSHIPS ADDRESS AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY HELD BY AGE HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE TRUSTEE ------------------------------------------------------------------------------------------------------------------------------ Allen G. Botwinick(2) Chairman of the Trustee and Chairman Executive Vice Four Advest, Inc.; 90 State House Square Board and Trustee of the Board since President of Lebenthal Funds, Hartford, CT 06103 March 2000 Administration and Inc. (three Age: 61 Operations, The funds) Advest Group, Inc. and Advest, Inc. Michael J. Vogelzang(3) President, Chief Trustee, President Boston Four Advest, Inc. One Federal Street Executive Officer and Chief Executive Advisors, Inc., Boston, MA 02110 and Trustee Officer since March President and Chief Age: 43 2000 Investment Officer, 4/99 - present; Senior Vice President and Chief Investment Officer, 8/97 - 4/99.
DISINTERESTED TRUSTEES
NUMBER OF TERM OF PRINCIPAL PORTFOLIOS IN OTHER NAME, OFFICE(1) OCCUPATION(S) TRUST COMPLEX DIRECTORSHIPS ADDRESS AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY HELD BY AGE HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE TRUSTEE ------------------------------------------------------------------------------------------------------------------------------ Mone Anathan III Trustee Trustee since March Harvard Divinity Four Brookstone, Inc. 99 Garden Street 2000 School, Student, (specialty Cambridge, MA 02136 9/97 - present; retailer) Age: 65 Victor Chang Trustee Trustee since Retired. Guest Four Lebenthal One Federal Street December 2003 lecturer and Funds, Inc. Boston, MA 02110 researcher for (three funds) Age: 65 central banks and the U.S. and foreign governments. President V.C. Management Co., Inc. which was in the business of providing financial analysis and economic consulting (1980 - 1996). Vice President of and consultant to Fuji Securities Company Inc. (1996 - 1998).
33
NUMBER OF TERM OF PRINCIPAL PORTFOLIOS IN OTHER NAME, OFFICE(1) OCCUPATION(S) TRUST COMPLEX DIRECTORSHIPS ADDRESS AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY HELD BY AGE HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE TRUSTEE ------------------------------------------------------------------------------------------------------------------------------ Ezekiel Russell Peach, Jr. Trustee Trustee since March Retired, 12/99 - Four Lebenthal 137 Atlantic Avenue 2000 present; Robert, Funds, Inc. Marblehead, MA 01945 Finnegan & Lynah, (three funds); Age: 69 PC (public Salem Five Cent accounting), Savings Bank; partner/ principal, Wentworth 84 1968 - 12/99. Irrevocable Trust Penny Zuckerwise Trustee Trustee since Principal and Four BBR Partners Wiserock, L.L.C. December 2003 founder, Wiserock, (asset One West 81st Street L.L.C. (management management and New York, NY 10024 oversight and advisory Age: 48 business advice), services); 1999 - present; Co- Colspace Founder, general (software based partner, governing knowledge board member, management Boldcap Ventures LLC company); (private equity Lebenthal investment fund), Funds, Inc. 6/00 - present; (three funds); President and Chief Lioness Capital Operating Officer, Parners (private Chancellor LGT Asset equity fund). Management (currently, INVESCO), 1991 - 1998.
(1) Each Trustee will hold office until his successor is elected or the Trust is terminated; except that (a) any Trustee may resign by written instrument signed by him and delivered to the other Trustees or to any Trust officer, which will take effect upon delivery or upon such later date as is specified; (b) any Trustee may be removed at any time with or without cause by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal will become effective; (c) any Trustee who requests in writing to be retired or who has become incapacitated by illness or injury may be retired by written instruments signed by a majority of the other Trustees, specifying the date of his retirement; or (d) a Trustee may be removed at any special meeting of the shareholders of the Trust by a vote of two-thirds of the outstanding shares of beneficial interest of the Trust. (2) Mr. Botwinick may be deemed an "interested person" of the Trust as defined under the Investment Company Act of 1940 (the "1940 Act") based on his affiliation with Advest, Inc. (3) Mr. Vogelzang may be deemed an "interested person" of the Trust as defined under the 1940 Act based on his affiliation with Boston Advisors, Inc. OFFICERS
PRINCIPAL NAME, TERM OF OFFICE(4) OCCUPATION(S) ADDRESS AND POSITION(S) AND LENGTH OF DURING PAST AGE HELD WITH TRUST TIME SERVED 5 YEARS ---------------------------------------------------------------------------------------- Todd A. Finkelstein Vice President Vice President since Boston One Federal Street March 2000 Advisors, Inc., Boston, MA 02110 Senior Vice Age: 43 President and Director of Fixed Income, 8/98 - present; BankBoston, Vice President and Senior Investment Officer, 12/94 - 8/98.
34
PRINCIPAL NAME, TERM OF OFFICE(4) OCCUPATION(S) ADDRESS AND POSITION(S) AND LENGTH OF DURING PAST AGE HELD WITH TRUST TIME SERVED 5 YEARS ---------------------------------------------------------------------------------------- Ronald B. Maggiacomo Treasurer and Treasurer and Chief Treasurer of One Federal Street Chief Financial Financial Officer Lebenthal Boston, MA 02110 Officer since December 2003 Funds, Inc. since Age: 61 October 2003; Boston Advisors, Inc., Chief Operating Officer, 3/03 - present; President of Billings & Co. Inc. since March 1982; Vice President of Bank Street Management Company since June 2003. Annellen McNamara Assistant Assistant Treasurer Director, Mutual Investors Bank & Trust Treasurer since March 2002 Fund Administration, 200 Clarendon Street Investors Bank & Boston, MA 02116 Trust Company, Age: 37 6/02 - present; Senior Manager, 1/00 - 5/02; Manager 1996 - 1999. John DelPrete Secretary Secretary since June Senior Associate Investors Bank & Trust 2001 Counsel, Mutual Fund 200 Clarendon Street Administration, Boston, MA 02116 Investors Bank & Age: 35 Trust Company, 1/01 - present; Associate Counsel, 5/97 - 12/00. Ellen O'Leary Blanchard Assistant Assistant Secretary Associate Counsel, Investors Bank & Trust Secretary since September 2002 Mutual Fund 200 Clarendon Street Administration, Boston, MA 02116 Investors Bank & Age: 30 Trust Company, 1999 - present; Fund Accountant, 1996 - 1999.
(4) Officers are elected to hold such office until their successor is elected and qualified to carry out the duties and responsibilities of their office, or until he or she resigns or is removed from office. The Trust's Statement of Additional Information has additional information abut the Trust's Trustees and is available without charge upon request by calling 1-800-523-5903. 35 ITEM 2 CODE OF ETHICS. As of February 24, 2004, the Registrant had adopted a Code of Ethics that applies to the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002. For the year ended April 30, 2004, there were no amendments to a provision of the Code of Ethics nor were there any waivers granted from a provision of the Code of Ethics. A copy of the Registrant's Code of Ethics is filed with this Form N-CSR under item 11 (a). ITEM 3 AUDIT COMMITTEE FINANCIAL EXPERT The Registrant's Board of Directors has determined that the Registrant has at least one audit committee financial expert serving on its audit committee. The audit committee financial expert serving on the Registrant's audit committee is Ezekiel Russell Peach, Jr., who is "independent" as defined in Item 3 of Form N-CSR. ITEM 4 PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) AUDIT FEES: The aggregate fees paid and accrued by the Registrant for professional services rendered by its independent auditors, Pricewaterhousecoopers LLP, for the audit of the Registrant's annual financial statements for 2004 and 2003 were $78,700 and $81,000, respectively. (b) AUDIT RELATED FEES: No such fees were billed to the Registrant by PricewaterhouseCoopers LLP for 2004 or 2003. (c) TAX FEES: The aggregate fees paid or accrued by the Registrant for professional services rendered by Pricewaterhousecoopers LLP for the review of excise tax distribution calculations for 2004 and 2003 were $15,700 and $9,000, respectively. (d) ALL OTHER FEES: The aggregate fees paid and accrued by the Registrant for professional services rendered by Pricewaterhousecoopers LLP for the review of transfer agent services for 2004 and 2003 were $30,000 and $30,000, respectively. (e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICY: The Registrant's audit committee pre-approves all audit and non-audit services to be performed by the Registrant's accountant before the accountant is engaged by the Registrant to perform such services. (e) (2) Not applicable. (f) Not applicable. (g) The aggregate fees paid and accrued by the Registrant for professional services rendered by Pricewaterhousecoopers LLP and by the Registrant's investment adviser for non-audit services for 2004 and 2003 were $863,403 and $2,964,529. (h) Not applicable. ITEM 5 AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to this filing. ITEM 6 SCHEDULE OF INVESTMENTS Not applicable to this filing. ITEM 7 DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to this filing. ITEM 8 PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to this filing. ITEM 9 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 10 CONTROLS AND PROCEDURES. (a) The Registrant's Principal Executive Officer and Principal Financial Officer concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) were effective as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"), based on their evaluation of the effectiveness of the Registrant's disclosure controls and procedures as of the Evaluation Date. (b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 11 EXHIBITS: (a)(1) Code of Ethics Described in Item 2 is attached. (a)(2) Certifications of the Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a) are attached hereto as Exhibit 99CERT.302 (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as required by Rule 30a-2(b), under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)), Rule 15d-14(b) under the Securities Exchange Act of 1934 (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) is attached hereto as Exhibit 99.906CERT. FORM N-CSR(3 OF 3) Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Boston Advisors Trust By: /s/ Michael J. Vogelzang -------------------------------------------------- Michael J. Vogelzang, Chief Executive Officer Date July 8, 2004 ---------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities, and on the dates indicated. By: /s/ Michael J. Vogelzang ---------------------------------------------------- Michael J. Vogelzang, Chief Executive Officer Date July 8, 2004 ---------------------------- By: /s/ Ronald B. Maggiacomo ----------------------------------------------- Ronald B. Maggiacomo, Chief Financial Officer Date July 8, 2004 -------------------------------