SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 30 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 30 [ X ]
(Check appropriate box or boxes)
NEW ENGLAND CASH MANAGEMENT TRUST
(Exact Name of Registrants Specified in Charter)
399 Boylston Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
(617) 267-6600
(Registrant's Telephone Number, including Area Code)
Robert P. Connolly, Esq. Edward A. Benjamin, Esq.
New England Funds, L.P. Ropes & Gray
399 Boylston Street One International Place
Boston, Massachusetts 02116 Boston, Massachusetts 02110
(Name and Address of Agents for Service)
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ X ] on September 1, 1995 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has registered an indefinite number of securities under the
Securities Act of 1933 in accordance with Rule 24f-2 under the
Investment Company Act of 1940, as amended. Registrant filed the Rule
24f-2 Notice for the Registrant's fiscal year ended June 30, 1995 on
August 15, 1995.
CALCULATION OF REGISTRATION FEE
UNDER THE SECURITIES ACT OF 1933
Title of Amount Proposed Proposed Amount of
securities being maximum maximum registrati
being registered offering aggregate on fee
offered price per offering
unit price*
Shares of 82,144,279 $1.00 $82,144,279 $100.00
beneficial shares
interest
* The calculation of the maximum aggregate offering price is made
pursuant to Rule 24e-2 under the Investment Company Act of 1940.
The following information is furnished pursuant to the requirements
of paragraph (b) thereof:
Total amount of securities redeemed
or repurchased during the previous
year: $1,292,952,698
Total amount of redeemed or
repurchased securities used for
reductions pursuant to paragraph
(a) of Rule 24e-2 or pursuant to
paragraph (c) of Rule 24f-2 in all
previous filings during the
current year: $1,211,098,419
Amount of redeemed or repurchased
securities being used for such
reduction in this amendment: $81,854,279
Amount being registered hereby
in excess of amount of redeemed
or repurchased securities being
used for reduction in this
amendment: $290,000
Total amount being registered: $82,144,279
<PAGE>
New England Cash Management Trust
(Prospectus and Statement of Additional Information)
Cross Reference Sheet
Items required by Form N-1A
Item No. of
Form N-1A Caption in Prospectus
1 Cover Page
2 Schedule of Fees
3 Financial Highlights; Fund Yields;
Additional Facts about the Funds
4 Investment Objectives; How the Funds
Pursue Their Objectives; Fund Investments;
Investment Risks; Additional Facts about the
Funds
5 Fund Management; Back Cover Page
6 Cover Page; Minimum Investment; 6 Ways
to Buy Fund Shares; Fund Dividend
Payments; Income Tax Considerations;
Additional Facts about the Funds
7 Cover Page; 6 Ways to Buy Fund Shares;
Exchanging Among New England Funds;
Back Cover Page
8 5 Ways to Sell Fund Shares
9 None
<PAGE>
Item No. of
Form N-1A Caption in Statement of Additional Information
10 Cover page
11 Table of Contents
12 Not Applicable
13 Investment Objectives and Policies;
Investment Restrictions
14 Management of the Funds
15 Description of the Funds and Ownership of
Shares
16 Investment Advisory, Distribution and Other
Services
17 Portfolio Transactions
18 Description of the Funds and Ownership of
Shares
19 Purchase of Shares; Shareholder Services;
Redemptions; Net Income, Dividends and
Valuation; Taxes
20 Net Income, Dividends and Valuation; Taxes
21 Investment Advisory ond Other Services
22 Net Income, Dividends and Valuation; Taxes
23 Financial Statements and Report of
Independent Accountants
<PAGE>
[New England Funds Logo]
NEW ENGLAND CASH MANAGEMENT TRUST
MONEY MARKET SERIES
U.S. GOVERNMENT SERIES
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
(The "Funds," and each a "Fund")
Prospectus and Application
September 1, 1995
This prospectus concisely provides information that you should know
about each of the Funds before investing. Please read it carefully
and keep it for future reference.
Investments in the Funds are neither insured nor guaranteed by the
U.S. Government. There can be no assurance that the Funds will be
able to maintain a stable net asset value of $1.00 per share.
The Funds offer two classes of shares to the general public. Class A
and Class B shares are both offered at net asset value; however, under
conditions described below, a contingent deferred sales charge
("CDSC") may be imposed upon redemption of Fund shares originally
acquired by exchange of shares from series of New England Funds Trust
I or New England Funds Trust II (the "Trusts"). See "Owning Fund
Shares -- Exchanging Among New England Funds" and "Selling Fund Shares
-- Contingent Deferred Sales Charges."
You can find more detailed information about the Funds in the
Statement of Additional Information (the "Statement") dated September
1, 1995 which has been filed with the Securities and Exchange
Commission (the "SEC") and is available free of charge. Write to New
England Funds, L.P. (the "Distributor"), SAI Fulfillment Desk, 399
Boylston Street, Boston, MA 02116 or call toll free at 1-800-225-5478.
The Statement contains more detailed information about the Funds and
is incorporated into this prospectus by reference.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION, ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
For general information on the Funds or any of
their services and for assistance in opening an
account, contact your investment dealer or call
the Distributor toll free at 1-800-225-5478.
<PAGE>
T A B L E O F C O N T E N T S
Page NEW ENGLAND MONEY MARKET FUNDS
Investment Objectives The investment goal for each Fund.
New England Investment The Funds' adviser is an affiliate of
Companies and the NEIC.
Funds' Adviser
FUND EXPENSES AND FINANCIAL INFORMATION
Schedule of Fees Sales charges, yearly operating
expenses.
Financial Highlights Historical information on the Funds'
performance.
INVESTMENT STRATEGY
How the Funds Pursue Their Objectives
Fund Investments Descriptions of the types of securities
in which each Fund invests.
INVESTMENT RISKS Each Fund expects to maintain the net
asset value of its shares at $1.00,
but it is important to understand the
risks inherent in a Fund before
you invest.
FUND MANAGEMENT Information about Back Bay Advisors(R),
L.P., the Funds' investment adviser.
BUYING FUND SHARES
Minimum Investment Everything you need to know to open and
6 Ways to Buy Fund Shares add to a New England Funds account.
[] Through your investment dealer
[] By mail
[] By wire transfer
[] By Investment Builder
[] By electronic purchase through ACH
[] By exchange from another New England Fund
OWNING FUND SHARES
Exchanging Among New England Funds offer three
New England Funds convenient ways to exchange Fund shares.
Fund Dividend Payments
SELLING FUND SHARES
5 Ways to Sell Fund Shares How to withdraw money or close
your account.
[] Through your investment dealer
[] By telephone
[] By mail
[] By check
[] By Systematic Withdrawal Plan
Contingent Deferred Class B shareholders who have exchanged from
Sales Charges the Stock or Bond Series may be
subject to a CDSC upon redemption.
FUND DETAILS Additional information you may find
Fund Yields important.
Income Tax Considerations
Additional Facts About the Funds
<PAGE>
N E W E N G L A N D M O N E Y M A R K E T F U N D S
Investment Objectives
NEW ENGLAND CASH MANAGEMENT TRUST -- MONEY MARKET SERIES
(the "Money Market Fund")
The Money Market Fund is a separate series of New England Cash
Management Trust that seeks maximum current income consistent with
preservation of capital and liquidity. The Money Market Fund invests
in a variety of high quality money market instruments.
NEW ENGLAND CASH MANAGEMENT TRUST -- U.S. GOVERNMENT SERIES
(the "Government Fund")
The Government Fund is a separate series of New England Cash
Management Trust that seeks the highest current income consistent with
maximum safety of capital and liquidity. The Government Fund invests
only in obligations backed by the full faith and credit of the U.S.
Government and in related repurchase agreements.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
(the "Tax Exempt Fund")
The Tax Exempt Fund is a separate Massachusetts business trust that
seeks current income exempt from federal income taxes consistent with
preservation of capital and liquidity. The Tax Exempt Fund invests
primarily in a diversified portfolio of high quality short-term fixed,
variable and floating rate municipal obligations.
There can be no assurance that any of the Funds will achieve its
objective.
New England Investment Companies and the Funds' Adviser
New England Investment Companies, L.P. ("NEIC"), the fifth-largest
publicly traded investment management firm in the United States, is
the parent of Back Bay Advisors(R), L.P. ("Back Bay Advisors(R)"),
which manages the Funds. NEIC is listed on the New York Stock
Exchange and directly or through its subsidiaries or affiliate manages
over $68 billion in assets for individuals and institutions. Each of
NEIC's subsidiaries, including Back Bay Advisors(R), operates
independently and is staffed by experienced investment professionals.
Each subsidiary applies specialized knowledge and careful analysis to
the pursuit of the investment objectives of each fund it manages.
Back Bay Advisors(R), investment adviser of the Funds, manages over $6
billion in assets, primarily mutual fund and institutional fixed-
income portfolios.
F U N D E X P E N S E S A N D F I N A N C I A L
I N F O R M A T I O N
Schedule of Fees
Expenses are one of several factors to consider when you invest in the
Funds. The following table summarizes your maximum transaction costs
from investing in the Funds and estimated annual expenses for each
class of the Funds' shares. The Example on the following page shows
the cumulative expenses attributable to a hypothetical $1,000
investment in each class of shares of the Funds for the periods
specified.
Shareholder transaction expenses -- paid directly by shareholders
New England
Cash
Management New England
Trust - Cash New England
Money Management Tax Exempt
Market Trust - U.S. Money Market
Series Government Trust
Series
Class Class Class Class Class Class
A B A B A B
Maximum Initial Sales None None None None None None
Charge Imposed on a
Purchase (as a
percent of offering
price)
Maximum Contingent None* None* None* None* None* None*
Deferred Sales
Charge (as a percent
of original
purchase price or
redemption proceeds,
as applicable)
Deferred Sales Charge None None None None None None
Maximum Sales Charge None None None None None None
on Reinvested
Dividends
Redemption Fees None None None None None None
Exchange Fees None None None None None None
*Shares of each Class are sold without any sales charge. However,
Class A and Class B shares may be subject to a contingent deferred
sales charge if the shares were purchased by exchange from a Stock
or Bond Series. See "5 Ways To Sell Fund Shares" and "Contingent
Deferred Sales Charges."
Annual operating expenses - paid directly by the Fund, and indirectly
by its shareholders
(as a percentage of average net assets)
New England Cash New England New England
Management Trust Cash Management Tax Exempt
- Money Market Trust - U.S. Money Market Trust
Series Government
Series
Class A Class B Class A Class B Class A Class B
Management
Fees............ 0.42% 0.42% 0.43% 0.43% 0.12%(1) 0.12%(1)
12b-1
Fees............. 0.00 0.00 0.00 0.00 0.00 0.00
Other
Expenses......... 0.46 0.46 0.49 0.49 0.44 0.44
Total Fund
Operating
Expenses......... 0.88 0.88 0.92 0.92 0.56(1) 0.56(1)
(1) Back Bay Advisors(R) has voluntarily agreed to reduce its
management fee and, if necessary, to assume expenses of the Tax
Exempt Fund in order to limit those expenses for the Class A and B
shares to an annual rate of 0.5625% of that Fund's average daily
net assets. Without this expense limitation for the Class A and B
shares, Management Fees would be 0.40%, and Total Fund Operating
Expenses would be 0.85%.
Total Fund Operating Expenses are stated as a percentage of the
average net assets of each Fund for the year ended June 30, 1995.
Example
A $1,000 investment would incur the following expenses, assuming a 5%
annual return, and, unless otherwise noted, redemption at the end of
each time period. The 5% return and expenses in the Example should
not be considered indicative of actual or expected Fund performance or
expenses, both of which will vary.
New England New England New England
Cash Cash Tax Exempt
Management Management Money Market
Trust - Money Trust - U.S. Trust
Market Series Government
Series
Class Class Class Class Class Class
A B A B A B
(1) (1) (1)
1 year $ 9 $ 9 $ 9 $ 9 $ 6 $ 6
3 years 28 28 29 29 18 18
5 years 49 49 51 51 31 31
10 years 108 108 113 113 70 70
(1) Assumes CDSC does not apply to the redemption.
The purpose of this fee schedule is to help you understand the various
expenses that you will bear directly or indirectly if you invest in
one or more of the Funds.
A wire fee (currently $5.00) will be deducted from your proceeds if
you elect to transfer redemption proceeds by wire.
Please keep in mind that the Example shown above is hypothetical. The
information above should not be considered a representation of past or
future return or expenses; actual return or expenses may be more or
less than shown.
Financial Highlights
(For a Class A and B share of each Fund outstanding throughout the
indicated periods.)
The Financial Highlights presented on pages 4 through 6 have been
included in financial statements for the Funds. The financial
statements have been examined by Price Waterhouse LLP, independent
accountants, whose reports thereon were unqualified. The Financial
Highlights should be read in conjunction with the financial statements
and the notes thereto incorporated by reference in Part II of the
Statement.
<TABLE>
NEW ENGLAND CASH MANAGEMENT TRUST _ MONEY MARKET SERIES
Year Ended June 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
value,
beginning
of period
Income from investment operations
Net 0.0703 0.0554 0.0643 0.0816 0.0801 0.0693 0.0450 0.0275 0.0264 0.0469
investment
income
Net gains 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
or losses
on
securities
(both
realized
and un-
realized
Total 0.0703 0.0554 0.0643 0.0816 0.0801 0.0693 0.0450 0.0275 0.0264 0.0469
income
from
investment
operations
Less distributions
Dividends (0.0703) (0.0554) (0.0643) (0.0816) (0.0801) (0.0693) (0.0450) (0.0275) (0.0264) (0.0469)
(from net
investment
income)
Distribu- 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
tions
(from net
realized
capital
gains)
Total (0.0703) (0.0554) (0.0643) (0.0816) (0.0801) (0.0693) (0.0450) (0.0275) (0.0264) (0.0469)
distributions
Net asset $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
value,
end of
period
Total 7.24 5.68 6.60 8.45 8.29 7.15 4.58 2.84 2.68 4.79
return (%)
Ratios/Supplemental data
Net $733,194 $685,026 $823,742 $984,246 $1,140,852 $1,150,963 $925,077 $775,914 $699,369
assets, $649,808
end of
period (000)
Ratio of 0.76 0.81 0.74 0.72 0.67 0.68 0.73 0.79 0.84 0.88
expenses
to
average
net
assets
(%)
Ratio of 7.05 5.54 6.44 8.21 8.00 6.92 4.56 2.78 2.65 4.67
net
income to
average
net
assets(%)
NEW ENGLAND CASH MANAGEMENT TRUST -- U.S. GOVERNMENT SERIES
Year Ended June 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
asset
value,
beginn-
ing
of
period
Income from investment operations
Net 0.0698 0.0539 0.0585 0.0772 0.0762 0.0660 0.0449 0.0271 0.0257 0.0454
invest
ment
income
Net 0.0002 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0000 0.0000 0.000
gains
or
losses
on
secur-
ities
(both
realiz-
ed and
un-
realiz
ed)
Total 0.0700 0.0540 0.0586 0.0773 0.0763 0.0661 0.0449 0.0271 0.0257 0.0454
income
from
invest
ment
opera-
tions
Less distributions
Divide (0.0700) (0.0540) (0.0586) (0.0773) (0.0763) (0.0661) (0.0449) (0.0271) (0.0257) (0.0454)
nds
(from
net
invest
ment
income)(1)
Distri 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
butions
(from
net
realized
capital
gains)
Total (0.0700) (0.0540) (0.0586) (0.0773) (0.0763) (0.0661) (0.0449) (0.0271) (0.0257) (0.0454)
distri
butions
Net
asset
value,
end
of $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
period
Total
7.87 5.53 6.00 7.99 7.88 6.80 4.57 2.80 2.60 4.64
return
(%)
Ratios/Supplemental data
Net
assets,
end
of
$43,450 $46,585 $57,183 $57,697 $61,746 $87,380 $79,218 $64,595 $58,963 $59,742
period
(000)
Ratio
of
expenses
to
average
net
assets
(%) 0.76 0.84 0.83 0.81 0.79 0.74 0.73 0.78 0.84 0.92
Ratio
of net
income
to
average
net
7.05 5.44 5.87 7.74 7.62 6.50 4.50 2.73 2.54 4.53
assets
(%)
(1) Including net realized gain on investments.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
Year Ended June 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Net
asset
value,
beginn-
ing
of $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
period
Income
from
investment
operations
Net
investment
0.0474 0.0382 0.0427 0.0541 0.0544 0.0483 0.0337 0.0214 0.0208 0.0314
income
Net
gains or
losses
on
securities
(both
realized
and
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
unrealized)
Total
income
from
investment
0.0474 0.0382 0.0427 0.0541 0.0544 0.0483 0.0337 0.0214 0.0208 0.0314
operations
Less distributions
Dividends
(from
net
investment
(0.0474) (0.0382) (0.0427) (0.0541) (0.0544) (0.0483) (0.0337) (0.0214) (0.0208) (0.0314)
Distributions
(from
net
realized
capital
gains) 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Total
distributions-
(0.0474) (0.0382) (0.0427) (0.0541) (0.0544) (0.0483) (0.0337) (0.0214) (0.0208) (0.0314)
Net
asset
value,
end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total
return 4.84 3.89 4.34 5.53 5.56 4.93 3.41 2.20 2.10 3.18
(%)
Ratios/Supplemennal data
Net assets,
end of
period
(000) $44,617 $56,874 $65,721 $65,433 $68,287 $72,634 $65,753 $56,555 $66,620 $67,797
Ratio of
expenses
to
average
net
assets
(%)(1) 0.46 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.56
Ratio of net
income
to average net
assets (%) 4.73 3.81 4.27 5.41 5.42 4.81 3.38 2.14 2.08 3.15
(1) The ratio of operating expenses to average net assets
without giving effect to the expense limitation described in Note
3 to the Financial Statements contained in the Statement would
have been 0.77%, 0.76%, 0.75%, 0.74%, 0.76%, 0.76%, 0.76%, 0.83%,
0.89% and 0.85% for the years ended June 30, 1986, 1987, 1988,
1989, 1990, 1991, 1992, 1993, 1994 and 1995, respectively.
</TABLE>
I N V E S T M E N T S T R A T E G Y
How the Funds Pursue
Their Objectives
Investments in each Fund will be pooled with money from other
investors in that Fund to invest in a managed portfolio consisting of
securities appropriate to the Fund's investment objective and
policies, as described below. There can be no assurance that any Fund
will achieve its objective.
Fund Investments
[] Money Market Fund
The Money Market Fund invests in certificates of deposit, bankers'
acceptances and other dollar-denominated obligations of banks whose
net assets exceed $100 million. Up to 100% of the Fund's assets
may be invested in these kinds of obligations. These obligations
may be issued by U.S. banks or their foreign branches, or foreign
banks (including their U.S. or London branches), subject to the
conditions set forth in the Statement.
The Fund may invest in commercial paper and other corporate debt
obligations that satisfy the Fund's quality and maturity standards.
The Fund may invest in U.S. Government Securities, which term, as
used in this prospectus, includes all securities issued or
guaranteed by the U.S. Government or its agencies, authorities or
instrumentalities. Some U.S. Government Securities are backed by
the full faith and credit of the United States, some are supported
by the discretionary authority of the U.S. Government to purchase
the issuer's obligations (e.g., obligations of the Federal National
Mortgage Association), some by the right of the issuer to borrow
from the U.S. Government (e.g., obligations of Federal Home Loan
Banks), while still others are supported only by the credit of the
issuer itself (e.g., obligations of the Student Loan Marketing
Association).
The Fund may also invest in repurchase agreements of domestic banks
or broker-dealers relating to any of the above. In repurchase
agreements, the Fund buys a security from a seller, usually a bank
or brokerage firm, with the understanding that the seller will
repurchase the security from the Fund at a higher price at a later
date.
All of the Fund's investments (other than U.S. Government
Securities and repurchase agreements relating thereto) will be
rated in the highest rating category by a major rating agency or,
if unrated, will be of comparable quality as determined by the
Fund's investment adviser under guidelines approved by New England
Cash Management Trust's trustees.
[]Government Fund
The Government Fund invests in U.S. Government Securities, limited,
however, to obligations backed by the full faith and credit of the
U.S. Government.
The Government Fund may also invest in repurchase agreements
related to the foregoing.
[]Tax Exempt Fund
The Tax Exempt Fund invests in notes, commercial paper and bonds
which pay interest that, in the opinion of the issuer's counsel, is
exempt from federal income tax ("Municipal Securities"). Municipal
Securities are generally issued by states and local governments and
their agencies. The Fund will only invest in Municipal Securities
which are:
-short-term notes rated MIG-2 or better by Moody's Investors
Service, Inc. ("Moody's") or SP-2 or better by Standard & Poor's
Ratings Group ("S&P");
-municipal bonds rated Aa or better by Moody's or AA or better by
S&P with a remaining maturity of 397 days or less whose issuer has
comparable short-term obligations that are rated in the top rating
category by Moody's or S&P; or
-other types of Municipal Securities, including commercial paper,
rated P-2 by Moody's or A-2 by S&P or unrated Municipal Securities
determined to be of comparable quality by the Fund's investment
adviser under guidelines approved by the Fund's trustees, subject
to any limitations imposed by Rule 2a-7 under the Investment
Company Act of 1940.
Some of these may be variable or floating rate Municipal Securities,
which pay a rate of interest adjusted on a periodic basis and
determined by reference to a prescribed formula. Such obligations
will be subject to prepayment without penalty, at the option of either
the Fund or the issuer.
The interest on certain types of Municipal Securities, known as
"private activity" bonds, is an item of tax preference, subject to the
federal alternative minimum tax with a maximum rate of 28%. The Tax
Exempt Fund has instituted procedures to avoid investment in "private
activity" Municipal Securities in order to reduce the possibility that
Fund dividends will constitute an item of tax preference. However,
there can be no assurance that these procedures will be totally
effective. The Tax Exempt Fund intends to continue these procedures
so long as it deems them necessary and prudent. Shareholders should
be aware that, while these procedures are in effect, the Tax Exempt
Fund will not be able to invest in the full range of issues available
in the Municipal Securities market. The Tax Exempt Fund's investments
in Municipal Securities that are subject to the federal alternative
minimum tax, together with other investments the interest on which is
subject to the alternative minimum tax, will not normally exceed 20%
of Fund investments.
The interest on Municipal Securities issued after August 15, 1986 is
retroactively taxable from the date of issuance if the issuer does not
comply with certain requirements concerning the use of bond proceeds
and the application of earnings on bond proceeds.
The Tax Exempt Fund may also invest some of its assets in cash or
taxable, high-quality money market securities eligible for purchase by
the Money Market Fund. However, unless it has adopted a temporary
defensive position, it is a fundamental policy of the Fund to invest
at least 80% of its net assets in Municipal Securities.
The Fund may buy Municipal Securities on a when-issued basis, and may
buy Municipal Securities from a broker-dealer with the right to sell
them back at a certain time and price (puts). These practices, as
well as repurchase agreements, may present risks in addition to those
associated with Municipal Securities.
The issuer of a Municipal Security may make payments from money raised
through a variety of sources, such as (1) the issuer's general taxing
power, (2) a specific type of tax such as a property tax or (3) a
particular facility or project such as a highway. The ability of an
issuer to make these payments could be affected by litigation,
legislation or other political events or the bankruptcy of the issuer.
The Fund will make all of its investments in a manner which complies
with Rule 2a-7 under the Investment Company Act of 1940.
All Funds
All investments of the Funds mature in 397 days or less, and the
average maturity of the investments of each Fund is 90 days or less.
The maturity of repurchase agreements is calculated by reference to
the repurchase date, not by reference to the maturity of the
underlying security. All investments of each Fund will be in U.S.
dollars and will be determined to present minimal credit risks by the
Fund's trustees (or by the investment adviser under guidelines
established by the trustees).
It is a fundamental policy of each Fund that no more than 10% of the
net assets of the Fund are to be invested in illiquid securities,
including repurchase agreements with maturities of more than seven
days.
Note: Except for each Fund's investment objective and each Fund's
policies that are explicitly described as fundamental, the investment
policies of the Funds may be changed without shareholder approval or
prior notice.
I N V E S T M E N T R I S K S
Investment Risks
It is important to understand the following risks inherent in
investing in the Funds before you invest.
By investing only in high-quality, short-term securities, each Fund
seeks to minimize risk. Although changes in interest rates can change
the market value of a security, the Funds expect those changes to be
minimal and that each Fund will be able to maintain the net asset
value of its shares at $1.00, although this value cannot be
guaranteed. The price stability and liquidity of the Tax Exempt Fund
may not be equal to that of a taxable money market fund, because the
market for Municipal Securities is not as broad as the market for
taxable money market instruments and because the average portfolio
maturity is likely to be greater for the Fund than for a taxable money
market fund.
All repurchase agreements entered into by the Funds provide that the
seller's obligations must be fully collateralized at all times. A
Fund may, however, face various delays and risks of loss if the seller
defaults.
The Money Market Fund's holdings of obligations of foreign banks or of
foreign branches or subsidiaries of U.S. banks may be subject to
different risks than obligations of domestic banks, such as foreign
economic, political and legal developments and the fact that different
regulatory requirements apply.
F U N D M A N A G E M E N T
Fund Management
Each Fund is managed by Back Bay Advisors(R), 399 Boylston Street,
Boston, MA 02116. Back Bay Advisors(R) provides discretionary
investment management services to mutual funds and other institutional
investors. Formed in 1986, Back Bay Advisors(R) now manages 15 mutual
fund portfolios and a total of over $6 billion of securities. The
general partners of each of Back Bay Advisors(R) and the Distributor
are special purpose organizations that are wholly-owned subsidiaries
of NEIC. NEIC's sole general partner, New England Investment
Companies, Inc., is a wholly-owned subsidiary of New England Mutual
Life Insurance Company.
In addition to selecting and reviewing each Fund's investments, Back
Bay Advisors(R) provides executive and other personnel for the
management of the Funds. The trustees of the Funds supervise the
affairs of the Funds as conducted by Back Bay Advisors(R).
Under an agreement between Back Bay Advisors(R) and the Distributor,
Back Bay Advisors(R) pays the Distributor to provide certain
administrative services to the Funds.
Back Bay Advisors(R) was paid 0.42%, 0.43% and 0.12% of the average
net assets of the Money Market Fund, the Government Fund and the Tax
Exempt Fund, respectively, for the advisory services it rendered to
each Fund during the fiscal year ended June 30, 1995.
Until further notice, Back Bay Advisors(R) has voluntarily agreed to
reduce its management fee and, if necessary, to assume expenses of the
Tax Exempt Fund in order to limit those expenses to an annual rate of
0.5625% of that Fund's average daily net assets. But for this
reduction and assumption, Back Bay Advisors'(R) fee would have been
0.40% of the Fund's average net assets during the year ended June 30,
1995.
B U Y I N G F U N D S H A R E S
Minimum Investment
$1,000 is the minimum for an initial investment in a Fund and $50 is
the minimum for each subsequent investment. There are special initial
investment minimums for the following plans:
[]$25 (for initial and subsequent investments) for
payroll deduction investment programs for 401(k), SARSEP, 403(b)(7)
retirement plans and certain other retirement plans.
[]$50 for automatic investing through the Investment Builder program.
[]$250 for retirement plans with tax benefits such as corporate
pension and profit sharing plans, IRAs and Keogh plans.
6 Ways to Buy Fund Shares
The Funds offer two classes of shares, Class A and Class B, in order
to enable investors in either class of the Stock or Bond Series to
invest in money market shares. The Stock Series of the Trusts are:
New England Growth Fund, New England International Equity Fund, New
England Star Advisers Fund, New England Capital Growth Fund, New
England Value Fund, New England Growth Opportunities Fund and New
England Balanced Fund. The Bond Series of the Trusts are: New England
High Income Fund, New England Strategic Income Fund, New England
Government Securities Fund, New England Bond Income Fund, New England
Limited Term U.S. Government Fund, New England Adjustable Rate U.S.
Government Fund, New England Tax Exempt Income Fund, New England
Massachusetts Tax Free Income Fund, New England Intermediate Term Tax
Free Fund of California and New England Intermediate Term Tax Free
Fund of New York.
To determine which class of shares is appropriate for you, see
"Exchanging Among New England Funds." You may purchase shares in the
following ways:
[] Through your investment dealer:
Many investment dealers have a sales agreement with the Distributor
and would be pleased to accept your order.
[] By mail:
For an initial investment, simply complete an application and return
it, with a check payable to New England Funds, P.O. Box 8551, Boston,
MA 02266-8551. Proceeds from redemptions of Fund shares purchased by
check may not be available for up to ten days after the purchase date.
For subsequent investments, please mail your check to New England
Funds, P.O. Box 8551, Boston, MA 02266-8551 along with a letter of
instruction (including your account number) or an additional deposit
slip from your statements. To make investing even easier, you can
also order personalized investment slips by calling 1-800-225-5478.
[] By wire transfer of Federal Funds:
For an initial investment, call us at 1-800-225-5478 between 8:00 a.m.
and 7:00 p.m. (Eastern time) to obtain an account number and wire
transfer instructions.
For subsequent investments, direct your bank to transfer funds to
State Street Bank and Trust Company, ABA #011000028, DDA #99011538,
Credit Fund (Fund name and Class of shares), Shareholder Name,
Shareholder Account Number. Funds may be transferred between 9:00
a.m. and 4:00 p.m. (Eastern time). Your bank may charge a fee for
this service.
Using Tele#Facts 1-800-346-5984
Tele#Facts, New England Funds' automated service
system, gives you 24-hour access to your account.
Through your touch-tone telephone, you can receive
your current account balance, your last five
transactions, Fund prices and recent performance
information. You can also purchase, sell or
exchange Class A shares of any New England Fund.
For a free brochure about Tele#Facts including a
convenient wallet card, call us at 1-800-225-5478.
[] By Investment Builder:
Investment Builder is New England Funds' automatic investment plan.
You may authorize automatic monthly transfers of $50 or more from your
bank checking or savings account to purchase shares of one or more New
England Funds.
For an initial investment, please indicate that you would like to
begin an automatic investment plan through Investment Builder.
Indicate the amount of the monthly investment on the enclosed
application and enclose a check marked "Void" or a deposit slip from
your bank account.
To add Investment Builder to an existing account, please call us at 1-
800-225-5478 for a Service Options form.
[] By electronic purchase through ACH:
You may purchase additional shares electronically through the
Automated Clearing House ("ACH") system as long as your bank or credit
union is a member of the ACH system and you have a completed, approved
ACH application on file with the Fund.
To purchase through ACH, call us at 1-800-225-5478 between 8 a.m. and
7 p.m. (Eastern time) for instructions or call Tele#Facts at 1-800-346-
5984 twenty-four hours a day. If you purchase your shares through
ACH, you will receive the net asset value next determined after your
order is received. Proceeds of redemptions of Fund shares purchased
through ACH may not be available for up to ten days after the purchase
date.
[] By exchange from another New England Fund:
You may also purchase shares of a Fund by exchanging shares from
another Fund or a Stock or Bond Series. Please see "Exchanging Among
New England Funds" for complete details.
General
All purchase orders are subject to acceptance by the Funds and will be
effected at the net asset value next determined after the order is
received in proper form by State Street Bank and Trust Company ("State
Street Bank"). However, orders received by your investment dealer
before the close of trading on the New York Stock Exchange [the
"Exchange"] and transmitted to the Distributor by 5:00 p.m. [Eastern
time] on the same day, will be effected at the net asset value
determined on that day. Although the Funds do not anticipate doing
so, they reserve the right to suspend or change the terms of sale of
shares.
Class B shares and certain special services may not be available to
persons whose shares are held in street name accounts.
You will not receive any certificates for your Class A shares unless
you request them in writing from New England Funds, L.P. (the
"Servicing Agent"). The Funds' "open account" system for recording
your investment eliminates the problems of handling and safekeeping
certificates. Certificates will not be issued for Class B shares. If
you wish transactions in your account to be effected by another person
under a power of attorney from you, special rules apply. Please
contact your investment dealer or the Distributor for details.
To make investing even easier, you can also order
personalized investment slips by calling 1-800-225-
5478.
O W N I N G F U N D S H A R E S
Exchanging Among
New England Funds
Class A Shares
You or your investment dealer can exchange some or all of your Class A
shares of a Fund for Class A shares of any other Fund described in
this prospectus with no sales charge and exchange some or all of your
Class A shares of a Fund which have not previously been subject to a
sales charge for Class B shares of any other Fund described in this
prospectus with no sales charge.
Class A Fund shares acquired by initial purchase or on which no sales
charge was previously paid may be exchanged (i) for Class A shares of
any of the Stock or Bond Series on the basis of relative net asset
value plus the sales charge applicable to initial purchases of the
Class A shares of the series into which you are exchanging, (ii) for
Class B shares of any of the Stock or Bond Series on the basis of
relative net asset value subject to the CDSC schedule of the series
into which you are exchanging or (iii) for Class C shares of any of
the Stock or Bond Series on the basis of relative net asset value.
Class A Fund shares which have previously been subject to a sales
charge may not be exchanged for Class B or Class C shares of the Stock
or Bond Series.
Class B Shares
You can exchange some or all of your Class B shares of a Fund for
Class B shares of any other Fund described in this prospectus with no
sales charge. Class B Fund shares may be exchanged for Class B shares
of any of the Stock or Bond Series subject to the CDSC schedule of the
Stock or Bond Series acquired. For purposes of computing the CDSC
payable upon redemption of shares acquired by such exchange, the
holding period of the Class B Fund shares is not included. See
"Contingent Deferred Sales Charges."
To make an exchange, please call 1-800-225-5478 between 8 a.m. and 7
p.m. (Eastern time), write to New England Funds or call Tele#Facts at
1-800-346-5984 twenty-four hours a day. The exchange must be for a
minimum of $500 (or the total net asset value of your account,
whichever is less), except that, under the Automatic Exchange Plan,
the minimum is $50. All exchanges are subject to the minimum
investment and eligibility requirements of the Fund or Stock or Bond
Series into which you are exchanging. Also, see "Contingent Deferred
Sales Charges." In connection with any exchange, you must receive a
current prospectus of the Series into which you are exchanging. The
exchange privilege may be exercised only in those states where shares
of such other Series may be legally sold.
You have the automatic privilege to exchange your Fund shares by
telephone. The Servicing Agent will employ reasonable procedures to
confirm that your telephone instructions are genuine, and, if it does
not, it may be liable for losses due to unauthorized or fraudulent
instructions. The Servicing Agent will require a form of personal
identification prior to acting upon your telephone instructions, will
provide you with written confirmations of such transactions and will
tape record your instructions.
Automatic Exchange Plan
The Funds have an Automatic Exchange Plan under
which shares of a Fund which have never been
subject to a sales charge or a CDSC are
automatically exchanged each month for shares of
the same Class of any other Fund or Stock or Bond
Series (other than New England Growth Fund, which
is available only to certain investors) subject to
the appropriate sales charge or CDSC. The minimum
monthly exchange amount under the plan is $50.
There is no fee for exchanges made pursuant to
this program.
Except as otherwise permitted by SEC rule, shareholders will receive
at least 60 days' advance notice of any material change to the
exchange privilege.
Fund Dividend Payments
Each Fund pays out as dividends substantially all of the net
investment income from interest it receives from its investments. The
dividends of each Fund are declared daily and paid to you monthly. If
all of your shares of a Fund are redeemed at any time during a month,
all dividends accrued to date will be paid together with the
redemption proceeds. Dividends are automatically reinvested in more
shares. If you prefer, you may receive them in cash by selecting that
option on your account application or by notifying the Servicing Agent
in writing. If you elect to receive your dividends in cash and the
dividend checks sent to you are returned "undeliverable" to the Fund
or remain uncashed for six months, your cash election will be
automatically changed and your future dividends will be reinvested.
DIVIDEND DIVERSIFICATION PROGRAM
You may also establish a dividend diversification program, that allows
you to have all dividends and any other distributions from either
class of the Funds automatically invested in shares of the same class
of a Stock or Bond Series. Class A shareholders may also have
dividends and distributions automatically invested in Class C shares
of a Stock or Bond Series. For Class A shareholders, investments will
be made at the appropriate public offering price, which may include a
sales charge. For Class B shareholders, shares acquired through this
program will be subject to a CDSC if they are redeemed from the
account. For both classes, this program is subject to the investor
eligibility requirements of the Stock or Bond Series and to state
securities law requirements. Dividends will be invested in the
selected Stock or Bond Series' shares on the dividend payable date. A
dividend diversification account must be in the same registration
(shareholder name) as the distributing Fund account and, if a new
account in a Stock or Bond Series is being established, the minimum
investment requirements of that Series must be met. Before
establishing a dividend diversification program into any Stock or Bond
Series, you must obtain a copy of that Stock or Bond Series'
prospectus.
S E L L I N G F U N D S H A R E S
5 Ways to Sell Fund Shares
[] Through your investment dealer:
Call your authorized investment dealer for information.
[] By Telephone:
You or your investment dealer may redeem (sell) shares by telephone
using any of the three methods described below:
Wired to Your Bank Account - If you have previously selected the
telephone redemption privilege on your account, you may redeem either
Class of shares by calling 1-800-225-5478 between 8:00 a.m. and 7:00
p.m. (Eastern time). Class A shares only may also be redeemed by
calling Tele#Facts at 1-800-346-5984 twenty-four hours a day.
Redemption requests accepted after the Exchange has closed (4:00 p.m.
[Eastern time]) will be processed at the next determined net asset
value. The proceeds (less any applicable CDSC) generally will be
wired on the next business day to the bank account previously chosen
by you on your application. A wire fee (currently $5.00) will be
deducted from the proceeds.
You may elect this service on your initial application or you may add
it later or change bank information by completing the Service Options
form (with a signature guarantee), available through your investment
dealer or by calling 1-800-225-5478. Your bank must be a member of
the Federal Reserve System or have a correspondent bank that is a
member. If your account is with a savings bank, it must have only one
correspondent bank that is a member of the Federal Reserve System.
Mailed to Your Address of Record _ Both classes of shares may be
redeemed by calling 1-800-225-5478 and requesting that a check for the
proceeds (less any applicable CDSC) be mailed to the address on your
account, provided that the address has not changed during the previous
month and that the proceeds are for $100,000 or less. Generally, the
check will be mailed to you on the business day after your redemption
request is received.
Through ACH _ Shares may be redeemed electronically through the ACH
system, provided that you have an approved ACH application on file
with the Fund. To redeem through ACH, call 1-800-225-5478 between
8:00 a.m. and 7:00 p.m. (Eastern time) on a day when the Fund is open
for business. The proceeds (less any applicable CDSC) generally will
arrive at your bank within three business days; their availability
will depend on your bank's particular rule. Class A shareholders may
also redeem shares by calling Tele#Facts at 1-800-346-5984 twenty-four
hours a day. Redemptions will be processed the day your telephone
call is made if it is made prior to 4:00 p.m. (Eastern time). Orders
submitted through Tele#Facts or ACH after 4:00 p.m. (Eastern time), or
after the Exchange closes, if it closes earlier than 4:00 p.m., will
be accepted and processed the next business day.
[] By mail:
You may redeem your shares at their net asset value (less any
applicable CDSC) next determined after receipt of your request in good
order by sending a written request (including any necessary special
documentation) to New England Funds, P.O. Box 8551, Boston, MA 02266-
8551.
The request must include the name of the Fund, your account number,
the exact name(s) in which your shares are registered and the number
of shares or the dollar amount to be redeemed and must indicate
whether the proceeds should be mailed to your address of record, wired
to your bank or transmitted through ACH. All owners of the shares
must sign the request in the exact names in which the shares are
registered (this appears on the confirmation statement) and indicate
any special capacity in which they are signing (such as trustee,
custodian or under power of attorney or on behalf of a partnership,
corporation or other entity).
If you are redeeming shares worth less than $100,000 and the proceeds
check is made payable to the registered owner(s) and mailed to the
record address, no signature guarantee is required. Otherwise, you
generally must have your signature guaranteed by an eligible guarantor
institution in accordance with procedures established by the Servicing
Agent. See the Statement. Signature guarantees by notaries public
are not acceptable.
Additional written information may be required for redemptions by
certain benefit plans and IRAs. Contact the Distributor or your
investment dealer for details.
If you hold certificates for your Class A shares, you must enclose
them with your redemption request or your request will not be honored.
The Funds recommend that certificates be sent by registered mail.
[] By check:
For Class A shares only, you may select the checkwriting option on
your application and complete the attached signature card and you will
be sent checks drawn on State Street Bank. You may add checkwriting
to an existing account by completing the Service Options Form (with a
signature guarantee) available through your investment dealer or by
calling 1-800-225-5478. You will continue to earn dividends on shares
redeemed by check until the check clears. There is currently a $5.00
fee to establish this service. Each check must be written for $250 or
more, except that, for a one-time fee of $20, qualified corporate
retirement plans and certain other corporate accounts may write checks
for any amount.
If you use withdrawal checks, you will be subject to State Street
Bank's rules governing checking accounts. The Funds and the
Distributor are in no way responsible for any checkwriting account
established with State Street Bank.
You may not close your Fund account by withdrawal check, because the
exact balance of your account will not be known until after the check
is received by State Street Bank.
[] By Systematic Withdrawal Plan:
You may establish a Systematic Withdrawal Plan that allows you to
redeem shares and receive payments on a regular schedule. In the case
of shares subject to a CDSC, the amount or percentage you specify may
not exceed, on an annualized basis, 10% of the value of your Fund
account. Redemptions of shares pursuant to the Plan will not be
subject to a CDSC. For information, contact the Distributor or your
investment dealer.
General. Redemption requests will be effected at the net asset value
next determined after your redemption request is received in proper
form by State Street Bank or your investment dealer (except that
orders received by your investment dealer before the close of regular
trading on the Exchange and transmitted to the Distributor by 5:00
p.m. Eastern time on the same day will receive that day's net asset
value). In certain cases where shares were acquired by exchanging
shares of a Stock or Bond Series, however, redemption proceeds will be
reduced by the amount of any applicable CDSC that would have been
imposed on a redemption of shares of the Stock or Bond Series. See
"Contingent Deferred Sales Charges" below. Redemption proceeds will
normally be mailed to you within seven days after State Street Bank or
the Distributor receives your request in good order. However, in
those cases where you have recently purchased your shares by check or
an electronic funds transfer through the ACH system and you make a
redemption request within 10 days after such purchase or transfer, a
Fund may withhold redemption proceeds until the Fund knows that the
check or funds have cleared.
During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If you are unable to
contact the Distributor by telephone, shares may be redeemed by
delivering the redemption request in person to the Distributor or by
mail as described above. Requests are processed at the net asset
value next determined after the request is received.
Special rules apply to redemptions under powers of attorney. Please
call the Distributor or your investment dealer for more information.
Telephone redemptions are not available for tax qualified retirement
plans or for Fund shares in certificate form. If certificates have
been issued for your investment, you must send them to New England
Funds along with your request before a redemption request can be
honored. See the instructions for redemption by mail above.
The Funds may suspend the right of redemption and may postpone payment
for more than seven days when the Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the SEC, when
trading on the Exchange is restricted or during an emergency which
makes it impracticable for the Funds to dispose of their securities or
to determine fairly the value of their net assets, or during any other
period permitted by the SEC for the protection of investors.
Contingent Deferred Sales Charges
Shares of the Funds are sold without any sales charge at the time of
purchase. Class A _ Class A Fund shares acquired through exchange of
Class A shares of a Stock or Bond Series that were subject to a CDSC
at the time of the exchange will be subject to a CDSC of 1% if
redeemed within one year after the original purchase of the Stock and
Bond Series; the time that Class A Fund shares are held is not
included in the holding periods used to determine the applicability of
a Stock or Bond Series' Class A CDSC. Class B _ Class B shares may be
subject to a CDSC upon redemption if the shares were acquired by
exchange of Class B shares of a Stock or Bond Series. The time that
Class B Fund shares are held is not included in the holding periods
used to determine the CDSC and conversion to Class A shares. The CDSC
is calculated at the following rates, measured in each case from the
time the shares in the Stock or Bond Series were purchased, and
without regard to the period during which Class B shares of the Funds
were held: 4% during the first year, 3% in each of the second and
third years, 2% in the fourth year, 1% in the fifth year and 0% the
sixth year and thereafter. Investors are referred to the prospectus
of the relevant Stock or Bond Series for a description of the
applicable CDSC.
Shareholders may obtain copies of prospectuses of the New England
Funds by telephoning 1-800-255-5478 or by writing to:
New England Funds, L.P.
P.O. Box 8551
Boston, Massachusetts 02266-8551
F U N D D E T A I L S
Fund Yields
The yield is different for each Fund because each invests in different
types of securities. For current yield information, shareholders or
their investment representatives may call Tele#Facts, 24 hours a day
at 1-800-346-5984.
Income Tax Considerations
As long as a Fund distributes substantially all its net investment
income and net short-term capital gains, if any, to its shareholders,
it will not pay federal income tax on the amounts distributed.
The Funds usually do not realize a substantial amount of long-term
capital gains. If a Fund does, it will distribute them and they will
be taxable to you as long-term capital gains, whether received in cash
or additional shares and regardless of how long you have held your
shares. No distribution from any Fund is expected to be eligible for
the dividends-received deduction for corporations.
To avoid certain excise taxes, each Fund must distribute by December
31 each year virtually all of its ordinary income realized in that
year, and of any previously undistributed capital gains it realized in
the twelve months ended on October 31 of that year. Certain dividends
declared by a Fund in December, but not actually received by you until
January, will be treated for federal tax purposes as though you had
received them on December 31.
New England Funds, L.P. will send you and the Internal Revenue Service
an annual statement detailing federal tax information, including
information about dividends and distributions paid to you during the
preceding year. Be sure to keep this statement as a permanent record.
A fee may be charged for any duplicate information requested.
The Money Market Fund and the Government Fund are each required to
withhold 31% of all income dividends and capital gain distributions it
pays to you if you do not provide a correct, certified taxpayer
identification number, if the Fund is notified that you have
underreported income in the past, or if you fail to certify to the
Fund that you are not subject to such federal back-up withholding. In
addition, each such Fund is required to withhold 31% of the gross
proceeds of Fund shares you redeem if you have not provided a correct,
certified taxpayer identification number. Similar withholding
requirements apply to the Tax Exempt Fund, but only if less than 95%
of the Fund's dividends for any year are "exempt-interest dividends"
(dividends derived from interest on Municipal Securities).
[] Money Market Fund and Government Fund
Dividends and distributions of short-term capital gains, if any, are
taxable to you as ordinary income, whether paid in cash or in
additional shares.
Dividends derived from interest on U.S. Government Securities may be
exempt from state and local taxes. Each Fund intends to advise
shareholders of the proportion of its dividends derived from such
interest. Before investing in either Fund, you should check the
consequences of your local and state tax laws, and of any retirement
plan offering tax benefits.
[] Tax Exempt Fund
You may exclude from your gross income on your federal tax return
any "exempt-interest dividends" received from the Fund. However, if
you receive social security benefits, you may be taxed on a portion
of those benefits as a result of receiving tax exempt income. Also,
if the Fund invests in private activity Municipal Securities, a
portion of the Fund's dividends may constitute a tax preference item
subject to the alternative minimum tax. In addition, all exempt-
interest dividends will constitute an item of "adjusted current
earnings" (although not taxable income) to corporate shareholders,
which may in certain circumstances give rise to alternative minimum
tax liability.
Other dividends and short-term capital gains, if any, are taxable to
you as ordinary income, whether paid in cash or additional shares.
The federal exemption for "exempt-interest dividends" does not
necessarily result in an exemption from state and local taxes.
Distributions of "exempt-interest dividends" may be exempt from state
and local taxation to the extent they are derived from the state or
locality in which you reside. The Fund will report annually on a
state-by-state basis the source of income the Fund receives on
Municipal Securities which was paid out as dividends during the
preceding year.
Note: The information above is only a summary of applicable tax law.
You should consult your own tax adviser for more information about the
tax consequences of an investment in the Funds.
Additional Facts About the Funds
[] If the balance in your account with a Fund is less than a minimum
dollar amount set by the Trustees of the Funds (currently $500 for
all accounts, except for those indicated below and for Individual
Retirement Accounts which have a $25 minimum), that Fund may close
your account and send the proceeds to you. Shareholders who are
affected by this policy will be notified of a Fund's intention to
close the account and will have 60 days immediately following the
notice in which to bring the account up to the minimum. The
minimum does not apply to Keogh, pension and profit sharing plans,
automatic investment programs or accounts established in conjunction
with New England Securities Brokerage Services.
[] The Distributor pays a service fee to investment dealers for
services provided and expenses incurred when establishing or
servicing shareholder accounts in any of the Funds. The fee is not
a direct or indirect expense of the Funds or their shareholders and
does not affect a Fund's yield.
[] New England Cash Management Trust and New England Tax Exempt Money
Market Trust each offers only its own shares for sale. In some
circumstances, a Fund might be held liable to shareholders of the
other for misstatements, if any, contained in this combined
prospectus. The Trustees of the Funds have considered this possible
liability and have approved the use of a combined prospectus.
[] Assets of each Fund normally are valued at amortized cost on each
day that the Exchange is open for trading. Net asset value per
share is determined by dividing each Fund's net assets by the total
number of Fund shares outstanding. Each Fund's net assets are equal
to the value of its investments and its other assets minus its
liabilities.
[] Shares of each Fund are freely transferable and are entitled to be
voted at shareholder meetings. Each Fund holds shareholder meetings
only when required rather than on an annual basis.
[] The Money Market Fund and the Government Fund are separate series
of New England Cash Management Trust, a Massachusetts business trust
organized on June 5, 1980. The Tax Exempt Fund is a Massachusetts
business trust organized on January 18, 1983. Each Fund is
registered as a diversified open-end management investment company
under the Investment Company Act of 1940 and is authorized to issue
an unlimited number of full and fractional shares.
[] Each Fund may include its yield in advertisements or other written
sales material. Yield may be either the yield for a particular
seven-day period (stated on an annualized basis), or an "effective
yield" calculated by assuming that an investor reinvests all Fund
dividends throughout a one-year period and that the Fund earns net
income for the entire year at the same rate as net income is earned
during a particular seven-day period. The Tax Exempt Fund may also
advertise its tax-equivalent yield, which is the taxable yield an
investor would have to earn to receive the equivalent of the Fund's
yield after payment of federal income tax (assuming a particular
federal income tax rate).
Each Fund may also show illustrations of how the value of an account
with the Fund would have grown over past time periods, assuming that
all dividends paid to that account were immediately reinvested in
shares of the Fund.
[] New England Funds, L.P., 399 Boylston Street, Boston, MA is the
transfer and dividend paying agent for each Fund. It has delegated
certain of its functions as such to State Street Bank, 225 Franklin
Street, Boston, MA 02110.
NEW ENGLAND MONEY MARKET FUNDS
NEW ENGLAND CASH MANAGEMENT TRUST - MONEY MARKET SERIES
NEW ENGLAND CASH MANAGEMENT TRUST - U.S. GOVERNMENT SERIES
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1995
This Statement of Additional Information (the "Statement") is not a
prospectus. This Statement relates to the prospectus of New England
Cash Management Trust and New England Tax Exempt Money Market Trust
dated September 1, 1995 (the "Prospectus"), and should be read in
conjunction therewith. A copy of the Prospectus may be obtained from
New England Funds, L.P. (the "Distributor"), 399 Boylston Street,
Boston, Massachusetts 02116.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objectives and Policies 3
Investment Restrictions 6
Management of the Funds 10
Investment Advisory, Distribution and Other Services 12
Portfolio Transactions 16
Performance 16
Description of the Funds and Ownership of Shares 18
Purchase of Shares 21
Shareholder Services 22
Open Accounts 22
Retirement Plans Offering Tax Benefits 23
Systematic Withdrawal Plans 23
Exchange Privilege 24
Automatic Exchange Plan 24
Redemptions 26
Net Income, Dividends and Valuation 27
Tax-Free Investing 28
Taxes 29
Appendix A -- Description of Certain New England Cash A-1
Management Trust Investments
Appendix B -- Description of Municipal Securities B-1
Appendix C -- Ratings of Corporate and Municipal Bonds, C-1
Commercial Paper and Short-Term Tax Exempt Obligations
Appendix D -- Publications That May Be Referred to in Fund D-1
Advertisements or Sales Literature
Appendix E -- Certain Information That May Be Included in E-1
Advertising and Promotional Literature
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GENERAL
The investment objectives and policies of New England Cash
Management Trust - Money Market Series (the "Money Market Fund"), New
England Cash Management Trust - U.S. Government Series (the
"Government Fund") and New England Tax Exempt Money Market Trust (the
"Tax Exempt Fund") (the "Funds," and each a "Fund") are summarized in
the Prospectus under "Investment Objectives," "Investment Strategy"
and "Investment Risks."
The investment policies and types of permitted investments of
each Fund set forth below and in the Prospectus may be changed without
shareholder approval except that the investment objective of each, and
any investment policy expressly identified as fundamental, may not be
changed without the approval of a majority of the outstanding voting
securities of that Fund.
The terms "shareholder approval" and "majority of the outstanding
voting securities" as used in the Prospectus and this Statement each
mean the lesser of (i) 67% or more of the shares of the applicable
Fund represented at a meeting at which more than 50% of the
outstanding shares of such Fund are represented or (ii) more than 50%
of the outstanding shares of such Fund.
New England Cash Management Trust and New England Tax Exempt
Money Market Trust are sometimes referred to hereinafter as the
"Trusts," and each as a "Trust."
MONEY MARKET FUND AND GOVERNMENT FUND
Each Fund will invest only in securities which the Funds'
adviser, Back Bay Advisors(R), L.P. ("Back Bay Advisors(R)"), acting
under guidelines established by the relevant Trust's Board of
Trustees, has determined are of high quality and present minimal
credit risk. For a description of certain of the money market
instruments in which each Fund may invest, and the related
descriptions of the ratings of Standard and Poor's Ratings Group
("S&P") and Moody's Investors Service, Inc. ("Moody's"), see the
Appendices to this Statement. Money market instruments maturing in
less than one year may yield less than obligations of comparable
quality having longer maturities.
Obligations in which the Government Fund invests generally yield
less than the obligations in which the Money Market Fund may invest.
Therefore, the Government Fund may generally be expected to have a
lower yield than the Money Market Fund.
As described in the Prospectus, the Money Market Fund's
investments may include certain U.S. dollar-denominated obligations of
foreign banks or of foreign branches and subsidiaries of U.S. banks,
which may be subject to foreign economic, political and legal risks.
Such risks include foreign economic and political developments,
foreign governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign withholding and
other taxes on interest income, difficulties in obtaining and
enforcing a judgment against a foreign obligor, exchange control
regulations (including currency blockage), and the expropriation or
nationalization of assets or deposits. Foreign branches of U.S. banks
and foreign banks are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks. For instance,
such branches and banks may not be subject to the types of
requirements imposed on domestic banks with respect to mandatory
reserves, loan limitations, examinations, accounting, auditing,
recordkeeping and the public availability of information. Obligations
of such branches or banks will be purchased only when Back Bay
Advisors(R) believes the risks are minimal.
The full faith and credit obligations of the U.S. Government in
which the Government Fund may invest include obligations issued by
such government agencies as the Government National Mortgage
Association, the Farmer's Home Administration and the Small Business
Administration.
Considerations of liquidity, safety and preservation of capital
may preclude the Funds from investing in money market instruments
paying the highest available yield at a particular time. Each Fund,
consistent with its investment objective, attempts to maximize yields
by engaging in portfolio trading and by buying and selling portfolio
investments in anticipation of or in response to changing economic and
money market conditions and trends. Each Fund also invests to take
advantage of what are believed to be temporary disparities in the
yields of the different segments of the high quality money market or
among particular instruments within the same segment of the market.
These policies, as well as the relatively short maturity of
obligations to be purchased by the Funds, may result in frequent
changes in the portfolio of each Fund. There are usually no brokerage
commissions as such paid by the Funds in connection with the purchase
of securities of the type in which they invest. See "Portfolio
Transactions."
See also "Investment Restrictions" below.
TAX EXEMPT FUND
As described in the Prospectus, the Tax Exempt Fund seeks to
achieve its objective through investment in a diversified portfolio
consisting primarily of high quality short-term fixed, variable and
floating rate debt securities the interest on which is, in the opinion
of bond counsel for the issuers of the securities at the time of their
issuance, exempt from federal income taxation ("Municipal
Securities"). Municipal Securities are generally obligations issued
by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, or by or on behalf of multi-state
agencies or authorities. For a more complete description of various
types of Municipal Securities and the meanings of the Moody's and S&P
ratings referred to in the Prospectus, see the Appendices to this
Statement. The Fund expects that at least 95% of all dividends paid
by the Fund in any given year will be exempt from federal income tax.
See "Taxes."
As described in the Prospectus, the Fund may elect on a temporary
basis to hold cash or to invest in obligations other than Municipal
Securities when such action is deemed advisable by Back Bay
Advisors(R). For example, the Fund might hold cash or make such
temporary investments: (i) due to market conditions; (ii) in the
event of the scarcity of suitable Municipal Securities; (iii) pending
investment of proceeds from subscriptions for Fund shares or from the
sale of portfolio securities; or (iv) in anticipation of redemptions.
The Fund will limit its investments in obligations other than
Municipal Securities to "money market securities" such as (i) short-
term obligations issued or guaranteed by the United States Government
or its agencies, authorities or instrumentalities ("U.S. Government
Securities"), (ii) high quality short-term domestic certificates of
deposit, commercial paper and domestic bankers' acceptances and other
high quality money market instruments, or (iii) repurchase agreements
with brokers, dealers and banks relating to Municipal or U.S.
Government Securities. The interest earned on money market securities
is not exempt from federal income tax and may be taxable to
shareholders as ordinary income. The ability of the Fund to invest in
such taxable money market securities is limited by a requirement of
the Internal Revenue Code (the "Code") that at least 50% of the Fund's
total assets be invested in Municipal Securities at the end of each
quarter of the Fund's fiscal year (see "Taxes") and by a fundamental
policy of the Fund which requires that during periods of normal market
conditions the Fund will not purchase any security if, as a result,
less than 80% of the Fund's net assets would then be invested in
Municipal Securities.
As described in the Prospectus, the Fund may invest in variable
or floating rate Municipal Securities. These obligations pay a rate
of interest adjusted on a periodic basis and determined by reference
to a prescribed formula. Such obligations will be subject to
prepayment without penalty, at the option of either the Fund or the
issuer, and may be backed by letters of credit or similar arrangements
where necessary to ensure that the obligations are of appropriate
investment quality. Back Bay Advisors(R) intends to evaluate the
credit of the issuers of these obligations and the providers of credit
support no less frequently than monthly.
The price stability and liquidity of the Fund may not be equal to
that of a money market fund which invests exclusively in short-term
taxable money market securities, because the taxable money market is a
broader and more liquid market with a greater number of investors,
issuers and market makers than the short-term Municipal Securities
market and because the average portfolio maturity of a money market
fund will generally be shorter than the average portfolio maturity of
a tax exempt money fund such as the Fund. Adverse economic, business
or political developments might affect all or a substantial portion of
the Fund's Municipal Securities in the same manner.
When-Issued Securities
As described in the Prospectus, the Tax Exempt Fund may purchase
Municipal Securities on a when-issued basis, which means that delivery
and payment for the securities normally occurs 15 to 45 days after the
date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the securities are each fixed
at the time the buyer enters into the commitment. Pending delivery of
securities purchased on a when-issued basis, the amount of the
purchase price will be held in liquid assets such as cash or high
quality debt obligations. Such obligations and cash will be
maintained in a separate account with the Fund's custodian in an
amount equal on a daily basis to the amount of the Fund's when-issued
commitments. By committing itself to purchase Municipal Securities on
a when-issued basis, the Fund subjects itself to market and credit
risks on such commitments as well as such risks otherwise applicable
to its portfolio securities. Therefore, to the extent the Fund
remains substantially fully invested at the same time that it has
purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets will vary from
$1.00 per share. (See "Net Income, Dividends and Valuation.") The
Fund will make commitments to purchase such securities only with the
intention of actually acquiring the securities. However, the Fund may
sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy. Such sales may result
in capital gains which are not exempt from federal income taxes. When
the time comes to pay for when-issued securities, the Fund will meet
its obligations from then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from
the sale of the when-issued securities themselves (which may have a
value greater or less than the Fund's payment obligation).
Purchase of Securities with Rights to Put Securities to Seller
The Fund has authority to purchase securities, including
Municipal 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 if the Fund simultaneously acquires the right to sell the
securities back to the seller at an agreed-upon price at any time
during a stated period or on a certain date. Such a right is
generally called a "put." The purpose of engaging in transactions
involving puts is to maintain flexibility and liquidity and to permit
the Fund to meet redemptions while remaining as fully invested as
possible in Municipal Securities. The Fund will acquire puts only
from recognized security dealers.
For the purposes of asset valuation, the Fund will never ascribe
any value to puts. The Fund will rarely pay specific consideration
for them (although typically the yield on a security that is subject
to a put will be lower than for an otherwise comparable security that
is not subject to a put). In no event will the specific consideration
paid for puts held in the Fund's portfolio at any time exceed 1/2 of
1% of the Fund's net assets. Puts purchased by the Fund will
generally not be marketable and the Fund's ability to exercise puts
will depend on the creditworthiness of the other party to the
transaction.
ALL FUNDS
As noted in the Prospectus, each Fund may enter into repurchase
agreements, which are agreements by which the Fund purchases a
security and obtains a simultaneous commitment from the seller (a
member bank of the Federal Reserve or, to the extent permitted by the
Investment Company Act of 1940 [the "1940 Act"], a recognized
securities dealer) to repurchase the security at an agreed upon price
and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and
reflects an agreed upon market rate unrelated to the coupon rate on
the purchased security. Such transactions afford each Fund the
opportunity to earn a return on temporarily available cash at minimal
market risk. While the underlying security may be a U.S. Government
Security (in the case of any Fund), a Municipal Security (in the case
of the Tax Exempt Fund) or another type of high quality money market
instrument, the obligation of the seller is not guaranteed by the U.S.
Government, the issuer of the Municipal Security, or the issuer of any
other high quality money market instrument underlying the agreement,
and there is a risk that the seller may fail to repurchase the
underlying security. In such event, the Fund would attempt to
exercise rights with respect to the underlying security, including
possible disposition in the market. However, in case of such a
default, a Fund may be subject to various delays and risks of loss,
including (a) possible declines in the value of the underlying
security during the period while the Fund seeks to enforce its rights
thereto, (b) possible reduced levels of income and lack of access to
income during this period, and (c) inability to enforce rights and the
expenses involved in attempted enforcement. Each Fund will enter into
repurchase agreements only where the market value of the underlying
security equals or exceeds the repurchase price, and each Fund will
require the seller to provide additional collateral if this market
value falls below the repurchase price at any time during the term of
the repurchase agreement.
As described in the Prospectus, all of each Fund's investments
will, at the time of investment, have remaining maturities of 397 days
or less. The average maturity of each Fund's portfolio securities
based on their dollar value will not exceed 90 days at the time of
each investment. If the disposition of a portfolio security results
in a dollar-weighted average portfolio maturity in excess of 90 days
for any Fund, such Fund will invest its available cash in such a
manner as to reduce its dollar-weighted average portfolio maturity to
90 days or less as soon as reasonably practicable. For the purposes
of the foregoing maturity restrictions, variable rate instruments are
treated as having a maturity equal to the longer of (i) the period
remaining until the next readjustment of the interest rate and (ii) if
the Fund is entitled to demand prepayment of the instrument, the
notice period remaining before the Fund is entitled to such
prepayment; floating rate instruments are treated as having a maturity
equal to the notice period remaining before the Fund is entitled to
demand prepayment of the instrument.
The value of the securities in each Fund can be expected to vary
inversely to changes in prevailing interest rates. Thus, if interest
rates increase after a security is purchased, that security, if sold,
might be sold at a loss. Conversely, if interest rates decline after
purchase, the security, if sold, might be sold at a profit. In either
instance, if the security were held to maturity, no gain or loss would
normally be realized as a result of these fluctuations. Substantial
redemptions of the shares of any Fund could require the sale of
portfolio investments of that Fund at a time when a sale might not be
desirable.
After purchase by a Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by such
Fund. Neither event will require a sale of such security by such
Fund. However, such event will be considered in determining whether
the Fund should continue to hold the security. To the extent that the
ratings given by Moody's or S&P (or another SEC-approved nationally
recognized statistical rating organization ["NRSRO"]) may change as a
result of changes in such organizations or their rating systems, each
Fund will, in accordance with standards approved by the relevant Board
of Trustees, attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in
the Prospectus.
INVESTMENT RESTRICTIONS
The following is a list of each Fund's investment restrictions.
Except as otherwise specifically indicated, they are fundamental
policies and, accordingly, will not be changed without the consent of
the holders of a majority of the outstanding voting securities of the
applicable Fund.
MONEY MARKET FUND AND GOVERNMENT FUND
Neither the Money Market Fund nor the Government Fund will:
(1) Purchase any security (other than U.S. Government Securities
and repurchase agreements relating thereto) if, as a result, more than
5% of the Fund's total assets (taken at current value) would be
invested in securities of a single issuer. This restriction applies
to securities subject to repurchase agreements but not to the
repurchase agreements themselves;
(2) Purchase any security if, as a result, more than 25% of the
Fund's total assets (taken at current value) would be invested in any
one industry. This restriction does not apply to U.S. Government
Securities and bank obligations. For purposes of this restriction,
telephone, gas and electric public utilities are each regarded as
separate industries and finance companies whose financing activities
are related primarily to the activities of their parent companies are
classified in the industry of their parents;
(3) Purchase securities on margin (but it may obtain such short-
term credits as may be necessary for the clearance of purchases and
sales of securities); or make short sales except where, by virtue of
ownership of other securities, it has the right to obtain, without
payment of further consideration, securities equivalent in kind and
amount to those sold, and the Fund will not deposit or pledge more
than 10% of its total assets (taken at current value) as collateral
for such sales;
(4) Acquire more than 10% of the total value of any class of the
outstanding securities of an issuer or acquire more than 10% of the
outstanding voting securities of an issuer. This restriction does not
apply to U.S. Government Securities;
(5) Borrow money, except as a temporary measure for
extraordinary or emergency purposes (but not for the purpose of
investment) up to an amount not in excess of 10% of its total assets
(taken at cost) or 5% of such total assets (taken at current value),
whichever is lower;
(6) Pledge, mortgage or hypothecate more than 10% of its total
assets (taken at cost);
(7) Invest more than 5% of its total assets (taken at current
value) in securities of businesses (including predecessors) less than
three years old;
(8) Purchase or retain securities of any issuer if, to the
knowledge of the Fund, officers and Trustees of the Fund or officers
and directors of any investment adviser of the Fund who individually
own beneficially more than 1/2 of 1% of the securities of that
company, together own beneficially more than 5%;
(9) Make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its objective and investment
policies. This restriction does not apply to repurchase agreements;
(10) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, commodities or commodity contracts or real estate.
This restriction does not prevent the Fund from purchasing securities
of companies investing in real estate or of companies which are not
principally engaged in the business of buying or selling such leases,
rights or contracts;
(11) Act as underwriter except to the extent that, in connection
with the disposition of portfolio securities, it may be deemed to be
an underwriter under the federal securities laws;
(12) Make investments for the purpose of exercising control or
management;
(13) Participate on a joint or joint and several basis in any
trading account in securities. (The "bunching" of orders for the
purchase or sale of portfolio securities with New England Mutual Life
Insurance Company ["The New England"] or accounts under its management
or the management of Back Bay Advisors(R) to reduce acquisition costs,
to average prices among them, or to facilitate such transactions, is
not considered participating in a trading account in securities);
(14) Write or purchase puts, calls or combinations thereof; or
(15) Invest in the securities of other investment companies,
except in connection with a merger, consolidation or similar
transaction.
Except as otherwise stated, the foregoing percentages and the
percentage limitations set forth in the Prospectus will apply at the
time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs or exists immediately
after and as a result of a purchase of such security.
As a matter of operating policy and subject to change without
shareholder approval, the Funds will not purchase or sell real
property, including limited partnership interests.
TAX EXEMPT FUND
The Tax Exempt Fund will not:
(1) Purchase any security if, as a result, more than 5% of the
Fund's total assets (based on current value) would then be invested in
the securities of a single issuer. This limitation does not apply to
securities of the United States Government, its agencies or
instrumentalities or to any security guaranteed thereby. The
limitation applies to securities subject to credit enhancement, but
guarantors, insurers, issuers of puts and letters of credit and other
parties providing credit enhancement are not considered issuers for
purposes of the restriction, although investment in such securities
may be limited by applicable regulatory restrictions. The restriction
also applies to securities subject to repurchase agreements but not to
the repurchase agreements themselves. (The SEC staff currently takes
the position that only fully collateralized repurchase agreements may
be excluded from such restriction);
(2) Purchase voting securities or make investments for the
purpose of exercising control or management;
(3) Invest more than 25% of its total assets in industrial
development bonds which are based, directly or indirectly, on the
credit of private entities in any one industry or in securities of
private issuers in any one industry. (In the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries.);
(4) Participate on a joint or joint and several basis in any
trading account in securities;
(5) Make short sales of securities, maintain a short position or
purchase securities on margin, except that the Fund may obtain short-
term credits as necessary for the clearance of security transactions;
(6) Borrow money except for temporary or emergency purposes and
then only in an amount not exceeding 10% of its total assets taken at
cost, except that the Fund may enter into reverse repurchase
agreements. The Fund will not, however, borrow or enter into reverse
repurchase agreements if the value of the Fund's assets would be less
than 300% of its borrowing and reverse repurchase agreement
obligations. In addition, when borrowings (other than reverse
repurchase agreements) exceed 5% of the Fund's total assets (taken at
current value), the Fund will not purchase additional portfolio
securities. Permissible borrowings and reverse repurchase agreements
will be entered into solely for the purpose of facilitating the
orderly sale of portfolio securities to accommodate redemption
requests;
(7) Make loans, except that the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies
and may enter into loan participations and repurchase agreements;
(8) Pledge, mortgage or hypothecate its assets except in
connection with reverse repurchase agreements and except to secure
temporary borrowings permitted by (6) above in aggregate amounts not
to exceed 10% of its net assets taken at cost at the time of the
incurrence of such borrowings;
(9) Act as an underwriter of securities of other issuers except
that, in the disposition of portfolio securities, it may be deemed to
be an underwriter under the federal securities laws;
(10) Invest in securities of other investment companies, except
by purchases in the open market involving only customary brokers'
commissions, or in connection with a merger, consolidation,
reorganization or similar transaction. Under the 1940 Act the Fund
may not (a) invest more than 10% of its total assets (taken at current
value) in such securities, (b) own securities of any one investment
company having a value in excess of 5% of the Fund's total assets
(taken at current value), or (c) own more than 3% of the outstanding
voting stock of any one investment company;
(11) Purchase or retain securities of an issuer if, to the
knowledge of the Fund, officers, trustees or directors of the Fund or
any investment adviser of the Fund who individually own beneficially
more than 1/2 of 1% of the shares or securities of that issuer own
more than 5% of such shares or securities;
(12) Purchase securities of any company which has (with
predecessor businesses and entities) a record of less than three
years' continuing operation or purchase securities whose source of
repayment is based, directly or indirectly, on the credit of such a
company, except (i) obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities, or (ii)
Municipal Securities which are rated by at least two nationally
recognized municipal bond rating services, if as a result more than 5%
of the total assets of the Fund (taken at current value) would be
invested in such securities;
(13) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, commodities or commodity contracts or real estate
(except that the Fund may buy Municipal Securities or other permitted
investments secured by real estate or interests therein), or
(14) Write or purchase puts, calls, warrants, straddles, spreads
or combinations thereof, except that the Fund may purchase puts as
described under "Investment Objectives and Policies -- Tax Exempt Fund
-- Purchase of Securities with Rights to Put Securities to Seller" and
may purchase Municipal Securities on a "when-issued" basis as
described under "Investment Objectives and Policies -- Tax Exempt Fund
-- When-Issued Securities";
Except as otherwise stated in restriction (6), the foregoing
percentages and the percentage limitations set forth in the Prospectus
will apply at the time of the purchase of a security and shall not be
considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of a purchase of such security. As
regards restriction (6), as a non-fundamental operating policy, any
borrowings of the Tax Exempt Fund will not exceed 5% of the Fund's
total assets.
For the purpose of the foregoing investment restrictions, the
identification of the "issuer" of Municipal Securities which are not
general obligation bonds (see Appendix A-2) is made by Back Bay
Advisors(R) on the basis of the characteristics of the obligation, the
most significant of which is the source of funds for the payment of
principal and interest on such securities. If the assets and revenues
of an agency, authority, instrumentality or other political
subdivision are separate from those of the government creating the
subdivision, and the obligation is based solely on the assets and
revenues of the subdivision, such subdivision would be regarded as the
sole issuer. Similarly, in the case of industrial development bonds
(see Appendix A-2), if the bond is backed only by the assets and
revenues of the non-governmental user, the non-governmental user would
be regarded as the sole issuer.
As a matter of operating policy and subject to change without
shareholder approval, the Funds will not purchase or sell real
property, including limited partnership interests.
ALL FUNDS
No Fund will purchase any security restricted as to disposition
under federal securities laws if, as a result, more than 10% of such
Fund's net assets would be invested in such securities or in other
securities that are illiquid.
The staff of the SEC is currently of the view that repurchase
agreements maturing in more than seven days are "illiquid" securities.
Each Fund currently intends to conduct its operations in a manner
consistent with this view. In addition, certain loan participations
may be "illiquid" securities for this purpose.
MANAGEMENT OF THE FUNDS
Trustees
The trustees of the Trusts and their principal occupations during
at least the past five years are as follows:
GRAHAM T. ALLISON, JR.--Trustee (55); 79 John F. Kennedy Street,
Cambridge, MA 02138; Douglas Dillon Professor and Director for
the Center of Science and International Affairs, John F. Kennedy
School of Government; Special Advisor to the United States
Secretary of Defense; formerly, Assistant Secretary of Defense;
formerly Dean, John F. Kennedy School of Government.
KENNETH J. COWAN -- Trustee (63); One Beach Drive, S.E. #2103, St.
Petersburg, Florida 33701; Retired; formerly, Senior Vice
President-Finance and Chief Financial Officer, Blue Cross of
Massachusetts, Inc. and Blue Shield of Massachusetts, Inc.;
formerly, Director, Neworld Bank for Savings and Neworld Bancorp.
SANDRA O. MOOSE -- Trustee (53); 135 E. 57th Street New York, NY
10022; Senior Vice President and Director, The Boston Consulting
Group, Inc. (management consulting); Director, GTE Corporation
and Rohm and Haas Company (specialty chemicals).
HENRY L. P. SCHMELZER* -- Trustee and President (52); President, Chief
Executive Officer and Director, NEF Corporation; President and
Chief Executive Officer, New England Funds, L.P.; President and
Chief Executive Officer, New England Funds Management, L.P.
("NEFM"); Director, Back Bay Advisors(R), Inc.; formerly,
Director, New England Securities Corporation ("New England
Securities").
JAMES H. SCOTT -- Trustee (52); 2001 Bryan Street, Suite 1850, Dallas,
Texas 75201; Vice President - Corporate Services, Texas Utilities
Services, Inc. (electric utility); formerly, Treasurer, The
Trustees of Amherst College.
JOHN A. SHANE -- Trustee (62); 300 Unicorn Drive, Woburn,
Massachusetts 01801; President, Palmer Service Corporation
(venture capital organization); General Partner, The Palmer
Organization and Palmer Partners L.P.; Director, Arch
Communications Group, Inc. (paging service); Director, Dowden
Publishing Company, Inc. (publishers of medical magazines);
Director, Eastern Bank Corporation; Director, Overland Data, Inc.
(manufacturer of computer tape drives); Director, Gensym
Corporation (expert system software); Director, Summa Four, Inc.
(manufacturer of telephone switching equipment); Director, United
Asset Management Corporation (holding company for institutional
money management); formerly, Director, Abt Associates, Inc.
(consulting firm); formerly, Director, Aviv Corporation
(manufacturer of controllers); and formerly, Director, Banyan
Systems, Inc. (manufacturer of network software); formerly,
Director, Cerjac Inc. (manufacturer of telephone testing
equipment).
PETER S. VOSS* -- Chairman of the Board, Chief Executive Officer and
Trustee (48); President and Chief Executive Officer of New
England Investment Companies, L.P. ("NEIC"); Director, President
and Chief Executive Officer of New England Investment Companies,
Inc.; Chairman of the Board and Director, NEF Corporation;
Chairman of the Board and Director, Back Bay Advisors(R), Inc.;
Director, The New England; formerly, Executive Vice President,
Bank of America; formerly, Group Head of International Banking,
Trading and Securities, Security Pacific National Bank and Chief
Executive Officer, Security Pacific Investment Group.
* Trustee deemed an "interested person" of the Trusts, as defined
in the 1940 Act.
PENDLETON P. WHITE -- Trustee (64); 6 Breckenridge Lane, North,
Savannah, Georgia 31411; Retired; formerly, President and Chairman
of the Executive Committee, Studwell Associates (executive search
consultants); Trustee, The Faulkner Corporation.
* Trustee deemed an "interested person" of the Trusts, as defined in
the 1940 Act.
Officers
In addition to Messrs. Voss and Schmelzer, the officers of the
Trusts and their principal occupations during the past five years are
as follows:
CHARLES T. WALLIS -- Senior Vice President; President, Chief Executive
Officer and Director, Back Bay Advisors(R), Inc.; President and
Chief Executive Officer, Back Bay Advisors(R); Director, NEF
Corporation.
J. STEVEN NEAMTZ -- Executive Vice President; Executive Vice
President, NEF Corporation; Executive Vice President, New England
Funds, L.P.
BRUCE R. SPECA -- Executive Vice President; Executive Vice President,
NEF Corporation; Executive Vice President, New England Funds,
L.P.; Executive Vice President, NEFM.
J. SCOTT NICHOLSON -- Vice President; Senior Vice President, Back Bay
Advisors(R).
HAROLD B. BJORNSON -- Vice President; Vice President, Back Bay
Advisors(R); formerly, Assistant Vice President, New England
Securities.
JOHN E. MALONEY (New England Tax Exempt Money Market Trust only) --
Vice President; Portfolio Manager, Back Bay Advisors(R);
formerly, Assistant Portfolio Manager, Back Bay Advisors(R) and
Treasury Specialist, The New England.
ROBERT P. CONNOLLY -- Secretary and Clerk; Senior Vice President and
General Counsel, NEF Corporation; Senior Vice President and
General Counsel, New England Funds, L.P.; Senior Vice President
and General Counsel, NEFM; formerly, Managing Director and
General Counsel, Kroll Associates, Inc. (business consulting
company); formerly, Managing Director and General Counsel,
Equitable Capital Management Corporation (investment management
company).
FRANK NESVET -- Treasurer; Senior Vice President and Chief Financial
Officer, NEF Corporation; Senior Vice President and Chief
Financial Officer, New England Funds, L.P.; Senior Vice President
and Chief Financial Officer, NEFM; formerly, Executive Vice
President, SuperShare Services Corporation.
Previous positions during the past five years with The New
England, Back Bay Advisors(R), New England Securities or New England
Funds, L.P. are omitted, if not materially different. Each of the
trustees is also a director or trustee of several other investment
companies for which New England Funds, L.P. acts as principal
underwriter and affiliates of The New England act as investment
adviser.
The address of each trustee and officer affiliated with NEF
Corporation, New England Funds, L.P., NEFM, New England Securities or
Back Bay Advisors(R) is 399 Boylston Street, Boston, MA 02116.
Compensation
Neither Trust pays compensation to its officers, or to its
trustees who are "interested persons" of the Trusts.
Until May 1, 1995, each trustee who is not an interested person
of the Trusts received, in the aggregate for serving on the boards of
the Trusts and thirty-three other mutual fund portfolios, a retainer
fee at the annual rate of $40,000 and meeting attendance fees of
$2,500 for each meeting of the boards he or she attended and $1,500
for each meeting he or she attended of a committee of the board of
which he or she was a member. Each committee chairman received an
additional retainer fee at the annual rate of $2,500. These fees were
allocated among the Funds and thirty-three other mutual fund
portfolios based on a formula that took into account, among other
factors, the net assets of each Fund.
Since May 1, 1995, each trustee who is not an interested person
has received the foregoing rates of compensation for serving as
trustee of the Trusts and seventeen other mutual fund portfolios. The
compensation is allocated among the Funds and these seventeen
portfolios based on a formula similar to that in effect before May 1,
1995.
During the fiscal year ended June 30, 1995, the persons who were
trustees of the Trusts for all or part of such year received the
amounts set forth in the following table for serving as a trustee of
the Trusts; and during the year ended December 31, 1994, such persons
received the amounts set forth below for serving as trustee of the
Trusts and for also serving on the governing boards of thirty-three
other mutual fund portfolios (the "Other Funds"). As of December 31,
1994, there were a total of 36 Funds in the Trusts and the Other Funds
combined.
Aggregate
Aggregate Compensation
Compensation from New
from New England Tax Total
England Cash Exempt Money Compensation from
Management Market Trust the Trusts and
Trust in the in the Year the Other Funds
Year Ended Ended in Year Ended
Name of Trustee June 30, 1995 June 30, 1995 December 31, 1994
Kenneth J. Cowan $4,340 $1,635 $59,375
Joseph M. Hinchey 4,182 1,547 56,875
Richard S. 4,182 1,547 56,875
Humphrey, Jr.
Robert B. 4,182 1,547 89,279(a)
Kittredge
Laurens MacLure 4,340 1,635 91,779(a)
Sandra O. Moose 3,993 1,443 52,875
James H. Scott 4,182 1,547 56,875
John A. Shane 4,182 1,547 55,875
Joseph F. Turley 4,182 1,547 58,375
Pendleton P. White 4,182 1,547 58,375
(a) Also includes compensation paid by the 5 CGM Funds, a group of
mutual funds for which Capital Growth Management Limited Partnership,
the investment adviser of New England Funds Trust I's New England
Growth Fund, serves as investment adviser.
The Trusts provide no pension or retirement benefits to trustees,
but have adopted a deferred payment arrangement under which each Trustee
may elect not to receive fees from each Fund on a current basis but to
receive in a subsequent period an amount equal to the value that such
fees would have if they had been invested in each Fund on the normal
payment date for such fees. As a result of this method of calculating
the deferred payments, each Fund, upon making the deferred payments,
will be in the same financial position as if the fees had been paid on
the normal payment dates.
At August 1, 1995, the officers and trustees of each Trust as a
group owned less than 1% of the outstanding shares of each class of
shares of each Trust.
INVESTMENT ADVISORY, DISTRIBUTION AND OTHER SERVICES
Investment Advisory Agreements
In General. Back Bay Advisors(R) serves as investment adviser to
the Funds. Formed in 1986, Back Bay Advisors(R) provides investment
management services to institutional clients, including other
registered investment companies and accounts of The New England and
its affiliates. Back Bay Advisors'(R) general partner, Back Bay
Advisors(R), Inc., is a wholly-owned subsidiary of NEIC. NEIC and its
seven subsidiary or affiliated asset management firms, collectively,
have more than $68 billion of assets under management or
administration.
Pursuant to separate advisory agreements dated May 31, 1985
relating to the Money Market Fund and the Government Fund and April
21, 1983 relating to the Tax Exempt Fund, Back Bay Advisors(R) manages
the investment and reinvestment of the assets of each Fund, subject to
the supervision and control of the trustees. The New England was
originally a party to these agreements, but Back Bay Advisors(R)
assumed the responsibilities of The New England under these agreements
on September 10, 1986. Under each agreement, Back Bay Advisors(R)
also furnishes or pays the expenses of the applicable Fund for office
space, facilities and equipment, services of executive and other
personnel of the Fund and certain administrative services, such as
accounting and the preparation of prospectuses and proxy materials.
Each Fund pays all of its expenses not assumed by Back Bay
Advisors(R), including, but not limited to, the charges and expenses
of the Fund's custodian and transfer agent, independent auditors and
legal counsel, all brokerage commissions and transfer taxes in
connection with portfolio transactions, all taxes and filing fees, the
fees and expenses for registration or qualification of its shares
under the federal or state securities laws, all expenses of
shareholders' and trustees' meetings and of preparing and printing
reports to shareholders and the compensation of trustees who are not
directors, officers or employees of Back Bay Advisors(R) or its
affiliates (other than registered investment companies).
Under each advisory agreement, if the total ordinary business
expenses of a particular Fund (and, in the case of New England Cash
Management Trust, the total ordinary business expenses of the Trust as
a whole) for any fiscal year exceed the lowest applicable limitation
(based on a percentage of average net assets or income) prescribed by
any state in which shares of that Fund (or, with respect to New
England Cash Management Trust, of any series of the Trust) are
qualified for sale, Back Bay Advisors(R) shall pay such excess. At
the date of this Statement, the most restrictive state annual expense
limitation is 2 1/2% of the average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of
such assets in excess of $100,000,000. Back Bay Advisors(R) will not
be required to reduce its fee or pay such expenses to an extent or
under circumstances which might result in a Fund's inability to
qualify as a regulated investment company under the Code. The term
"expenses" is defined in the statutes or regulations of such
jurisdictions and, generally speaking, excludes brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary
expenses.
Each advisory agreement provides that it will continue in effect
only if it is approved at least annually (i) by the trustees of the
relevant Trust or by vote of a majority of the outstanding voting
securities of the applicable Fund and (ii) by vote of a majority of
the trustees who are not interested persons of the Fund or Back Bay
Advisors(R). Any amendment to the advisory agreements must be
approved by vote of a majority of the outstanding voting securities of
the applicable Fund and by vote of a majority of the trustees who are
not such interested persons. Each agreement may be terminated without
penalty by the trustees or by the shareholders of the applicable Fund
upon 60 days' written notice or by Back Bay Advisors(R) upon 90 days'
written notice, and each terminates automatically in the event of its
assignment.
Each advisory agreement provides that Back Bay Advisors(R) shall
not be subject to any liability in connection with the performance of
its services thereunder in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and
duties.
Back Bay Advisors(R) has contracted with New England Securities
for New England Securities to provide certain administrative services
to the Funds, at Back Bay Advisors'(R) expense.
Certain officers and employees of Back Bay Advisors(R) who are
also officers of the Trusts have responsibility for portfolio
management of other advisory accounts and clients of Back Bay
Advisors(R) (including other registered investment companies and
accounts of affiliates of Back Bay Advisors(R)) that may invest in
securities in which the Funds also invest. If Back Bay Advisors(R)
determines that an investment purchase or sale opportunity is
appropriate and desirable for more than one advisory account, purchase
and sale orders may be executed separately or may be combined and, to
the extent practicable, allocated by Back Bay Advisors(R) to the
participating accounts.
It is believed that the ability of the Funds to participate in
larger volume transactions in this manner will in some cases produce
better executions for the Funds. However, in some cases, this
procedure could have a detrimental effect on the price and amount of a
security available to a Fund or the price at which a security may be
sold. The trustees are of the view that the benefits of retaining
Back Bay Advisors(R) as investment adviser to each of the Funds
outweigh the disadvantages, if any, that may result from participating
in such transactions.
Where advisory accounts have competing interests in a limited
investment opportunity, Back Bay Advisors(R) will allocate an
investment purchase opportunity based on the relative time the
competing accounts have had funds available for investment, and the
relative amounts of available funds, and will allocate an investment
sale opportunity based on relative cash requirements and the relative
time the competing accounts have had investments available for sale.
It is Back Bay Advisors'(R) policy to allocate, to the extent
practicable, investment opportunities to each client over a period of
time on a fair and equitable basis relative to its other clients.
Money Market Fund and Government Fund -- Under the advisory
agreements relating to the Money Market Fund and the Government Fund,
each such Fund pays Back Bay Advisors(R) a monthly fee based on the
annual percentage rates of the corresponding levels of that Fund's
average daily net asset values set forth below:
Annual Percentage Average Daily Net Asset Value Levels
Rate
.425% the first $500 million
.400% the next $500 million
.350% the next $500 million
.300% the next $500 million
.250% amounts in excess of $2 billion
For the fiscal years ended June 30, 1993, 1994 and 1995, this
compensation amounted to $3,511,783, $3,022,248 and $2,796,164
respectively, for the Money Market Fund and $314,873, $265,221 and
$255,727 respectively, for the Government Fund.
Tax Exempt Fund -- Under the advisory agreement relating to the
Tax Exempt Fund, the Fund pays Back Bay Advisors(R) a monthly fee at
the annual rate of 4/10 of 1% of the average daily net asset value of
the Fund up to $100,000,000 and 3/10 of 1% of such asset value in
excess of $100,000,000.
Until further notice to the Fund, Back Bay Advisors(R) has agreed
to reduce its fee and/or pay the charges, expenses and fees for the
Class A and B shares of the Fund (not including fees payable to the
trustees who are not "interested persons") to the extent necessary to
limit the Fund's expenses for the Class A and B shares to an annual
rate of 0.5625 of 1% of average assets. For the fiscal years ended
June 30, 1993, 1994 and 1995, gross management fees of $238,984,
$231,093 and $281,837, respectively, were reduced by $163,494,
$192,773 and $199,639 respectively, as a result of this expense
limitation.
Distribution Agreement
Under separate agreements with each Fund, New England Funds,
L.P., the Distributor, 399 Boylston Street, Boston, Massachusetts
02116, a wholly-owned subsidiary of NEIC, acts as the distributor of
the Funds' shares, which are sold at net asset value without any sales
charge. The Distributor receives no compensation from the Funds or
purchasers of Fund shares for acting as distributor. The agreements
do not obligate the Distributor to sell a specific number of shares.
Under the agreements, the Distributor pays promotion and distribution
expenses relating to the sale of Fund shares, including the cost of
preparing, printing and distributing prospectuses used in offering
shares of the Funds for sale.
The Distributor pays investment dealers a service fee in order to
compensate them for services they provide and expenses they incur in
connection with the establishment or maintenance of shareholder
accounts in the Funds. The service fee is paid quarterly at an annual
rate equal to 0.10% of average Fund net assets, including reinvested
dividends, in accounts serviced by the investment dealer during the
year. In order to receive a fee for a particular quarter, the
investment dealer's clients' average daily net asset balance in a Fund
must equal or exceed $1 million. The Distributor pays the service
fee; the fee is not a direct or indirect expense of the Funds or their
shareholders and does not affect the Funds' yields.
The Distributor also acts as general distributor for several
other mutual funds advised by affiliates of NEIC.
Independent Accountants
The Funds' independent accountants are Price Waterhouse LLP, 160
Federal Street, Boston, Massachusetts 02110. Price Waterhouse LLP
conducts an annual audit of the Funds' financial statements, assists
in the preparation of the Funds' federal and state income tax returns
and consults with the Funds as to matters of accounting and federal
and state income taxation. The information concerning Financial
Highlights in the Prospectus, and the financial statements
incorporated by reference in this Statement, have been so included in
reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in
auditing and accounting.
Custodian
State Street Bank and Trust Company ("State Street Bank"), 225
Franklin Street, Boston, Massachusetts 02102, is the custodian for
each Fund. As such, State Street Bank holds in safekeeping
certificated securities and cash belonging to each Fund and, in such
capacity, is the registered owner of securities in book-entry form
belonging to each Fund. Upon instruction, State Street Bank receives
and delivers cash and securities in connection with transactions of
each Fund and collects all dividends and other distributions made with
respect to each Fund's portfolio securities. State Street Bank also
maintains certain accounts and records of the Funds and calculates the
total net asset value, total net income and net asset value per share
of the Funds. State Street Bank does not determine the investment
policies of the Funds or decide which securities a Fund will buy or
sell.
Other Services
Pursuant to a contract between the Funds and the Distributor, the
Distributor acts as shareholder servicing and transfer agent for the
Funds and is responsible for services in connection with the
establishment, maintenance and recording of shareholder accounts,
including all related tax and other reporting requirements and the
implementation of investment and redemption arrangements offered in
connection with the sale of the Funds' shares. The Funds pay a per
account fee to the Distributor for these services in the amount of
$21.50, annually, which may be increased with the approval of the
Trusts' Boards. The aggregate amount of fees paid by the Funds to the
Distributor for these services during the three most recent fiscal
years of the Funds were as follows:
Fiscal Year Ended June 30,
Trust 1993 1994 1995
New England Cash $0 $1,720,812 $2,111,479
Management Trust
New England Tax Exempt $0 $58,609 $76,391
Money Market Trust
Prior to September 1, 1993, the Distributor provided more limited
services to the Funds and was compensated at a substantially lower
rate per shareholder account.
The Distributor has subcontracted with State Street Bank for it to
provide, through its subsidiary, Boston Financial Data Services, Inc.
("BFDS"), transaction processing, mail and other services.
PORTFOLIO TRANSACTIONS
In General
In placing orders for the purchase and sale of portfolio
securities for each Fund, Back Bay Advisors(R) will always seek the
best price and execution. It is expected that the Funds' portfolio
transactions will generally be with issuers or dealers in money market
instruments acting as principal. Accordingly, the Funds do not
anticipate that they will pay significant brokerage commissions.
During the year ended June 30, 1995, the Funds did not incur any
brokerage fees in connection with portfolio transactions.
Some of the portfolio transactions for each Fund are placed with
dealers who provide Back Bay Advisors(R) with supplementary investment
and statistical information or furnish market quotations to the Funds
or other investment companies advised by Back Bay Advisors(R). The
business would not be so placed if the Funds would not thereby obtain
the best price and execution. Although it is not possible to assign an
exact dollar value to these research services, they may, to the extent
used, tend to reduce the expenses of Back Bay Advisors(R). The
research services may also be used by Back Bay Advisors(R) in
connection with its other advisory accounts and in some cases may not
be used with respect to the Funds.
The Board of Trustees of the Trust has requested that Back Bay
Advisors(R) seek to reduce underwriting commissions or similar fees on
Trust portfolio transactions through certain methods currently
available. It is not expected that these methods will result in
material reductions. The Board has not requested that Back Bay
Advisors(R) or its affiliates attempt to join underwriting syndicates
to reduce underwriting commissions or fees.
Tax Exempt Fund
It is expected that the Tax Exempt Fund's portfolio securities
will normally be purchased directly from an underwriter or in the over-
the-counter market from the principal dealers in such securities,
unless it appears that a better price or execution may be obtained
elsewhere. Purchases from underwriters will include a commission or
concession paid by the issuer to the underwriter, and purchases from
dealers will include the spread between the bid and asked price.
PERFORMANCE
From time to time, the Funds may use performance data in
advertisements and promotional material. These results may include
comparisons to the average daily yields of money market funds
reporting to IBC/Donoghue's Money Fund Report ("Donoghue's"),
including comparisons of such average yields for funds considered by
Donoghue's to be in the same category as each of the Funds. See "Net
Income, Dividends and Valuation" below for an explanation of how the
Funds calculate yield and "effective" (or "compound") yield.
From inception of each Fund (Class A shares) or date of first
offering (Class B shares) through each of the dates set forth below,
an investment of $10,000 in each Fund grew, assuming the reinvestment
of all dividends, to the respective amounts set forth below. The
periods covered included periods of widely fluctuating interest rates
and should not necessarily be considered representative of performance
of an investment in a Fund today.
New England Cash Management Trust -- Money Market Series
($10,000 investment on 7/10/78)
(Class A Shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/78 $10,000 $ 385 $10,385
12/31/79 10,385 1,504 11,504
12/31/80 11,504 2,971 12,971
12/31/81 12,971 5,194 15,194
12/31/82 15,194 7,155 17,155
12/31/83 17,155 8,680 18,680
12/31/84 18,680 10,628 20,628
12/31/85 20,628 12,259 22,259
12/31/86 22,259 13,675 23,675
12/31/87 23,675 15,110 25,110
12/31/88 25,110 16,915 26,915
12/31/89 26,915 19,320 29,320
12/31/90 29,320 21,638 31,638
12/31/91 31,638 23,499 33,499
12/31/92 33,499 24,655 34,655
12/31/93 34,655 25,536 35,536
06/30/94 35,536 26,036 36,036
06/30/95 36,036 27,750 37,750
New England Cash Management Trust -- Money Market Series
($10,000 investment on 9/13/93)
(Class B Shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/93 $10,000 $ 74 $10,074
06/30/94 10,074 216 10,216
06/30/95 10,216 702 10,702
New England Cash Management Trust - U.S. Government Series
($10,000 investment on 6/2/82)
(Class A Shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/82 $10,000 $ 543 $10,543
12/31/83 10,543 1,435 11,435
12/31/84 11,435 2,559 12,559
12/31/85 12,559 3,550 13,550
12/31/86 13,550 4,402 14,402
12/31/87 14,402 5,213 15,213
12/31/88 15,213 6,232 16,232
12/31/89 16,232 7,610 17,610
12/31/90 17,610 8,925 18,925
12/31/91 18,925 10,009 20,009
12/31/92 20,009 10,694 20,694
12/31/93 20,694 11,213 21,213
06/30/94 21,213 11,500 21,500
06/30/95 21,500 12,486 22,486
New England Cash Management Trust - U.S. Government Series
($10,000 investment on 9/20/93)
(Class B Shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/93 $10,000 $ 67 $10,067
06/30/94 10,067 203 10,203
06/30/95 10,203 672 10,672
New England Tax Exempt Money Market Trust
($10,000 investment on 4/21/83)
(Class A Shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/83 $10,000 $ 371 $10,371
12/31/84 10,371 984 10,984
12/31/85 10,984 1,543 11,543
12/31/86 11,543 2,043 12,043
12/31/87 12,043 2,531 12,531
12/31/88 12,531 3,134 13,134
12/31/89 13,134 3,899 13,899
12/31/90 13,899 4,660 14,660
12/31/91 14,660 5,268 15,268
12/31/92 15,268 5,667 15,667
12/31/93 15,667 5,979 15,979
06/30/94 15,979 6,153 16,153
06/30/95 16,153 6,663 16,663
New England Tax Exempt Money Market Trust
($10,000 investment on 9/13/93)
(Class B shares)
Value of Value of
Period Ended Investment on Cumulative Total Value
First Day of Reinvested
Period Dividends
12/31/93 $10,000 $ 60 $10,060
06/30/94 10,060 170 10,170
06/30/95 10,170 491 10,491
DESCRIPTION OF THE FUNDS AND OWNERSHIP OF SHARES
New England Cash Management Trust was organized as a
Massachusetts business trust under the laws of Massachusetts by an
agreement and declaration of trust ("Declaration of Trust") dated June
5, 1980. The Trust commenced operations on October 3, 1980 by
acquiring all the assets and liabilities of NEL Cash Management
Account, Inc., which commenced operations on July 10, 1978 and had the
same investment objective, policies restrictions and investment
adviser as the Money Market Fund then had. On June 2, 1982 the U.S.
Government Series commenced operations as a separate portfolio of New
England Cash Management Trust, the Trust's then existing portfolio
having been redesignated the "Money Market Series." The Money Market
Fund and the Government Fund are the only series of New England Cash
Management Trust currently in existence. Each such Fund has two
classes of shares available for purchase.
New England Tax Exempt Money Market Trust was organized as a
Massachusetts business trust under the laws of Massachusetts by a
Declaration of Trust dated January 18, 1983, and commenced operations
on April 21, 1983. Only one series of shares of New England Tax
Exempt Money Market Trust is currently in existence; it has two
classes of shares available for purchase.
Class A and B shares of each Fund are identical, except that the
classes have different exchange privileges, as set forth in detail in
the Prospectus.
The Declarations of Trust currently permit the relevant trustees
to issue an unlimited number of full and fractional shares of each
Fund. Each Fund is represented by a particular series of shares. The
Declarations of Trust further permit each Trust's trustees to divide
the shares of each series into any number of separate classes, each
having such rights and preferences relative to other classes of the
same series as the trustees may determine. The shares of each Fund
have no pre-emptive rights. Upon termination of any Fund, whether
pursuant to liquidation of the Fund or otherwise, shareholders of each
series of shares are entitled to share pro rata in the net assets
belonging to that series then available for distribution to such
shareholders.
The assets received by each series of the Cash Management Trust
from the issue or sale of shares of each series thereof and all
income, earnings, profits, losses and proceeds therefrom, subject only
to the rights of creditors, are allocated to, and constitute the
underlying assets of, that series. The underlying assets of each
series are segregated and are charged with the expenses in respect of
that series and with a share of the general expenses of New England
Cash Management Trust. Any general expenses of New England Cash
Management Trust not readily identifiable as belonging specifically to
a particular series are allocated by or under the direction of the
trustees in such manner as the trustees determine to be fair and
equitable. While the expenses of New England Cash Management Trust
are allocated to the separate books of account of each series of the
Trust, certain expenses may be legally chargeable against the assets
of both series.
The Declarations of Trust also permit the trustees to charge
shareholders directly for custodial, transfer agency and servicing
expenses.
The Declarations of Trust also permit the trustees, without
shareholder approval, to subdivide any series or class of shares into
various sub-series or sub-classes participating in the same portfolio
with such dividend preferences and other rights as the trustees may
designate. While the trustees have no current intention to exercise
this power, it is intended to allow them to provide for an equitable
allocation of the impact of any future regulatory requirements which
might affect various classes of shareholders differently. The
trustees may also, without shareholder approval, establish one or more
additional series or classes or merge two or more series or classes.
At such time as the trustees of New England Tax Exempt Money Market
Trust create another series, the Fund would become a "series" company
as that term is used in Section 18(f) of the 1940 Act. Currently, New
England Cash Management Trust is such a "series" company.
The Declarations of Trust provide for the perpetual existence of
the Funds. Either Trust or any Fund, however, may be terminated at
any time by vote of at least two-thirds of the outstanding shares of
the Fund affected or by the relevant trustees upon written notice to
the shareholders. Similarly, any class within a Fund may be
terminated by vote of at least two-thirds of the outstanding shares of
such class or by notice from the trustees.
VOTING RIGHTS
General
As summarized in the Prospectus, shareholders are entitled to one
vote for each full share held (with fractional votes for fractional
shares held) and may vote (to the extent described below) in the
election of trustees and the termination of the Funds and on other
matters submitted to the vote of shareholders.
The Declaration of Trust for each Trust provides that, on any
matter submitted to a vote of all Trust shareholders, all of a Trust's
shares entitled to vote shall be voted together irrespective of series
or class unless the rights of a particular series or class would be
adversely affected by the vote, in which case a separate vote of that
series or class shall also be required to decide the question. Also,
a separate vote shall be held whenever required by the 1940 Act or any
rule thereunder. Rule 18f-2 under the 1940 Act provides in effect
that a series or class shall be deemed to be affected by a matter
unless it is clear that the interests of each series or class in the
matter are substantially identical or that the matter does not affect
any interest of such series or class. On matters affecting an
individual series or class, only shareholders of that series or class
are entitled to vote.
There will normally be no meetings of shareholders for the
purpose of electing trustees except that in accordance with the 1940
Act (i) each Trust will hold a meeting of its shareholders for the
election of trustees at such time as less than a majority of the
trustees holding office have been elected by shareholders, and (ii)
if, as a result of a vacancy in the Board of Trustees, less than two-
thirds of the trustees holding office have been elected by the
shareholders, that vacancy may only be filled by a vote of the
shareholders. In addition, trustees of the Tax Exempt Fund may be
removed from office by a written consent signed by the holders of two-
thirds of the outstanding shares and filed with the Fund's custodian
or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for the purpose, which meeting shall be held
upon the written request of the holders of not less than 10% of the
outstanding shares.
Upon written request by the holders of shares having a net asset
value of $25,000 or constituting 1% of the outstanding shares stating
that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a
meeting to consider removal of a trustee, the Tax Exempt Fund has
undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold
office and may appoint successor trustees. Voting rights are not
cumulative.
No amendment may be made to the Declarations of Trust without the
affirmative vote of a majority of the outstanding shares of the
applicable Trust except (i) to change the name of the Trust or a
series thereof or to cure technical problems in the Declaration of
Trust, (ii) to establish and designate new series or classes of
shares, and (iii) to establish, designate or modify new and existing
series or classes of shares or modify other provisions relating to
Trust shares in response to applicable laws or regulations, or, in the
case of the Tax Exempt Fund, in order to convert the Fund into a
"series" company. If one or more new series of either Trust is
established and designated by the trustees, the shareholders having
beneficial interests in the Funds described in the Prospectus and this
Statement shall not be entitled to vote on matters exclusively
affecting such new series, such matters including, without limitation,
the adoption of or any change in the investment objectives, policies
or restrictions of the new series and the approval of the investment
advisory contracts of the new series. Similarly, the shareholders of
the new series shall not be entitled to vote on any such matters as
they affect the Funds.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, a Trust's shareholders could, under
certain circumstances, be held personally liable for the obligations
of the Trust. However, the Declarations of Trust disclaim shareholder
liability for acts or obligations of a Fund and require that notice of
such disclaimer be given in each agreement, obligation or instrument
entered into or executed by a Trust or its trustees. The Declarations
of Trust provide for indemnification out of the assets of a Fund for
all loss and expense of any shareholder held personally liable for the
obligations of that Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered
remote since it is limited to circumstances in which the disclaimer is
inoperative and the Fund itself would be unable to meet its
obligations.
The Declarations of Trust further provide that the trustees will
not be liable for errors of judgment or mistakes of fact or law.
However, nothing in the Declarations of Trust protects a trustee
against any liability to which the trustee would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office. The By-Laws of each Trust provide for indemnification by the
Trust of the trustees and the officers of such Trust except with
respect to any matter as to which any such person did not act in good
faith in the reasonable belief that his or her action was in or not
opposed to the best interests of the Trust. Such person may not be
indemnified against any liability to the Trust or its shareholders to
which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
OWNERSHIP OF SHARES
At June 30, 1995, there were 649,808,456 shares of the Money
Market Fund, 59,742,493 shares of the Government Fund and 67,797,313
shares of the Tax Exempt Fund issued and outstanding. State Street
Bank in its capacity as trustee for various retirement and individual
trust accounts owned of record and may be deemed to have owned
beneficially approximately 57,528,575 shares of the Money Market
Fund's Class A shares, about 8.9% of the total Class A shares then
outstanding, and one account registered to National Financial Services
Corp. (For the Exclusive Benefit of its Customers), 200 Liberty
Street, 1 World Financial Center; New York, NY 10281 owned 41, 216,190
Class A shares of the Fund, about 6.5% of the total Class A shares
then outstanding. State Street Bank in its capacity as trustee for
various retirement and individual trust accounts owned of record and
may be deemed to have owned beneficially approximately 1,579,260
shares of the Money Market Fund's Class B shares, about 34.6% of the
total Class B shares then outstanding. State Street Bank in its
capacity as trustee for various retirement and individual trust
accounts owned of record and may be deemed to have owned beneficially
approximately 5,829,083 shares of the Government Fund's Class A
shares, about 9.9% of the total shares then outstanding, and two
accounts registered to National Financial Services Corp. (For the
Exclusive Benefit of its Customers), 200 Liberty Street, 1 World
Financial Center, New York, NY 10281 and Kevin and Mary Mahoney, 228
Common Street, Belmont, MA 02178 owned 5,786,931 and 3,344,211 Class A
shares of the Fund, respectively, about 9.9% and 5.7%, respectively,
of the total Class A shares then outstanding. State Street Bank in
its capacity as trustee for various retirement and individual trust
accounts owned of record and may be deemed to have owned beneficially
approximately 269,928 shares of the Government Fund's Class B shares,
about 41.3% of the total shares then outstanding, and five accounts
registered to Jean Magill (Guardian, Amy L. Magill - U/A/DTD 6/15/93),
P.O. Box 1673, Snellville, GA 30278, Jean J. Magill (Guardian for
Property of James C. Magill, Jr.), P.O. Box 1673, Snellville, GA
30278, Mable J. Snell, 2145 North Road, Snellville, GA 30278, State
Street Bank and Trust Company (Custodian for the IRA Rollover of
Ronald J. Weber), 101 Rainbow Drive, Apartment Number 4691,
Livingston, TX 77351 and State Street Bank and Trust Company
(Custodian for the IRA Rollover of Marilyn Seidner Batshaw), 166
Westgate Drive, Edison, NJ 08820 owned 75,012, 75,012, 104,609, 77,708
and 44,812 Class B shares of the Fund, respectively, about 11.4%,
11.4%, 15.8%, 11.8% and 6.8%, respectively of the total Class B shares
then outstanding. For the Tax Exempt Fund's Class A shares, there is
one account registered to National Financial Services Corp. (For the
Exclusive Benefit of its Customers), 200 Liberty Street, 1 World
Financial Center, New York, NY 10281, which owned 8,259,059 Class A
shares of the Fund, about 12.5% of the total Class A shares then
outstanding. State Street Bank in its capacity as trustee for various
retirement and individual trust accounts owned of record and may be
deemed to have owned beneficially none of the Tax Exempt Fund's Class
B shares, and three accounts registered to Henry S. Belber II, Trico
Construction Company, Inc., 227 Lancaster, Avenue, Devon, PA 19333,
Lawrence and Alex Friedman, 160 Washington Avenue, Watchung, NJ 07060
and Ann Coughlin, Box 399 Golf Course Road, Dallas, PA 18612 owned
166,064, 144,556 and 54,630 Class B shares of the Fund, respectively,
about 38.1%, 33.2% and 12.5%, respectively, of the total Class B
shares then outstanding.
PURCHASE OF SHARES
The procedures for purchasing shares of the Funds are summarized
in the Prospectus under the caption "6 Ways to Buy Fund Shares."
Shares may also be purchased either in writing, by phone or by
electronic funds transfer, or by exchange as described in the
Prospectus, through firms that have selling agreements with the
Distributor.
Shares of each Fund are offered for sale continuously at their
respective net asset values, which the Funds seek to maintain at a
constant $1 per share. See "Net Income, Dividends and Valuation."
There is no sales charge.
The minimum initial investment is $1,000, with a $50 minimum for
subsequent investments. There are reduced initial investment minimums
for certain investments described below under "Shareholder Services."
Banks may charge a fee for transmitting funds by wire or through
the Automated Clearing House ("ACH") system. With respect to shares
purchased by federal funds wire, shareholders should bear in mind that
wire transfers may take two or more hours to complete.
A shareholder may purchase additional shares electronically
through the ACH system so long as the shareholder's bank or credit
union is a member of the ACH system and the shareholder has a
completed, approved ACH application on file.
In all instances where checks are sent for the purchase of
shares, they must be drawn on U.S. banks and payable in U.S. dollars.
SHAREHOLDER SERVICES
Open Accounts
Except for investors who own shares through certain broker
"street name" or retirement plan arrangements, each shareholder's
investment is automatically credited to a separate open account
maintained for the shareholder by the Distributor, and the shareholder
will receive a monthly statement disclosing the current balance of
shares owned in the shareholder's account and the details of all
transactions in that account during the month; however, if there were
no transactions other than dividend declarations during a month, the
shareholder will receive a quarterly statement instead of a monthly
statement. After the close of each calendar year, the Distributor
will send the shareholder a statement for each of his or her accounts
providing federal tax information on dividends and distributions paid
during the year including information as to that percentage, if any,
of Tax Exempt Fund dividends that are not exempt from federal income
taxation. Shareholders should retain this as a permanent record. The
Distributor reserves the right to charge a fee for providing duplicate
information.
Automatic Investment Plans
As described in the Prospectus, shareholders may, after opening
an account, authorize automatic monthly transfers of a least $50 from
the shareholder's bank account to purchase shares of a Fund. These
transfers are effected through checks drawn under Investment Builder,
a program designed to facilitate such periodic payments.
Under Investment Builder, funds normally are credited to the Fund
not later than the fourth business day after the check is drawn. An
Investment Builder application must be completed to open an automatic
investment plan. An application is included in the Prospectus or may
be obtained from your investment dealer or from New England Funds by
calling 1-800-225-5478. The plan may be discontinued by written
notice to New England Funds, L.P., which must be received at least
five business days prior to any payment date. The plan may be
discontinued by State Street Bank at any time without prior notice if
any check is not paid upon presentation; or by written notice to
shareholders at least thirty days prior to any payment date. State
Street Bank is under no obligation to notify shareholders as to the
nonpayment of any check.
Retirement Plans Offering Tax Benefits - Money Market Fund and
Government Fund
The federal tax laws provide for a variety of retirement plans
offering tax benefits. These plans may be funded with shares of the
Money Market Fund or the Government Fund, or with certain other
investments. The plans include H.R. 10 (Keogh) plans for self-
employed individuals and partnerships, individual retirement accounts
(IRAs), corporate pension and profit sharing plans, including 401(k)
plans, and retirement plans for public school systems and certain tax
exempt organizations (403(b) plans).
Initial investments in either Fund must be at least $250 for each
participant in corporate pension and profit sharing plans, IRAs and
Keogh plans and $50 for subsequent investments. There is a special
initial and subsequent investment minimum of $25 for payroll deduction
investment programs for 401(k), SARSEP, 403(b) and certain other
retirement plans. Income dividends and capital gain distributions
will be automatically reinvested (unless the investor is age 59 1/2 or
disabled). Plan documents can be obtained from the Distributor.
An investor should consult a competent tax or other adviser as to
the suitability of either Fund's shares as a vehicle for funding a
plan, in whole or in part, under the Employee Retirement Income
Security Act of 1974 and as to the eligibility requirements for a
specific plan and its state as well as federal tax aspects.
Systematic Withdrawal Plans
A shareholder owning shares having a value of $5,000 or more in
any Fund may establish a Systematic Withdrawal Plan providing for
periodic payments of a fixed or variable amount from the shareholder's
account. There is no minimum account size where payments are made
directly to The New England or the Distributor. There is no charge
for this service, and the shareholder may terminate his or her plan at
any time. Shareholders can establish the plan on the account
application or obtain a Service Options form for establishing such a
plan by calling New England Funds at 1-800-225-5478.
Under a Systematic Withdrawal Plan, shareholders may elect to
receive or direct payments monthly, quarterly, semiannually or
annually for a fixed amount of not less than $100 or a variable amount
based on (1) a specified percentage of an account's market value or
(2) a specified number of years for liquidating an account (e.g., a 20-
year program of 240 monthly payments would be liquidated at a monthly
rate of 1/240, 1/239, 1/238, etc.). Under a variable payment option,
the initial payment from an account for each Fund must be $100 or
more. In addition, shareholders who have purchased insurance or
annuity products of The New England may elect to have amounts
withdrawn from a Fund monthly to pay the necessary premiums.
Withdrawals may be paid to a person other than the shareholder if a
signature guarantee is provided. On Systematic Withdrawal Plans for
accounts subject to a contingent deferred sales charge ("CDSC"), the
redemption of shares will not be subject to a CDSC if the amount or
percentage you specify does not exceed, on an annualized basis, 10% of
the value of your account with the Fund. In the case of Class A and B
shares not subject to a CDSC, there is no limit on the percentage of
an account that may be redeemed. Please consult your investment
dealer or New England Funds for additional information.
No share certificates will be issued for an account that is
subject to a Systematic Withdrawal Plan. Income dividends and capital
gain distributions will be reinvested.
Since Systematic Withdrawal Plan payments represent proceeds from
the liquidation of shares, withdrawals may reduce and possibly exhaust
the initial investment, particularly in the event of a period of low
earnings. Accordingly, the shareholder should consider whether a
Systematic Withdrawal Plan and the specified amounts to be withdrawn
are appropriate in the circumstances. The Funds and New England Funds
make no recommendations or representations in this regard. It may be
appropriate for the shareholder to consult a tax adviser before
establishing such a Plan. See "Redemptions" and "Tax Status," below,
for certain information as to federal income taxes. New England Funds
may modify or terminate this program at any time.
Exchange Privilege
Class A Fund shares may be exchanged for shares of either class
of the other Funds and Class B Fund shares may be exchanged for Class
B shares of any other Funds, subject to the minimum investment and
eligibility requirements of the series into which you are exchanging
and state securities law requirements. Shareholders may also exchange
their shares in the Funds for shares of the same class of any other
fund in the New England Funds listed below, subject to those funds'
eligibility requirements and sales charges. Class A shares may also
be exchanged for Class C shares of the New England Funds' Stock or
Bond Series, subject to the applicable sales charge. The Stock Series
of the New England Funds are: New England Capital Growth Fund, New
England Value Fund, New England Balanced Fund, New England Growth
Opportunities Fund, New England International Equity Fund, New England
Star Advisers Fund and New England Growth Fund; the Bond Series of the
New England Funds are: New England Government Securities Fund, New
England Limited Term U.S. Government Fund, New England Adjustable Rate
U.S. Government Fund, New England Strategic Income Fund, New England
Bond Income Fund, New England High Income Fund, New England Tax Exempt
Income Fund, New England Massachusetts Tax Free Income Fund, New
England Intermediate Term Tax Free Fund of California and New England
Intermediate Term Tax Free Fund of New York.
Shareholders of any of the other funds in the New England Funds
may exchange all or any portion of their shares (including the
proceeds of shares redeemed within 30 days before the exchange) for
shares of the same class of the Funds by telephoning or writing New
England Funds or their investment dealer; however, shareholders of
Class C shares of the New England Funds' Stock or Bond Series may
exchange those shares only for Class A shares of the Funds. Such an
exchange in the case of the Class B shares of the New England Funds
stops the aging period for purposes of determining the CDSC and
conversion to Class A, and the aging resumes only when an exchange is
made back into a non-money market fund in the New England Funds.
Shares of any Fund acquired through an exchange from the New
England Funds listed above may be re-exchanged for shares of the same
class of those New England Funds. Any such exchange will be based on
the respective current net asset values of the shares involved and no
sales charge will be imposed. Shareholders making such exchanges must
provide New England Funds with sufficient information to permit
verification of their prior ownership of shares.
An exchange may be effected, provided that neither the registered
name nor address of the accounts are different and provided that a
certificate representing the shares being exchanged has not been
issued to the shareholder, by (1) a telephone request to New England
Funds at 1-800-225-5478 or (2) a written request to New England Funds,
using the Service Options Form available from your investment dealer.
In any event, a current prospectus of the fund whose shares will be
received must be delivered to the shareholder before the transaction
can be completed.
Automatic Exchange Plan
Shareholders may establish an Automatic Exchange Plan under which
shares are automatically redeemed each month and immediately
reinvested in shares of the same class of one or more of New England
Funds listed below, subject to the investor eligibility requirement of
that other fund and the exchange rules regarding Class A and Class B
above. Also, proceeds of automatic redemptions of Class A shares of
the Funds may be reinvested in Class C shares of those New England
Funds' Stock or Bond Series that offer Class C shares. Registrations
on all accounts must be identical. The two dates each month on which
exchanges may be made are the 15th or 28th (or the first business day
thereafter if the 15th or the 28th are not business days) and are made
until the account is exhausted or until New England Funds is notified
in writing to terminate the plan. Exchanges may be made in amounts of
$50 or more from any Fund. A sales charge will be imposed on such
exchanges unless the shares being exchanged were previously acquired
through an exchange from one of the New England Funds listed below.
Complete the account application or the Service Options form available
from New England Funds to establish an Automatic Exchange Plan.
Every exchange constitutes a sale of fund shares for federal
income tax purposes, on which an investor may realize a long- or short-
term capital gain or loss.
The other New England Funds and their investment objectives are as
follows:
STOCK FUNDS
NEW ENGLAND CAPITAL GROWTH FUND -- long term growth of capital.
NEW ENGLAND VALUE FUND -- a reasonable long-term investment return
from a combination of market appreciation and dividend income
from equity securities.
NEW ENGLAND BALANCED FUND -- a reasonable long-term investment return
from a combination of long-term capital appreciation and moderate
current income.
NEW ENGLAND GROWTH OPPORTUNITIES FUND -- opportunities for long-term
growth of capital and income.
NEW ENGLAND INTERNATIONAL EQUITY FUND -- total return, from long-term
growth of capital and dividend income, primarily through
investment in international equity securities.
NEW ENGLAND STAR ADVISERS FUND -- long-term growth of capital.
NEW ENGLAND GROWTH FUND -- long-term growth of capital through
investment in equity securities of companies whose earnings are
expected to grow at a faster rate than the United States economy.
(Note: New England Growth Fund offers only Class A shares, and
is available for purchase only by certain eligible investors.)
BOND FUNDS
NEW ENGLAND GOVERNMENT SECURITIES FUND -- a high level of current
income consistent with safety of principal by investing in U.S.
Government Securities and engaging in transactions involving
related options, futures and options on futures.
NEW ENGLAND LIMITED TERM U.S. GOVERNMENT FUND -- a high current return
consistent with preservation of capital. The Fund's current
return will include both interest income earned on investments
and any net short-term capital gains realized from options and
other portfolio transactions.
NEW ENGLAND ADJUSTABLE RATE U.S. GOVERNMENT FUND -- a high level of
current income consistent with low volatility of principal.
NEW ENGLAND STRATEGIC INCOME FUND -- high current income with a
secondary objective of capital growth.
NEW ENGLAND BOND INCOME FUND -- a high level of current income
consistent with what the Fund considers reasonable risk.
NEW ENGLAND HIGH INCOME FUND -- high current income plus the
opportunities for capital appreciation to produce a high total
return.
NEW ENGLAND TAX EXEMPT INCOME FUND -- as high a level of current
income exempt from federal income taxes as is consistent with
reasonable risk and protection of shareholders' capital.
NEW ENGLAND MASSACHUSETTS TAX FREE INCOME FUND -- as high a level of
current income exempt from federal income tax and Massachusetts
personal income taxes as the Fund's investment adviser and
manager believes is consistent with preservation of capital.
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA -- as high a
level of current income exempt from federal income tax and
California state personal income tax as is consistent with
preservation of capital.
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF NEW YORK -- as high a
level of current income exempt from federal income tax and New
York state personal income tax and New York City personal income
tax as is consistent with preservation of capital.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in
the Prospectus following the caption "Selling Fund Shares." As
described in the Prospectus, under "Contingent Deferred Sales
Charges", a CDSC may be imposed in certain instances upon the
redemption of Fund shares which were acquired through an exchange of
shares of the New England Funds. For purposes of the CDSC, an
exchange of shares from one Fund to another Fund is not considered a
redemption or purchase. Any applicable CDSC will be calculated in the
manner described in the relevant prospectus of the New England Funds
and the related Statement of Additional Information.
Except as noted below, signatures on redemption requests must be
guaranteed by an "Eligible Guarantor Institution" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934. Signature
guarantees by notaries public are not acceptable. However, as noted
in the Prospectus, a signature guarantee will not be required if the
proceeds of the redemption do not exceed $100,000 and the proceeds
check is made payable to the registered owner(s) and mailed to the
record address.
In order to have redemption proceeds sent to your bank by
telephone, you either must select this service when completing the new
account application or must do so subsequently on the Service Options
Form, available from New England Funds or your investment dealer.
When selecting the service, you must designate a bank account to which
the redemption proceeds should be sent. Any change in the bank
account so designated may be made by furnishing to New England Funds
or your investment dealer a completed Service Options Form with a
signature guarantee. Telephone redemptions proceeds may be wired to a
bank account only if the designated bank is a member of the Federal
Reserve System or has a correspondent bank that is a member of the
System. If the account is with a savings bank, it must have only one
correspondent bank that is a member of the System. The Funds, the
Distributor and State Street Bank are not responsible for the
authenticity of withdrawal instructions received by telephone.
In order to redeem shares electronically through the ACH system,
a shareholder's bank or credit union must be a member of the ACH
system and the shareholder must have a completed, approved ACH
application on file. In addition, the telephone request must be
received no later than 4:00 p.m. (Eastern time). Upon receipt of the
required information, the appropriate number of shares will be
redeemed and the monies forwarded to the bank designated on the
shareholder's application through the ACH system. The redemption will
be processed the day the telephone call is made and the monies
generally will arrive at the shareholder's bank within three business
days. The availability of these monies will depend on the individual
bank's rules.
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special
documentation are received by New England Funds in proper form.
Payment normally will be made by State Street Bank on behalf of the
Fund within seven days thereafter. However, payment of the redemption
proceeds may be delayed if the purchase of shares was made by a check
or an electronic funds transfer, which was deposited or initiated,
respectively, less than ten days prior to the redemption request
(unless the Fund is aware that the check or transfer has cleared).
The Funds will normally redeem shares for cash. However, each of
the Funds reserves the right to pay the redemption price wholly or
partly in kind if the Board of Trustees of the relevant Trust
determines it to be advisable in the interest of the remaining
shareholders. If portfolio securities are distributed in lieu of
cash, the shareholder may be unable to sell the securities for the
full value placed on them when held by the Fund and will probably have
to pay a "dealer spread" or other brokerage amounts in order to
liquidate such securities. However, each Trust has elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which each Fund
is obligated to redeem shares solely in cash for any shareholder
during any 90-day period up to the lesser of $250,000 or 1% of the
total net asset value of the Fund at the beginning of such period.
NET INCOME, DIVIDENDS AND VALUATION
Determination of Net Income
The net income of each Fund is determined as of the close of
regular trading on the New York Stock Exchange (the "Exchange") on
each day that the Exchange is open for trading. The Exchange is
expected to be closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Net income includes (i) all
interest accrued and discount earned on the portfolio investments of
the Fund, minus (ii) amortized premium on such investments, plus or
minus (iii) all realized gains and losses on such investments, and
minus (iv) all expenses of the Fund.
Determination of Yield
Yield. Each Fund's yield, as it may appear in advertisements or
written sales material, represents the net change, exclusive of
capital changes, in the value of a hypothetical account having a
balance of one share at the beginning of the period for which yield is
determined (the "base period"). Current yield for the base period
(for example, seven calendar days) is calculated by dividing (i) the
net change in the value of the account for the base period by (ii) the
number of days in the base period. The resulting number is then
multiplied by 365 to determine the net income on an annualized basis.
This amount is divided by the value of the account as of the beginning
of the base period, normally $1, in order to state the current yield
as a percentage. Yield may also be calculated on a compound basis
("effective" or "compound" yield) which assumes continual reinvestment
throughout an entire year of net income earned at the same rate as net
income is earned by the account for the base period.
Each Fund's yield for the seven days ended June 30, 1995 and
effective yield based on such seven-day period were, respectively,
5.47% and 5.62% (Money Market Fund), 5.72% and 5.88% (Government Fund)
and 3.64% and 3.71% (Tax Exempt Fund).
Tax-Equivalent Yield. The Tax Exempt Fund may also advertise a
tax-equivalent yield or tax-equivalent effective yield, calculated as
described above, except that, for any given tax bracket, net
investment income will be calculated using as gross investment income
an amount equal to the sum of (i) any taxable income of the Fund plus
(ii) the tax exempt income of the Fund divided by the difference
between 1 and the effective federal income tax rate for taxpayers in
that tax bracket.
Tax-Equivalent Yield and Tax-Equivalent
Effective Yield for the 7 day period ended 6/30/95
7 day yield: 3.64%
7 day effective: 3.71%
Federal Tax- Tax-Equivalent
Tax Rate Equivalent Effective Yield
Yield
15% 4.28% 4.36%
28% 5.06% 5.15%
31% 5.28% 5.38%
36% 5.69% 5.80%
39.6% 6.03% 6.14%
The table below compares taxable and tax-free yields, based on
tax rates for 1995:
TAX-FREE INVESTING
Federal
Marginal
TAXABLE INCOME Tax
Joint Single Rate If tax exempt yield is:
Return Return (1995) 2% 3% 4% 5% 6%
Then the Equivalent Taxable Yield
Would be:
$0-$39,000 $0-$23,350 15% 2.35% 3.53% 4.71% 5.88% 7.06%
$39,001- $23,351- 28% 2.78% 4.17% 5.56% 6.94% 8.33%
$94,250 $56,550
$94,251- $56,551- 31% 2.90% 4.35% 5.80% 7.25% 8.70%
$143,600 $117,950
$143,601- $117,951- 36% 3.13% 4.69% 6.25% 7.81% 9.38%
$256,500 $256,500
over over 39.6% 3.31% 4.97% 6.62% 8.28% 9.93%
$256,500 $256,500
The table above does not take into account the effect of state
and local taxes, if any, or federal income taxes on social security
benefits which may arise as a result of receiving tax exempt income.
In General
Yield is calculated without regard to realized and unrealized
gains and losses. The yield of each Fund will vary depending on
prevailing interest rates, operating expenses and the quality,
maturity and type of instruments held in the portfolio of that Fund.
Consequently, no yield quotation should be considered as
representative of what the yield of the applicable Fund may be for any
future period. The Funds' yields are not guaranteed.
Shareholders comparing Fund yield with that of alternative
investments (such as savings accounts, various types of bank deposits,
and other money market funds) should consider such things as
liquidity, minimum balance requirements, checkwriting privileges, the
differences in the periods and methods used in the calculation of the
yields being compared, and the impact of taxes on alternative types of
investments.
Yield information may be useful in reviewing each Fund's
performance and providing a basis for comparison with other investment
alternatives. However, unlike bank deposits, traditional corporate or
municipal bonds or other investments which pay a fixed yield for a
stated period of time, money market and tax exempt money market fund
yields fluctuate.
Daily Dividends
As described in the Prospectus, the net income of each Fund is
declared as a dividend, at the closing of regular trading on the
Exchange each day that the Exchange is open. Dividends will be paid
in cash to the shareholder if the shareholder has notified State
Street Bank in writing of the election on or before payable date. The
net income for Saturdays, Sundays and other days on which the Exchange
is closed is declared as a dividend on the immediately preceding
business day. Although the Funds do not expect to realize any long-
term capital gains, if such gains are realized they will be
distributed once a year.
Valuation of the Funds' Portfolio Investments
The total net asset value of each Fund (the excess of the Fund's
assets over its liabilities) is determined by State Street Bank as of
the close of regular trading on the Exchange on each day the Exchange
is open for trading. (See "Determination of Net Income.") The
portfolio securities of each Fund are valued at their fair value as
determined in good faith by the relevant Trust's Board of Trustees or
persons acting at their direction. Under normal market conditions,
portfolio securities will be valued at amortized cost as described
below. Expenses of each Fund are paid or accrued each day.
Under the amortized cost method of valuation, securities are
valued at cost on the date of purchase. Thereafter, the value of
securities purchased at a discount or premium is increased or
decreased incrementally each day so that at maturity the purchase
discount or premium is fully amortized and the value of the security
is equal to its principal amount. Due to fluctuations in interest
rates, the amortized cost value of the securities of a Fund may at
times be more or less than their market value.
By using amortized cost valuation, the Funds seek to maintain a
constant net asset value of $1.00 per share despite minor shifts in
the market value of their portfolio securities. The yield on a
shareholder's investment may be more or less than that which would be
recognized if the net asset value per share were not constant and were
permitted to fluctuate with the market value of the portfolio
securities of each Fund. However, as a result of the following
procedures, it is believed that any difference will normally be
minimal. The trustees monitor quarterly the deviation between the net
asset value per share of each Fund as determined by using available
market quotations and its amortized cost price per share. Back Bay
Advisors(R) makes such comparisons at least weekly and will advise the
trustees promptly in the event of any significant deviation. If the
deviation exceeds 1/2 of 1% for any Fund, the relevant Board of
Trustees will consider what action, if any, should be initiated to
provide fair valuation of the portfolio securities of that Fund and
prevent material dilution or other unfair results to shareholders.
Such action may include redemption of shares in kind; selling
portfolio securities prior to maturity; withholding dividends; or
using a net asset value per share as determined by using available
market quotations. There is no assurance that each Fund will be able
to maintain its net asset value at $1.00.
TAXES
In General
The tax status of the Funds and the distributions that each Fund
may make are summarized in the text of the Prospectus titled "Income
Tax Considerations." Each Fund intends to qualify as a regulated
investment company under the Code. This means that the Fund is not
subject to federal income tax on net income and net realized capital
gains distributed to shareholders provided it distributes annually
substantially all its net investment income and net realized short-
term capital gains.
To avoid certain excise taxes, each Fund must distribute by
December 31 each year virtually all of its ordinary income realized in
that year, and any previously undistributed capital gains it realized
in the twelve months ended on October 31 of that year. Certain
dividends declared by a Fund in December but not actually received by
you until January will be treated for federal tax purposes as though
you had received them in December.
Money Market Fund and Government Fund
It is not expected that either Fund will realize any long-term
capital gains. However, to the extent that distributions of any net
realized long-term capital gains are made to shareholders of either
Fund, such gains are taxable to such shareholders as long-term capital
gains, whether received in cash or additional shares and regardless of
how long shareholders have held their shares. Such distributions are
not eligible for the dividends received deduction for corporations.
The Money Market Fund and the Government Fund are treated as
separate entities for federal income tax purposes.
Tax Exempt Fund
The Fund intends to have at least 50% of its total assets
invested in Municipal Securities at the close of each quarter of its
taxable year so that dividends paid by the Fund which are derived from
interest on Municipal Securities will be "exempt-interest dividends"
within the meaning of the Code. Exempt-interest dividends may be
treated by shareholders as interest excludable from gross income under
Section 103(a) of the Code. Dividends derived from income which is
not exempt from federal income tax, including interest earned on
investments in taxable money market securities or in repurchase
agreements and any net short-term capital gains realized by the Fund,
will be taxable to shareholders as ordinary income whether received in
cash or additional shares. See the Prospectus for information
concerning the federal income tax treatment of interest on "private
activity bonds" and certain other limitations on the tax-exempt status
of interest on Municipal Securities.
Net long-term capital gain distributions, if any, will be taxable
to shareholders as long-term capital gains, regardless of the length
of time the shareholder has held shares of the Fund.
None of the Funds' dividends or distributions are expected to be
eligible for the dividends-received deduction available to
corporations.
Under the Code, investors may not deduct interest on indebtedness
incurred or continued to purchase or carry shares of an investment
company paying exempt-interest dividends, such as the Fund. (See
Section 265(4) of the Code.) Further, entities or persons who are
"substantial users" (or persons related to "substantial users") of
facilities financed by industrial development bonds (see Appendix A-2)
should consult their tax advisers before purchasing shares of the
Fund.
Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal income taxation of
the Fund and the income tax consequences to its shareholders.
All Funds
The foregoing relates only to federal income taxation of
individuals and corporations. Prospective shareholders should consult
their tax advisers as to the possible application of state and local
income tax laws to Fund dividends and capital gain distributions and
the tax consequences of retirement plans offering tax benefits.
Information regarding the tax status of distributions made by the
Funds will be sent to shareholders shortly after the end of each
calendar year.
Financial Statements
The Financial Statements of each of the Funds and the related
reports of the independent accountants included in the annual reports
of the Funds for the year ended June 30, 1995, are incorporated herein
by reference.
______________________________________________________________________
APPENDIX A
______________________________________________________________________
DESCRIPTION OF CERTAIN NEW ENGLAND CASH MANAGEMENT TRUST INVESTMENTS:
Obligations Backed by Full Faith and Credit of the U.S.
Government1 -- are bills, certificates of indebtedness, notes and
bonds issued by (i) the U.S. Treasury or (ii) agencies, authorities
and instrumentalities of the U.S. Government or other entities and
backed by the full faith and credit of the U.S. Government. Such
obligations include, but are not limited to, obligations issued by the
Government National Mortgage Association, the Farmers' Home
Administration and the Small Business Administration.
----------
1These obligations, together with related repurchase agreements, are the
only obligations that may be purchased by the U.S. Government Series.
Other U.S. Government Obligations -- are bills, certificates of
indebtedness, notes and bonds issued by agencies, authorities and
instrumentalities of the U.S. Government which are supported by the
right of the issuer to borrow from the U.S. Treasury or by the credit
of the agency, authority or instrumentality itself. Such obligations
include, but are not limited to, obligations issued by the Tennessee
Valley Authority, the Bank for Cooperatives, Federal Home Loan Banks,
Federal Intermediate Credit Banks, Federal Land Banks and the Federal
National Mortgage Association.
Repurchase Agreements -- are agreements by which the Fund
purchases a security (usually a U.S. Government Obligation) and
obtains a simultaneous commitment from the seller (a member bank of
the Federal Reserve System or, to the extent permitted by the 1940
Act, a recognized securities dealer) to repurchase the security at an
agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to
the coupon rate on the purchased security. Such transactions afford
an opportunity for the Fund to earn a return on temporarily available
cash at minimal market risk, although the Fund may be subject to
various delays and risks of loss if the seller is unable to meet its
obligation to repurchase.
Certificates of Deposit -- are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a
specified rate of return and are normally negotiable.
Bankers' Acceptances -- are short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are
termed "accepted" when a bank guarantees their payment at maturity.
Yankeedollar Obligations -- obligations of U.S. branches of
foreign banks.
Eurodollar Obligations -- dollar-denominated obligations of
foreign banks (including U.S. and London branches of foreign banks)
and foreign branches of U.S. banks.
Commercial Paper -- refers to promissory notes issued by
corporations in order to finance their short-term credit needs. (See
Appendix C.)
Corporate Obligations -- include bonds and notes issued by
corporations in order to finance longer-term credit needs. (See
Appendix C.)
______________________________________________________________________
APPENDIX B
______________________________________________________________________
DESCRIPTION OF MUNICIPAL SECURITIES
The three principal classifications of Municipal Securities are
"Notes," "Bonds" and "Commercial Paper."
Municipal Notes. Municipal Notes are generally issued to finance
short-term capital needs and generally have maturities of one year or
less. Municipal Notes include:
1. Project Notes. Project Notes are issued by public bodies (called
"local issuing agencies") created under the laws of a state, territory
or U.S. possession. They have maturities that range up to one year
from the date of issuance. These Notes provide financing for a wide
range of financial assistance programs for housing, redevelopment and
related needs (such as low-income housing programs and urban renewal
programs). While they are the primary obligations of the local public
housing agencies or the local urban renewal agencies, they are also
backed by the full faith and credit of the U.S. Government.
Accordingly, investment restriction (1) of New England Tax Exempt
Money Market Trust is not applicable to Project Notes. See
"Investment Restrictions."
2. Tax Anticipation Notes. Tax Anticipation Notes are issued to
finance working capital needs of states, counties, municipalities and
other public bodies which have the legal power to tax. Generally,
they are issued in anticipation of various seasonal tax revenues, such
as real and personal property, income, sales, use and business taxes,
and are payable from some or all of these specific future taxes.
3. Revenue Anticipation Notes. Revenue Anticipation Notes are
issued to provide interim financing in expectation of receipt of
various types of non-tax revenue, such as revenues available to the
issuer under various federal revenue sharing programs. In some cases,
Revenue Anticipation Notes may be payable additionally from tax
revenues.
4. Bond Anticipation Notes. Bond Anticipation Notes are issued to
provide interim financing until long-term financing can be arranged.
In most cases, the long-term bonds, when sold and issued, then provide
the money for repayment of the Notes.
5. Construction Loan Notes. Construction Loan Notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the
Federal Housing Administration under "Fannie Mae" (the Federal
National Mortgage Association) or "Ginnie Mae" (the Government
National Mortgage Association) programs.
Municipal Bonds. Municipal Bonds, which meet longer-term capital
needs and generally have maturities of more than one year when issued,
have two principal classifications: General Obligation Bonds and
Limited Obligation or Revenue Bonds. One type of Municipal Revenue
Bonds is referred to as Industrial Development Bonds. These three are
discussed below.
1. General Obligation Bonds. Issuers of General Obligation Bonds
include states, counties, cities, towns and regional districts. The
proceeds of these obligations are used to fund a wide range of public
projects, including construction or improvement of schools, highways
and roads, and water and sewer systems. The basic security behind
General Obligation Bonds is the issuer's pledge of its full faith and
credit and taxing power for the payment of principal and interest.
General Obligation Bonds are not payable from any particular fund or
source. The characteristics and method of enforcement of General
Obligation Bonds vary according to the law applicable to the
particular issuer and payment may be dependent upon an appropriation
by the issuer's legislative body. The taxes that can be levied for
the payment of debt service may be limited or unlimited as to rate or
amount. Such bonds may be additionally secured by special
assessments.
2. Limited Obligation or Revenue Bonds. The principal source for
repayment of a Revenue Bond is generally the net revenues derived from
a particular facility or group of facilities or, in some cases, the
proceeds of a special excise or other specific revenue source.
Revenue Bonds have been or may be issued to finance a wide variety of
capital projects including: electric, gas, water and sewer systems;
highways, bridges and tunnels; port facilities; colleges and
universities; and hospitals. Although the principal security behind
these bonds may vary, many provide additional security in the form of
a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security, including partially or
fully insured mortgages, rent subsidies and/or collateralized
mortgages, and/or the net revenues from housing or other public
projects. Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in the
debt service reserve fund.
3. Industrial Development Bonds. Prior to the Tax Reform Act of
1986, certain debt obligations known as Industrial Development Bonds
could be 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; such obligations
are included within the term Municipal Bonds if the interest paid
thereon is, in the opinion of bond counsel, exempt from federal income
tax. These bonds also have been or may be used to finance public
facilities, which may be privately used and operated, 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 or personal property so financed as
security for such payment. The Tax Reform Act of 1986 eliminated some
types of industrial revenue bonds but retained others under the
general category of "private activity bonds."
Tax-Exempt Commercial Paper. Tax-Exempt Commercial Paper is a
short-term obligation with a stated maturity of 365 days or less. It
is issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in
anticipation of longer term financing. Tax-Exempt Commercial Paper is
often renewed or refunded at its maturity by the issuance of other
short or long-term obligations.
Other Types of Municipal Securities. The foregoing describes
types of Municipal Securities which are presently available. New
England Tax Exempt Money Market Trust may, to the extent consistent
with its investment objective, policies and restrictions, invest in
other types of Municipal Securities as they become available in the
future.
______________________________________________________________________
APPENDIX C
______________________________________________________________________
RATINGS OF CORPORATE AND MUNICIPAL BONDS, COMMERCIAL PAPER AND
SHORT-TERM TAX-EXEMPT OBLIGATIONS
Set forth below are descriptions of the highest ratings of Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings
Group ("S&P") for corporate and municipal bonds, commercial paper and
short-term tax-exempt obligations. Ratings for commercial paper have
been included since certain of the obligations which the Funds are
authorized to purchase have characteristics of commercial paper and
have been rated as such by Moody's and S&P.
MOODY'S RATINGS
Corporate and Municipal Bonds
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
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 high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than 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.
Short-Term Municipal Notes
The two highest ratings of Moody's for short-term municipal notes are
MIG-1 and MIG-2: MIG-1 denotes "best quality, enjoying strong
protection from established cash flows;" MIG-2 denotes "high quality,"
with margins of protection ample although not so large as in the
preceding group.
Commercial Paper
The rating P-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings
are the following: (1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten
years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such
obligations.
Issuers rated Prime-1 are judged to be of the best quality. Their
short-term debt obligations carry the smallest degree of investment
risk. Margins of support for current indebtedness are large or stable
with cash flow and asset protection well assured. Current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available. While
protective elements may change over the intermediate or long term,
such changes are most unlikely to impair the fundamentally strong
position of short-term obligations.
S&P RATINGS
Corporate and Municipal Bonds
AAA -- This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small
degree.
Short-Term Municipal Notes
S&P does not rate short-term municipal notes as such.
Commercial Paper
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. Long-term
senior debt is rated "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow
have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer
has a strong position within the industry. The reliability and
quality of management are unquestioned. Commercial paper within the A-
1 category which has overwhelming safety characteristics is denoted "A-
1+."
_____________________________________________________________________
APPENDIX D
_____________________________________________________________________
PUBLICATIONS THAT MAY BE REFERRED TO IN FUND ADVERTISEMENTS OR
SALES LITERATURE
ABC and affiliates
Adam Smith's Money World
America On Line
Anchorage Daily News
Atlanta Constitution
Atlanta Journal
Arizona Republic
Austin American Statesman
Baltimore Sun
Barron's
Bergen County Record (NJ)
Bloomberg Business News
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Financial News Network
Financial Planning
Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the) Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Advisor
Investment Company Institute
Investment Dealers Digest
Investment Profiles
Investment Vision
Investor's Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
Los Angeles Times
Leckey, Andrew (syndicated column)
Lear's
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
New York Times
Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UPI
US News and World Report
USA Today
USA TV Network
Value Line
Wall St. Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ
WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
Worth Magazine
WRKO
_____________________________________________________________________
APPENDIX E
_____________________________________________________________________
CERTAIN INFORMATION THAT MAY BE INCLUDED IN ADVERTISING AND
PROMOTIONAL LITERATURE
References may be included in New England Funds' advertising and
promotional literature to NEIC and its affiliates that perform
advisory or subadvisory functions for New England Funds including, but
not limited to: New England Funds Management, L.P., Back Bay
Advisors(R), Loomis, Sayles & Company, L.P., Capital Growth Management
Limited Partnership, Draycott Partners, Ltd. and Westpeak Investment
Advisors, L.P.
References may be included in New England Funds' advertising and
promotional literature to NEIC affiliates that do not perform advisory
or subadvisory functions for the Funds including, but not limited to,
New England Investment Associates, L.P., Copley Real Estate Advisors,
L.P., Marlborough Capital Advisors, L.P., Reich & Tang Capital
Management and Reich & Tang Mutual Funds Group.
References to subadvisers unaffiliated with NEIC that perform
subadvisory functions on behalf of New England Funds may be contained
in New England Funds' advertising and promotional literature
including, but not limited to, Berger Associates, Inc., Janus Capital
Corporation and Founders Asset Management, Inc.
New England Funds' advertising and promotional material may
include, but is not limited to, discussions of the following
information about the above entities:
[] Specific and general investment emphasis, specialties,
competencies, operations and functions
[] Specific and general investment philosophies, strategies, processes
and techniques
[] Specific and general sources of information, economic models,
forecasts and data services utilized, consulted or considered in the
course of providing advisory or other services
[] The corporate histories, founding dates and names of founders of
the entities
[] Awards, honors and recognition given to the firms
[] The names of those with ownership interest and the percentage of
ownership
[] Current capitalization, levels of profitability and other financial
information
[] Identification of portfolio managers, researchers, economists,
principals and other staff members and employees
[] The specific credentials of the above individuals, including but
not limited to, previous employment, current and past positions,
titles and duties performed, industry experience, educational
background and degrees, awards and honors
[] Specific identification of, and general reference to, current
individual, corporate and institutional clients, including pension
and profit sharing plans
[] Current and historical statistics about:
-total dollar amount of assets managed
-New England Funds' assets managed in total and by fund
-the growth of assets
-asset types managed
-numbers of principal parties and employees, and the length of
their tenure, including officers, portfolio managers,
researchers, economists, technicians and support staff
-the above individuals' total and average number of years of
industry experience and the total and average length of their
service to the adviser or the subadviser
In addition, communications and materials developed by New
England Funds may make reference to the following information about
NEIC and its affiliates:
NEIC is the fifth largest publicly traded money manager in the
U.S. listed on the New York Stock Exchange. NEIC maintains over $68
billion in assets under management. Clients serviced by NEIC and its
affiliates, besides New England Funds, include wealthy individuals,
major corporations and large institutions.
Back Bay Advisors(R) employs a conservative style of management
emphasizing short and intermediate term securities to reduce
volatility, adds value through careful, continuous credit analysis and
has expertise in government, corporate and tax-free municipal bonds
and equity securities. Among its clients are Boston City Retirement
System, Public Service Electric & Gas of New Jersey, Petrolite Corp.
and General Mills.
Draycott Partners, Ltd. specializes in international stocks and
tracks key world markets and economic trends from offices in London
and Boston. Its investment approach is based on concentration on
"blue chip" companies in stable, growing economies and is guided by
independent, non-consensus thinking. It monitors country weightings
with strict attention to risk control to promote long-term returns.
Capital Growth Management Limited Partnership seeks to deliver
exceptional growth for its clients through the selection of stocks
with the potential to outperform the market and grow at a faster rate
than the U.S. economy. Among its approaches are pursuit of growth 50%
above the Standard & Poor's Index of 500 Common Stocks, prompt
responses to changes in the market or economy and aggressive, highly
concentrated portfolios.
Loomis, Sayles & Company, L.P. is one of the oldest and largest
investment firms in the U.S. and has provided investment counseling to
individuals and institutions since 1926. Characteristic of Loomis,
Sayles & Company, L.P. is that it has one of the largest staffs of
research analysts in the industry, practices strict buy and sell
disciplines and focuses on sound value in stock and bond selection.
Among its clients are large corporations such as Chrysler, Mobil Oil
and Revlon.
Westpeak Investment Advisors, L.P. ("Westpeak") employs
proprietary research and a disciplined stock selection process that
seeks rigorously to control unnecessary risk. Its investment process
is designed to evaluate when value and growth styles - two primary
approaches to stock investing - hold potential for reward. Over
seventy fundamental attributes are continuously analyzed by Westpeak's
experienced analysts and sophisticated computer systems. The results
are assessed against Wall Street's consensus thinking, in pursuit of
returns in excess of appropriate benchmarks. The value/growth
strategy is a unique blend of investment styles, seeking opportunities
for increased return with reduced risk. Among the keys to Westpeak's
investment process are continuous review of timely, accurate data on
over 3600 companies, analysis of dozens of factors for excess return
potential and identification of overvalued and undervalued stocks.
On June 30, 1995, NEIC purchased the assets of Graystone
Partners, L.P. ("Graystone"), a Chicago-based consulting firm focusing
exclusively on working with the wealthiest families in the country.
Founded in 1993, Graystone specializes in assisting high net worth
families in developing asset allocation strategies, identifying
appropriate portfolio managers and the monitoring of investment
performance.
In addition, NEIC expects to purchase the assets of Harris
Associates, L.P., a Chicago-based investment management company with
more than $6.5 billion in assets under management, comprised of the
$3.2 billion Oakmark Fund Group and $3.3 billion in institutional
assets.
References may be included in New England Funds' advertising and
promotional literature about its 401(k) and retirement plans. The
information may include, but is not limited to:
[] Specific and general references to industry statistics regarding
401(k) and retirement plans including historical information and
industry trends and forecasts regarding the growth of assets,
numbers of plans, funding vehicles, participants, sponsors and
other demographic data relating to plans, participants and
sponsors, third party and other administrators, benefits
consultants and firms including, but not limited to, DC Xchange,
William Mercer and other organizations involved in 401(k) and
retirement programs with which New England Funds may or may not
have a relationship.
[] Specific and general reference to comparative ratings, rankings and
other forms of evaluation as well as statistics regarding the New
England Funds as a 401(k) or retirement plan funding vehicle
produced by, including, but not limited to, Access Research,
Dalbar, Investment Company Institute and other industry
authorities, research organizations and publications.
[] Specific and general discussion of economic, legislative and other
environmental factors affecting 401(k) and retirement plans,
including but not limited to, statistics, detailed explanations or
broad summaries of:
-past, present and prospective tax legislation and IRS
requirements and rules, including, but not limited to, reporting
standards, minimum distribution notices, Forms 5500, Form 1099R
and other relevant forms and documents, Department of Labor rules
and standards and other regulations. This includes past, current
and future initiatives, interpretive releases and positions of
regulatory authorities about the past, current or future
eligibility, availability, operations, administration, structure,
features, provisions or benefits of 401(k) and other retirement
plans
-information about the history, status and future trends of Social
Security and similar government benefit programs including, but
not limited to, eligibility and participation, availability,
operations and administration, structure and design, features,
provisions, benefits and costs
-current and prospective ERISA regulations and requirements.
[] Specific and general discussion of the benefits of 401(k)
investment and retirement plans, and, in particular, the New
England Funds 401(k) and retirement plans, to the participant and
plan sponsor, including explanations, statistics and other data
about:
-increased employee retention
-reinforcement or creation of morale
-deductibility of contributions for participants
-deductibility of expenses for employers
-tax deferred growth, including illustrations and charts
-loan features and exchanges among accounts
-educational services, materials and efforts, including, but not
limited to, videos, slides, presentation materials, brochures, an
investment calculator, payroll stuffers, quarterly publications,
releases and information on a periodic basis and the availability
of wholesalers and other personnel.
[] Specific and general reference to the benefits of investing in
mutual funds for 401(k) and retirement plans, and, in particular,
New England Funds and its 401(k) and retirement plan offerings,
including but not limited to:
-the significant economies of scale experienced by mutual fund
companies in the 401(k) and retirement benefits arena
-broad choice of investment options and competitive fees
-plan sponsor and participant statements and notices
-the plan prototype, summary descriptions and board resolutions
-plan design and customized proposals
-trusteeship, record keeping and administration
-the services of State Street Bank, including but not limited to,
trustee services and tax reporting
-the services of DST Systems, Inc. and BFDS, including but not
limited to mutual fund processing support, participant 800
numbers and participant 401(k) statements
-the services of Trust Consultants Inc., including but not limited
to, sales support, plan record keeping, document service support,
plan sponsor support, compliance testing and Form 5500
preparation.
[] Specific and general reference to the role of the investment dealer
and the benefits and features of working with a financial
professional including:
-access to expertise on investments
-assistance in interpreting past, present and future market trends
and economic events
-providing information to clients, including participants, during
enrollment and on an ongoing basis after enrollment
-promoting and understanding the benefits of investing, including
mutual fund diversification and professional management.
NEW ENGLAND CASH MANAGEMENT TRUST
Part C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following are incorporated by reference in Part B and filed
herein as Exhibit 17:
(i) Money Market Series of Registrant
Schedule I - Investments as of June 30, 1995
Statement of Assets and Liabilities as of June 30, 1995
Statement of Operations for the year ended June 30, 1995
Statement of Changes in Net Assets for the years ended June
30, 1995 and 1994
Financial Highlights
Notes to Financial Statements
(ii) U.S. Government Series of Registrant
Schedule I - Investments as of June 30, 1995
Statement of Assets and Liabilities as of June 30, 1995
Statement of Operations for the year ended June 30, 1995
Statement of Changes in Net Assets for the years ended June
30, 1995 and 1994
Financial Highlights
Notes to Financial Statements
(b) Exhibits
1. The Fourth Amended and Restated Declaration of Trust and
Amendments Nos. 1 and 2 thereto are incorporated herein by
reference to Post-Effective Amendment No. 29 to the
Registrant's Registration Statement on Form N-1A (File No. 2-
68348) filed on August 31, 1994.
2. Amended By-Laws are filed herein.
3. None.
4. Not applicable.
5. Advisory Agreement dated May 31, 1985 for each of the Money
Market Series and U.S. Government Series is incorporated
herein by reference to Registration Statement on Form
N-1A (File No. 2-68348) filed on July 1, 1985.
6. Form of Distribution Agreement between the Registrant, on
behalf of its series, and New England Funds, L.P. is
incorporated herein by reference to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-
1A (File No. 2-68348) filed on July 1, 1991.
7. None.
8. (a) Custodian Agreement is incorporated herein by reference
to Registration Statement on Form S-14 (File No. 2-68348)
filed on July 1, 1980.
(b) Letter of Amendment to Custodian Agreement is
incorporated herein by reference to Post-Effective Amendment
No. 6 to the Registrant's Registration Statement on Form N-
1A (File No. 2-68348) filed on April 1, 1982.
9. (a) Agency Agreement is incorporated herein by reference to
the Registrant's Registration Statement on Form S-14 (File
No. 2-68348) filed on July 1, 1980.
(b) Amendment to Agency Agreement dated January 2, 1981, is
incorporated herein by reference to Post-Effective Amendment
No. 5 to the Registrant's Registration Statement on Form N-1
(File No. 2-68348) filed on August 27, 1981.
(c) Letter of Amendment to Agency Agreement is incorporated
herein by reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1 (File No. 2-
68348) filed on April 1, 1982.
(d) Powers of attorney for Trustees are filed herewith.
10. Opinion and consent of counsel is filed herewith.
11. Consent of Price Waterhouse is filed herewith.
12. None.
13. Not applicable.
14. The following are incorporated herein by reference to Post-
Effective Amendment No. 29 to Registration Statement on Form
N-1A (File No. 2-28971) of NEL Growth Fund, Inc. filed on
December 22, 1983: (i) NEL Equity Services Corporation Tax
Sheltered Mutual Fund Plan; (ii) HR - 10 New England Life
Defined Contribution Prototype Retirement Plan for the Self-
Employed: and (iii) NEL funds Prototype Individual
Retirement Account Plan.
15. Not applicable.
16. Schedule for calculation of performance data is incorporated
herein by reference to Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A (File No. 2-68348) filed
on August 19, 1988.
17. Financial Statements are filed herewith.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
The following table sets forth the number of record holders
of each class of securities of the Registrant as of June 30,
1995:
(1) (2)
Title of Class Number of Record Holders
Shares of beneficial interest, New England Cash Management Trust
no par value
Class Class
A B
(a) Money Market 63,149 853
Series
(b) U.S. Gov't 2,910 79
Series
Item 27. Indemnification
See Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form
N-1A (File No. 2-68348) filed on July 3, 1986, which is
incorporated herein by reference.
Item 28: Business and Other Connections of Investment Adviser
Back Bay Advisors, L.P. ("Back Bay Advisors"), the adviser
of the Registrant, is a registered investment adviser
incorporated in 1986 and is indirectly majority owned by New
England Mutual Life Insurance Company ("The New England").
Back Bay Advisors serves as investment adviser to a number
of other registered investment companies.
Back Bay Advisors' general partner and officers have been
engaged during the past two years in the following
businesses, vocations or employments of a substantial nature
(former affiliations are marked with an asterisk):
Name and Office with Name and Address of Nature of
Back Bay Advisors Other Affiliations Connection
Back Bay Advisors, None General Partner
Inc.
Charles T. Wallis, NEF Corporation Director
President and Chief 399 Boylston Street
Executive Officer Boston, MA 02116
Back Bay Advisors, Inc. President, CEO and
399 Boylston Street Director
Boston, MA 02116
Edgar M. Reed, Aetna Capital Management* Head of Fixed Income
Executive Vice 151 Farmington Avenue Management Group
President and Chief Hartford, CT 06156
Investment Officer
Scott A. Millimet, Chicago Board of Trade* Senior Vice President
Executive Vice 141 West Jackson Boulevard and Manager of
President Chicago, IL 60604 Carroll, McEntee &
McGinley
Kimberly J. Forsyth, Legg Mason, Incorporated* Senior Vice President
Senior Vice President 7 East Redwood Street and Director of Tax-
Baltimore, MD 21202 Exempt Credit
Research
Via International Independent
City/County Consultant to
Management Association* Bulgaria
777 North Capitol Street,
NE
Washington, DC 20002
Charles G. Glueck, None None
Senior Vice President
Catherine Bunting, None None
Senior Vice President
J. Scott Nicholson, None None
Senior Vice President
Name and Office with Name and Address of Nature of
Back Bay Advisors Other Affiliations Connection
Harold B. Bjornson, None None
Vice President
Peter Palfrey, Vice None None
President
Nathan R. Wentworth, None None
Vice President
Paul Zamagni, Vice None
President and
Treasurer
Peter Hanson, Draycott Partners, Ltd. Assistant Secretary
Secretary and Clerk 8 City Road and Assistant Clerk
London, England EC2Y 1HE
NEIC Counsel, Senior Vice
399 Boylston Street President, Assistant
Boston, MA 02116 Secretary and
Assistant Clerk
Item 29. Principal Underwriters
(a) New England Funds, L.P. also serves as principal underwriter
for:
New England Funds Trust I
New England Tax Exempt Money Market Trust
New England Funds Trust II
(b) The general partner and officers of the Registrant's
principal underwriter, New England Funds, L.P., and their
addresses are as follows:
Positions and Offices Positions and
Name with Principal Offices
Underwriter with Registrant
NEF Corporation General Partner None
Henry L.P. Schmelzer President and Chief President and
Executive Officer Trustee
J. Steven Neamtz Executive Vice President Vice President
Bruce R. Speca Executive Vice President Vice President
Robert P. Connolly Senior Vice President, Secretary
General Counsel,
Secretary and Clerk
Frank Nesvet Senior Vice President and Treasurer
Chief Financial
Sheila M. Barry Vice President, Assistant Assistant Secretary
Secretary and Assistant
Clerk
Elizabeth P. Burns Vice President None
James H. Davis Vice President None
Peter H. Duffy Vice President None
Martin G. Dyer Vice President None
Tracy A. Fagan Vice President None
William H. Finnegan Vice President None
Raymond K. Girouard Vice President, Treasurer None
and Controller
Annette Golia Vice President None
Ralph M. Greggs Vice President None
Caren I. Leedom Vice President None
Marie G. McKenzie Vice President None
Bernard M. Shavelson Vice President None
Christine L. Swanson Vice President None
Kristine E. Swanson Vice President None
Beatriz A. Pina Assistant Comptroller None
The principal business address of all the above persons is 399
Boylston Street, Boston, MA 02116.
(c) Not Applicable.
Item 30. Location of Accounts and Records
The following companies maintain possession of the documents
required by the specified rules:
(a) Registrant
Rule 31a-1(b)(4)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Rule 31a-1(a)
Rule 31a-1(b) (1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Back Bay Advisors, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Rule 31a-1(a) (9), (10), (11); (f)
Rule 31a-2(a); (e)
(d) New England Funds, L.P.
501 Boylston Street
Boston, Massachusetts 02116
Rule 31a-1(d)
Rule 31a-2(c)
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Not Applicable.
NEW ENGLAND CASH MANAGEMENT TRUST
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 30 to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Boston, in the Commonwealth of
Massachusetts on the 24 day of August, 1995.
NEW ENGLAND CASH MANAGEMENT TRUST
By: PETER S. VOSS*
Peter S. Voss
Chief Executive Officer
*By: /s/ ROBERT P. CONNOLLY
Robert P. Connolly
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registration Statement No. 2-68348 has
been signed below by the following persons in the capacities and on
the date indicated.
Signature Title Date
PETER S. VOSS* Chairman of the Board; August 24, 1995
Peter S. Voss Chief Executive Officer;
Principal Executive
Officer; Trustee
/s/FRANK NESVET Chief Financial Officer August 24, 1995
Frank Nesvet
GRAHAM T. ALLISON, JR.* Trustee August 24, 1995
Graham T. Allison
KENNETH J. COWAN* Trustee August 24, 1995
Kenneth J. Cowan
SANDRA O. MOOSE* Trustee August 24, 1995
Sandra O. Moose
JAMES H. SCOTT* Trustee August 24, 1995
James H. Scott
HENRY L. P. SCHMELZER* Trustee and President August 24, 1995
Henry L. P. Schmelzer
JOHN A. SHANE* Trustee August 24, 1995
John A. Shane
PENDLETON P. WHITE* Trustee August 24, 1995
Pendleton P. White
*By: /s/ ROBERT P. CONNOLLY
Robert P. Connolly
Attorney-In-Fact
August 24, 1995
N-1A EXHIBITS ITEM 24(B)
EX-99.B2 Amended By-Laws
EX-99.B9D Powers of Attorney for Trustees
EX-99.B10 Opinion and Consent of Counsel
EX-99.B11 Consent of Price Waterhouse
EX-99.B17 Financial Statements
EX-27.1A Money Market Financial Data Schedule
Series
EX-27.1B Money Market Financial Data Schedule
Series
EX-27.2A U.S. Gov't Financial Data Schedule
Series
EX-27.2B U.S. Gov't Financial Data Schedule
Series
EXHIBIT-99.B2:
AMENDED BY-LAWS
EXHIBIT-99.B9D:
POWERS OF ATTORNEY FOR TRUSTEES
EXHIBIT-99.B10:
OPINION AND CONSENT OF COUNSEL
EXHIBIT-99.B11:
CONSENT OF PRICE WATERHOUSE
EXHIBIT-99.B17:
FINANCIAL STATEMENTS
BY-LAWS
of
NEL CASH MANAGEMENT TRUST
(Amended as of May 8, 1985)
ARTICLE 1
Agreement and Declaration
of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws
shall be subject to the Agreement and Declaration of Trust,
as from time to time in effect (the "Declaration of Trust"),
of NEL Cash Management Trust, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal
office of the Trust shall be located in Boston,
Massachusetts.
ARTICLE 2
Meeting of Trustees
2.1 Regular Meetings. Regular meetings of the
Trustees may be held without call or notice at such places
and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting
following any such determination shall be given to absent
Trustees.
2.2 Special Meetings. Special meetings of the
Trustees may be held, at any time and at any place
designated in the call of the meeting, when called by the
Chairman of the Board, if any, the President or the
Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling
the meeting.
2.3 Notice. It shall be sufficient notice to a
Trustee of a special meeting to send notice by mail at least
forty-eight hours or by telegram at least twenty-four hours
before the meeting addressed to the Trustee at his usual or
last-known business or residence address or to give notice
to him in person or by telephone at least twenty-four hours
before the meeting. Notice of a meeting need not be given
to any Trustee if a written waiver of notice, executed by
him before or after the meeting, is filed with the records
of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the
lack of notice to him. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority
of the Trustees then in office shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority
of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without
further notice.
2.5 Action by Vote. When a quorum is present at any
meeting, a majority of Trustees present may take any action,
except when a larger vote is expressly required by law, by
the Declaration of Trust or by these By-Laws.
2.6 Action by Writing. Except as required by law, any
action required or permitted to be taken at any meeting of
the Trustees may be taken without a meeting if a majority of
the Trustees (or such larger proportion thereof as shall be
required by any express provision of the Declaration of
Trust or these By-Laws) consent to the action in writing and
such written consents are filed with the records of the
meetings of Trustees. Such consent shall be treated for all
purposes as a vote taken at a meeting of Trustees.
2.7 Presence Through Communications Equipment. Except
as required by law, the Trustees may participate in a
meeting of Trustees by means of a conference telephone or
similar communications equipment by means of which all
persons participating in the meeting can hear each other at
the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the
Trust shall be a President, a Treasurer, a Clerk, and such
other officers, if any, as the Trustees from time to time
may in their discretion elect. The Trust may also have such
agents as the Trustees from time to time may in their
discretion appoint. If a Chairman of the Board is elected,
he shall be a Trustee and may but need not be a shareholder;
and any other officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the
same person.
3.2 Election and Tenure. The President, the
Treasurer, the Clerk and such other officers as the Trustees
may in their discretion from time to time elect shall each
be elected by the Trustees to serve until his successor is
elected or qualified, or until he sooner dies, resigns, is
removed or becomes disqualified. Each officer shall hold
office and each agent shall retain authority at the pleasure
of the Trustees.
3.3 Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties
and powers herein and in the Declaration of Trust set forth,
such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized
as a Massachusetts business corporation and such other
duties and powers as the Trustees may from time to time
designate.
3.4 President and Vice Presidents. The President
shall have the duties and powers specified in these By-Laws
and shall have such other duties and powers as may be
determined by the Trustees.
Any Vice Presidents shall have such duties and
powers as shall be designated from time to time by the
Trustees.
3.5 Chief Executive Officer. The Chief Executive
Officer of the Trust shall be the Chairman of the Board, the
President or such other officer as is designated by the
Trustees and shall, subject to the control of the Trustees,
have general charge and supervision of the business of the
Trust and , except as the Trustees shall otherwise
determine, preside at all meetings of the stockholders and
of the Trustees. If no such designation is made, the
President shall be the Chief Executive Officer.
3.6 Chairman of the Board. If a Chairman of the Board
of Trustees is elected, he shall have the duties and powers
specified in these by-laws and shall have such other duties
and powers as may be determined by the Trustees.
3.7 Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall,
subject to the provisions of the Declaration of Trust and to
any arrangement made by the Trustees with a custodian,
investment adviser or manager or transfer, shareholder
servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be
designated from time to time by the Trustees or by the
President.
3.8 Clerk. The Clerk shall record all proceedings of
the shareholders and the Trustees in books to be kept
therefor, which books or a copy thereof shall be kept at the
principal office of the Trust. In the absence of the Clerk
from any meeting of the shareholders or Trustees, an
assistant Clerk, or if there be none or if he is absent, a
temporary clerk chosen at such meeting shall record the
proceedings thereof in the aforesaid books.
3.9 Resignations and Removals. Any officer may resign
at any time by written instrument signed by him and
delivered to the President or the Clerk or to a meeting of
the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time.
The Trustees may remove any officer with or without cause.
Except to the extent expressly provided in a written
agreement with the Trust, no officer resigning and no
officer removed shall have any right to any compensation for
any period following his resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Indemnification
4.1 Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of any
alleged act or omission as a Trustee or officer or by reason
of his being or having been such a Trustee or officer,
except with respect to any matter as to which such Covered
Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good
faith in the reasonable belief that such Covered Person's
action was in the best interest of the Trust and except that
no Covered Person shall be indemnified against any liability
to the Trust or its shareholders to which such Covered
Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees
so incurred by any such Covered Person, may be paid from
time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding on the
condition that the amounts so paid shall be repaid to the
Trust if it is ultimately determined that indemnification of
such expenses is not authorized under this Article.
4.2 Compromise Payment. As to any matter disposed of
by a compromise payment by any such Covered Person referred
to in Section 4.1 above, pursuant to a consent decree or
otherwise, no such indemnification either for said payment
or for any other expenses shall be provided unless such
compromise shall be approved as in the best interests of the
Trust, after notice that it involved such indemnification,
(a) by a disinterested majority of the Trustees then in
office; or (b) by a majority of the disinterested Trustees
then in office; or (c) by any disinterested person or
persons to whom the question may be referred by the
Trustees, provided that in the case of approval pursuant to
clause (b) or (c) there has been obtained an opinion in
writing of independent legal counsel to the effect that such
Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best
interests of the Trust and that such indemnification would
not protect such person against any liability to the Trust
or its shareholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of office; or (d) by vote of shareholders
holding a majority of the shares entitled to vote thereon,
exclusive of any shares beneficially owned by any interested
Covered Person. Approval by the Trustees pursuant to clause
(a) or (b) or by any disinterested person or persons
pursuant to clause (c) of this Section shall not prevent the
recovery from any Covered Person of any amount paid to such
Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the
Trust or to have been liable to the Trust or its
shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
4.3 Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which any such Covered Person may
be entitled. As used in this Article 4, the term "Covered
Person" shall include such person's heirs; executors and
administrators; an "interested Covered Person" is one
against whom the action, suit or proceedings in question or
another action, suit or other proceeding on the same or
similar grounds is then or has been pending; and a
"disinterested Trustee" or "disinterested person" is a
Trustee or a person against whom none of such actions, suits
or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has
been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render
reports at the time and in the manner required by the
Declaration of Trust or any applicable law. Officers shall
render such additional reports as they may deem desirable or
as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the
Trust shall end on such date as is determined in advance or
in arrears by the Treasurer and subsequent fiscal years
shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with
the name of the Trust and the year of its organization cut
or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on,
and its absence shall not impair the validity of, any
document, instrument or other paper executed and delivered
by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or
in particular cases authorize the execution thereof in some
other manner, all checks, notes, drafts and other
obligations and all registration statements and amendments
thereto and all applications and amendments thereto to the
Securities and Exchange Commission shall be signed by the
Chairman, if any, the President, any Vice President or the
Treasurer or any of such other officers or agents as shall
be designated for that purpose by a vote of the Trustees.
ARTICLE 9
Provisions Relating to the
Conduct of the Trust's Business
9.1 Certain Definitions. When used herein the
following words shall have the following meanings:
"Distributor" shall mean any one or more corporations, firms
or associations which have distributor's or principal
underwriter's contracts in effect with the Trust providing
that redeemable shares of any class or series issued by the
Trust shall be offered and sold by such Distributor.
"Adviser" shall mean any corporation, firm or association
which may at the time have an advisory or management
contract with the Trust.
9.2 Limitation on Dealings with Officers or Trustees.
The Trust will not lend any of its assets to the Distributor
or Adviser or to any officer or director of the Distributor
or Adviser or any officer or Trustee of the Trust and shall
not permit any officer or Trustee or any officer or director
of the Distributor or Adviser, to deal for or on behalf of
the Trust with himself as principal or agent, or with any
partnership, association or corporation in which he has a
financial interest; provided that the foregoing provisions
shall not prevent (a) officers and Trustees of the Trust or
officers and directors of the Distributor or Adviser from
buying, holding or selling shares in the Trust or from being
partners, officers or directors of or otherwise financially
interested in the Distributor or the Adviser; (b) a purchase
or sale of securities or other property if such transaction
is permitted by or is exempt or exempted from the provisions
of the Investment Company Act of 1940 and does not involve
any commission or profit to any security dealer who is, or
one or more of whose partners, shareholders, officers or
directors is, an officer or Trustee of the Trust or an
officer or director of the Distributor or Adviser; (c)
employment of legal counsel, registrars, transfer agents,
shareholder servicing agents, dividend disbursing agents or
custodians who are, or any one of which has a partner,
shareholder, officer or director who is, an officer or
Trustee of the Trust or an officer or director of the
Distributor or Adviser if only customary fees are charged
for services to the Trust; (d) sharing of statistical,
research, legal and management expenses and office hire and
expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of
the Distributor or Adviser is an officer or director or
otherwise financially interested.
9.3 Limitation on Dealing in Securities of the Trust
by Certain Officers, Trustees, Distributor or Adviser.
Neither the Distributor nor Adviser, nor any officer or
Trustee of the Trust or officer or director of the
Distributor or Adviser shall take long or short positions in
securities issued by the Trust; provided, however, that:
(a) The Distributor may purchase from the Trust and
otherwise deal in shares issued by the Trust pursuant to the
terms of its contract with the Trust;
(b) Any officer or Trustee of the Trust or officer or
director of the Distributor or Adviser or any trustee or
fiduciary for the benefit of any of them may at any time, or
from time to time, purchase from the Trust or from the
Distributor shares issued by the Trust at the price
available to the public or to such officer, Trustee,
director or fiduciary, no such purchase to be in
contravention of any applicable state or federal
requirement; and
(c) The Distributor or the Adviser may at any time, or
from time to time, purchase for investment shares issued by
the Trust.
9.4 Securities and Cash of the Trust to be held by
Custodian Subject to Certain Terms and Conditions.
(a) All securities and cash owned by the Trust shall,
as hereinafter provided, be held by or deposited with one or
more banks or trust companies having (according to its last
published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits (any such bank or
trust company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and willing to
act. The Trust may, or may permit any Custodian to, deposit
all or any part of the securities owned by any class or
series of shares of the Trust in a system for the central
handling of securities established by a national securities
exchange or national securities association registered with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, or such other person as may be
permitted by said Commission, pursuant to which system all
securities of any particular class or series of any issue
deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry, without
physical delivery of such securities.
(b) The Trust shall enter into a written contract with
each Custodian regarding the powers, duties and compensation
of such Custodian with respect to the cash and securities of
the Trust held by such Custodian. Said contract and all
amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability
to serve of any Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by any class or series of shares of the Trust and
in the possession of the resigning or disqualified
Custodian be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities
owned by any class or series of shares of the
Trust and in the possession of the resigning or
disqualified Custodian otherwise than to a
successor Custodian, the question whether that
class or series shall be liquidated or shall
function without a Custodian.
9.5 Limitations on Investment by the Trust in
Securities of Any One Issuer. The Trust may not purchase
for its portfolio or for the portfolio of any class or
series of the Trust's shares the securities of any issuer if
immediately after such purchase the Trust or that class or
series would thereupon hold securities representing more
than 10% of the total value of the outstanding securities of
such issuer or more than 10% of the voting securities of
such issuer as disclosed in the last available financial
statements of such issuer. This limitation shall not apply
to obligations issued or guaranteed by the government of the
United States of America or to obligations of any
corporation organized under a general Act of Congress if
such corporation is an instrumentality of the United States.
For purposes of this limitation, each state and each
political subdivision, agency, authority or instrumentality
thereof and each multistate agency and authority shall be
considered a separate issuer.
9.6 Determination of Net Asset Value. The Trustees or
any officer or officers or agent or agents of the Trust
designated from time to time for this purpose by the
Trustees shall determine at least once daily the net income
and the value of all the assets attributable to any class or
series of shares of the Trust on each day upon which the New
York Stock Exchange is open for unrestricted trading and at
such other times as the Trustees shall designate. The value
of such assets so determined, less total liabilities of
belonging to that class or series of shares (exclusive of
capital stock and surplus) shall be the net asset value
until a new asset value is determined by the Trustees or
such officers or agents. As a result of the provisions for
the determination and declaration as a dividend of net
income provided for in the Declaration of Trust, the net
asset value per share of each class or series of shares is
intended to remain at a constant amount immediately after
each such determination and declaration. Subject to the
Trustees' power to alter the method for determining net
asset value, all securities shall be valued in accordance
with the amortized cost method, as permitted by applicable
law or regulation from time to time, for purposes of
determining net asset value. In determining the net asset
value the Trustees or such officers or agents may include in
liabilities such reserves for taxes, estimated accrued
expenses and contingencies in accordance with accounting
principles generally accepted at the time as the Trustees or
such officers or agents may in their best judgment deem fair
and reasonable under the circumstances. The manner of
determining net asset value may from time to time be altered
as necessary or desirable in the judgment of the Trustees to
conform it to any other method prescribed or permitted by
applicable law or regulation. Determinations of net asset
value made by the Trustees or such officers or agents in
good faith shall be binding on all parties concerned. The
foregoing sentence shall not be construed to protect any
Trustee, officer or agent of the Trust against any liability
to the Trust or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE 10
Amendments to the By-Laws
10.1 General. These By-Laws may be amended or
repealed, in whole or in part, by a majority of the Trustees
then in office at any meeting of the Trustees.
A true copy.
A T T E S T:
/s/WENDY WILES
Assistant Clerk
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/KENNETH J. COWAN
Kenneth J. Cowan - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/PETER S. VOSS
Peter S. Voss - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/HENRY L.P. SCHMELZER
Henry L. P. Schmelzer - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/GRAHAM T. ALLISON
Graham T. Allison, Jr. - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/JAMES H. SCOTT
James H. Scott - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/PENDLETON P. WHITE
Pendleton P. White - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/JOHN A. SHANE
John A. Shane - Trustee
POWER OF ATTORNEY
I, the undersigned, hereby constitute Edward A. Benjamin,
Frank Nesvet, Henry L.P. Schmelzer and Robert P. Connolly, each
of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name in the
capacity indicated below, any and all registration statements and
any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time
to time investment companies of which I am now or hereafter a
Director or Trustee and for which Capital Growth Management
Limited Partnership, Back Bay Advisors, Inc., Loomis, Sayles &
Company, Incorporated, Draycott Partners Limited, Westpeak
Investment Advisors, Inc. and/or any other affiliate of New
England Mutual Life Insurance Company ("The New England") serves
as adviser, sub-adviser or co-adviser, registering the shares of
such companies and generally to do all such things in my name and
in my behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and
all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming my signature as it
may be signed by my said attorneys and any and all registration
statements and amendments thereto.
Witness my hand on the 28th day of April, 1995.
/s/SANDRA O. MOOSE
Sandra O. Moose - Trustee
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
August 24, 1995
New England Cash Management Trust
399 Boylston Street
Boston, Massachusetts 02116
Ladies and Gentlemen:
You have informed us that you propose to offer and sell from time to time
82,144,279 of your shares of beneficial interest, no par value, of your
Money Market Series and your U.S. Government Series (the "Shares"), for
cash or securities at the net asset value per share, determined in accordance
with your By-Laws, which Shares are in addition to your shares of beneficial
interest which you have previously offered and sold or which you are currently
offering.
We have examined your Fourth Amended and Restated Agreement and
Declaration of Trust and Amendments Nos. 1 and 2 thereto (together, the
"Agreement and Declaration of Trust") on file in the office of the Secretary of
State of The Commonwealth of Massachusetts and are familiar with the actions
taken by your Trustees to authorize the issuance and sale from time to time of
your authorized and unissued shares of beneficial interest at not less than net
asset value. We have also examined a copy of your By-Laws and such other
documents, receipts and records as we have deemed necessary for the purposes of
this opinion.
Based upon the foregoing, we are of the opinion that:
1. New England Cash Management Trust (the "Trust") is a legally
organized and validly existing voluntary association with transferable shares
of beneficial interest under the laws of The Commonwealth of Massachusetts and
is authorized to issue an unlimited number of shares of beneficial interest of
each of your Money Market Series and your U.S. Government Series.
2. Upon the issue of any of the Shares for cash or securities at net
asset value, and the receipt of the appropriate consideration therefor as
provided in your By-Laws, such Shares so issued will be validly issued, fully
paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or its Trustees. The Agreement and Declaration of Trust
provides for indemnification out of the property of the particular series of
shares for all loss and expense of any shareholder of that series held
personally liable for the obligations of the Trust solely by reason of his or
her being or having been such a shareholder. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the series of shares itself would be unable to meet its
obligations.
We understand that this opinion is to be used in connection with the
registration of the Shares for offering and sale pursuant to the Securities Act
of 1933, as amended, and the provisions of Rule 24e-2 under the Investment
Company Act of 1940, as amended. We consent to the filing of this opinion with
and as part of Post-Effective Amendment No. 30 to your Registration Statement
No. 2-68348.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference
in the Prospectus and Statement of Additional
Information constituting parts of this Post-Effective
Amendment No. 30 to the registration statement
on Form N-1A (the "Registration Statement") of our
report dated August 7, 1995, relating to the
financial statements and financial highlights
appearing in the June 30, 1995 Annual Report to
Shareholders of each of the two series of New England
Cash Management Trust, which is also
incorporated by reference into the Registration
Statement. We also consent to the references to us
under the headings "Independent Accountants" and
"Financial Statements" in the Statement of
Additional Information.
Price Waterhouse LLP
Boston, Massachusetts
August 24, 1995
<PAGE>
--------------------------------------------------------------------------------
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
------------------------------------
Annual Report and Performance Update
------------------------------------
New England
Money Market Funds
-------------
June 30, 1995
-------------
<PAGE>
--------------------------------------------------------------------------------
July 20, 1995
Dear Shareholder:
We have good news to present in this Annual Report for New England Money
Market Funds, which includes your Portfolio Manager's commentary and complete
financial information.
Market Overview
Investors who stayed the course in 1995 were amply rewarded. Major U.S.
stock market indices soared to record highs and the bond market staged a
spectacular comeback from its 1994 lows. Fueling the rally was clear evidence
that the economy had begun to slow down as a result of the interest rate hikes
engineered by the Federal Reserve Board to keep inflation in check. Indeed, with
declining housing starts and rising unemployment numbers reported in the first
half of 1995, expectations grew that the Fed's next move would be downward, to
prevent the slowing economy from slipping into recession.
The bond market surged at the prospect of lower rates, and the stock market
followed suit, with the Standard & Poor's 500(R) Index gaining 20.14% during
the first half of the year. The large, blue-chip companies led the way, in part
because a weak U.S. dollar gave them a competitive advantage overseas and
contributed to surprisingly healthy earnings reports. Finally, on July 6, just
after this reporting period ended, the Fed lowered a key short-term rate by
0.25%, a relatively modest move, but a significant psychological change in
direction.
Your Financial Adviser -- A Trusted Ally
As a shareholder in New England Funds, you have a valuable ally you can
turn to at all times -- your financial adviser. This experienced
<PAGE>
--------------------------------------------------------------------------------
professional can help you design an asset allocation program suitable to your
goals and risk tolerance. Most important, during times of market volatility or
uncertainty, your adviser can help you avoid making costly mistakes, such as
trying to "time" the market. Investors who go it alone can overreact to short-
term market events, buying and selling on the basis of this week's headlines, or
chasing the latest "hot" investment. Such behavior can derail an otherwise
prudent investment program. But investors who work with a financial adviser
receive guidance throughout the market's ups and downs. Your adviser will help
you place short-term market swings in their proper perspective and keep you
focused on your long-term investment program.
Your adviser is just one of the experts whose talents we have tapped in our
effort to bring the best minds in the business to the task of managing your
money. These experts are a vital part of the investment process at New England
Funds, and we encourage you to take advantage of their skills to the fullest.
We invite you to read the accompanying management commentary and financial
highlights. If you have any questions or comments, please contact your financial
adviser or New England Funds directly at 800-225-5478. Once again, we appreciate
your continued confidence and investment in New England Funds.
Sincerely,
/s/ Peter S. Voss /s/ Henry L.P. Schmelzer
Peter S. Voss Henry L.P. Schmelzer
Chairman President
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
NEW ENGLAND MONEY MARKET FUNDS
1995 PERFORMANCE REVIEW
From February 1994 through February 1995, the Federal Reserve Board raised
short-term rates seven times in an effort to slow down a rapidly growing economy
and ward off potential inflationary pressures. Throughout 1994 and into 1995,
yields on New England Money Market Funds rose in response to the Fed's actions.
Indeed, yields reached their highest level in recent years. However, during the
first six months of the year evidence accumulated that the economy had slowed
dramatically in response to the Fed's monetary policy. The markets began to
anticipate that the Fed would be forced to reduce rates to prevent the economy
from slipping into recession. Then, on July 6 (just after the end of this
reporting period), the Fed reversed direction and lowered short-term rates by a
modest 0.25%, signaling a possible change in interest rate policy.
New England Cash Management
Trust -- Money Market Series and
U.S. Government Series
[PHOTO APPEARS HERE]
Portfolio Manager: Scott Nicholson,
Back Bay Advisors, L.P.(R)
Shareholders in New England Cash Management Trust enjoyed high rates throughout
the first half of the year as the effects of the Fed's interest rate hikes
worked their way through the system. At June 30, 1995, the 7-day yield for the
Money Market Series stood at 5.47% (compared to 5.02% on December 31, 1994),
while the 7-day yield for the U.S. Government Series was 5.72%
1
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
(versus 4.90% on December 31, 1994). The 7-day yields for both Series as of
June 30 continue to compare favorably with the average money market deposit
account (MMDA), which was yielding 3.42%. (Source: Wall Street Journal,
7/6/95)./1/
How We Positioned Your Fund
In a period of rising interest rates, money market fund managers will reduce the
average days to maturity of their Fund's holdings so that assets can be quickly
rolled over into higher-yielding instruments. During periods of declining rates,
the average maturity of the fund will be extended, in order to lock in the
higher yields for as long as possible. At the end of 1994, we believed that
economic growth would perhaps pause for a short while and then continue on its
upward path, leading to continued interest rate hikes by the Fed. Accordingly,
we shortened the average maturity of the Cash Management Trust (which had dipped
as low as 26 days on the Money Market Series at year-end).
In the first few months of 1995, our outlook on the economy began to shift. As
the evidence mounted that the economy was indeed slowing, we thought it less
likely that the Fed would continue raising rates and that it might even reverse
trend. Consequently, we lengthened the average maturity to 55 days for the Money
Market Series and to approximately 50 days for the U.S. Government Series. At
mid-year our outlook is generally positive, although concerns remain that lower
interest rates may spur excessive growth in the economy later in the year.
2
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
Outlook for Our Shareholders
We have probably seen the peak of the current interest rate cycle and we think
that yields will stabilize or edge downward from their June 30 levels. Of
course, this scenario could change if economic numbers in the latter part of the
year point toward resurgent inflation; we will be looking for signs of an
economic rebound later in the year that would cause the Fed to keep short rates
at current levels for an extended period of time.
No matter the economic climate, however, New England Cash Management Trust can
form a key part of an investor's portfolio. We manage both funds conservatively,
following strict investment guidelines to seek high current income and
stability./1/ For those investors looking for added credit safety, the U.S.
Government Series offers the security of a portfolio made up solely of
instruments backed by the U.S. Government. The U.S. government guarantee applies
to the underlying securities and not to shares of the Fund.
New England Tax Exempt Money
Market Trust
[PHOTO APPEARS HERE]
Portfolio Manager: John Maloney,
Back Bay Advisors, L.P.(R)
Following the strategy described above with the Cash Management Trust, we
extended the average maturity of your Fund from around 44 days at year end 1994
to 62 days at June 30, 1995, in anticipation of lower interest rates. Our goal
was to lock in the higher tax-free yields for as long as possible. At mid-year,
the 7-day yield on
3
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
the Tax Exempt Money Market Trust stood at 3.64%, which translates into a
taxable equivalent yield of 6.02% for an investor in the maximum federal tax
bracket of 39.6%. We are pleased to report that your Fund's year to date return
placed it in the top quartile of 128 tax exempt money funds, as reported by
Lipper Analytical Services, a leading mutual fund monitoring service./2/
High Quality
Your Fund maintains a very high credit quality, invest-ing only in top tier
municipal securities. In light of the recent news reports concerning Orange
County, California, we would like to emphasize that your Fund does not and did
not hold any Orange County paper, and the California debt we do own is secured
by Letters of Credit.
Supply/Demand Factors
The tax exempt money market is subject to special pressures resulting from a
unique supply/demand situation. For example, June is the largest supply month
for one-year notes and most tax exempt funds will show a lengthening in their
average maturity during this time of the year. In addition, the short-term
municipal market is highly dependent on the dynamics of the intermediate and
long-term markets. If the longer maturity funds are in a defensive mode, they
move more towards highly liquid, short-term securities, such as those held by
your Fund. This buying activity by the long maturity funds exerts downward
pressure on the yields in the short-term market, which is what we have been
experiencing in 1995.
4
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
Outlook for Our Shareholders
We believe that the current interest rate cycle has peaked and that rates will
most likely stabilize or edge downward from here. Much will depend, of course,
on the pace of economic activity in the latter part of 1995. If the economy
strengthens, then the Fed may be forced to reverse course and increase rates.
However, no matter what the economic climate, shareholders in New England Tax
Exempt Money Market Trust can be confident that their fund is invested in highly
liquid, high-quality instruments, providing current income that is sheltered
from federal income taxes./3/
/1/ Money Market Funds are not insured or guaranteed by the U.S. government.
There can be no assurance that the Funds will maintain a stable net asset
value of $1.00 per share. MMDAs are insured and offer fixed rates for
specified periods.
/2/ Past performance is no guarantee of future results.
/3/ If you receive Social Security benefits, federal taxes may apply.
Alternative minimum taxes may apply to certain shareholders.
5
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
INVESTMENT RESULTS THROUGH JUNE 30, 1995
--------------------------------------------------------------------------------
Average Annual Total Returns For Periods Ended 6/30/95*
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6-month 1-year 5-year
(Class A&B) (Class A&B) (Class A)
<S> <C> <C> <C>
New England Cash Management Trust-- 5.52% 4.79% 4.40%
Money Market Series
Donoghue's All-Taxable Peer Group Average 5.52 4.99 4.42
New England Cash Management Trust-- 5.31 4.64 4.27
U.S. Government Series
Donoghue's U.S. Treasury Peer Group Average 5.29 4.77 4.27
New England Tax Exempt 3.65 3.18 3.16
Money Market Trust
Donoghue's Tax Free Peer Group Average 3.43 3.19 3.10
</TABLE>
* Investment results in this table are from IBC/Donoghue's Money Fund Report(R)
for the period ended 6/30/95. Donoghue's taxable, U.S. Treasury and tax-free
peer group averages are unmanaged indices that rank the performance of several
categories of money market funds. Investment results in this table represent
effective annual yields assuming reinvestment of dividends. Figures quoted
above represent past performance and are not a guarantee of future results.
Yields will fluctuate with changes in market conditions. The Trust's
annualized yields for Class A and B for the 7-day period ended June 30, 1995
were 5.47% (Money Market Series), 5.72% (U.S. Government Series) and 3.64%
(Tax Exempt Money Market Trust).
6
<PAGE>
--------------------------------------------------------------------------------
New England Money Market Funds
--------------------------------------------------------------------------------
Glossary for Mutual Fund Investors
Total Return - The change in value of a mutual fund investment over a specific
time period, assuming all earnings are reinvested in additional shares of the
fund. Expressed as a percentage.
Income Distributions - Payments to shareholders resulting from the net interest
or dividend income earned by a fund's portfolio.
Capital Gains Distributions - Payments to shareholders of profits earned from
selling securities in a fund's portfolio. Capital gains distributions are
usually paid once a year.
Yield - The rate at which a fund pays income. Yield calculations for 7-day
periods are standardized among mutual funds, based on a formula developed by the
Securities and Exchange Commission.
Maturity - Refers to the period of time before principal repayment on a bond is
due. A bond fund's "average maturity" refers to the weighted average of the
maturities of all the individual bonds in the portfolio.
Duration - A measure, stated in years, of a bond or bond fund's sensitivity to
interest rates. Duration is a means to directly compare the volatility of
different instruments. As a general rule, for every 1% move in interest rates, a
fund is expected to fluctuate in value as indicated by its duration. For
example, if interest rates fall by 1%, a fund with a duration of 4 years should
rise in value 4%. Conversely, the fund should decline by 4% if interest rates
rise 1%.
Treasuries - Negotiable debt obligations of the U.S. government, secured by its
full faith and credit. The income from treasury securities is exempt from state
and local income taxes, but not from federal income taxes. There are three types
of treasuries: Bills (maturity of 3-12 months), Notes (maturity of 1-10 years)
and Bonds (maturity of 10-30 years).
Municipal Bond - A debt security issued by a state or municipality to finance
public expenditures. Interest payments are exempt from federal taxes and in most
cases from state and local income taxes. The two main types are General
Obligation (GO) Bonds, which are backed by the full faith and credit and taxing
powers of the municipality; and Revenue Bonds, supported by the revenues from a
municipal enterprise, such as airports and toll bridges.
7
<PAGE>
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
Portfolio Composition, Financial Statements and Highlights
NEW ENGLAND
MONEY MARKET
FUNDS
June 30, 1995
<PAGE>
PORTFOLIO COMPOSITION
Cash Management Trust--
Money Market Series
Investments as of June 30, 1995
INVESTMENTS--99.9% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
AMOUNT DESCRIPTION RATE DATE VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BANKERS ACCEPTANCE--2.3%
$ 5,000,000 Societe Generale.................. 5.740% 8/23/95 $ 4,957,747
4,012,925 State Street Bank................. 6.090% 9/08/95 3,966,084
6,000,000 ABN Amro Bank..................... 5.560% 11/13/95 5,874,900
------------
Total Bankers Acceptance (Cost $14,798,731).......... 14,798,731
------------
BANK NOTE--1.5%
10,000,000 First Union National Bank of North
Carolina.......................... 6.040% 5/10/96 10,000,000
------------
Total Bank Note (Cost $10,000,000)................... 10,000,000
------------
CERTIFICATES OF DEPOSIT--4.8%
6,000,000 Societe Generale New York......... 6.050% 7/03/95 6,000,000
5,000,000 Bank of Nova Scotia............... 6.000% 8/01/95 5,000,000
5,000,000 Societe Generale New York......... 5.950% 8/14/95 5,000,000
5,000,000 Bank of Nova Scotia............... 5.950% 8/29/95 5,000,000
5,000,000 Commerzbank....................... 6.410% 9/08/95 4,999,814
5,000,000 Swiss Bank........................ 5.930% 9/21/95 5,000,337
------------
Total Certificates of Deposit (Cost $31,000,151)..... 31,000,151
------------
CERTIFICATES OF DEPOSIT (EURODOLLARS)--0.7%
5,000,000 Deutsche Bank..................... 6.580% 12/08/95 5,004,660
------------
Total Certificates of Deposit (Eurodollars) (Cost
$5,004,660)......................................... 5,004,660
------------
COMMERCIAL PAPER--89.1%
AGRICULTURE--0.6%
4,125,000 Canadian Wheat Board.............. 6.120% 9/27/95 4,063,290
------------
AUTOMOBILES--8.4%
9,000,000 General Motors Acceptance Corp. .. 5.950% 7/25/95 8,964,300
10,000,000 General Motors Acceptance Corp. .. 5.990% 7/28/95 9,955,075
6,000,000 General Motors Acceptance Corp. .. 5.920% 7/31/95 5,970,400
6,000,000 General Motors Acceptance Corp. .. 5.910% 8/03/95 5,967,495
4,000,000 Ford Motor Credit Corp. .......... 6.100% 8/23/95 3,964,078
7,000,000 Ford Motor Credit Corp. .......... 6.200% 9/11/95 6,913,200
5,700,000 Ford Motor Credit Corp. .......... 6.100% 9/12/95 5,629,494
3,500,000 Ford Motor Credit Corp. .......... 5.910% 9/20/95 3,453,459
4,000,000 Ford Motor Credit Corp. .......... 6.050% 1/08/96 3,871,606
------------
54,689,107
------------
BANKING--25.0%
5,000,000 Banque Nationale de Paris U.S.
Finance Co. ..................... 6.320% 7/03/95 4,998,244
5,000,000 Banque Nationale de Paris U.S.
Finance Co. ..................... 6.420% 7/03/95 4,998,217
6,000,000 Barclays Bank of Canada........... 5.950% 7/05/95 5,996,033
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
PORTFOLIO COMPOSITION--continued
Cash Management Trust--
Money Market Series
Investments as of June 30, 1995
INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
AMOUNT DESCRIPTION RATE DATE VALUE (A)
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BANKING--CONTINUED
$ 7,000,000 Norwest Corp. ................... 6.080% 7/05/95 $ 6,995,271
10,000,000 Toronto Dominion Holdings USA,
Inc. ........................... 5.940% 7/10/95 9,985,150
5,000,000 CIT Group Holdings............... 6.070% 7/11/95 4,991,569
4,400,000 Amro North America Finance,
Inc. ........................... 5.940% 7/12/95 4,392,014
2,000,000 CIT Group Holdings............... 5.950% 7/26/95 1,991,736
7,000,000 CIT Group Holdings............... 6.080% 7/26/95 6,970,444
8,000,000 J. P. Morgan & Co., Inc. ........ 6.170% 7/31/95 7,958,867
10,000,000 ABN Bank of Canada............... 5.910% 8/09/95 9,935,975
5,000,000 Bank of Nova Scotia.............. 5.830% 8/10/95 4,967,611
5,000,000 Norwest Corp. ................... 5.950% 8/14/95 4,963,639
10,000,000 Toronto Dominion Holdings USA,
Inc. ........................... 6.200% 8/15/95 9,922,500
7,000,000 Norwest Corp. ................... 5.930% 8/24/95 6,937,735
5,000,000 Royal Bank of Canada............. 5.820% 8/31/95 4,950,692
8,000,000 Commerzbank...................... 5.750% 9/06/95 7,914,389
10,000,000 Barclays Bank of Canada.......... 5.820% 9/08/95 9,888,450
10,000,000 Norwest Corp. ................... 5.880% 9/26/95 9,857,900
5,000,000 ABN Bank of Canada............... 5.800% 9/28/95 4,928,306
7,000,000 Dresdner US Finance Corp. ....... 6.060% 11/01/95 6,855,065
5,000,000 Commerzbank...................... 6.050% 11/02/95 4,895,806
6,000,000 Commerzbank...................... 6.050% 11/20/95 5,856,817
6,000,000 Toronto Dominion Holdings USA,
Inc. ........................... 5.880% 12/18/95 5,833,400
5,800,000 Commerzbank...................... 5.700% 12/21/95 5,641,128
------------
162,626,958
------------
DRUGS--5.0%
5,000,000 American Home Products Corp. .... 5.960% 07/07/95 4,995,033
6,000,000 American Home Products Corp. .... 5.970% 07/07/95 5,994,030
4,009,000 American Home Products Corp. .... 5.960% 07/27/95 3,991,743
2,000,000 American Home Products Corp. .... 5.850% 08/03/95 1,989,275
5,000,000 American Home Products Corp. .... 5.950% 08/03/95 4,972,729
7,500,000 American Home Products Corp. .... 5.940% 08/10/95 7,450,500
3,000,000 American Home Products Corp. .... 5.950% 08/24/95 2,973,225
------------
32,366,535
------------
ELECTRICAL EQUIPMENT--2.9%
4,000,000 General Electric Capital Corp. .. 6.120% 10/12/95 3,929,960
5,000,000 General Electric Capital Corp. .. 6.460% 10/25/95 4,895,922
5,000,000 General Electric Capital Corp. .. 6.530% 10/31/95 4,889,353
5,000,000 General Electric Capital Corp. .. 6.000% 12/11/95 4,864,167
------------
18,579,402
------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
PORTFOLIO COMPOSITION--continued
Cash Management Trust--
Money Market Series
Investments as of June 30, 1995
INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
AMOUNT DESCRIPTION RATE DATE VALUE (A)
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FINANCE--32.8%
$ 5,000,000 Sears Roebuck Acceptance Corp. .. 5.980% 7/06/95 $ 4,995,847
4,000,000 USAA Capital Corp. .............. 6.170% 7/07/95 3,995,887
10,000,000 American Express Credit Corp. ... 6.120% 7/12/95 9,981,300
3,770,000 Paccar Financial Corp. .......... 6.130% 7/13/95 3,762,297
10,000,000 Transamerica Financial Group..... 6.080% 7/13/95 9,979,733
9,500,000 Bell Atlantic Financial Services. 5.950% 7/14/95 9,479,588
9,000,000 Weyerhauser Mortgage............. 6.000% 7/19/95 8,973,000
10,000,000 Sears Roebuck Acceptance Corp. .. 5.970% 7/24/95 9,961,858
5,000,000 Avco Financial Services, Inc. ... 5.950% 7/27/95 4,978,514
5,000,000 USAA Capital Corp. .............. 5.920% 7/31/95 4,975,333
4,000,000 American Express Credit Corp. ... 6.110% 8/02/95 3,978,276
5,000,000 Beneficial Corp. ................ 5.850% 8/04/95 4,972,375
8,000,000 Associates Corp. of North
America......................... 5.930% 8/07/95 7,951,242
10,000,000 Household Finance Corp. ......... 5.950% 8/11/95 9,932,236
7,000,000 Sears Roebuck Acceptance Corp. .. 5.950% 8/16/95 6,946,781
8,500,000 Paccar Financial Corp. .......... 5.940% 8/18/95 8,432,680
4,000,000 Avco Financial Services, Inc .... 5.900% 8/21/95 3,966,567
8,000,000 Beneficial Corp. ................ 5.920% 8/21/95 7,932,907
9,000,000 Sears Roebuck Acceptance Corp. .. 5.900% 8/21/95 8,924,138
5,000,000 Beneficial Corp. ................ 5.900% 8/23/95 4,956,569
10,000,000 Avco Financial Services, Inc. ... 5.910% 8/25/95 9,909,708
7,000,000 Hanson Finance PLC............... 5.930% 8/25/95 6,936,582
5,000,000 American Express Credit Corp. ... 6.100% 8/28/95 4,950,861
5,000,000 Hanson Finance PLC............... 5.950% 8/28/95 4,952,069
8,000,000 Hanson Finance PLC............... 5.770% 8/30/95 7,923,067
7,000,000 Avco Financial Services, Inc. ... 5.750% 9/19/95 6,910,556
5,000,000 Hanson Finance PLC............... 5.830% 9/22/95 4,932,793
6,794,000 Transamerica Financial Group..... 6.050% 10/17/95 6,670,689
4,500,000 American Express Credit Corp..... 5.850% 11/08/95 4,404,938
10,000,000 Beneficial Corp. ................ 5.900% 11/21/95 9,765,639
5,000,000 Paccar Financial Corp. .......... 5.900% 11/21/95 4,882,819
2,000,000 American Express Credit Corp. ... 5.900% 12/14/95 1,945,589
------------
213,262,438
------------
INSURANCE--0.8%
5,000,000 Prudential Funding Corp. ........ 6.050% 7/05/95 4,996,639
------------
MANAGEMENT SERVICES--1.4%
6,000,000 PHH Corp. ....................... 5.960% 7/25/95 5,976,160
3,000,000 PHH Corp. ....................... 5.980% 8/08/95 2,981,063
------------
8,957,223
------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
PORTFOLIO COMPOSITION--continued
Cash Management Trust--
Money Market Series
Investments as of June 30, 1995
INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
AMOUNT DESCRIPTION RATE DATE VALUE (A)
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
POLLUTION CONTROL--1.6%
$ 5,000,000 WMX Technologies, Inc. ......... 6.170% 11/20/95 $ 4,878,314
5,532,000 WMX Technologies, Inc. ......... 6.200% 11/20/95 5,396,712
------------
10,275,026
------------
SECURITIES--10.6%
4,500,000 Merrill Lynch & Co. ............ 5.980% 7/06/95 4,496,262
6,000,000 Merrill Lynch & Co. ............ 6.000% 7/06/95 5,995,000
5,000,000 Goldman Sachs Group............. 6.230% 7/10/95 4,992,212
5,000,000 Merrill Lynch & Co. ............ 6.000% 7/11/95 4,991,667
7,000,000 Merrill Lynch & Co. ............ 5.970% 7/18/95 6,980,266
6,000,000 Merrill Lynch & Co. ............ 5.970% 7/21/95 5,980,100
7,000,000 Smith Barney Inc. .............. 5.960% 8/01/95 6,964,074
5,000,000 Smith Barney Inc. .............. 5.940% 8/04/95 4,971,950
5,000,000 Goldman Sachs Group............. 6.840% 9/11/95 4,931,600
6,000,000 Goldman Sachs Group............. 6.130% 9/14/95 5,923,375
5,000,000 Goldman Sachs Group............. 6.900% 9/18/95 4,924,292
8,000,000 Goldman Sachs Group............. 5.880% 10/13/95 7,864,107
------------
69,014,905
------------
Total Commercial Paper (Cost $578,831,523)......... 578,831,523
------------
GOVERNMENT AGENCY--1.5%
4,837,451 Small Business Association
Variable Rate Interest
Certificate (b).................. 7.000% 7/01/95 4,837,451
4,627,355 Small Business Association
Variable Rate Interest
Certificate (b).................. 7.125% 7/01/95 4,627,355
------------
Total Government Agency (Cost $9,464,806).......... 9,464,806
------------
Total Investments--99.9% (Cost $649,099,871) (c)... 649,099,871
Receivables........................................ 7,226,596
Liabilities........................................ (6,518,011)
------------
Total Net Assets--100%............................. $649,808,456
============
</TABLE>
(a) See note 1a.
(b) Variable rate interest certificates are instruments whose interest rates
vary with changes in a designated base rate on a specific date. This
certificate resets interest quarterly based on the prime interest rate.
The maturity date shown is the next interest reset date. The final
maturity on these certificates are 8/25/18 and 4/25/19, respectfully.
(c) The aggregate cost for federal income tax purposes was $649,099,871.
Percentage of Net Assets invested in obligations of foreign banks or foreign
branches of U.S. Banks at June 30, 1995:
Canada 7.03%
France 3.99% Netherlands 3.87%
Germany 6.34% Switzerland 0.77%
Great Britain 2.44%
See accompanying notes to financial statements.
5
<PAGE>
PORTFOLIO COMPOSITION--continued
Cash Management Trust
U.S. Government Series
Investments as of June 30, 1995
INVESTMENTS--96.9% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE INTEREST MATURITY
AMOUNT DESCRIPTION RATE DATE VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT AGENCY--12.8%
$ 4,543,136 Small Business
Administration, Variable
Rate Interest Certificate
(b)........................ 6.750% 7/01/95 $ 4,543,136
3,083,165 Small Business
Administration, Variable
Rate Interest Certificate
(b)........................ 7.375% 7/01/95 3,083,165
-----------
Total Government Agency (Cost $7,626,301).... 7,626,301
-----------
U.S. GOVERNMENT--34.6%
6,000,000 U.S. Treasury Bill........ 5.890% 7/20/95 5,981,348
7,000,000 U.S. Treasury Bill........ 5.835% 11/16/95 6,843,428
8,000,000 U.S. Treasury Bill........ 6.010% 11/16/95 7,815,693
-----------
Total U.S. Government (Cost $20,640,469)..... 20,640,469
-----------
REPURCHASE AGREEMENTS--
49.5%
24,600,000 Repurchase Agreement with Goldman Sachs &
Co. dated 6/30/95 at 6.00% to be
repurchased at $24,612,300 on 7/03/95
collateralized by $19,525,000 U.S. Treasury
Bonds, 10.75% due 5/15/03, with a value of
$25,232,466................................. 24,600,000
5,000,000 Repurchase Agreement with Goldman Sachs &
Co. dated 6/01/95 at 5.95% to be
repurchased at $5,099,167 on 9/29/95
collateralized by $5,308,499 Government
National Mortgage Association II ARM, 4%
due 8/20/24, with a value of $5,067,670..... 5,000,000
-----------
Total Repurchase Agreements (Cost
$29,600,000)................................ 29,600,000
-----------
Total Investments--96.9% (Cost $57,866,770)
(c)......................................... 57,866,770
Cash and Receivables......................... 2,033,796
Liabilities.................................. (158,073)
-----------
Total Net Assets--100%....................... $59,742,493
===========
</TABLE>
(a) See note 1a.
(b) Variable rate interest certificates are instruments whose interest rates
vary with changes in a designated base rate on a specific date. These
certificates reset interest quarterly based on the prime interest rate.
The maturity dates shown are the next interest reset date. The final
maturities on these certificates are 9/25/18 and 5/25/16 respectively.
(c) The aggregate cost for federal income tax purposes was $57,866,770.
See accompanying notes to financial statements.
6
<PAGE>
PORTFOLIO COMPOSITION--continued
Tax Exempt Money Market Trust
Investments as of June 30, 1995
TAX EXEMPT OBLIGATIONS--105.1% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE
AMOUNT ISSUER VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
ALABAMA--1.2%
$ 800,000 Winfield Industrial Revenue Bond Floating Rate 4.250%
(b).................................................. $ 800,000
-----------
ALASKA--0.8%
500,000 State Certificates of Partnership in Rent 9.700%,
10/01/95 (c)......................................... 515,590
-----------
ARIZONA--6.6%
500,000 Pima County Sewer Revenue Bond Anticipation Note
7.200%, 7/01/95...................................... 500,000
1,000,000 Mesa Municipal Development Commercial Paper 3.300%,
7/12/95.............................................. 1,000,000
1,000,000 Mesa Municipal Development Commercial Paper 4.200%,
7/25/95.............................................. 1,000,000
2,000,000 Maricopa County School District Bond Anticipation Note
4.700%, 7/28/95 (e).................................. 2,000,712
-----------
4,500,712
-----------
CALIFORNIA--6.7%
500,000 California Student Loan Bond Anticipation Note 3.900%,
7/01/95.............................................. 500,000
1,500,000 Los Angeles County Bond Anticipation Note 4.500%,
7/01/96 (d).......................................... 1,510,050
2,000,000 San Bernardino County Bond Anticipation Note 4.500%,
7/05/96 (d).......................................... 2,010,520
500,000 California Health Facilities Floating Rate 4.300% (b). 500,000
-----------
4,520,570
-----------
COLORADO--5.0%
1,500,000 Arapahoe County Capital Improvement Highway Revenue
Bonds 4.450%, 8/31/95 (e)............................ 1,500,000
1,900,000 Student Obligation Board Authority Floating Rate
4.350% (b)........................................... 1,900,000
-----------
3,400,000
-----------
CONNECTICUT--0.5%
335,000 Connecticut State Special Tax & Obligation 8.700%,
10/15/95 (c)......................................... 346,225
-----------
DISTRICT OF COLUMBIA--4.7%
3,200,000 District of Columbia Floating Rate 4.700% (b)......... 3,200,000
-----------
FLORIDA--18.2%
500,000 West Orange County Memorial Hospital Commercial Paper
4.600%, 7/03/95...................................... 500,000
500,000 Sarasota County Public Hospital Commercial Paper
4.150%, 7/10/95...................................... 500,000
500,000 Sarasota County Public Hospital Commercial Paper
4.650%, 7/10/95...................................... 499,996
500,000 Sunshine State Governmental Financing Commercial Paper
4.150%, 8/01/95...................................... 500,000
500,000 Sarasota County Public Hospital District Commercial
Paper 4.100%, 8/02/95................................ 500,000
600,000 Alachua County Health Facilities Commercial Paper
4.300%, 8/09/95...................................... 600,000
1,000,000 West Orange County Memorial Hospital Commercial Paper
3.800%, 8/17/95...................................... 1,000,000
1,000,000 Alachua County Health Facilities Commercial Paper
4.300%, 9/05/95...................................... 1,000,000
500,000 Alachua County Health Facilities Commercial Paper
3.900%, 9/08/95...................................... 500,000
500,000 Alachua County Health Facilities Commercial Paper
3.750%, 9/11/95...................................... 500,000
600,000 Alachua County Health Facilities Commercial Paper
4.250%, 9/12/95...................................... 600,000
700,000 Sunshine State Governmental Financing Commercial Paper
3.600%, 10/23/95..................................... 700,000
950,000 Sarasota County Public Hospital Commercial Paper
3.700%, 11/20/95..................................... 950,000
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
PORTFOLIO COMPOSITION--continued
Tax Exempt Money Market Trust
Investments as of June 30, 1995
TAX EXEMPT OBLIGATIONS--CONTINUED
<TABLE>
<CAPTION>
FACE
AMOUNT ISSUER VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
FLORIDA--CONTINUED
$ 700,000 Dade County Special Obligation Floating Rate 4.300%
(b).................................................. $ 700,000
200,000 Dade County Health Facilities Floating Rate 4.450%
(b).................................................. 200,000
3,100,000 Broward County Housing Finance Authority Floating Rate
4.450% (b)........................................... 3,100,000
-----------
12,349,996
-----------
GEORGIA--9.2%
Gwinnett County Industrial Development Authority
800,000 Floating Rate 4.25% (b).............................. 800,000
College Park Business & Industrial Development
200,000 Floating Rate 4.450% (b)............................. 200,000
Columbus Downtown Development Authority Floating Rate
2,000,000 4.300% (b)........................................... 2,000,000
Fulton County Municipal Housing Authority Floating
3,220,000 Rate 4.450% (b)...................................... 3,220,000
-----------
6,220,000
-----------
HAWAII--0.9%
State Department of Budget and Finance Floating Rate
600,000 4.850% (b)........................................... 600,000
-----------
ILLINOIS--8.8%
1,000,000 City of Chicago Commercial Paper 4.150%, 7/19/95...... 1,000,000
1,000,000 Development Finance Authority Pollution Control
Commercial Paper
4.150%, 7/25/95...................................... 1,000,000
1,000,000 Development Finance Authority Pollution Control
Commercial Paper
3.600%, 11/16/95..................................... 1,000,000
1,000,000 Health Facilities Authority Floating Rate 4.200% (b).. 1,000,000
Saint Charles Industrial Development Revenue Floating
2,000,000 Rate 4.100% (b)...................................... 2,000,000
-----------
6,000,000
-----------
INDIANA--6.8%
400,000 Jasper Industrial Pollution Control Revenue Commercial
Paper
4.150%, 7/05/95...................................... 400,000
1,000,000 Jasper Industrial Pollution Control Revenue Commercial
Paper
4.150%, 8/01/95...................................... 1,000,000
700,000 Jasper Industrial Pollution Control Revenue Commercial
Paper
4.100%, 8/03/95...................................... 700,000
500,000 Jasper Industrial Pollution Control Revenue Commercial
Paper
4.150%, 8/07/95...................................... 500,000
500,000 Jasper Industrial Pollution Control Revenue Commercial
Paper
3.700%, 11/21/95..................................... 500,000
1,500,000 Fort Wayne Hospital Floating Rate 4.200% (b).......... 1,500,000
-----------
4,600,000
-----------
IOWA--6.6%
Iowa Municipalities Workers Bond Anticipation Note
1,415,000 3.950%, 7/01/95...................................... 1,415,000
3,000,000 Iowa School Corps Commercial Paper 4.750%, 6/28/96.... 3,025,768
-----------
4,440,768
-----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
PORTFOLIO COMPOSITION--continued
Tax Exempt Money Market Trust
Investments as of June 30, 1995
TAX EXEMPT OBLIGATIONS--CONTINUED
<TABLE>
<CAPTION>
FACE
AMOUNT ISSUER VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
KANSAS--2.9%
Burlington Pollution Control Commercial Paper 4.200%,
$1,000,000 7/21/95............................................... $ 1,000,000
Burlington Pollution Control Commercial Paper 4.200%,
1,000,000 8/04/95............................................... 1,000,000
-----------
2,000,000
-----------
KENTUCKY--2.1%
Pendleton County Bond Anticipation Note 3.750%,
900,000 7/01/95............................................... 900,000
Pendleton County Bond Anticipation Note 4.000%,
500,000 7/01/96............................................... 500,000
-----------
1,400,000
-----------
LOUISIANA--5.2%
300,000 Louisiana State Recovery Floating Rate 4.350% (b)..... 300,000
Louisiana Public Facilities Hospital Authority
3,200,000 Floating Rate 4.450% (b).............................. 3,200,000
-----------
3,500,000
-----------
MINNESOTA--3.4%
500,000 Owatonna Hospital Revenue Floating Rate 4.250% (b).... 500,000
1,770,000 Mendota Heights Floating Rate 4.100% (b).............. 1,770,000
-----------
2,270,000
-----------
PENNSYLVANIA--1.3%
Bucks County Industrial Development Floating Rate
900,000 4.250% (b)............................................ 900,000
-----------
SOUTH CAROLINA--1.0%
Charleston Industrial Revenue Floating Rate 4.100%
700,000 (b)................................................... 700,000
-----------
TEXAS--9.0%
Austin Utility Service Commercial Paper 4.100%,
500,000 7/05/95............................................... 500,000
600,000 North Central Health Facilities Development Commercial
Paper
4.100%, 8/02/95...................................... 600,000
500,000 North Central Health Facilities Development Commercial
Paper
4.125%, 8/02/95...................................... 500,000
Austin Utility Service Commercial Paper 4.150%,
500,000 8/07/95............................................... 500,000
Austin Utility Service Commercial Paper 3.650%,
500,000 9/14/95............................................... 500,000
Austin Utility Service Commercial Paper 4.100%,
1,000,000 9/14/95............................................... 1,000,000
1,000,000 North Central Health Facilities Development Commercial
Paper
3.400%, 10/03/95..................................... 1,000,000
1,000,000 North Central Health Facilities Development Commercial
Paper
3.600%, 11/17/95..................................... 1,000,000
Nueces County Health Facilities Floating Rate 4.300%
500,000 (b)................................................... 500,000
-----------
6,100,000
-----------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
PORTFOLIO COMPOSITION--continued
Tax Exempt Money Market Trust
Investments as of June 30, 1995
TAX EXEMPT OBLIGATIONS--CONTINUED
<TABLE>
<CAPTION>
FACE
AMOUNT ISSUER VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
UTAH--3.5%
$ 870,000 Utah State Bond Anticipation Note 4.600%, 7/01/95.... $ 870,000
500,000 Emery Pollution Control Revenue Commercial Paper
4.250%, 7/06/95..................................... 500,000
1,000,000 Emery Pollution Control Revenue Commercial Paper
3.600%, 10/20/95.................................... 1,000,000
-----------
2,370,000
-----------
WEST VIRGINIA--0.7%
500,000 State Hospital Finance Authority Floating Rate 4.300%
(b)................................................. 500,000
-----------
Total Investments--105.1% (Identified Cost
$71,233,861) (f).................................... 71,233,861
Cash and Receivables................................. 968,267
Liabilities.......................................... (4,404,815)
-----------
Total Net Assets--100%............................... $67,797,313
===========
</TABLE>
(a) See Note 1a.
(b) Floating rate notes are instruments whose interest rates vary with changes
in a designated base rate such as the prime interest rate. These
instruments are payable on demand and are secured by letters of credit or
other credit support agreements from major banks.
(c) These are prerefunded securities. The dates shown are the prerefunded
dates. The final maturity dates on these securities are 10/01/07 and
10/15/05, respectively.
(d) Purchased on a when-issued basis. See Note 1d.
(e) These securities or a portion thereof are being used to collateralize the
when-issued purchases indicated in note (d) above.
(f) The aggregate cost for federal income tax purposes was $71,233,861.
See accompanying notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
June 30, 1995
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
---------------------------- TAX EXEMPT
MONEY MARKET U.S. GOVERNMENT MONEY MARKET
SERIES SERIES TRUST
------------ --------------- ------------
<S> <C> <C> <C>
ASSETS
Investments at value
Securities......................... $649,099,871 $28,266,770 $71,233,861
Repurchase agreements.............. -- 29,600,000 --
------------ ----------- -----------
Total investments................. 649,099,871 57,866,770 71,233,861
Cash............................... -- 58,430 135,763
Receivable for:
Shares of the Trust sold........... 6,723,430 1,876,814 342,461
Security paydowns.................. 13,200 5,193 --
Interest........................... 489,966 93,359 490,043
------------ ----------- -----------
656,326,467 59,900,566 72,202,128
------------ ----------- -----------
LIABILITIES
Payable for:
Shares of the Trust redeemed....... 5,832,400 74,473 305,191
Securities purchased............... -- -- 4,020,570
Dividends declared................. 28,834 2,423 850
Due to Custodian Bank.............. 244,207 -- --
Accrued expenses:
Management fees.................... 225,056 19,665 4,556
Deferred trustees' fees............ 25,630 24,564 29,691
Other expenses..................... 161,884 36,948 43,957
------------ ----------- -----------
6,518,011 158,073 4,404,815
------------ ----------- -----------
NET ASSETS.......................... $649,808,456 $59,742,493 $67,797,313
============ =========== ===========
Net Assets consist of:
Capital paid in Class A shares..... $645,225,499 $59,087,045 $67,360,908
Capital paid in Class B shares..... 4,582,957 655,448 436,405
------------ ----------- -----------
NET ASSETS.......................... $649,808,456 $59,742,493 $67,797,313
============ =========== ===========
Shares of beneficial interest
outstanding, no par value Class A
shares............................ 645,225,499 59,087,045 67,360,908
Shares of beneficial interest
outstanding, no par value Class B
shares............................ 4,582,957 655,448 436,405
------------ ----------- -----------
Shares of beneficial interest
outstanding....................... 649,808,456 59,742,493 67,797,313
============ =========== ===========
Net asset value per share Class A
and Class B shares*............... $1.00 $1.00 $1.00
============ =========== ===========
Cost of investments................. $649,099,871 $57,866,770 $71,233,861
============ =========== ===========
</TABLE>
*Shares of the Series are sold and redeemed at net asset value (Net assets /
Shares of beneficial interest outstanding).
See accompanying notes to financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
---------------------------- TAX EXEMPT
MONEY MARKET U.S. GOVERNMENT MONEY MARKET
SERIES SERIES TRUST
------------ --------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest........................... $37,058,454 $3,281,743 $2,614,894
----------- ---------- ----------
Expenses
Management fees.................... 2,796,164 255,727 281,837
Trustees' fees..................... 28,723 17,800 17,732
Custodian.......................... 141,079 44,092 52,637
Transfer agent..................... 2,681,811 144,953 129,893
Audit and tax services............. 27,000 27,000 29,000
Legal.............................. 10,048 10,048 11,048
Printing........................... 107,169 6,567 6,081
Registration....................... 37,567 40,127 59,134
Insurance.......................... 8,503 718 841
Miscellaneous...................... 16,275 7,632 7,769
----------- ---------- ----------
5,854,339 554,664 595,972
Less--waiver of fee by investment
adviser.......................... -- -- (199,639)
----------- ---------- ----------
Net investment income.............. 31,204,115 2,727,079 2,218,561
REALIZED GAIN (LOSS) ON
INVESTMENTS--NET................... 794 -- (415)
----------- ---------- ----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS......................... $31,204,909 $2,727,079 $2,218,146
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
------------------------------------------------------------ TAX EXEMPT
MONEY MARKET SERIES U.S. GOVERNMENT SERIES MONEY MARKET TRUST
------------------------------ ---------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1995
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income... $ 19,106,073 $ 31,204,115 $ 1,596,898 $ 2,727,079 $ 1,208,979 $ 2,218,561
Net realized gain (loss)
from investments....... 490 794 -- -- (414) (415)
-------------- -------------- ------------ ------------ ----------- ------------
Increase in net assets
from operations........ 19,106,563 31,204,909 1,596,898 2,727,079 1,208,565 2,218,146
-------------- -------------- ------------ ------------ ----------- ------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS.......... (19,106,563) (31,204,909) (1,596,898) (2,727,079) (1,208,565) (2,218,146)
-------------- -------------- ------------ ------------ ----------- ------------
FROM CAPITAL SHARE
TRANSACTIONS..........
Proceeds from the sale
of shares.............. 1,201,665,845 1,103,481,598 103,988,803 107,616,822 97,941,744 114,083,133
Net asset value of share
issued in connection
with the reinvestment
of dividends from net
investment income...... 18,645,090 30,418,561 1,552,275 2,654,498 1,188,380 2,176,771
Cost of shares redeemed. (1,296,855,395) (1,183,461,017) (111,173,577) (109,491,682) (89,065,116) (115,082,758)
-------------- -------------- ------------ ------------ ----------- ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... (76,544,460) (49,560,858) (5,632,499) 779,638 10,065,008 1,177,146
-------------- -------------- ------------ ------------ ----------- ------------
Total increase
(decrease) in net
assets................. (76,544,460) (49,560,858) (5,632,499) 779,638 10,065,008 1,177,146
NET ASSETS
Beginning of the year... 775,913,774 699,369,314 64,595,354 58,962,855 56,555,159 66,620,167
-------------- -------------- ------------ ------------ ----------- ------------
End of the year......... $ 699,369,314 $ 649,808,456 $ 58,962,855 $ 59,742,493 $66,620,167 $ 67,797,313
============== ============== ============ ============ =========== ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FROM INVESTMENT OPERATIONS
----------------------------------------------
NET NET
ASSET REALIZED AND TOTAL
VALUE AT NET UNREALIZED FROM
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT
OF PERIOD INCOME ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
CASH MANAGEMENT TRUST--MONEY
MARKET SERIES
Year Ended June 30,
1991........................... $1.00 $0.0693 $ -- $0.0693
1992........................... 1.00 0.0450 -- 0.0450
1993........................... 1.00 0.0275 -- 0.0275
1994........................... 1.00 0.0264 -- 0.0264
1995........................... 1.00 0.0469 -- 0.0469
CASH MANAGEMENT TRUST--U.S.
GOVERNMENT SERIES
Year Ended June 30,
1991........................... $1.00 $0.0660 $0.0001 $0.0661
1992........................... 1.00 0.0449 -- 0.0449
1993........................... 1.00 0.0271 -- 0.0271
1994........................... 1.00 0.0257 -- 0.0257
1995........................... 1.00 0.0454 -- 0.0454
TAX EXEMPT MONEY MARKET TRUST
Year Ended June 30,
1991........................... $1.00 $0.0483 $ -- $0.0483
1992........................... 1.00 0.0337 -- 0.0337
1993........................... 1.00 0.0214 -- 0.0214
1994........................... 1.00 0.0208 -- 0.0208
1995........................... 1.00 0.0314 -- 0.0314
</TABLE>
(a) Including net realized gain on investments.
(b) In the case of New England Tax Exempt Money Market Trust, the ratio of
operating expenses to average net assets without giving effect to the
voluntary expense limitation described in Note 3 to the Financial
Statements would have been 0.76%, 0.76%, 0.83%, .89% and .85% for the years
ended June 30, 1991, 1992, 1993, 1994, and 1995.
See accompanying notes to financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
------------------------ ---------------------------------
RATIO OF RATIO OF
NET NET OPERATING NET
DIVIDENDS ASSET ASSETS EXPENSES TO INCOME TO
FROM NET VALUE AT TOTAL END OF AVERAGE AVERAGE
INVESTMENT TOTAL END RETURN PERIOD NET ASSETS NET ASSETS
INCOME (A) DISTRIBUTIONS OF PERIOD (%) (000) (%) (B) (%)
---------- ------------- --------- ------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
$(0.0693) $(0.0693) $1.00 7.15 $1,150,963 0.68 6.92
(0.0450) (0.0450) 1.00 4.58 925,077 0.73 4.56
(0.0275) (0.0275) 1.00 2.84 775,914 0.79 2.78
(0.0264) (0.0264) 1.00 2.68 699,369 0.84 2.65
(0.0469) (0.0469) 1.00 4.79 649,808 0.88 4.67
$(0.0661) $(0.0661) $1.00 6.80 $87,380 0.74 6.50
(0.0449) (0.0449) 1.00 4.57 79,218 0.73 4.50
(0.0271) (0.0271) 1.00 2.80 64,595 0.78 2.73
(0.0257) (0.0257) 1.00 2.60 58,963 0.84 2.54
(0.0454) (0.0454) 1.00 4.64 59,742 0.92 4.53
$(0.0483) $(0.0483) $1.00 4.93 $72,634 0.56 4.81
(0.0337) (0.0337) 1.00 3.41 65,753 0.56 3.38
(0.0214) (0.0214) 1.00 2.20 56,555 0.56 2.14
(0.0208) (0.0208) 1.00 2.10 66,620 0.56 2.08
(0.0314) (0.0314) 1.00 3.18 67,797 0.56 3.15
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES. New England Cash Management Trust and New
England Tax Exempt Money Market Trust (the "Trusts") are registered under the
Investment Company Act of 1940, as amended, as diversified, open-end investment
companies.
NEW ENGLAND CASH MANAGEMENT TRUST--The Trust's Agreement and Declaration of
Trust permits the issuance of an unlimited number of shares of beneficial
interest, no par value, in separate Series, with shares of each Series
representing interests in a separate portfolio of assets. Effective September
13, 1993, each Series began offering two classes of shares, Class A and Class
B, in order to enable investors in either class of the New England Stock or
Bond Funds to invest in money market shares. Class A and B shares are identical
except that Class B shares may be subject to a contingent deferred sales charge
upon redemption if the shares were acquired by exchange of Class B shares of a
stock or bond fund. Each Series is separately managed and has its own
objectives and policies. The Trust is comprised of the Money Market Series and
the U.S. Government Series.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST--The Trust's Agreement and
Declaration of Trust permits the issuance of an unlimited number of shares of
beneficial interest, no par value. Effective September 13, 1993, the Trust
began offering two classes of shares, Class A and Class B, in order to enable
investors in either class of the New England Stock or Bond Funds to invest in
money market shares. Class A and B shares are identical except that Class B
shares may be subject to a contingent deferred sales charge upon redemption if
the shares were acquired by exchange of Class B shares of a stock or bond fund.
The following is a summary of significant accounting policies followed by the
Trusts in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
A. SECURITY VALUATION. The Trusts employ the amortized cost method of security
valuation as set forth in Rule 2a-7 under the Investment Company Act of 1940
which, in the opinion of the trustees of each Trust, represents the fair value
of the particular security. The amortized cost of a security is determined by
valuing it at original cost and thereafter amortizing any discount or premium
on a straight-line basis.
B. REPURCHASE AGREEMENTS. The Trusts, through their custodian, receive delivery
of the underlying securities collateralizing repurchase agreements. It is the
Trust's policy that the market value of the collateral be at least equal to
100% of the repurchase price. Back Bay Advisors, L.P. ("Back Bay Advisors") is
responsible for determining that the value of the collateral is at all times at
least equal to the repurchase price. In connection with transactions in
repurchase agreements, if the seller defaults and the value of the collateral
declines or if the seller enters an insolvency proceeding, realization of the
collateral by the Trusts may be delayed or limited.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--continued
June 30, 1995
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date (date the order to buy or sell is executed)
and interest income is recorded on the accrual basis. In determining the net
gain or loss on securities sold, the cost of securities is determined on the
identified cost basis.
D. WHEN-ISSUED SECURITIES. Delivery and payment for securities purchased on a
when-issued or delayed delivery basis can take place one month or more after
the date of the transaction. The securities so purchased are subject to market
fluctuation during this period. At June 30, 1995, the cost of when issued
purchase commitments for the Tax Exempt Money Market Trust amounted to
$3,520,570.
E. FEDERAL INCOME TAXES. Each Series of the Cash Management Trust and the Tax
Exempt Money Market Trust intends to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies, and to distribute to
its shareholders all of its taxable and tax exempt income. Accordingly, no
provision for federal income tax has been made.
F. DIVIDENDS TO SHAREHOLDERS. Dividends are declared daily to shareholders of
record at the time and are paid monthly.
G. OTHER. Each of the Trusts invests primarily in a portfolio of money market
instruments maturing in 397 days or less whose ratings are within the two
highest ratings categories of a nationally recognized rating agency or, if not
rated, are believed to be of comparable quality. The ability of the issuers of
the securities held by the Trusts to meet their obligations may be affected by
foreign, economic, political and legal developments in the case of foreign
banks or foreign branches or subsidiaries of U.S. banks, or domestic, economic
developments in a specific industry, state or region.
2. INVESTMENT TRANSACTIONS.
For the year ended June 30, 1995:
NEW ENGLAND CASH MANAGEMENT TRUST--Purchase and sales or maturities of short-
term obligations, including securities purchased subject to repurchase
agreements, aggregated $5,993,472,617 and $6,075,795,455, respectively, for the
Money Market Series. Purchases and sales or maturities of United States
government obligations, including securities purchased subject to repurchase
agreements, aggregated $8,776,548,418 and $8,778,942,830, respectively, for the
U.S. Government Series.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST--Purchases and sales or maturities of
short-term obligations aggregated $225,482,192 and $225,654,330, respectively.
3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
A. During the year ended June 30, 1995, the Trusts incurred management fees
payable to the Trusts' investment adviser, Back Bay Advisors, certain officers
and directors of which are also officers and trustees of the Trusts. Back Bay
Advisors is a
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS--continued
June 30, 1995
wholly-owned subsidiary of New England Investment Companies, L.P. ("NEIC")
which is a majority owned subsidiary of New England Mutual Life Insurance
Company.
NEW ENGLAND CASH MANAGEMENT TRUST--Under the Management agreements, each Series
pays Back Bay Advisors a monthly fee based on the annual percentage rates of
the corresponding levels of that Series' average daily net asset values as set
forth below:
<TABLE>
<CAPTION>
ANNUAL
PERCENTAGE
RATE ANNUAL NET ASSET VALUE LEVELS
---------- -------------------------------
<S> <C>
.425% the first $500 million
.400% the next $500 million
.350% the next $500 million
.300% the next $500 million
.250% amounts in excess of $2 billion
</TABLE>
During the year ended June 30, 1995, the Money Market Series incurred
management fees of $2,796,164 and the U.S. Government Series incurred
management fees of $255,727.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST--The management agreement provides
for a fee at the annual rate of 4/10 of 1% on the first $100,000,000 of the
Trust's average daily net assets and 3/10 of 1% on average daily net assets
above this amount. During the year ended June 30, 1995, the Trust incurred
gross management fees of $281,837.
Back Bay Advisors has voluntarily agreed, until further notice, to reduce the
management fee and, if necessary, to assume Trust expenses in order to limit
the expenses to 0.5625 of 1% of average net assets per year. As a result of
exceeding the expense limitation, management fees for the year ended June 30,
1995 were reduced by $199,639.
B. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder
servicing agent for the Trusts. For the year ended June 30, 1995, the New
England Cash Management Trust and Tax Exempt Money Market Trust paid $2,111,479
and $76,391, respectively, to New England Funds as compensation for its
services in that capacity.
4. TRUSTEES FEES AND EXPENSES. The Trusts do not pay any compensation to
officers or trustees who are directors, officers, or employees of Back Bay
Advisors, NEIC, New England Funds or their affiliates, other than registered
investment companies.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS--continued
June 30, 1995
Each disinterested trustee is compensated by each series of the Cash Management
Trust and by the Tax Exempt Money Market Trust as follows:
<TABLE>
<CAPTION>
TAX EXEMPT MONEY
MONEY MARKET SERIES U.S. GOV'T SERIES MARKET TRUST
------------------- ----------------- ----------------
<S> <C> <C> <C>
Annual Retainer $2,400 $1,600 $1,600
Meeting Fee $125/meeting $125/meeting $125/meeting
Committee Meeting Fee $75/meeting $75/meeting $75/meeting
Committee Chairman
Annual Retainer $125 $125 $125
</TABLE>
A deferred compensation plan is available to members of the boards of trustees.
A trustee's participation in the plan is voluntary. Each participating trustee
will receive an amount equal to the value that such deferred compensation would
have, had it been invested in the relevant series or Trust on the normal
payment date.
5. CONCENTRATION OF CREDIT. The Tax Exempt Money Market Trust had the following
industry concentrations in excess of 10% on June 30, 1995 as a percentage of
the Trust's total net assets: Education (11%), Government (16%), Hospitals
(28%), Housing (16%), and Utilities (18%). The Trust also had more than 10% of
its total net assets invested in Florida (18%) and had more than 10% of its net
assets backed by letters of credit with Sumitomo Bank (15%).
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of New England Cash Management Trust
and New England Tax Exempt Money Market 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 each of the two
series of the New England Cash Management Trust and New England Tax Exempt
Money Market Trust (formerly TNE Cash Management Trust and the TNE Tax Exempt
Money Market Trust) at June 30, 1995, the results of each of their operations
for the year then ended, the changes in each of their net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trusts' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 7, 1995
20
<PAGE>
--------------------------------------------------------------------------------
New England Funds
--------------------------------------------------------------------------------
Stock Funds
International Equity Fund
Growth Fund
Star Advisers Fund
Capital Growth Fund
Value Fund
Growth Opportunities Fund
Balanced Fund
Bond Funds
High Income Fund
Strategic Income Fund
Government Securities Fund
Bond Income Fund
Limited Term U.S. Government Fund
Adjustable Rate U.S. Government Fund
Tax Exempt Funds
Tax Exempt Income Fund
Massachusetts Tax Free Income Fund
Intermediate Term Tax Free Fund of California
Intermediate Term Tax Free Fund of New York
Money Market Funds
Cash Management Trust
-- Money Market Series
-- U.S. Government Series
Tax Exempt Money Market Trust
To learn more, and for a free prospectus,
contact your financial representative.
New England Funds, L.P.
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors when it is
preceded or accompanied by the Fund's current prospectus, which contains
information about distribution charges, management and other items of interest.
Investors are advised to read the prospectus carefully before investing.
<PAGE>
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
---------------------
399 Boylston Street
Boston, Massachusetts
02116
---------------------
95-0769 (MM58)
[RECYCLING LOGO APPEARS HERE]
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 649,099,871
<INVESTMENTS-AT-VALUE> 649,099,871
<RECEIVABLES> 7,226,596
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 656,326,467
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,518,011
<TOTAL-LIABILITIES> 6,518,011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 645,225,499
<SHARES-COMMON-STOCK> 645,225,499
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 31,204,115
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 794
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 645,225,499
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,058,454
<OTHER-INCOME> 0
<EXPENSES-NET> 5,854,339
<NET-INVESTMENT-INCOME> 31,204,115
<REALIZED-GAINS-CURRENT> 794
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31,204,115
<DISTRIBUTIONS-OF-GAINS> 794
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,103,481,598
<NUMBER-OF-SHARES-REDEEMED> 1,183,461,017
<SHARES-REINVESTED> 30,418,561
<NET-CHANGE-IN-ASSETS> (49,560,858)
<ACCUMULATED-NII-PRIOR> 19,106,073
<ACCUMULATED-GAINS-PRIOR> 490
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,794,164
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,854,339
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> MONEY MARKET SERIES CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-3-1995
<INVESTMENTS-AT-COST> 649,099,871
<INVESTMENTS-AT-VALUE> 649,099,871
<RECEIVABLES> 7,226,596
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 656,326,467
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,518,011
<TOTAL-LIABILITIES> 6,518,011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,582,957
<SHARES-COMMON-STOCK> 4,582,957
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 31,204,115
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 794
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,582,957
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,058,454
<OTHER-INCOME> 0
<EXPENSES-NET> 5,854,339
<NET-INVESTMENT-INCOME> 31,204,115
<REALIZED-GAINS-CURRENT> 794
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31,204,115
<DISTRIBUTIONS-OF-GAINS> 794
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,103,481,598
<NUMBER-OF-SHARES-REDEEMED> 1,183,461,017
<SHARES-REINVESTED> 30,418,561
<NET-CHANGE-IN-ASSETS> (49,560,858)
<ACCUMULATED-NII-PRIOR> 19,106,073
<ACCUMULATED-GAINS-PRIOR> 490
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,794,164
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,854,339
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> US GOV'T SERIES CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 57,866,770
<INVESTMENTS-AT-VALUE> 57,866,770
<RECEIVABLES> 1,975,366
<ASSETS-OTHER> 58,430
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59,742,493
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158,073
<TOTAL-LIABILITIES> 158,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59,087,045
<SHARES-COMMON-STOCK> 59,087,045
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,727,079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 59,087,045
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,281,743
<OTHER-INCOME> 0
<EXPENSES-NET> 554,664
<NET-INVESTMENT-INCOME> 2,727,079
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,727,079
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107,616,822
<NUMBER-OF-SHARES-REDEEMED> 109,491,682
<SHARES-REINVESTED> 2,654,498
<NET-CHANGE-IN-ASSETS> 779,638
<ACCUMULATED-NII-PRIOR> 1,596,898
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 255,727
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 554,664
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> US GOV'T SERIES CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 57,866,770
<INVESTMENTS-AT-VALUE> 57,866,770
<RECEIVABLES> 1,975,366
<ASSETS-OTHER> 58,430
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59,742,493
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158,073
<TOTAL-LIABILITIES> 158,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 655,448
<SHARES-COMMON-STOCK> 655,448
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,727,079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 655,448
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,281,743
<OTHER-INCOME> 0
<EXPENSES-NET> 554,664
<NET-INVESTMENT-INCOME> 2,727,079
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,727,079
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107,616,822
<NUMBER-OF-SHARES-REDEEMED> 109,491,682
<SHARES-REINVESTED> 2,654,498
<NET-CHANGE-IN-ASSETS> 779,638
<ACCUMULATED-NII-PRIOR> 1,596,898
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 255,727
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 554,664
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
