<PAGE>
Registration Nos. 2-68348
811-2819
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 32 [X]
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [X]
ACT OF 1940
Amendment No. 32 [X]
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(Check appropriate box or boxes)
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NEW ENGLAND CASH MANAGEMENT TRUST
(Exact Name of Registrant as Specified in Charter)
399 Boylston Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices, including Zip Code)
(617) 578-1388
(Registrant's Telephone Number, including Area Code)
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Robert E. O'Hare, Esq.
New England Funds, L.P.
399 Boylston Street
Boston, Massachusetts 02116
(Name and address of agent for service)
Copy to:
Edward A. Benjamin, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
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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, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) 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 on or about August 20, 1997
the Rule 24f-2 Notice for the Registrant's fiscal year ended June 30, 1997.
<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 Caption in Statement of
N-1A 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 and Other
Services
22 . . . . . . . . . . . . . . . . Net Income, Dividends and
Valuation; Taxes
23 . . . . . . . . . . . . . . . . Financial Statements and Report of
Independent Accountants
<PAGE>
[LOGO](R)
NEW ENGLAND FUNDS(R)
Where The Best Minds Meet(R)
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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, 1997
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.
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 (Classes A and B) 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 (a "CDSC") may be
imposed upon redemption of Fund shares originally acquired by exchange of shares
from any of the New England Stock or Bond Funds (the "Stock or Bond Funds"). 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, 1997, 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
Page
FUND EXPENSES AND FINANCIAL INFORMATION
<S> <C> <C>
1 Schedule of Fees Sales charges, yearly operating expenses.
3 Financial Highlights Historical information on the Funds' performance.
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT STRATEGY
6 Investment Objectives The investment goal for each Fund.
6 New England Investment Companies and the Funds' The Funds' adviser and subadviser are affiliates of
Adviser and Subadviser NEIC.
6 How the Funds Pursue Their Objectives
6 Fund Investments Descriptions of the types of securities in which
each Fund invests.
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9 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.
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10 FUND MANAGEMENT Information about the Funds' adviser and
subadviser.
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BUYING FUND SHARES
11 Minimum Investment Everything you need to know to open and add to
11 6 Ways to Buy Fund Shares a New England Funds account.
[] Through your investment dealer
[] By mail
[] By wire transfer of Federal Funds
[] By Investment Builder
[] By electronic purchase through ACH
[] By exchange from another New England Fund
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OWNING FUND SHARES
13 Exchanging Among New England Funds New England Funds offer three convenient ways to
exchange Fund shares.
14 Fund Dividend Payments
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SELLING FUND SHARES
15 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
17 Contingent Deferred Sales Charges Class A and Class B shareholders who have exchanged
from the Stock or Bond Funds may be subject to a
CDSC upon redemption.
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FUND DETAILS
18 Fund Yields Additional information you may find important.
18 Income Tax Considerations
19 Additional Facts About the Funds
</TABLE>
<PAGE>
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 tables summarize 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
<TABLE>
<CAPTION>
NEW ENGLAND CASH NEW ENGLAND CASH NEW ENGLAND TAX
MANAGEMENT TRUST -- MANAGEMENT TRUST -- EXEMPT MONEY
MONEY MARKET SERIES U.S. GOVERNMENT SERIES MARKET TRUST
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Initial Sales Charge
Imposed on a Purchase ...... None None None None None None
Maximum Contingent Deferred
Sales Charge ............... 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 Fund. See "Selling Fund Shares--Contingent Deferred Sales Charges."
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
NEW ENGLAND CASH NEW ENGLAND CASH NEW ENGLAND TAX
MANAGEMENT TRUST -- MANAGEMENT TRUST -- EXEMPT MONEY
MONEY MARKET SERIES U.S. GOVERNMENT SERIES MARKET TRUST
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after
voluntary fee waiver where
indicated) .................. 0.42% 0.42% 0.43% 0.43% 0.11%(2) 0.11%(2)
12b-1 Fees .................... None None None None None None
Other Expenses (after voluntary
fee waiver where indicated) . 0.46% 0.46% 0.52%(1) 0.52%(1) 0.45% 0.45%
Total Fund Operating Expenses
(after voluntary fee waiver
where indicated) ............ 0.88% 0.88% 0.95%(1) 0.95%(1) 0.56%(2) 0.56%(2)
(1) Without the voluntary waiver of accounting and administrative fees by the Distributor, Other Expenses
would be 0.56% and Total Fund Operating Expenses would be 0.99% for both Class A and Class B shares.
These voluntary limitations can be terminated by the Distributor at any time. See "Fund Management."
(2) Without the voluntary fee waiver by the Fund's adviser and subadviser, Management Fees would be 0.40%
and Total Fund Operating Expenses would be 0.85% for both Class A and Class B shares. These voluntary
limitations can be terminated by the Fund's adviser or subadviser at any time. See "Fund Management."
</TABLE>
<PAGE>
EXAMPLE
A $1,000 investment would incur the following expenses, assuming a 5% annual
return and 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 may be more or less than shown.
NEW ENGLAND CASH NEW ENGLAND CASH NEW ENGLAND TAX
MANAGEMENT TRUST -- MANAGEMENT TRUST -- EXEMPT MONEY
MONEY MARKET SERIES U.S. GOVERNMENT SERIES MARKET TRUST
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
(1) (1) (1)
1 year ........ $ 9 $ 9 $ 10 $ 10 $ 6 $ 6
3 years ....... $ 28 $ 28 $ 30 $ 30 $18 $18
5 years ....... $ 49 $ 49 $ 53 $ 53 $31 $31
10 years ...... $108 $108 $117 $117 $70 $70
(1) Assumes CDSC does not apply to the redemption.
The purpose of this fee schedule is to help you understand the various costs and
expenses that you will bear directly or indirectly if you invest in the Funds.
For additional information about the Funds' fees and other expenses, see "Fund
Management."
A wire fee (currently $5.00) will be deducted from your proceeds if you elect to
transfer redemption proceeds by wire.
<PAGE>
FINANCIAL HIGHLIGHTS
(For Class A and B shares of each Fund outstanding throughout the indicated
periods.)
The Financial Highlights presented on pages 3 through 5 have been included in
financial statements for the Funds. The financial statements have been examined
by Price Waterhouse LLP, independent accountants, whose reports thereon, which
were unqualified, are incorporated by reference in the Statement and can be
obtained by shareholders. The Financial Highlights should be read in conjunction
with the financial statements and the notes thereto incorporated by reference in
the Statement. Each Fund's annual report contains additional performance
information and is available upon request and without charge.
<TABLE>
NEW ENGLAND CASH MANAGEMENT TRUST -- MONEY MARKET SERIES
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income ............ 0.0643 0.0816 0.0801 0.0693 0.0450 0.0275 0.0264 0.0469 0.0482 0.0467
Net gains or losses
on securities
(both realized and
unrealized) ...... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0002 0.0000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from
investment
operations ....... 0.0643 0.0816 0.0801 0.0693 0.0450 0.0275 0.0264 0.0469 0.0484 0.0467
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.0643) (0.0816) (0.0801) (0.0693) (0.0450) (0.0275) (0.0264) (0.0469) (0.0484)(a) (0.0465)
Distributions (from
net realized
capital gains) ... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 (0.0002)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.0643) (0.0816) (0.0801) (0.0693) (0.0450) (0.0275) (0.0264) (0.0469) (0.0484) (0.0467)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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 (%) ... 6.60 8.45 8.29 7.15 4.58 2.84 2.68 4.79 4.95 4.77
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
period (000) ....... $823,742 $984,246 $1,140,852 $1,150,963 $925,077 $775,914 $699,369 $649,808 $663,621 $698,659
Ratio of expenses
to average net
assets (%) ....... 0.74 0.72 0.67 0.68 0.73 0.79 0.84 0.88 0.90 0.88
Ratio of net income
to average net
assets (%) ....... 6.44 8.21 8.00 6.92 4.56 2.78 2.65 4.67 4.85 4.66
(a) Including net realized gain on investments.
</TABLE>
<PAGE>
<TABLE>
NEW ENGLAND CASH MANAGEMENT TRUST -- U.S. GOVERNMENT SERIES
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income ........... 0.0585 0.0772 0.0762 0.0660 0.0449 0.0271 0.0257 0.0454 0.0465 0.0441
Net gains or losses
on securities
(both realized and
unrealized) ...... 0.0001 0.0001 0.0001 0.0001 0.0000 0.0000 0.0000 0.0000 0.0010 0.0000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from
investment
operations ....... 0.0586 0.0773 0.0763 0.0661 0.0449 0.0271 0.0257 0.0454 0.0475 0.0441
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.0586) (0.0773) (0.0763) (0.0661) (0.0449) (0.0271) (0.0257) (0.0454) (0.0475)(a) (0.0431)
Distributions (from
net realized
capital gains) ... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 (0.0010)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.0586) (0.0773) (0.0763) (0.0661) (0.0449) (0.0271) (0.0257) (0.0454) (0.0475) (0.0441)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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 (%) ... 6.00 7.99 7.88 6.80 4.57 2.80 2.60 4.64 4.86 4.50
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
period (000) ..... $57,183 $57,697 $61,746 $87,380 $79,218 $64,595 $58,963 $59,742 $52,547 $49,136
Ratio of expenses to
average net
assets (%) ....... 0.83 0.81 0.79 0.74 0.73 0.78 0.84 0.92 0.93(b) 0.95(b)
Ratio of net income
to average net
assets (%) ....... 5.87 7.74 7.62 6.50 4.50 2.73 2.54 4.53 4.80 4.46
(a) Including net realized gain on investments.
(b) The ratio of expenses to average net assets without giving effect to the voluntary fee waiver described in Note 3 to the
Finan cial Statements contained in the Statement would have been 0.96% and 0.99% for the years ended June 30, 1996 and 1997,
respectively.
</TABLE>
<PAGE>
<TABLE>
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income ........... 0.0427 0.0541 0.0544 0.0483 0.0337 0.0214 0.0208 0.0314 0.0327 0.0314
Net gains or losses
on securities
(both realized and
unrealized) ...... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0001
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income from
investment
operations ....... 0.0427 0.0541 0.0544 0.0483 0.0337 0.0214 0.0208 0.0314 0.0327 0.0315
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.0427) (0.0541) (0.0544) (0.0483) (0.0337) (0.0214) (0.0208) (0.0314) (0.0327) (0.0315)(a}
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 (0.0427) (0.0541) (0.0544) (0.0483) (0.0337) (0.0214) (0.0208) (0.0314) (0.0327) (0.0315)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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 (%) ... 4.34 5.53 5.56 4.93 3.41 2.20 2.10 3.18 3.32 3.20
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
period (000) ..... $65,721 $65,433 $68,287 $72,634 $65,753 $56,555 $66,620 $67,797 $64,897 $67,736
Ratio of expenses to
average net
assets (%)(b) .... 0.56 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 (%) ....... 4.27 5.41 5.42 4.81 3.38 2.14 2.08 3.15 3.29 3.17
(a) Including net realized gain on investments.
(b) The ratio of expenses to average net assets without giving effect to the expense limitation described in Note 3 to the
Financi al Statements contained in the Statement would have been 0.75%, 0.74%, 0.76%, 0.76%, 0.76%, 0.83%, 0.89%, 0.85%,
0.90% and 0.85% for the years ended June 30, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997, respectively.
</TABLE>
<PAGE>
I N V E S T M E N T S T R A T E G Y
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 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.
New England Cash Management Trust and New England Tax Exempt Money Market
Trust are referred to in this prospectus as the "Trusts."
NEW ENGLAND INVESTMENT COMPANIES AND THE FUNDS' ADVISER AND SUBADVISER
The investment adviser and subadviser of each of the Funds are independently
operated subsidiaries of New England Investment Companies, L.P. ("NEIC"), one of
the largest publicly traded investment management firms in the United States.
NEIC is listed on the New York Stock Exchange and through its subsidiaries or an
affiliate manages over $100 billion in assets for individuals and institutions.
The adviser and subadviser operate independently and are staffed by experienced
investment professionals. The adviser and subadviser apply specialized knowledge
and careful analysis to the pursuit of each Fund's objectives.
NEW ENGLAND FUNDS MANAGEMENT, L.P. ("NEFM") is investment adviser of each of
the Funds, as well as most of the other New England Funds.
BACK BAY ADVISORS(R), L.P. ("BACK BAY ADVISORS(R)"), subadviser of each of the
Funds, manages over $7 billion in assets, primarily mutual fund and
institutional fixed-income portfolios.
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 at the time of purchase (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
subadviser under guidelines approved by New England Cash Management Trust's
trustees.
[ ] GOVERNMENT FUND
The Government Fund invests in U.S. Government Securities (as defined
above), 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 subadviser under guidelines approved
by New England Tax Exempt Money Market Trust's trustees, subject to any
limitations imposed by Rule 2a-7 under the Investment Company Act of 1940,
as amended.
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 may 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 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 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 Fund will not be able to
invest in the full range of issues available in the Municipal Securities
market. The 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 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 generally.
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.
[ ] 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 subadviser under guidelines established by the Trusts'
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 in this prospectus or in the
Statement, the investment policies of the Funds may be changed without
shareholder approval or prior notice.
The Funds will make all of their investments in a manner which complies with
Rule 2a-7 under the Investment Company Act of 1940.
<PAGE>
I N V E S T M E N T R I S K S
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.
<PAGE>
F U N D M A N A G E M E N T
NEFM, 399 Boylston Street, Boston, Massachusetts 02116, serves as the adviser to
each of the Funds. NEFM oversees, evaluates and monitors the subadvisory
services provided to each Fund and furnishes general business management and
administration to each Fund. NEFM does not determine what investments will be
purchased by the Funds.
Back Bay Advisors(R), 399 Boylston Street, Boston, Massachusetts 02116, is the
subadviser of each of the Funds. Back Bay Advisors provides discretionary
investment management services to mutual funds and other institutional
investors. Formed in 1986, Back Bay Advisors now manages a total of over $7
billion of assets, primarily mutual fund and institutional fixed-income
portfolios.
The general partners of Back Bay Advisors, NEFM, and the Distributor are special
purpose corporations that are indirect, wholly-owned subsidiaries of NEIC.
NEIC's sole general partner, New England Investment Companies, Inc., is a
wholly-owned subsidiary of Metropolitan Life Insurance Company.
Subject to the supervision of NEFM, Back Bay Advisors manages each Fund in
accordance with the Fund's investment objective and policies, makes investment
decisions for the Fund, places orders to purchase and sell securities for the
Fund and employs professional advisers and securities analysts who provide
research services relating to the Fund.
In addition to overseeing the management of the Funds as conducted by Back Bay
Advisors, NEFM provides executive and other personnel for the management of the
Trusts. Each Trust's Board of Trustees supervises the affairs of that Trust as
conducted by NEFM and Back Bay Advisors.
For the fiscal year ended June 30, 1997, the Money Market Fund, Government Fund
and Tax Exempt Fund paid 0.42%, 0.425% and 0.11%, (after the voluntary fee
waiver described below) respectively, of their average daily net assets in
management fees to NEFM.
For the fiscal year ended June 30, 1997, with respect to the Money Market Fund,
Government Fund and Tax Exempt Fund, NEFM paid 0.20%, 0.2125% and 0.055%, (after
the voluntary fee waiver described below) respectively, of each Fund's average
daily net assets in sub-advisory fees to Back Bay Advisors.
The Funds pay no direct fees to Back Bay Advisors.
In addition to the management fees paid to NEFM, each Fund pays the Distributor
for providing certain accounting and administrative services. The amount of the
payments is based on the allocated costs that the Distributor incurs in
providing these services.
Until further notice to the Tax Exempt Fund, NEFM and Back Bay Advisors have
each agreed to proportionately reduce their fees and, if necessary, to bear
certain expenses associated with operating the Fund (not including fees payable
to the trustees of the Tax Exempt Fund who are not "interested persons" thereof)
to the extent necessary in order to limit those fees and expenses to an annual
rate of 0.5625% of the Fund's average daily net assets. NEFM and Back Bay
Advisors may terminate these voluntary limitations at any time. In such event,
the Fund would supplement its prospectus. In addition, until further notice, the
Distributor has agreed to waive certain accounting and administrative fees
payable by the Government Fund.
<PAGE>
B U Y I N G F U N D S H A R E S
USING NEW ENGLAND FUNDS PERSONAL ACCESS LINE(TM) 1-800-346-5984
NEW ENGLAND FUNDS PERSONAL ACCESS LINE(TM), NEW ENGLAND FUNDS' AUTOMATED
SERVICE SYSTEM, GIVES YOU 24-HOUR ACCESS TO YOUR ACCOUNT. THROUGH YOUR
TOUCH- TONE TELEPHONE, YOU CAN RECEIVE YOUR ACCOUNT BALANCE, YOUR RECENT
TRANSACTIONS, FUND PRICES AND RECENT PERFORMANCE INFORMATION. YOU CAN
ALSO PURCHASE, SELL OR EXCHANGE CLASS A SHARES OF ANY NEW ENGLAND FUND.
FOR MORE INFORMATION ABOUT NEW ENGLAND FUNDS PERSONAL ACCESS LINE(TM),
CALL US AT 1-800-225-5478 BETWEEN 8:00 A.M. AND 7:00 P.M. (EASTERN
TIME).
MINIMUM INVESTMENT
$2,500 is the minimum for an initial investment in a Fund and $100 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, SEP, SIMPLE Plans, 403(b)(7)
retirement plans and certain other retirement plans.
[ ] $100 on initial and subsequent investments for automatic investing through
the Investment Builder program.
[ ] $250 on initial and $100 on subsequent investments for retirement plans with
tax benefits such as corporate pension and profit sharing plans and Keogh
plans.
[ ] $500 on initial and $100 on subsequent investments for IRAs.
[ ] $2,000 on initial and $100 on subsequent investments for accounts registered
under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors
Act.
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 Funds to invest in money market
shares. The Stock Funds are: New England Growth Fund, New England International
Equity Fund, New England Star Advisers Fund, New England Star Worldwide Fund,
New England Star Small Cap Fund, New England Capital Growth Fund, New England
Value Fund, New England Growth Opportunities Fund, New England Balanced Fund and
New England Equity Income Fund. The Bond Funds 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 Municipal 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 "Owning Fund
Shares--Exchanging Among New England Funds." You may purchase shares in the
following ways:
[Graphic Omitted] THROUGH YOUR INVESTMENT DEALER:
Many investment dealers have a sales agreement with the Distributor and would be
pleased to accept your order.
[Graphic Omitted] 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.
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 between 8:00 a.m. and 7:00 p.m. (Eastern time).
All purchases made by check should be in U.S. dollars and made payable to New
England Funds, or, in the case of a retirement account, the custodian or
trustee. Third party checks will generally not be accepted except under certain
circumstances approved by the Distributor. When purchases are made by check or
periodic account investment, redemptions may not be allowed until the investment
being redeemed has been in the account for a minimum of ten calendar days.
[Graphic Omitted] 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) on a day when the Funds are open for business 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) on a day when the
Funds are open for business. Your bank may charge a fee for this service.
[Graphic Omitted] BY INVESTMENT BUILDER:
Investment Builder is New England Funds' automatic investment plan. You may
authorize automatic monthly transfers of $100 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 on the enclosed
application. Indicate the amount of the monthly investment 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.
[Graphic Omitted] 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 1-800-225-5478 between 8:00 a.m. and 7:00 p.m.
(Eastern time) on a day when the Funds are open for business. You may also
purchase shares through ACH by calling New England Funds Personal Access Line
(TM) at 1-800-346-5984 twenty-four hours a day. Under normal circumstances, the
New York Stock Exchange (the "Exchange") closes at 4:00 p.m. (Eastern time).
Purchase orders through ACH or New England Funds Personal Access Line (TM) will
be complete only upon receipt by New England Funds of funds from your bank and,
on the day that funds are received, will be processed at the net asset value
next determined at the close of regular trading on the Exchange on days that the
Exchange is open. Proceeds of redemptions of Fund shares purchased through ACH
may not be available for up to ten days after the purchase date.
[Graphic Omitted] 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 Fund. Please see "Owning Fund Shares--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
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 shareholder features 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 and
expense 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 BETWEEN 8:00 A.M. AND 7:00
P.M. (EASTERN TIME).
<PAGE>
O W N I N G F U N D S H A R E S
AUTOMATIC EXCHANGE PLAN
THE FUNDS HAVE AN AUTOMATIC EXCHANGE PLAN UNDER WHICH SHARES OF A FUND
ARE AUTOMATICALL Y EXCHANGED EACH MONTH FOR SHARES OF THE SAME CLASS OF
ANY OTHER FUND OR STOCK OR BOND FUND SUBJECT TO THE APPROPRIATE SALES
CHARGE OR CDSC. THE MINIMUM MONTHLY EXCHANGE AMOUNT UNDER THE PLAN IS
$100. THERE IS NO FEE FOR EXCHANGES MADE PURSUANT TO THIS PROGRAM.
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, or 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 or Class B
shares of a Fund acquired by exchange from either another Fund or a Stock or
Bond Fund will be subject to a CDSC if, and to the same extent as, the shares
exchanged were subject to a CDSC.
Class A Fund shares on which no sales charge was previously paid may be
exchanged (i) for Class A shares of any of the Stock or Bond Funds on the basis
of relative net asset value plus the sales charge applicable to initial
purchases of Class A shares of the Stock or Bond Fund into which you are
exchanging, (ii) for Class B shares of any of the Stock or Bond Funds on the
basis of relative net asset value, subject to the CDSC schedule of the Stock or
Bond Fund into which you are exchanging, or (iii) for Class C shares of any of
the Stock or Bond Funds on the basis of relative net asset value.
Class A Fund shares which have previously been subject to a sales charge may be
exchanged on the basis of relative net asset value, without the payment of a
sales charge, for Class A shares of any of the Stock or Bond Funds, except as
described in the remainder of this paragraph, but may not be exchanged for Class
B or Class C shares of the Stock and Bond Funds. The absence of sales charges on
exchanges described in the previous sentence is subject to two exceptions: (i)
Class A shares of a Fund acquired through exchange from Class A shares of New
England Intermediate Term Tax Free Fund of California or New England
Intermediate Term Tax Free Fund of New York (the "California and New York
Funds") may be exchanged for Class A shares of another Stock or Bond Fund at net
asset value only if you held the California or New York Fund shares for at least
six months; otherwise, you will pay the difference between any sales charge you
have already paid on your California or New York Fund shares and the higher
sales charge of the Stock or Bond Fund into which you are exchanging; and (ii)
if Class A shares of a Fund acquired through exchange from Class A shares of New
England Adjustable Rate U.S. Government Fund (the "Adjustable Rate Fund") are
exchanged for shares of another Stock or Bond Fund that has a higher sales
charge, you will pay the difference between any sales charge you have already
paid on your Adjustable Rate Fund shares and the higher sales charge of the
Stock or Bond Fund into which you are exchanging.
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
shares of a Fund may be exchanged for Class B shares of any of the Stock or Bond
Funds on the basis of relative net asset value, subject to the CDSC schedule of
the Stock or Bond Fund acquired. For purposes of computing the CDSC payable upon
redemption of shares acquired by such exchange, and the conversion of such
shares to Class A shares, the holding period of any Class B Stock or Bond Fund
shares that were exchanged for Class B shares of a Fund is included, but the
holding period of the Class B shares of a Fund is not included. See "Selling
Fund Shares--Contingent Deferred Sales Charges."
TO MAKE AN EXCHANGE, please call 1-800-225-5478 between 8:00 a.m. and 7:00 p.m.
(Eastern time) on a day when the Funds are open for business, write to New
England Funds or call New England Funds Personal Access Line(TM) at
1-800-346-5984 twenty-four hours a day. Exchange requests after 4:00 p.m.
(Eastern time), or after the Exchange closes if it closes earlier than 4:00
p.m., will be processed at the net asset value determined at the close of
regular trading on the next day the Exchange is open. The exchange must be for a
minimum of $1,000 (or the total net asset value of your account, whichever is
less), except that, under the Automatic Exchange Plan, the minimum is $100. All
exchanges are subject to the eligibility requirements of the Fund or Stock or
Bond Fund into which you are exchanging. Also, see "Selling Fund Shares--
Contingent Deferred Sales Charges." In connection with an exchange into a Stock
or Bond Fund, you must obtain and carefully read a current prospectus of the
Stock or Bond Fund into which you are exchanging. The exchange privilege may be
exercised only in those states where shares of such Stock or Bond Fund 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.
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. You may change your distribution option by
notifying New England Funds in writing or by calling 1-800-225-5478. 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, which 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 Fund. Class A Fund shareholders may also have dividends
and distributions automatically invested in Class C shares of a Stock or
Bond Fund. 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 any investor eligibility
requirements of the Stock or Bond Fund and to state securities law
requirements. Dividends will be invested in the selected Stock or Bond
Fund's 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 Fund
is being established, the minimum investment requirements of that fund
must be met. Before establishing a dividend diversification program into
any Stock or Bond Fund, you must obtain and carefully read a copy of
that Stock or Bond Fund's prospectus.
- --------------------------------------------------------------------------------
<PAGE>
S E L L I N G F U N D S H A R E S
5 WAYS TO SELL FUND SHARES
You may sell shares of the Funds in the following ways:
[Graphic Omitted] THROUGH YOUR INVESTMENT DEALER:
Call your authorized investment dealer for information.
[Graphic Omitted] 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) on a day
when the Funds are open for business. Class A shares only may also be redeemed
by calling New England Funds Personal Access Line(TM) 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 between 8:00 a.m. and 7:00 p.m. (Eastern time) on a day
when the Funds are open for business 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 your
address of record 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 Funds are 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 New England Funds Personal Access
Line(TM) 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 New England
Funds Personal Access Line(TM) 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.
[Graphic Omitted] 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, the number of shares or the dollar
amount to be redeemed and whether you wish the proceeds 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.
[Graphic Omitted] BY CHECK:
For Class A shares only, you may select the checkwriting option on your
application and complete the attached signature card. 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. The Fund will send you checks drawn on State Street Bank. You
will continue to earn dividends on shares redeemed by check until the check
clears. Each check must be written for $250 or more, except that qualified
corporate retirement plans and certain other corporate accounts may write checks
for any amount. The checkwriting privilege does not apply to shares for which
you have requested share certificates to be issued. Checkwriting is not
available for investor accounts containing Class A shares subject to a CDSC.
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.
[Graphic Omitted] BY SYSTEMATIC WITHDRAWAL PLAN:
You may establish a Systematic Withdrawal Plan which 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 (based on the day you establish
your plan). 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 Fund, 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 Fund. 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 ten 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 held 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 shares of a Fund acquired through exchange of Class A shares
of a Stock or Bond Fund that were subject to a CDSC of 1% at the time of the
exchange will be subject to a CDSC of 1% upon redemption. If such shares are
exchanged for Class A shares of a Stock or Bond Fund rather than redeemed, then
the Class A Stock or Bond Fund shares will be subject to a 1% CDSC if redeemed
within one year after the original purchase of the Stock and Bond Fund shares
exchanged for the Class A shares of a Fund; the time that Class A Fund shares
are held is not included in the holding period used to determine the
applicability of a Stock or Bond Fund's Class A CDSC. CLASS B -- Class B shares
of a Fund will be subject to a CDSC upon redemption if the shares were acquired
by exchange of Class B shares of a Stock or Bond Fund which were subject to a
CDSC at the time of the exchange, at the rate applicable to redemptions of the
Stock or Bond Fund at such time. If such shares are exchanged for Class B shares
of a Stock or Bond Fund rather than redeemed, then the Class B Stock or Bond
Fund shares will continue to be subject to a CDSC during the applicable period.
The time that Class B shares of a Fund are held is not included in the holding
period used to determine the CDSC (and conversion to Class A shares). For Class
B Stock or Bond Fund shares purchased on or subsequent to May 1, 1997, the CDSC
is calculated at the following rates, measured in each case from the time the
shares in the Stock or Bond Fund were purchased, and without regard to the
period during which Class B shares of the Fund were held: 5% during the first
year, 4% in the second year, 3% in each of the third and fourth years, 2% in the
fifth year, 1% in the sixth year and 0% the seventh year and thereafter. For any
Class B Stock or Bond Fund shares purchased prior to May 1, 1997, the CDSC will
be calculated as follows: 4% if redemption occurs within the 1st year, 3% if
redemption occurs within the 2nd or 3rd year, 2% if redemption occurs within the
4th year, 1% if redemption occurs within the 5th year and no CDSC for
redemptions after the 5th year. For the purpose of the CDSC, it is assumed that
the shares held the longest are the first to be redeemed. Investors are referred
to the prospectus of the relevant Stock or Bond Fund 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 New England Funds Personal Access Line(TM) 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 annually 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 all of any
previously undistributed capital gain net income it realized in the twelve
months ending 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.
The Distributor 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. You should
consult your tax adviser about any state or local taxes that may apply to such
distributions. 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 they pay 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. If you are a tax-exempt shareholder,
however, these backup withholding rules will not apply so long as you furnish
the fund with an appropriate certification. Similar withholding requirements
apply to the tax exempt fund, except that such requirements will not apply to
dividends from the tax exempt fund if at least 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 Trusts (currently $1,000 for all accounts,
except for those indicated below), the 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 plans, 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.
[ ] Each Trust offers only its own shares for sale. In some circumstances, a
Trust might be held liable to shareholders of the other Trust for
misstatements, if any, contained in this combined prospectus. The trustees
of the Trusts 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. Shareholders of a Trust may remove
the trustees of that Trust from office by votes cast at a shareholder
meeting or by written consent.
[ ] 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 taxable-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 02116, is the
transfer and dividend paying agent for each Fund. It has subcontracted
certain of its obligations as such to State Street Bank, 225 Franklin
Street, Boston, MA 02110.
[ ] Each Fund's annual report contains additional performance information and
is available upon request and without charge. Each Fund will send a single
copy of its annual and semi- annual reports to an address at which more than
one shareholder of record with the same last name has indicated that mail is
to be delivered. Shareholders may request additional copies of any annual or
semi-annual report in writing or by telephone.
[ ] The Class A and Class B structure could be terminated should certain IRS
rulings be rescinded.
[ ] Each Trust's trustees have the authority without shareholder approval to
issue other classes of shares of each Fund that represent interests in the
Funds' portfolios but that have different sales load and fee arrangements.
[ ] Back Bay Advisors(R) is a registered trademark of Back Bay Advisors, L.P.
[ ] The Funds may in the future offer a third class of shares, Class Y, which
is currently not available for sale. If Class Y shares are offered, they
will be identical to Class A shares, except that Class Y shares may bear a
service fee of up to 0.25% annually of the Fund's average daily net assets.
Class Y may bear its own transfer agency and/or prospectus printing costs
and, if so, will not bear any portion of those costs relating to other
classes of shares.
<PAGE>
[RECYCLE LOGO] Printed on Recycled Paper XM51-0997
<PAGE>
[LOGO](R)
NEW ENGLAND FUNDS(R)
Where The Best Minds Meet(R)
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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, 1997
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, 1997 (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.
T A B L E O F C O N T E N T S
Page
Investment Objectives and Policies
Investment Restrictions
Management of the Funds
Investment Advisory, Subadvisory, Distribution and Other Services
Portfolio Transactions
Performance
Description of the Funds and Ownership of Shares
Purchase of Shares
Shareholder Services
Open Accounts
Automatic Investment Plans
Retirement Plans Offering Tax Benefits
Systematic Withdrawal Plans
Exchange Privilege
Automatic Exchange Plan
Redemptions
Net Income, Dividends and Valuation
Tax-Free Investing
Taxes
Financial Statements
Appendix A - Description of Certain New England Cash Management
Trust Investments A-1
Appendix B - Description of Certain New England Tax-Exempt Money
Market Trust Investments B-1
Appendix C - Ratings of Corporate and Municipal Bonds, Commercial
Paper and Short-Term Tax Exempt Obligations C-1
Appendix D - Media That May be Referred to in Fund Advertisements
or Sales Literature D-1
Appendix E - Advertising and Promotional Literature E-1
<PAGE>
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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 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 Fund, 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 refer to
approval by 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' subadviser,
Back Bay Advisors(R), L.P. ("Back Bay Advisors(R)"), acting under guidelines
established by the Cash Management 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 Appendices A and C 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
Appendices B and C 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 quarterly.
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 securities 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 relatively low 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 which are scheduled to mature
in more than 397 days 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; other variable
rate instruments are treated as having a maturity equal to the shorter of such
periods. Floating rate instruments which are scheduled to mature in more than
397 days are treated as having a maturity equal to the notice period remaining
before the Fund is entitled to demand prepayment of the instrument; other
floating rate instruments, and all such instruments which are U.S. Government
Securities, are treated as having a maturity of one day.
The value of the securities in each Fund can be expected to vary
inversely with 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.
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INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The following is a list of each Fund's investment restrictions. The
restrictions set forth in the numbered paragraphs 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 other accounts under 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.
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 securities 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 together own beneficially 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.
For the purpose of the foregoing investment restrictions, the
identification of the "issuer" of Municipal Securities which are not general
obligation bonds (see Appendix B) 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 B), 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.
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 Funds have implemented procedures to determine the liquidity of Section 4(2)
commercial paper purchased by the Funds for purposes of determining whether the
Fund's limit on the purchases of illiquid securities has been met.
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 ages (in parentheses) and
principal occupations during at least the past five years are as follows:
GRAHAM T. ALLISON, JR.--Trustee (57); 79 John F. Kennedy Street, Cambridge,
Massachusetts 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.
DANIEL M. CAIN -- Trustee (52); 452 Fifth Avenue, New York, New York 10018;
President and CEO, Cain Brothers & Company Incorporated (investment
banking); formerly, Trustee, Universal Health Realty Income Trust
(REIT); Chairman, Inter Fish, Inc. (aquaculture venture in Barbados).
KENNETH J. COWAN -- Trustee (65); One Beach Drive, S.E. #2103, St. Petersburg,
Florida 33701; Retired; Director, A Young Woman's Residence (social
services); 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.
RICHARD DARMAN -- Trustee (54); 1001 Pennsylvania Avenue, N.W., Washington, D.C.
20004; Partner and Managing Director, The Carlyle Group (investments);
Trustee, Council for Excellence in Government (not-for-profit);
Director, Frontier Ventures (personal investment); Director, Highway
Master Communications (mobile communications); Managing Partner, Little
Falls Partners (family investment); Director, Sequana Therapeutics
(biotechnology/genomics); Director, Telcom Ventures
(telecommunications); formerly, Director of the U.S. Office of
Management and Budget and a member of President Bush's Cabinet.
SANDRA O. MOOSE -- Trustee (55); 135 E. 57th Street New York, New York 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 (54); President, Chief
Executive Officer and Director, NEF Corporation; Managing Director,
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. ("BBAI"); Director,
Maine Bank and Trust Company; formerly, Director, New England
Securities Corporation ("New England Securities").
JOHN A. SHANE -- Trustee (64); 300 Unicorn Drive, Woburn, Massachusetts
01801; President, Palmer Service Corporation (venture capital
organization); General Partner, Palmer Partners L.P. (venture capital
organization); Director, Abt Associates, Inc. (consulting firm);
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).
PETER S. VOSS* -- Chairman of the Board, Chief Executive Officer and Trustee
(50); President and Chief Executive Officer, New England Investment
Companies, L.P. ("NEIC"); Director, President and Chief Executive
Officer, New England Investment Companies, Inc. ("NEIC Inc."); Chairman
of the Board and Director, NEF Corporation; Chairman of the Board and
Director, BBAI; formerly, Director, New England Life Insurance Company
("NELICO"); formerly, Group Executive Vice President, Bank of America
(Los Angeles); formerly, Group Head of International Banking, Trading
and Securities, Security Pacific National Bank and Chief Executive
Officer, Security Pacific Investment Group.
PENDLETON P. WHITE -- Trustee (66); 6 Breckenridge Lane, Savannah, Georgia
31411; Retired; formerly, President and Chairman of the Executive
Committee, Studwell Associates (executive search consultants); formerly,
Trustee, The Faulkner Corporation (community hospital corporation).
Officers
In addition to Messrs. Voss and Schmelzer, the officers of the Trusts
and their ages (in parentheses) and principal occupations during the past five
years are as follows:
BRUCE R. SPECA -- Executive Vice President (41); Executive Vice President,
NEF Corporation; Managing Director and Executive Vice President, New
England Funds, L.P.; Executive Vice President, NEFM.
FRANK NESVET -- Treasurer (53); Senior Vice President and Chief Financial
Officer, NEF Corporation; Managing Director, Senior Vice President and
Chief Financial Officer, New England Funds, L.P.; Senior Vice President
and Chief Financial Officer, NEFM; formerly, Executive Vice President,
Chairman and Chief Executive Officer, SuperShare Services Corporation
(mutual fund and unit investment trust sponsor).
- --------
* Trustee deemed an "interested person" of the Trusts, as defined in the
1940 Act.
Each person listed above holds the same position(s) with both Trusts.
Previous positions during the past five years with NELICO or Metropolitan Life
Insurance Company ("MetLife"), New England Funds, L.P. or NEFM 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.
The address of each trustee and officer affiliated with NEF
Corporation, New England Funds, L.P., NEFM or New England Securities is 399
Boylston Street, Boston, Massachusetts 02116.
Compensation
Neither Trust pays compensation to its officers, or to its trustees who
are "interested persons" of the Trusts.
Each trustee who is not an interested person of the Trusts receives in
the aggregate for serving on the boards of the Trusts and New England Funds
Trust I, New England Funds Trust II and New England Funds Trust III (all five
trusts collectively, the "New England Funds Trusts"), comprising a total of 23
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 attends and
$1,500 for each meeting he or she attends of a committee of the board of which
he or she is a member. Each committee chairman receives an additional retainer
fee at the annual rate of $2,500. These fees are allocated among the Funds and
the twenty other mutual fund portfolios in the New England Funds Trusts based on
a formula that takes into account, among other factors, the net assets of each
fund.
During the fiscal year ended June 30, 1997, the persons who were
trustees of the Trusts received the amounts set forth in the following table for
serving as a trustee of the Trusts; and during the year ended December 31, 1996,
such persons received the amounts set forth below for serving as trustee of the
Trusts and for also serving on the governing boards of the other New England
Funds Trusts.
<TABLE>
<CAPTION>
Aggregate Aggregate Pension or
Compensation Compensation Retirement Total Compensation
from New England from New England Benefits Accrued from the New
Cash Management Tax Exempt Money as Part of Fund Estimated England Funds
Trust in the Market Trust in Expenses in the Annual Trusts in the
Year Ended the Year Ended Year Ended June Benefits Upon Year Ended
Name ot Trustee June 30, 1997 June 30, 1997 30, 1997 Retirement December 31, 1996
--------------- ------------- ------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Graham T. Allison, Jr. $4,627 $1,915 $0 $0 $54,500
Daniel M. Cain* 5,381 2,188 $0 $0 51,250
Kenneth J. Cowan 5,451 2,196 $0 $0 61,250
Richard Darman* 4,991 2,097 $0 $0 48,500
Sandra O. Moose 5,128 2,165 $0 $0 59,000
John A. Shane 5,128 2,165 $0 $0 59,000
Pendleton P. White 5,127 2,165 $0 $0 57,500
* Messrs. Cain and Darman were elected trustees of the New England Funds Trusts on February 23, 1996.
</TABLE>
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, 1997, the officers and trustees of the Trusts as a group
owned less than 1% of the outstanding shares of each Fund.
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY, SUBADVISORY, DISTRIBUTION AND OTHER SERVICES
- --------------------------------------------------------------------------------
Investment Advisory and Subadvisory Agreements
Pursuant to separate advisory agreements, each dated August 30, 1996,
NEFM has agreed, subject to the supervision of the Board of Trustees of the
relevant Trust, to manage the investment and reinvestment of the assets of each
Fund and to provide a range of administrative services to each Fund. For the
services described in the advisory agreements, each Fund has agreed to pay NEFM
a management fee as set forth below:
Money Market Fund and Government Fund
Annual Percentage Rate Average Daily Net Asset Value Levels
---------------------- ------------------------------------
.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
Tax Exempt Fund -- Under the advisory agreement relating to the Tax
Exempt Fund, the Fund pays NEFM a fee at the annual rate of 0.40% of the average
daily net asset value of the Fund up to $100 million and 0.30% of such asset
value in excess of $100 million.
The advisory agreements each provide that NEFM may delegate its
responsibilities thereunder to other parties. Pursuant to separate subadvisory
agreements, each dated August 30, 1996, NEFM has delegated responsibility for
managing the investment and reinvestment of each Fund's assets to Back Bay
Advisors(R) as subadviser. For providing such subadvisory services to the Funds,
NEFM pays Back Bay Advisors(R) a subadvisory fee as set forth below:
Annual Average Net
Fund Fee Rate Asset Levels
---- -------- ------------
Money Market Fund 0.205% the first $500 million
0.180% the next $500 million
0.160% the next $500 million
0.140% the next $500 million
0.120% amounts in excess of $2 billion
Government Fund 0.2125% the first $500 million
0.2000% the next $500 million
0.1750% the next $500 million
0.1500% the next $500 million
0.1250% amounts in excess of $2 billion
Tax Exempt Fund 0.200% the first $100 million
0.150% amounts in excess of $100 million
The Funds pay no direct fees to Back Bay Advisors.
From January 2, 1996 to August 30, 1996, NEFM served as adviser and
Back Bay Advisors(R) served as subadviser to each Fund pursuant to separate
advisory and subadvisory agreements providing for the same management and
subadvisory fees as are currently in effect for the Funds. Prior to January 2,
1996, Back Bay Advisors(R) served as adviser to the Funds pursuant to separate
advisory agreements, each of which provided for an advisory fee payable by the
Fund to Back Bay Advisors(R) at the same rate as the management fee currently
payable by the Fund to NEFM.
For the fiscal year ended June 30, 1995 and the period July 1, 1995 to
December 31, 1995, the advisory fee paid to Back Bay Advisors amounted to
$2,796,164 and $1,379,803, respectively, for the Money Market Fund and $255,727
and $126,103, respectively, for the Government Fund.
For the six months ended June 30, 1996 and the fiscal year ended June
30, 1997, the management fee paid to NEFM amounted to $726,741 and $2,825,485,
respectively, for the Money Market Fund and $59,722 and $236,900, respectively,
for the Government Fund.
For the six months ended June 30, 1996 and the fiscal year ended June
30, 1997, the subadvisory fee NEFM paid to Back Bay Advisors amounted to
$678,119 and $1,340,219, respectively, for the Money Market Fund and $60,520 and
$118,450, respectively, for the Government Fund.
Beginning January 2, 1996 and until further notice to the Tax Exempt
Fund, NEFM and Back Bay Advisors(R) have each agreed to proportionately reduce
their fee and/or pay the charges, expenses and fees of the Fund (not including
fees payable to the trustees who are not "interested persons" of the Trust) to
the extent necessary to limit the Fund's expenses to an annual rate of 0.5625%
of average net assets. Prior to January 2, 1996, similar voluntary limitations
were in effect with regard to Back Bay Advisors(R) and the Fund. For the fiscal
year ended June 30, 1995 and the period July 1, 1995 to December 31, 1995, gross
advisory fees payable to Back Bay Advisors(R) of $281,837 and $134,552,
respectively, were reduced by $199,639 and $108,843, respectively, as a result
of this expense limitation. For the six months ended June 30, 1996 and the
fiscal year ended June 30, 1997, gross management fees payable to NEFM of
$133,354 and $273,587 were reduced by $54,887 and $192,978, respectively,
resulting in net management fees of $78,467 and $80,609, respectively, and gross
subadvisory fees payable by NEFM to Back Bay Advisors(R) of $66,677 and $136,794
were reduced by $54,887 and $96,489, respectively, resulting in net subadvisory
fees, of $11,790 and $40,305, respectively, as a result of this expense
limitation.
In General. Back Bay Advisors(R) serves as subadviser 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 NELICO and its affiliates. Back Bay Advisors'(R) general partner,
BBAI, is a wholly-owned subsidiary of NEIC Holdings, Inc. ("NEIC Holdings"),
which is a wholly-owned subsidiary of NEIC. NEIC owns the entire limited
partnership interest in Back Bay Advisors(R). Back Bay Advisors(R) specializes
in fixed-income management and currently manages over $7 billion in total
assets.
NEFM, formed in 1995, is a limited partnership whose sole general
partner, NEF Corporation, is a wholly-owned subsidiary of NEIC Holdings. NEF
Corporation is also the sole general partner of New England Funds, L.P., the
distributor of the Funds (the "Distributor"). NEIC owns the entire limited
partnership interest in each of NEFM and New England Funds, L.P.
NEIC's sole general partner, NEIC Inc., is a wholly-owned subsidiary of
MetLife New England Holdings, Inc., which in turn is a wholly-owned subsidiary
of MetLife. MetLife owns a majority limited partnership interest in NEIC. NEIC
and its 14 subsidiary or affiliated asset management firms, collectively, have
more than $100 billion of assets under management or administration.
Each Fund pays all of its expenses not assumed by NEFM or 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 NEFM, Back Bay Advisors(R) or their affiliates (other
than registered investment companies). Each Fund also pays NEFM for certain
accounting and legal services provided to the Fund by NEFM.
Each Fund's advisory agreement and subadvisory 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 NEFM. Any amendment to an
advisory or subadvisory agreement 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 NEFM upon 90 days' written
notice, and each terminates automatically in the event of its assignment. Each
subadvisory agreement also may be terminated by the subadviser upon 90 days'
notice and automatically terminates upon termination of the related advisory
agreement. In addition, each advisory agreement will automatically terminate if
the Trust or the Fund shall at any time be required by the Distributor to
eliminate all reference to the words "New England" or the letters "TNE" in the
name of the relevant Trust or the relevant Fund, unless the continuance of the
agreement after such change of name is approved by a majority of the outstanding
voting securities of the relevant Fund and by a majority of the trustees who are
not interested persons of the relevant Trust or the Fund's adviser or
subadviser.
Each Fund's advisory agreement and subadvisory agreement provides that
NEFM or 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.
Certain officers and employees of Back Bay Advisors(R) 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 subadviser 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.
Distribution Agreement
Under separate agreements with each Fund, the Distributor, 399 Boylston
Street, Boston, Massachusetts 02116, 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 controls the words "New England" in the names of the
Trusts and the Funds and if it should cease to be the distributor, New England
Cash Management Trust, New England Tax Exempt Money Market Trust or the affected
Fund may be required to change their names and delete these words or letters.
The Distributor also acts as general distributor for New England Funds Trust I,
New England Trust II and New England Funds Trust III.
The Distributor may publish information about the Funds in the media
described in Appendix D and may include information in advertising and sales
literature as described in Appendix E.
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 02110, 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:
Fund Fiscal Year Ended June 30,
- ------------------------------- ------------------------------------------
1995 1996 1997
---- ---- ----
Money Market Fund $2,011,935 $1,986,393 $1,743,823
Government Fund $ 99,544 $ 98,617 $ 83,709
Tax Exempt Money Market Trust $ 76,391 $ 76,498 $ 75,898
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.
In addition, during the fiscal year ended June 30, 1997 New England
Funds, L.P. performed certain accounting and administrative services for the
Funds. Each Fund reimbursed New England Funds for all or part of New England
Funds' expenses of providing these services which include the following: (i)
expenses for personnel performing bookkeeping, accounting, internal auditing and
financial reporting functions and clerical functions relating to the Fund, (ii)
expenses for services required in connection with the preparation of
registration statements and prospectuses, shareholder reports and notices, proxy
solicitation material furnished to shareholders of the Fund or regulatory
authorities and reports and questionnaires for SEC compliance, and (iii)
registration, filing and other fees in connection with requirements of
regulatory authorities.
During the fiscal year ended June 30, 1997, New England Funds, L.P.
received legal and accounting services fees paid by the Money Market Fund and
Tax Exempt Fund in the amounts of $137,144 and $14,230, respectively. New
England Funds, L.P. has voluntarily agreed to waive these legal and accounting
services fees for the Government Fund until further notice. As a result of this
voluntary waiver, the Distributor waived its entire fee for the Government Fund
of $12,059 for the fiscal year ended June 30, 1997.
- --------------------------------------------------------------------------------
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, 1997, 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 each Trust has requested that Back Bay
Advisors(R) seek to reduce underwriting commissions or similar fees on Fund
portfolio transactions through certain methods currently available. It is not
expected that these methods will result in material reductions. The Boards have
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.
New England Funds, L.P. may make reference in its advertising and sales
literature to awards, citations and honor bestowed on it by industry
organizations and other observers and raters, including, but not limited to
Dalbar's Quality Tested Service Seal and Key Honors Award. Such reference may
explain the criteria for the award, indicate the nature and significance of the
honor and provide statistical and other information about the award and New
England Funds, L.P.'s selection, including, but not limited to, the scores and
categories in which New England Funds, L.P. excelled, the names of funds and
fund companies that have previously won the award and comparative information
and data about those against whom New England Funds, L.P. competed for the
award, honor or citation.
New England Funds, L.P. may publish, allude to or incorporate in its
advertising and sales literature testimonials from shareholders, clients,
brokers who sell or own shares, broker-dealers, industry organizations and
officials and other members of the public, including, but not limited to, fund
performance, features and attributes, or service and assistance provided by
departments within the organization, employees or associates of New England
Funds, L.P.
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.
<TABLE>
New England Cash Management Trust -- Money Market Series
($10,000 investment on 7/10/78)
(Class A Shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
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 7,156 17,156
12/31/83 17,156 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 13,676 23,676
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 27,761 37,761
06/30/96 37,761 29,628 39,628
06/30/97 39,628 31,518 41,518
New England Cash Management Trust -- Money Market Series
($10,000 investment on 9/13/93)
(Class B Shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
12/31/93 $10,000 $ 74 $10,074
06/30/94 10,074 216 10,216
06/30/95 10,216 705 10,705
06/30/96 10,705 1,234 11,234
06/30/97 11,234 1,770 11,770
New England Cash Management Trust - U.S. Government Series
($10,000 investment on 6/2/82)
(Class A Shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
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 6,233 16,233
12/31/89 16,233 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 11,212 21,212
06/30/94 21,213 11,500 21,500
06/30/95 21,500 12,496 22,496
06/30/96 22,496 13,588 23,588
06/30/97 23,588 14,651 24,651
New England Cash Management Trust - U.S. Government Series
($10,000 investment on 9/20/93)
(Class B Shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
12/31/93 $10,000 $ 67 $10,067
06/30/94 10,067 203 10,203
06/30/95 10,203 676 10,676
06/30/96 10,676 1,195 11,195
06/30/97 11,195 1,699 11,699
New England Tax Exempt Money Market Trust
($10,000 investment on 4/21/83)
(Class A Shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
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 6,667 16,667
06/30/96 16,667 7,220 17,220
06/30/97 17,220 7,771 17,771
New England Tax Exempt Money Market Trust
($10,000 investment on 9/13/93)
(Class B shares)
<CAPTION>
Value of Investment on First Value of Cumulative
Period Ended Day of Period Reinvested Dividends Total Value
------------ ------------- -------------------- -----------
<S> <C> <C> <C>
12/31/93 $10,000 $ 60 $10,060
06/30/94 10,060 170 10,170
06/30/95 10,170 493 10,493
06/30/96 10,493 841 10,841
06/30/97 10,841 1,188 11,188
</TABLE>
- --------------------------------------------------------------------------------
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 (a "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. The
Trust was established with the same investment objective, policies, restrictions
and investment adviser as the NEL Cash Management Account, Inc. 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 New England 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 the 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 the 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 Trust 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
Trusts. 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 the trustees upon written notice.
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 August 1, 1997, there were 708,679,966 shares of the Money Market
Fund, 46,971,777 shares of the Government Fund and 70,252,311 shares of the Tax
Exempt Fund issued and outstanding. One account registered to National Financial
Services Corp. for the Exclusive Benefit of its Customers, P.O. Box 3752 Church
St. Station, New York, NY 10008-3752 owned 89,095,142 shares of the Money
Market's Class A shares, about 12.8% of the total Class A shares then
outstanding. One account registered to National Financial Services Corp. for the
Exclusive Benefit of its Customers, P.O. Box 3752 Church St. Station, New York,
NY 10008-3752 owned 7,271,792 Class A shares of the Government Fund, about 15.8%
of the Class A shares of the Government Fund then outstanding. Six accounts
registered to Smith Barney Inc, 388 Greenwich St., New York, NY 10013-2375,
Brady Diesel Inc. 401K Savings Plan, P.O. Box 4417, Houma, LA 70361-4417, Jean
Townsend (Guardian, Amy L. Magill U/A/DTD 6/15/93), P.O. Box 1673, Snellville,
Ga. 30278-1673, Jean Townsend (Guardian for Property of James C. Magill, Jr.),
P.O. Box 1673, Snellville, Ga. 30278-1673, Winnie S. Escoe, 2610 Glendale Ct.,
Conyers, Ga. 30208-1460 and Mable Snell, 2145 North Rd., Snellville Ga.
30278-2630 owned 109,879, 94,898, 91,636, 91,636, 53,010, and 50,792 Class B
shares of the fund, respectively, about 12.1%, 10.5%, 10.1%, 10.1%, 5.9% and
5.6%, respectively, of the total Class B shares of the Government Fund then
outstanding. For the Tax Exempt Fund's Class A shares, there were two accounts
registered to National Financial Services Corp. for the Exclusive Benefit of its
Customers, P.O Box 3752 Church St. Station, New York, NY 10008-3752 and Mark
Henkin, 265 East 66th St. #19-C, New York, NY 10021-6406 which owned 11,113,539
and 4,826,804 shares, respectively, about 15.9% and 6.9%, respectively, of the
Tax Exempt Fund's Class A shares then outstanding. Seven accounts registered to
Ruth L. Graff (Trustee of the Ruth L. Graff Trust DTD 7/27/90), 17 Raven Ln.,
Gloucester, Ma. 01930-4177, Thomas J. McNamara TOD Thomas J McNamara, Jr., 5903
Mount Eagle Dr. #1504, Alexandria, Va. 22303-2533, Joseph Defoto, 88 Doyle St.,
Long Beach, NY 11561-2519, M. Teresa Dempsey and Matthew P. Dempsey JT TEN, 4126
Jora Ln., Cincinnati Oh. 45209-1407, Judith A. Gizara, 1441 Main St.,
Leominster, Ma. 01453-6615, Roy S. Takaki and Gail M. Takai JT TEN, 7275 Nohili
St., Honolulu, Hi., 96825-2249 and Nelldeane Price and Lilly G. Woodall JT TEN,
1513 Oxmoor Rd., Birmingham, Al. 35209-3907 owned 41,413, 30,497, 22,208,
17,389, 15,682, 13,559 and 10,187 Class B shares of the Tax Exempt Fund,
respectively, about 21.4%, 15.7%, 11.5%, 9.0%, 8.1%, 7.0% and 5.3%,
respectively, of the Class B shares of the Tax Exempt Fund.
- --------------------------------------------------------------------------------
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 $2,500, with a $100 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 $100 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 $100 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 NELICO 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 $50 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 $50 or
more. In addition, shareholders who have purchased insurance or annuity products
of NELICO 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 (based on the day you established your Plan). 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 shares of a Fund may be exchanged for shares of either class of
the other Funds and Class B shares of a Fund may be exchanged for Class B shares
of any other Funds, subject to the investor eligibility requirements of the
Funds into which you are exchanging. 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 of a Fund may also be exchanged for Class C shares of
the New England Stock or Bond Funds, subject to the applicable sales charge. The
Stock Funds 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, New
England Star Worldwide Fund, New England Star Small Cap Fund, New England Growth
Fund and New England Equity Income Fund; the Bond Funds 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 Municipal 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 of
the other funds redeemed within 120 days before the exchange) for shares of the
same class of the Funds. However, Class A or Class B shares of a Fund acquired
by exchange either from the New England Stock or Bond Funds or another Fund will
be subject to a CDSC if, and to the extent as, the shares exchanged were subject
to a CDSC. Shareholders of Class C shares of the New England Stock or Bond Funds
may exchange those shares only for Class A shares of the Funds. Such exchanges
may be made by telephoning or writing New England Funds or certain investment
dealers. 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, P.O. Box 8551, Boston, MA 02266-8551. 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 the 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 Funds 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 $100 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 GROWTH FUND seeks long-term growth of capital through
investments in equity securities of companies whose earnings are expected to
grow at a faster rate than the United States economy.
NEW ENGLAND CAPITAL GROWTH FUND seeks long-term growth of capital.
NEW ENGLAND VALUE FUND seeks a reasonable long-term investment return
from a combination of market appreciation and dividend income from equity
securities.
NEW ENGLAND BALANCED FUND seeks a reasonable long-term investment
return from a combination of long-tern capital appreciation and moderate current
income.
NEW ENGLAND GROWTH OPPORTUNITIES FUND seeks opportunities for long-term
growth of capital and income.
NEW ENGLAND INTERNATIONAL EQUITY FUND seeks total return from long-term
growth of capital and dividend income primarily through investment in a
diversified portfolio of marketable international equity securities.
NEW ENGLAND STAR ADVISERS FUND seeks long-term growth of capital.
NEW ENGLAND STAR WORLDWIDE FUND seeks long-term growth of capital.
NEW ENGLAND STAR SMALL CAP FUND seeks capital appreciation.
NEW ENGLAND EQUITY INCOME FUND seeks current income and capital growth.
BOND FUNDS:
NEW ENGLAND GOVERNMENT SECURITIES FUND seeks 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 seeks a high current
return consistent with preservation of capital.
NEW ENGLAND ADJUSTABLE RATE U.S. GOVERNMENT FUND seeks a high level of
current income consistent with low volatility of principal.
NEW ENGLAND STRATEGIC INCOME FUND seeks high current income with a
secondary objective of capital growth.
NEW ENGLAND BOND INCOME FUND seeks a high level of current income
consistent with what the Fund considers reasonable risk. The Bond Income Fund
invests primarily in corporate and U.S. Government bonds.
NEW ENGLAND HIGH INCOME FUND seeks high current income plus the
opportunity for capital appreciation to produce a high total return.
NEW ENGLAND MUNICIPAL INCOME FUND seeks as high a level of current
income exempt from federal income taxes as is consistent with reasonable risk
and protection of shareholders' capital. The Municipal Income Fund invests
primarily in debt securities of municipal issuers, the interest of which is
exempt from federal income tax but may be subject to the federal alternative
minimum tax, and may engage in transactions in financial futures contracts and
options on futures.
NEW ENGLAND MASSACHUSETTS TAX FREE INCOME FUND seeks as high a level of
current income exempt from federal income tax and Massachusetts personal income
taxes as Back Bay Advisors, the Fund's subadviser, believes is consistent with
preservation of capital.
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA seeks as high
a level of current income exempt from federal income tax and its state personal
income tax as is consistent with preservation of capital.
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF NEW YORK seeks as high a
level of current income exempt from federal income tax and its 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 (with a signature
guarantee), 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, Martin Luther King 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.
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.
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, 1997 and effective
yield based on such seven-day period were, respectively, 5.07% and 5.20% (Money
Market Fund), 4.66% and 4.73% (Government Fund) and 3.69% and 3.76% (Tax Exempt
Fund).
Taxable-Equivalent Yield. The Tax Exempt Fund may also advertise a
taxable-equivalent yield or taxable-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.
Taxable-Equivalent Yield and Taxable-Equivalent
Effective Yield for the 7 day period ended 6/30/97
7 day yield: 3.69%
7 day effective: 3.76%
Federal Taxable-Equivalent Taxable-Equivalent
Tax Rate Yield Effective Yield
15% 4.34% 4.24%
28% 5.12% 5.22%
31% 5.35% 5.45%
36% 5.76% 5.88%
39.6% 6.11% 6.23%
- --------------------------------------------------------------------------------
TAX-FREE INVESTING
- --------------------------------------------------------------------------------
The table below compares taxable and tax-free yields, based on tax
rates for 1997:
<TABLE>
<CAPTION>
Federal
Marginal
TAXABLE INCOME Tax IF TAX EXEMPT YIELD IS
Joint -------------- Single Rate ----------------------
Return Return (1997) 2% 3% 4% 5% 6%
Then the Equivalent Taxable Yield Would Be
------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0 - $41,200 $0 - $24,650 15% 2.35% 3.53% 4.71% 5.88% 7.06%
$41,201 - $99,600 $24,651 - $59,750 28% 2.78% 4.17% 5.56% 6.94% 8.33%
$96,601 - $151,750 $59,751 - $124,650 31% 2.90% 4.35% 5.80% 7.25% 8.70%
$151,751 - $271,050 $124,651 - $271,050 36% 3.13% 4.69% 6.25% 7.81% 9.38%
over $271,050 over $271,050 39.6% 3.31% 4.97% 6.62% 8.28% 9.93%
</TABLE>
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.
- --------------------------------------------------------------------------------
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.
Determination of the taxability status of dividends is made using the average
annual method. The percentage of income designated as tax-exempt for any
particular distribution may be substantially different from the percentage of
the Fund's income that was tax-exempt during the period covered by the
distribution. 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 B) 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, 1997 are incorporated herein by reference.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A
DESCRIPTION OF CERTAIN NEW ENGLAND CASH MANAGEMENT TRUST INVESTMENTS:
- --------------------------------------------------------------------------------
Obligations Backed by Full Faith and Credit of the U.S. Government(1)
- -- 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.
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.)
- --------
(1) These obligations, together with related repurchase agreements, are the
only obligations that may be purchased by the U.S. Government Series.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B
- --------------------------------------------------------------------------------
DESCRIPTION OF CERTAIN NEW ENGLAND TAX-EXEMPT MONEY MARKET TRUST INVESTMENTS
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.
<PAGE>
- --------------------------------------------------------------------------------
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.
<PAGE>
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
- --------------------------------------------------------------------------------
MEDIA 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
Bank Investment Marketing
Barron's
Bergen County Record (NJ)
Bloomberg Business News
B'nai B'rith Jewish Monthly
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
Mutual Funds Magazine
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
World Wide Web
Worth Magazine
WRKO
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX E
- --------------------------------------------------------------------------------
ADVERTISING AND PROMOTIONAL LITERATURE
References may be included in New England Funds' advertising and
promotional literature to NEIC and its affiliates that perform advisory and
subadvisory functions for New England Funds including, but not limited to: Back
Bay Advisors(R), Harris Associates L.P., Loomis, Sayles & Company, L.P. ("Loomis
Sayles"), Capital Growth Management Limited Partnership ("CGM") and Westpeak
Investment Advisors, L.P. ("Westpeak"). Reference also may be made to the funds
of their respective fund groups, namely, Loomis Sayles Funds and The Oakmark
Funds.
References may be included in New England Funds' advertising and
promotional literature to other NEIC affiliates including, but not limited to,
New England Investment Associates, L. P., AEW Capital Management, L.P.,
Marlborough Capital Advisors, L.P., Reich & Tang Capital Management, Reich and
Tang Mutual Funds Group, Jurika & Voyles and its fund group, Vaughan, Nelson,
Scarborough & McConnell and Snyder Capital Management, Inc.
References to subadvisers unaffiliated with NEIC that perform
subadvisory functions on behalf of New England Funds and their respective fund
groups may be contained in New England Funds' advertising and promotional
literature including, but not limited to, Janus Capital Corporation, Founders
Asset Management, Inc., Montgomery Asset Management, L.P. and Robertson,
Stephens & Company Investment Management, L.P.
New England Funds' advertising and promotional material may include,
but is not limited to, discussions of the following information about both
affiliated and unaffiliated entities:
o Specific and general assessments and forecasts regarding U.S. and world
economies, the economics of specific nations and their impact on the New
England Funds
o Specific and general investment emphasis, specialties, fields of expertise,
competencies, operations and functions
o Specific and general investment philosophies, strategies, processes,
techniques and types of analysis
o 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
o The corporate histories, founding dates and names of founders of the
entities
o Awards, honors and recognition given to the firms
o The names of those with ownership interest and the percentage of ownership
o The industries and sectors from which clients are drawn and specific client
names and background information on current individual, corporate and
institutional clients, including pension and profit sharing plans
o Current capitalization, levels of profitability and other financial and
statistical information
o Identification of portfolio managers, researchers, economists, principals
and other staff members and employees
o 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
0 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
o The general and specific strategies applied by the advisers in the
management of New England Funds' portfolios including, but not limited to:
-the pursuit of growth, value, income oriented, risk management or other
strategies
-the manner and degree to which the strategy is pursued
-whether the strategy is conservative, moderate or extreme and an
explanation of other features and attributes
-the types and characteristics of investments sought and specific portfolio
holdings
-the actual or potential impact and result from strategy implementation
-through its own areas of expertise and operations, the value added by
subadvisers to the management process
-the disciplines it employs, e.g., in the case of Loomis Sayles, the strict
buy/sell guidelines and focus on sound value it employs, and goals and
benchmarks that it establishes in management, e.g., CGM pursues growth 50%
above the S&P 500
-the systems utilized in management, the features and characteristics of
those systems and the intended results from such computer analysis, e.g.,
Westpeak's efforts to identify overvalued and undervalued issues.
o Specific and general references to portfolio managers and funds that they
serve as portfolio manager of, other than New England Funds, and those
families of funds, other than New England Funds. Any such references will
indicate that New England Funds and the other funds of the managers differ
as to performance, objectives, investment restrictions and limitations,
portfolio composition, asset size and other characteristics, including fees
and expenses. References may also be made to industry rankings and ratings
of the Funds and other funds managed by the Funds' adviser and subadvisers,
including, but not limited to, those provided by Morningstar, Lipper
Analytical Services, Forbes and Worth.
In addition, communications and materials developed by New England
Funds will make reference to the following information about NEIC and its
affiliates:
NEIC is one of the largest publicly traded managers in the U.S. and is
listed on the New York Stock Exchange. NEIC maintains over $100 billion in
assets under management.
In addition, promotional materials may include:
o Specific and general references to New England Funds' multi-manager approach
through NEIC affiliates and outside firms including, but not limited to, the
following:
-that each adviser/manager operates independently on a day-to-day basis and
maintains an image and identity separate from NEIC and the other investment
managers
-other fund companies are limited to a "one size fits all" approach but New
England Funds draws upon the talents of multiple managers whose expertise
best matches the fund objective
-in this and other contexts reference may be made to New England Funds'
slogan "Where The Best Minds Meet"(R) and that New England Funds ability to
match the talent to the task is one more reason it is becoming known as
"Where The Best Minds Meet."
Financial Adviser Services ("FAS"), a division of NEIC, may be
referenced in Fund advertising and promotional literature concerning the
marketing services it provides to NEIC-affiliated fund groups including: New
England Funds, Loomis Sayles Funds, Oakmark Funds and Reich & Tang Funds.
FAS will provide marketing support to NEIC-affiliated fund groups
targeting financial advisers, financial intermediaries and institutional clients
who may transact purchases and other fund-related business directly with these
fund groups. Communications will contain information including, but not limited
to: descriptions of clients and the marketplaces to which it directs its
efforts; the mission and goals of FAS and the types of services it provides,
which may include: seminars; its 1-800 number, Web site, Internet or other
electronic facilities; qualitative information about the funds' investment
methodologies; information about specific strategies and management techniques;
performance data and features of the funds; institutional oriented research and
portfolio manager insight and commentary. Additional information contained in
advertising and promotional literature may include: rankings and ratings of the
funds including, but not limited to, those of Morningstar and Lipper Analytical
Services; statistics about the advisers', fund groups' or a specific fund's
assets under management; the histories of the advisers and biographical
references to portfolio managers and other staff including, but not limited to,
background, credentials, honors, awards and recognition received by the advisers
and their personnel; and commentary about the advisers, their funds and their
personnel from third-party sources including newspapers, magazines, periodicals,
radio, television or other electronic media.
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:
o 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 whom New England Funds may or may not have a relationship.
o 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.
o 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 regulation, Internal Revenue Service
requirements and rules, including, but not limited to, reporting standards,
minimum distribution notices, Form 5500, Form 1099R and other relevant
forms and documents, Department of Labor rules and standards and other
regulation. 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
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 regulation and requirements.
o 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.
o 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
investing in its 401(k) and retirement plans, 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 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. (TCI), including, but not limited
to, sales support, plan record keeping, document service support, plan
sponsor support, compliance testing and Form 5500 preparation.
o 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 participation
-promoting and understanding the benefits of investing, including mutual
fund diversification and professional management.
<PAGE>
NEW ENGLAND CASH MANAGEMENT TRUST
Part C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Highlights for each series of the Registrant are included
in the prospectus filed as Part A hereof. The following financial
statements are incorporated in the statement of additional
information included in Part B hereof by reference to the annual
report to shareholders of the series of the Registrant listed below
for the fiscal year ended June 30, 1997, which was filed with the
Commission on August 19, 1997.
(1) Money Market Series
(i) Portfolio Composition
(ii) Statement of Assets & Liabilities
(iii) Statement of Operations
(iv) Statement of Changes in Net Assets
(v) Per Share Data and Ratios
(2) U.S. Government Series
(i) Portfolio Composition
(ii) Statement of Assets & Liabilities
(iii) Statement of Operations
(iv) Statement of Changes in Net Assets
(v) Per Share Data and Ratios
(b) Exhibits
1. Fourth Amended and Restated Agreement and Declaration of Trust and
Amendments Nos. 1 and 2 thereto are filed herewith.
2. Amended By-Laws are incorporated herein by reference to Post-Effective
Amendment No. 30 to the Registrant's Registration Statement on Form
N-1A (File No. 2-68348), filed on August 28, 1995.
3. None.
4. Rights of shareholders are described in Article III, Section 6 of the
Fourth Amended and Restated Agreement and Declaration of Trust filed
herein as Exhibit 1 to this Registration Statement.
5. (a) Advisory Agreement between Registrant, with respect to its Money
Market Series, and New England Funds Management, L.P. ("NEFM") dated
January 2, 1996 is incorporated herein by reference to Post-Effective
Amendment No. 31 to the Registrant's Registration Statement on Form
N-1A (File No. 2-68348), filed on August 22, 1996.
(b) Advisory Agreement between Registrant, with respect to its U.S.
Government Series, and NEFM dated January 2, 1996 is incorporated
herein by reference to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement on Form N-1A (File No. 2-68348),
filed on August 22, 1996.
(c) Subadvisory Agreement, relating to the Money Market Series of the
Registrant, between NEFM and Back Bay Advisors, L.P. ("Back Bay
Advisors") dated January 2, 1996 is incorporated herein by reference to
Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A (File No. 2-68348), filed on August 22, 1996.
(d) Subadvisory Agreement, relating to the U.S. Government Series of
the Registrant, between NEFM and Back Bay Advisors is incorporated
herein by reference to Post-Effective Amendment No. 31 to the
Registrant's Registration Statement on Form N-1A (File No. 2-68348),
filed on August 22, 1996.
6. (a) Distribution Agreement between the Registrant, on behalf of its
Money Market Series, and New England Funds, L.P. is filed herewith.
(b) Distribution Agreement between the Registrant, on behalf of its
U.S. Government Series, and New England Funds, L.P. is filed herewith.
(C) Form of New England Funds, L.P. Dealer Agreement is filed herewith.
7. None.
8. (a) Custodian Agreement between the Registrant and State Street Bank
and Trust Company is filed herewith.
(b) Letter of Amendment to Custodian Agreement is filed herewith.
(c) Amendment to Custodian Agreement is filed herewith.
9. (a) Shareholder Servicing and Transfer Agency Agreement between the
Registrant and TNE Investment Services Corporation is filed herewith.
(b) Sub-Transfer Agency and Servicing Agreement between TNE Investment
Services Corporation and State Street Bank and Trust Company is filed
herewith.
(c) Powers of Attorney designating Edward A. Benjamin, Frank Nesvet,
Henry L.P. Schmelzer and Robert P. Connolly as attorneys to sign for
Kenneth J. Cowan, Peter S. Voss, Henry L.P. Schmelzer, Graham T.
Allsion, Jr., Pendleton P. White, John A. Shane and Sandra O. Moose are
incorporated herein by reference to Post-Effective Amendment No. 30 to
the Registrant's Registration Statement on Form N-1A (File No.
2-68348), filed on August 28, 1995.
(d) Powers of Attorney designating Edward A. Benjamin, Frank Nesvet,
Henry L.P. Schmelzer and Robert P. Connolly as attorneys to sign for
Daniel M. Cain and Richard Darman are incorporated herein by reference
to Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A (File No. 2-68348), filed on August 22, 1996.
10. None
11. Consent of Price Waterhouse LLP is filed herewith.
12. None.
13. Not applicable.
14. (a) The following are incorporated herein by reference to
Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A (File No. 2-68348), filed on August 22, 1996:
(i) New England Funds, L.P. Tax Sheltered Custodial Account Agreement;
(ii) New England Funds, L.P. Keogh Plan; (iii) New England Funds,
Simplified Employee Pension Plan; (iv) New England Funds, L.P.
Individual Retirement Account Prototype; and (v) New England Funds,
L.P. 401(k) Plan Prototype.
(b) New England Funds, L.P. SIMPLE IRA Plan is filed herewith.
15. Not applicable.
16. Schedule for calculation of performance data is incorporated herein by
reference to Post-Effective Amendment No. 31 to the Registrant's
Registration Statement on Form N-1A (File No. 2-68348), filed on August
22, 1996.
17. Financial Data Schedules 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, 1997:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
New England Cash Management Trust
Class A Class B
Shares of beneficial (a) Money Market Series 55,356 1,544
interest, no par value (b) U.S. Gov't Series 2,313 120
Item 27. Indemnification
See Article 4 of the Registrant's Amended By-Laws, filed as Exhibit 2
incorporated herein by reference.
In addition, New England Investment Companies, L.P. ("NEIC"), the
parent company of the Trust's adviser and distributor, maintains a
directors and officers liability insurance policy with maximum coverage
of $15 million, under which the trustees and officers of the trust are
named as insureds.
Item 28: Business and Other Connections of Investment Adviser
(a) Back Bay Advisors, which serves as subadviser to each series of the
Registrant, is a registered investment adviser that is wholly-owned by
NEIC, a New York Stock Exchange-listed company. 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 fiscal years in the following businesses,
professions, vocations or employments of a substantial nature (former
affiliations are marked with an asterisk):
<TABLE>
<CAPTION>
Name and Office with Name and Address of Nature of
Back Bay Advisors Other Affiliations Connection
----------------- ------------------ ----------
<S> <C> <C>
Back Bay Advisors, Inc. None None
General Partner
Charles T. Wallis, President and Chief NEF Corporation Director
Executive Officer 399 Boylston Street
Boston, MA 02116
Back Bay Advisors, Inc. President, Chief Executive Officer and
399 Boylston Street Director
Boston, MA 02116
Edgar M. Reed, Executive Vice President Aetna Capital Management* Head of Fixed Income Management Group
and Chief Investment Officer 151 Farmington Avenue
Hartford, CT 06156
Scott A. Millimet, Executive Vice Back Bay Advisors, Inc. Executive Vice President
President 399 Boylston Street
Boston, MA 02116
Kimberly J. Forsyth, Senior Vice None None
President
Catherine Bunting, Senior Vice President None None
J. Scott Nicholson, Senior Vice President None None
Eric Gutterson, Vice President None None
Harold B. Bjornson, Vice President None None
Peter Palfrey, Vice President None None
Nathan R. Wentworth, Vice President None None
Paul Zamagni, Vice President and None
Treasurer
</TABLE>
(b) New England Funds Management, L.P., a registered investment adviser
that is wholly-owned by NEIC, serves as investment adviser to each of
the series of the Registrant. NEFM, organized in 1995, also serves as
investment adviser to most of the series of New England Funds Trust I,
all of the series of New England Funds Trust II, New England Tax Exempt
Money Market Trust and New England Equity Income Fund. NEFM's general
partner, directors and officers have been engaged during the past two
fiscal years in the following businesses, professions, vocations or
employments of a substantial nature (former affiliations are marked
with an asterisk):
<TABLE>
<CAPTION>
Name and Office with Name and Address of Nature of
NEFM Other Affiliations Connection
---- ------------------ ----------
<S> <C> <C>
NEF Corporation New England Funds, L.P. General Partner
General Partner 399 Boylston Street
Boston, MA 02116
Henry L.P. Schmelzer, New England Funds, L.P. Managing Director, President and
President and Chief Executive Officer Chief Executive Officer
NEF Corporation President, Chief Executive Officer
and Director
Back Bay Advisors, Inc. Director
Maine Bank and Trust Company Director
467 Congress Street
Portland, ME 04104
Frank Nesvet, New England Funds, L.P. Managing Director, Senior Vice
Senior Vice President, Chief Financial President and Chief Financial Officer
Officer and Treasurer
NEF Corporation Senior Vice President, Chief
Financial Officer and Treasurer
Robert E. O'Hare NEF Corporation Vice President, Senior Counsel,
Vice President, Senior Counsel, Assistant Secretary and Assistant
Assistant Secretary and Assistant Clerk Clerk
New England Funds, L.P. Vice President, Senior Counsel,
Assistant Secretary and Assistant
Clerk
Chase Global Funds Service* Vice President and Associate General
73 Tremont Street Counsel
Boston, MA 02116
Bruce R. Speca, NEF Corporation Executive Vice President
New England Funds, L.P. Managing Director and Executive Vice
President
Peter H. Duffy, NEF Corporation Vice President
Vice President
New England Funds, L.P. Vice President
Martin G. Dyer NEF Corporation Vice President
Vice President
New England Funds, L.P. Vice President and Assistant Secretary
Ralph M. Greggs NEF Corporation Vice President
Vice President
New England Funds, L.P. Vice President
Beatriz A. Pina-Smith NEF Corporation Assistant Controller
Assistant Controller
New England Funds, L.P. Vice President and Assistant
Controller
</TABLE>
Item 29. Principal Underwriters
(a) New England Funds, L.P. also serves as principal underwriter for:
New England Funds Trust I
New England Funds Trust II
New England Funds Trust III
New England Tax Exempt Money Market Trust
(b) The general partner and officers of the Registrant's principal
underwriter, New England Funds, L.P., and their addresses are as
follows:
<TABLE>
<CAPTION>
Positions and Offices with Positions and Offices
Name Principal Underwriter with Registrant
---- --------------------- ---------------
<S> <C> <C>
NEF Corporation General Partner None
Henry L.P. Schmelzer Managing Director, President and Chief President and Trustee
Executive Officer
Bruce R. Speca Managing Director and Executive Vice President Executive Vice President
Frank Nesvet Managing Director, Senior Vice President and Treasurer
Chief Financial Officer
James H. Davis Managing Director and Senior Vice President None
Caren I. Leedom Managing Director and Senior Vice President None
Raymond K. Girouard Senior Vice President, Treasurer and None
Controller
Frank Maselli Senior Vice President None
Rayona T. Bennett Vice President None
Elizabeth P. Burns Vice President None
Peter H. Duffy Vice President Assistant Treasurer
Martin G. Dyer Vice President and Assistant Secretary None
Tracy A. Fagan Vice President None
Philip J. Graham Jr. Vice President None
Ralph M. Greggs Vice President None
Lynne H. Johnson Vice President None
David E. Kaplan Vice President None
Marie G. McKenzie Vice President None
Lynda A. Nelson Vice President None
Robert E. O'Hare Vice President, Senior Counsel, Assistant Assistant Secretary
Secretary and Assistant Clerk
John R.J. Simmons Vice Presient None
Kristine E. Swanson Vice President None
Beatriz A. Pina Smith Vice President and Assistant Controller None
Sharon M. Wratchford Vice President None
</TABLE>
The principal business address of all the above persons or entities 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
The Registrant undertakes to provide its annual report to any person
who receives the prospectus and who requests the annual report.
<PAGE>
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 Post-Effective Amendment No. 32 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 32 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
20th day of August, 1997.
By: PETER S. VOSS*
----------------------------
Peter S. Voss
Chief Executive Officer
*By: /s/ FRANK NESVET
----------------------------
Frank Nesvet
Attorney-in-Fact
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 32 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
--------- ----- ----
Chairman of the Board;
Chief Executive Officer;
Principal Executive
PETER S. VOSS* Officer; Trustee August 20, 1997
- -------------------------
Peter S. Voss
/s/FRANK NESVET Treasurer August 20, 1997
- -------------------------
Frank Nesvet
HENRY L.P. SCHMELZER* Trustee and President August 20, 1997
- -------------------------
Henry L.P. Schmelzer
GRAHAM T. ALLISON, JR.* Trustee August 20, 1997
- -------------------------
Graham T. Allison
DANIEL M. CAIN* Trustee August 20, 1997
- -------------------------
Daniel M. Cain
KENNETH J. COWAN* Trustee August 20, 1997
- -------------------------
Kenneth J. Cowan
RICHARD DARMAN* Trustee August 20, 1997
- -------------------------
Richard Darman
SANDRA O. MOOSE* Trustee August 20, 1997
- -------------------------
Sandra O. Moose
JOHN A. SHANE* Trustee August 20, 1997
- -------------------------
John A. Shane
PENDLETON P. WHITE* Trustee August 20, 1997
- -------------------------
Pendleton P. White
*By: /s/ FRANK NESVET
---------------------------
Frank Nesvet
Attorney-In-Fact
August 20, 1997
<PAGE>
N-1A EXHIBITS ITEM 24(B)
EXHIBIT NUMBER EXHIBIT
-------------- -------
EX-99.B1 Fourth Amended and Restated Agreement and Declaration of
Trust and Amendments Nos. 1 and 2 thereto
EX-99.B6(a) Distribution Agreement between the Registrant, on behalf of
its Money Market Series, and New England Funds, L.P.
EX-99.B6(b) Distribution Agreement between the Registrant, on behalf of
its U.S. Government Series, and New England Funds, L.P.
EX-99.B6(c) Form of New England Funds, L.P. Dealer Agreement
EX-99.B8(a) Custodian Agreement between the Registrant and State Street
Bank and Trust Company
EX-99.B8(b) Letter of Amendment to Custodian Agreement
EX-99.B8(c) Amendment to Custodian Agreement
EX-99.B9(a) Shareholder Servicing and Transfer Agency Agreement between
the Registrant and TNE Investment Services Corporation
EX-99.B9(b) Sub-Transfer Agency and Service Agreement between TNE
Investment Services Corporation and State Street Bank and
Trust Company
EX-99.B11 Consent of Price Waterhouse LLP
EX-99.B14(b) New England Funds, L.P. SIMPLE IRA Plan
EX-27.B17 Financial Data Schedules
<PAGE>
EXHIBIT 99.B1
FOURTH AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
TNE CASH MANAGEMENT TRUST
WHEREAS, Section 8 of Article VIII of the Third Amended and Restated
Agreement and Declaration of Trust, as amended by Amendments Nos. 1 and 2
thereto (the "Extant Declaration of Trust"), of TNE Cash Management Trust (the
"Trust"), provides that the Extant Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the Trustees when
authorized so to do by a majority of the Shares entitled to vote;
WHEREAS, Section 6(d) of Article III of the Extant Declaration of Trust
provides that the Shareholders of any particular Series shall not be entitled to
vote on any matters as to which such Series is not affected;
WHEREAS, a majority of the Shares of the Money Market Series have
authorized the Trustees to amend the Extant Declaration of Trust to permit each
such Series to issue one or more classes of shares of such Series having such
preferences or special or relative rights and privileges as the Trustees may
determine; and
WHEREAS, the Trustees of the Trust have determined that such amendments
shall take the form of a complete restatement of the Trust's Agreement and
Declaration of Trust.
NOW, THEREFORE, the undersigned, constituting a majority of the
Trustees of the Trust, direct that this Fourth Amended and Restated Agreement
and Declaration of Trust be filed with the Secretary of The Commonwealth of
Massachusetts and that the Trust's Declaration of Trust made as of June 5, 1980,
as amended and restated by the First Amended and Restated Agreement and
Declaration of Trust dated July 17, 1980, by the Second Amended and Restated
Agreement and Declaration of Trust dated March 19, 1982, by the Third Amended
and Restated Agreement and Declaration of Trust dated June 18, 1985 and by
Amendments Nos. 1 and 2 thereto, be further amended to read in its entirety as
follows, such amendment to be effective at the time of the filing referred to
above:
THIS FOURTH AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
made as of the 13th day of September 1993 by the Trustees hereunder and the
holders of shares of beneficial interest issued hereunder and to be issued
hereunder as hereinafter provided:
WITNESSETH that
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets, which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. This Trust shall be known as TNE Cash Management Trust and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided
(a) The "Trust" refers to the Massachusetts business trust established
by this Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust elected in
accordance with Article IV hereof;
(c) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust or in the Trust property belonging to any
Series of the Trust or in any class of Shares of the Trust (as the context may
require) shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Commission" and "principal underwriter" shall have the
meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(i) "Reserve Requirements" refers to Title 12, Part 229, Section 229.12
through and including Section 229.15 of the Code of Federal Regulations as in
effect on July 17, 1980 or as thereafter amended or re-enacted or any related or
successor rules, regulations, orders, rulings or interpretations of the Federal
Reserve Board of Governors or any other governmental agency or any statutory
provision or executive order to substantially the same effect as any such rules,
regulations, rulings, orders or interpretations;
(j) "Series Company" refers to the form of registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in any
successor statutory provision;
(k) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article III;
(l) "Multi-Class Series" refers to Series of Shares established and
designated under or in accordance with the provisions of Article III, Section 6;
and
(m) The terms "class" and "class of Shares" refer to the division of
Shares representing any Multi-Class Series into two or more classes in
accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment
primarily in securities and debt instruments.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of Shares,
without par value. Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V hereof, and holders
of the Shares of any Series shall be entitled to receive dividends, when and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. Except as otherwise provided in Section 6 of this Article III with
respect to Shares of Multi-Class Series, no Share shall have any priority or
preference over any other Share of the same Series with respect to dividends or
distributions upon termination of the Trust or of such Series made pursuant to
Article VIII, Section 4 hereof. Except as otherwise provided in Section 6 of
this Article III with respect to Shares of Multi-Class Series, all dividends and
distributions shall be made ratably among all Shareholders of a particular
Series or from the assets belonging to such Series according to the number of
Shares of such Series held of record by such Shareholder on the record date for
any dividend or distribution or on the date of termination, as the case may be.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees may from
time to time divide or combine the Shares of any particular Series or class into
a greater or lesser number of Shares of that Series or class without thereby
changing the proportionate beneficial interest of the Shares of that Series or
class in the assets belonging to that Series or attributable to that class or in
any way affecting the rights of Shares of any other Series or class.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series and
class. No certificates certifying the ownership of Shares shall be issued except
as the Trustees may otherwise determine from time to time. The Trustees may make
such rules as they consider appropriate for the transfer of Shares of each
Series and class and similar matters. The record books of the Trust as kept by
the Trust or any transfer or similar agent, as the case may be, shall be
conclusive as to who are the Shareholders of each Series or class and as to the
number of Shares of each Series and class held from time to time by each.
Section 3. Investments in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms and for such
consideration as they from time to time authorize.
Section 4. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholders, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
Section 5. Power of Trustees to Change Provisions Relating to Shares.
Notwithstanding any other provisions of this Declaration of Trust and without
limiting the power of the Trustees to amend the Declaration of Trust as provided
elsewhere herein, the Trustees shall have the power to amend this Declaration of
Trust, at any time and from time to time, in such manner as the Trustees may
determine in their sole discretion, without the need for Shareholder action, so
as to add to, delete, replace or otherwise modify any provisions relating to the
Shares contained in this Declaration of Trust for the purpose of (i) allocating
dividends of the Trust among the Shareholders in a manner which is consistent
with or responsive to any Reserve Requirements, (ii) responding to or complying
with any other regulations, orders, rulings or interpretations of any
governmental agency or any laws, now or hereafter applicable to the Trust, or
(iii) designating and establishing Series or classes in addition to those
established under or in accordance with the provisions of Section 6 of this
Article III; provided that before adopting any such amendment without
Shareholder approval the Trustees shall determine that it is consistent with the
fair and equitable treatment of all Shareholders. The establishment and
designation of any series of Shares in addition to those Series established and
designated in Section 6 of this Article III shall be effective upon the
execution by a majority of the then Trustees of an amendment to this Declaration
of Trust, taking the form of a complete restatement or otherwise, setting forth
such establishment and designation and the relative rights and preferences of
such Series, or as otherwise provided in such instrument. The establishment and
designation of any class of Shares shall be effective upon either the execution
by a majority of the then Trustees of an amendment to this Declaration of Trust
or the adoption by vote or written consent of a majority of the then Trustees of
a resolution setting forth such establishment and designation and the relative
rights and preferences of such class and such eligibility requirements for
investment therein as the Trustees may determine, or as otherwise provided in
such amendment or resolution.
Without limiting the generality of the foregoing, the Trustees may, for
the above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series or classes of Shares (in addition to any
Series or classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as shares
of particular Series or classes in accordance with such eligibility
requirements;
(b) amend any of the provisions set forth in paragraphs (a) through (i)
of Section 6 of this Article III;
(c) combine one or more Series or classes of Shares into a single
Series or class on such terms and conditions as the Trustees shall determine;
(d) change or eliminate any eligibility requirements for investment in
Shares of any Series or class, including without limitation the power to provide
for the issue of Shares of any Series or class in connection with any merger or
consolidation of the Trust with another trust or company or any acquisition by
the Trust of part or all of the assets of another trust or company;
(e) change the designation of any Series or class of Shares;
(f) change the method of allocating dividends among the various Series
and classes of Shares;
(g) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series or
classes of Shares;
(h) comply with Rule 6c-4(T) under the 1940 Act as now enacted or
hereafter amended or re-enacted or any successor rules, regulations, orders,
rulings or interpretations of the Commission or any statutory provisions to
substantially the same effect as any such rules, regulations, orders, rulings or
interpretations; and
(i) specifically allocate assets to any or all Series or classes of
Shares or create one or more additional Series or classes of Shares which are
preferred over all other Series or classes of Shares in respect of assets
specifically allocated thereto or any dividends paid by the Trust with respect
to any net income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise and provide for any special
voting or other rights with respect to such Series or classes.
Section 6. Establishment and Designation of Series and Classes. Without
limiting the authority of the Trustees set forth in Section 5, inter alia, to
establish and designate any further Series or classes or to modify the rights
and preferences of any Series or class, each of the following Series shall be,
and is hereby established and designated: the "Money Market Series" and the
"U.S. Government Series"; and the Money Market Series is hereby designated a
Multi-Class Series.
Shares of each Series established in this Section 6 shall have the
following rights and preferences relative to Shares of each other Series, and
Shares of each class of a Multi-Class Series shall have such rights and
preferences relative to other classes of the same Series as are set forth below,
together with such other rights and preferences relative to such other classes
as are set forth in this resolution of the Trustees establishing and designating
such class of Shares:
(a) Assets Belonging to Series. Subject to the provisions of paragraph
(c) of this Section 6:
All consideration received by the Trust for the issue or sale of Shares
of a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof from
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets belonging to" that
Series. In the event that there are any assets, income, earnings, profits and
proceeds thereof, funds or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Assets"), the Trustees
shall allocate such General Assets to, between or among any one or more of the
Series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable, and any
General Asset so allocated to a particular Series shall belong to that Series.
Each such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(b) Liabilities Belonging to Series. Subject to the provisions of
paragraph (c) of this Section 6:
The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect to that Series and all expenses, costs,
charges and reserves (including Reserve Requirements, if any) attributable to
that Series, and any general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the Series established
and designated from time to time in a manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges and reserves (including Reserve Requirements, if any) so charged
to a Series are herein referred to as "liabilities belonging to" that Series.
Each allocation of liabilities, expenses, costs, charges and reserves (including
Reserve Requirements, if any) by the Trustees shall be conclusive and binding
upon the holders of all Series for all purposes.
(c) Apportionment of Assets etc. in Case of Multi-Class Series. In the
case of any Multi-Class Series, to the extent necessary or appropriate to give
effect to the relative rights and preferences of any classes of Shares of such
Series, (i) any assets, income, earnings, profits, proceeds, liabilities,
expenses, charges, costs and reserves belonging or attributable to that Series
may be allocated or attributed to a particular class of Shares of that Series or
apportioned among two or more classes of Shares of that Series; and (2) Shares
of any class of such Series may have priority or preference over shares of other
classes or such Series with respect to dividends or distributions upon
termination of the Trust or of such Series or class or otherwise, provided that
no Share shall have any priority or preference over any other Shares of the same
class and that all dividends and distributions to shareholders or a particular
class shall be made ratably among all Shareholders of such class according to
the number of Shares and such class held of record by such Shareholders on the
record date for any dividend or distribution or on the date of termination, as
the case may be.
(d) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration, including, without
limitation, Article VI, no dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or class) with respect to, nor any redemption or repurchase of, the Shares of
any Series or class shall be effected by the Trust other than from the assets
belonging to such Series or attributable to such class, nor shall any
Shareholder of any particular Series or class otherwise have any right or claim
against the assets belonging to any other Series or attributable to any other
class except to the extent that such Shareholder has such a right or claim
hereunder as a Shareholder of such other Series or class.
(e) Voting. Notwithstanding any of the other provisions of this
Declaration, including, without limitation, Section 1 of Article V, the
Shareholders of any particular Series or class shall not be entitled to vote on
any matters as to which such Series or class is not affected. Except with
respect to matters as to which any particular Series or class is adversely
affected, all of the Shares of each Series and class shall, on matters as to
which it is entitled to vote, vote with other Series and classes so entitled as
a single class. Notwithstanding the foregoing, with respect to matters which
would otherwise be voted on by two or more Series or classes as a single class,
the Trustees may, in their sole discretion, submit such matters to the
Shareholders of any or all such Series or classes, separately.
(f) Equality. Except to the extent necessary or appropriate to give
effect to the relative rights and preferences of any classes of Shares of a
Multi-Class Series, all the Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series (subject to
the liabilities belonging to that Series), and each Share of any particular
Series shall be equal to each other Share of that Series. All the Shares of each
particular class of Shares within a Multi-Class Series shall represent an equal
proportionate interest in the assets belonging to such Series that are
attributable to such class (subject to the liabilities attributable to such
class), and each Share of any particular class within a Multi-Class Series shall
be equal to each other Share of such class.
(g) Fractions. Any fractional Share of a Series or class shall carry
proportionately all the rights and obligations of a whole share of that Series
or class, including rights with respect to voting, receipt of dividends and
distributions, redemption of Shares and termination of the Trust.
(h) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series or class shall have the right
to exchange said Shares for Shares of one or more other Series or classes of
Shares in accordance with such requirements and procedures as may be established
by the Trustees.
(i) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise required
by applicable law, to combine the assets and liabilities belonging to any two or
more Series into assets and liabilities belonging to a single series or class.
(j) Elimination of Series or Class. At any time that there are no
Shares outstanding of any particular Series previously established and
designated, the Trustees may amend this Declaration of Trust to abolish that
Series and to rescind the establishment and designation thereof, such amendment
to be effected in the manner provided in Section 5 of this Article III. At any
time that there are no Shares outstanding of any particular class previously
established and designated of a Multi-Series Class, the Trustees may abolish
that class and rescind the establishment and designation thereof, either by
amending this Declaration of Trust in the manner provided in Section 5 of this
Article III (if such class was established and designated by an amendment to
this Declaration of Trust), or by vote or written consent of a majority of the
then Trustees (if such class was established and designated by Trustee vote or
written consent).
Section 7. Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason of his
or her being or having been a Shareholder of the Trust or of a particular Series
or class and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Series (or attributable to the class) or which he or she is a
Shareholder or former Shareholder to be held harmless from and indemnified
against all loss and expense arising from such liability.
ARTICLE IV
The Trustees
Section 1. Election and Tenure. The Trustees may fix the numbers of
Trustees, fill vacancies in the Trustees, including vacancies arising from an
increase in the number of Trustees, or remove Trustees with or without cause.
Each Trustee shall serve during the continued lifetime of the Trust until he
dies, resigns or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his successor. Any Trustee may resign at any time by
written instrument signed by him and delivered to any officer of the Trust or to
a meeting of the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee resigning
and no Trustee 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. The Shareholders may fix the number of Trustees and elect Trustees at
any meeting of Shareholders called by the Trustees for that purpose.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal or incapacity of the Trustees, or
any of them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust.
Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all kinds on behalf
of the Trust. Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the regulation and
management of the affairs of the Trust and may amend and repeal them to the
extent that such By-Laws do not reserve that right to the Shareholders; they may
fill vacancies in or remove from their number (including any vacancies created
by an increase in the number of Trustees); they may elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
they may appoint from their own number and terminate one or more committees
consisting of two or more Trustees which may exercise the powers and authority
of the Trustees to the extent that the Trustees determine; and they may employ
one or more custodians of the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all or any part of such assets
in a system or systems for the central handling of securities or with a Federal
Reserve Bank, retain a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one or more
principal underwriters or otherwise, set record dates for the determination of
Shareholders with respect to various matters, and in general delegate such
authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to any
such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate or lease any
or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer, to pay calls or subscriptions with
respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property;
(k) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters or
independent contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Trustee, officer, employee, agent,
investment adviser, principal underwriter or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
liability; and
(m) To pay pensions as deemed appropriate by the Trustees and to adopt,
establish and carry out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity contracts as
a means of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by Trustees. The Trustees shall
not be required to obtain any court order to deal with any assets of the Trust
or take any other action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of principal and partly out of income, as they deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, principal underwriter, auditor, counsel, custodian, transfer agent,
Shareholder servicing agent and such other agents or independent contractors and
such other expenses and charges as the Trustees may deem necessary or proper to
incur.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series or class, to pay directly, in advance
or arrears, for charges of the Trust's custodian or transfer, Shareholder
servicing or similar agent, an amount fixed from time to time by the Trustees,
by setting off such charges due from such Shareholder from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of Shares in the
account of such Shareholder by that number of full and/or fractional Shares
which represents the outstanding amount of such charges due from such
Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trustees.
Section 7. Advisory, Management and Distribution Contracts. Subject to
such requirements and restrictions as may be set forth in the By-Laws, the
Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services for the Trust or for any Series
or class with New England Mutual Life Insurance Company or any other
corporation, trust, association or other organization (the "Manager"); and any
such contract may contain such other terms as the Trustees may determine,
including without limitation, authority for the Manager to determine from time
to time without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments. The Trustees may also, at any time and from time to time, contract
with NEL Equity Services Corporation, the Manager or other corporation, trust,
association or other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms as the Trustees may
determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter, distributor or affiliate or
agent of or for any corporation, trust, association, or other
organization, or of or for any parent or affiliate of any organization,
with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, Shareholder
servicing or other agency contract may have been or may hereafter be
made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal
underwriter's or distributor's contract, or transfer, Shareholder
servicing or other agency contract may have been or may hereafter be
made also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, Shareholder
servicing or other agency contract with one or more other corporations,
trusts, associations or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV, Section 1, (ii)
with respect to any amendment of this Declaration of Trust to the extent and as
provided in Article VIII, Section 8, (iii) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
(iv) with respect to the termination of the Trust or any Series or class to the
extent and as provided in Article VIII, Section 4 and (v) with respect to such
additional matters relating to the Trust as may be required by this Declaration
of Trust, the By-Laws or any registration of the Trust with the Commission (or
any successor agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. At any time when no Shares of a Series
or class are outstanding the Trustees may exercise all rights of Shareholders of
that Series with respect to matters affecting that Series and may with respect
to that Series take any action required by law, this Declaration of Trust or the
By-Laws to be taken by the Shareholders.
Section 2. Voting Power and Meetings. Meetings of the Shareholders may
be called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the By-Laws. Meetings of the Shareholders may
also be called by the Trustees from time to time for the purpose of taking
action upon any other matter deemed by the Trustees to be necessary or
desirable. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven days before
such meeting, postage prepaid, stating the time and place of the meeting, to
each Shareholder at the Shareholder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust or the By-Laws, a written waiver thereof,
executed before or after the meeting by such Shareholder or his attorney
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
Section 3. Quorum and Required Vote. Except when a larger quorum is
required by law, by the By-Laws or by this Declaration of Trust, 40% of the
Shares entitled to vote shall constitute a quorum at a Shareholders' meeting.
When any one or more Series or classes is to vote as a single class separate
from any other Shares which are to vote on the same matters as a separate class
or classes, 40% of the Shares of each such class entitled to vote shall
constitute a quorum at a Shareholders' meeting of that class. Any meeting of
Shareholders may be adjourned from time to time by a majority of the votes
properly cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned within a reasonable time after the date set for
the original meeting without further notice. When a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by law. If any question
on which the Shareholders are entitled to vote would adversely affect the rights
of any Series or class of Shares, the vote of a majority (or such larger vote as
is required as aforesaid) of the Shares of such Series or class which are
entitled to vote, voting separately, shall also be required to decide such
question.
Section 4. Action by Written Consent. Any action taken by Shareholders
may be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the
By-Laws) and holding a majority (or such larger proportion as aforesaid) of the
Shares of any Series or class entitled to vote separately on the matter consent
to the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series or class who are entitled to vote or act at any
meeting or any adjournment thereof, or who are entitled to receive payment of
any dividend or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 60 days before the date of any meeting
of Shareholders or the date for the payment of any dividend or of any other
distribution, as the record date for determining the Shareholders of such Series
or class having the right to notice of and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or distribution, and
in such case only Shareholders of record on such record date shall have such
right, notwithstanding any transfer of shares on the books of the Trust after
the record date; or without fixing such record date the Trustees may for any of
such purposes close the register or transfer books for one or more Series or
classes for all or any part of such period. Nothing in the foregoing sentence
shall be construed as precluding the Trustees from setting different record
dates for different Series or classes.
Section 6. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Income, Distributions, and Redemptions and Repurchases
Section 1. Distributions of Net Income. The Trustees shall each year,
or more frequently if they so determine in their sole discretion, distribute to
the Shareholders of each Series, in shares of that Series, cash or otherwise, an
amount approximately equal to the Net Income attributable to the assets
belonging to such Series, and may from time to time distribute to the
shareholders of each Series, in shares of that Series, cash or otherwise, such
additional amounts, but only from the assets belonging to such Series, as they
may authorize. Except as otherwise permitted by paragraph (c) of Section 6 of
Article III in the case of a Multi-Class Series, all dividends and distributions
on Shares of a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of Shares of that Series held by such
holders and recorded on the books of the Trust at the date and time of record
established for that payment of such dividend or distributions.
So long as any Series or class thereof shall use the amortized cost
method of determining its net asset value, the term "Net Income" as used with
respect to that particular Series or class shall mean (i) all interest income
(including both original issue and market discount accrued ratably to the date
of maturity) accrued on portfolio investments belonging to the Series or
attributable to the class, plus or minus (ii) realized gains and losses on
portfolio investments belonging to such Series or attributable to such class and
less (iii) all actual and accrued expenses and liabilities (including amortized
premium determined in accordance with accounting principles generally accepted
at the time) belonging to such Series or attributable to such class. At any
other time the term "Net Income" shall, subject to the last paragraph of this
section, mean: (i) such interest income plus or minus (ii) realized or
unrealized gains and losses on portfolio investments belonging to the Series or
attributable to such class determined by valuing the portfolio investments
belonging to the Series or attributable to such class in a manner consistent
with the requirements of the 1940 Act and any applicable provisions of the
By-Laws, and less (iii) all actual and accrued expenses and liabilities
belonging to such Series or attributable to such class. Such Net Income shall be
determined by the Trustees or by such person as they may authorize at the times
and in the manner provided in the By-Laws, and all of the Net Income of each
Series or class, to the extent there is a positive amount thereof since the last
determination of Net Income, shall be declared as a dividend to the Shareholders
of that Series or class. Determinations of Net Income of any Series or class
made by the Trustees, or by such person as they may authorize, 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. If, for
any reason, the Net Income of any Series or class determined at any time is a
negative amount, the pro rata share of such negative amount allocable to each
Shareholder of such Series or class shall constitute a liability of such
Shareholder to that Series or class which shall be paid at such times and in
such manner as the Trustees may from time to time determine (i) out of the
accrued dividend account of such Shareholder, (ii) by reducing the number of
Shares of that Series or class in the account of such Shareholder or (iii)
otherwise. As a result of such determinations and declarations as a dividend of
the Net Income of any Series or class, the net asset value per Share of each
Series or class (the value of all the assets belonging to such Series or
attributable to such class, less total liabilities belonging to such Series or
attributable to such class, divided by the number of Shares of that Series or
class outstanding) is intended to remain at a consent amount immediately after
each such determination and declaration subject, however, to the power of the
Trustees as provided in Section 1 of Article III hereof to divide or combine the
Shares of any Series or class into a greater or lesser number.
The manner of determining Net Income of any Series or class may from
time to time be altered as necessary or desireable in the judgment of the
Trustees to conform such manner of determination to any other matter prescribed
or permitted by applicable law.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, as determined in accordance with the By-Laws, next determined. Payment
for said Shares shall be made by the Trust to the Shareholder within seven days
after the date on which the request is made. The obligation set forth in this
Section 2 is subject to the provision that in the event that any time the New
York Stock Exchange is closed for other than weekends or holidays, or if
permitted by the rules of the Commission during periods when trading on the
Exchange is restricted or during any emergency which makes it impracticable for
the Trust to dispose of the investments of the applicable Series or to determine
fairly the value of the net assets belonging to such Series or attributable to a
particular class thereof or during any other period permitted by order of the
Commission for the protection of investors, such obligations may be suspended or
postponed by the Trustees. The Trust may also purchase or repurchase Shares at a
price not exceeding the net asset value of such Shares in effect when the
purchase or repurchase or any contract to purchase or repurchase is made.
The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the interest
of the remaining Shareholders of the Series or class the Shares of which are
being redeemed. In making any such payment wholly or partly in kind, the Trust
shall, so far as may be practicable, deliver assets which approximate the
diversification of all of the assets belonging at the time to the Series (or
attributable to the class) the Shares of which are being redeemed. Subject to
the foregoing, the fair value, selection and quantity of securities or other
property so paid or delivered as all or part of the redemption price may be
determined by or under authority of the Trustees. In no case shall the Trust be
liable for any delay of any corporation or other person in transferring
securities selected for delivery as all or part of any payment in kind.
Section 3. Redemptions at the Option of the Trust. The Trust shall have
the right at its option and at any time to redeem Shares of any Shareholder at
the net asset value thereof as described in Section 1 of this Article VI: (i) if
at such times such Shareholder owns Shares of any Series or class having an
aggregate net asset value of less than an amount, determined from time to time
by the Trustees; or (ii) to the extent that such Shareholder owns Shares equal
to or in excess of a percentage determined from time to time by the Trustees of
the outstanding Shares of the Trust or of any Series or class.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Limitation of Liability. The Trustees shall not be
responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, Manager or principal underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any other Trustee,
but nothing herein contained shall protect any Trustee against any liability to
which he would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
Miscellaneous
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust or any Series shall look only to the assets of the Trust, or, to the
extent that the liability of the Trust may have been expressly limited by
contract to the assets of a particular Series, only to the assets belonging to
the relevant Series, for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any Trustee against
any liability to which such Trustee would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued on behalf of the Trust by the Trustees, by any officers or officer or
otherwise shall give notice that this Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts and shall recite that the same
was executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officers or officer or otherwise and not individually and that
the obligations of such instrument are not binding upon any of them or the
shareholders individually but are binding only upon the assets and property of
the Trust or upon the assets belonging to the Series for the benefit of which
the Trustees have caused the note, bond, contract, instrument, certificate or
undertaking to be made or issued, and may contain such further recital as he or
they may deem appropriate, but the omission of any such recital shall not
operate to bind any Trustee or Trustees or officers or officer or Shareholders
or any other person individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 4. Termination of Trust, Series or Class. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by vote of at least 66-2/3% of the Shares of each
Series entitled to vote and voting separately by Series or by the Trustees by
written notice to the Shareholders. Any Series or class may be terminated at any
time by vote of at least 66-2/3% of the Shares of that Series or class or by the
Trustees by written notice to the Shareholders of that Series or class
Upon termination of the Trust (or any Series or class, as the case may
be), after paying or otherwise providing for all charges, taxes, expenses and
liabilities belonging, severally, to each Series (or the applicable Series or
attributable to the particular class, as the case may be), whether due or
accrued or anticipated as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate reduce the
remaining assets belonging, severally, to each Series (or the applicable Series
or attributable to the particular class, as the case may be), to distributable
form in cash or shares or other securities, or any combination thereof, and
distribute the proceeds belonging to each Series (or the applicable Series or
attributable to the particular class, as the case may be), to the Shareholders
of that Series or class, as a Series or class, ratably according to the number
of Shares of that Series or class held by the several Shareholders on the date
of termination.
Section 5. Merger and Consolidation. The Trustees may cause the Trust
to be merged into or consolidated with another trust or company under or
pursuant to any state or federal statute, if any, or otherwise to the extent
permitted by law, if such merger or consolidation has been authorized by vote of
a majority of the outstanding Shares; provided that in all respects not governed
by statute or applicable law, the Trustees shall have power to prescribe the
procedure necessary or appropriate to accomplish a sale of assets, merger or
consolidation.
Section 6. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of The Commonwealth of Massachusetts and with any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder", shall be deemed to refer to this instrument as amended
or affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7. Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
Section 8. Amendments. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then Trustees when
authorized so to do by vote of a majority of the Shares entitled to vote, except
that amendments described in Article III, Section 5 hereof or having the purpose
of changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by Shareholder vote.
[the rest of this page is intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
for our successors and assigns this 10th day of September, 1993.
/s/ Henry L.P. Schmelzer
-----------------------------
Henry L.P. Schmelzer
/s/ Kenneth J. Cowan /s/ James H. Scott
----------------------------- -----------------------------
Kenneth J. Cowan James H. Scott
/s/ Joseph M. Hinchey /s/ John A. Shane
----------------------------- -----------------------------
Joseph M. Hinchey John A. Shane
/s/ Richard S. Humphrey, Jr. /s/ Joseph F. Turley
----------------------------- -----------------------------
Richard S. Humphrey, Jr. Joseph F. Turley
/s/ Robert B. Kittredge /s/ Peter S. Voss
----------------------------- -----------------------------
Robert B. Kittredge Peter S. Voss
/s/ Laurens MacLure /s/ Pendleton P. White
----------------------------- -----------------------------
Laurens MacLure Pendleton P. White
/s/ Sandra O. Moose
-----------------------------
Sandra O. Moose
<PAGE>
TNE CASH MANAGEMENT TRUST
Amendment No. 1 to Fourth Amended and Restated
Agreement and Declaration of Trust
The undersigned, being at least a majority of the Trustees of TNE Cash
Management Trust (the "Trust"), hereby consent to and adopt the following
amendment to the Trust's Fourth Amended and Restated Agreement and Declaration
of Trust (the "Declaration of Trust"), a copy of which is on file in the office
of the Secretary of State of The Commonwealth of Massachusetts:
WHEREAS, Section 8 of Article VIII of the Declaration of Trust provides
that the Declaration of Trust may be amended at any time by an instrument in
writing signed by a majority of the Trustees when authorized so to do by a
majority of the Shares entitled to vote;
WHEREAS, Section 6(e) of Article III of the Declaration of Trust
provides that the Shareholders of any particular Series or class shall not be
entitled to vote on any matters as to which such Series or class is not
affected;
WHEREAS, a majority of the Shares of the Trust's U.S. Government Series
have authorized the Trustees to amend the Declaration of Trust to permit such
Series to issue one or more classes of shares of such Series having such
preferences or special or relative rights and privileges as the Trustees may
determine;
WHEREAS, Section 6 of Article III of the Declaration of Trust further
provides that each class of a Multi-Class Series shall have such rights and
preferences relative to other classes of the same Series as are set forth in
such Section 6, together with such other rights and preferences relative to such
other classes as are set forth in any resolution of the Trustees establishing
and designating such class of Shares; and
WHEREAS, the Declaration of Trust currently designates the Trust's
Money Market Series as a Multi-Class Series;
NOW, THEREFORE, the first sentence of Section 6 of Article III of the
Declaration of Trust is hereby amended to read in its entirety as follows:
Without limiting the authority of the Trustees set forth in Section 5,
inter alia, to establish and designate any further Series or classes or
to modify the rights and preferences of any Series or class, each of
the following Series shall be, and is hereby, established and
designated: (1) the Money Market Series and (2) the U.S. Government
Series; and the following Series shall be, and hereby are, designated
Multi-Class Series: the Money Market Series and the U.S. Government
Series.
The foregoing amendment shall become effective as of the time it is
filed with the Secretary of State of The Commonwealth of Massachusetts.
[the balance of this page is intentionally blank]
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
for our successors and assigns this ____ day of _________, 1993.
/s/ Henry L.P. Schmelzer
-----------------------------
Henry L.P. Schmelzer
/s/ Kenneth J. Cowan /s/ James H. Scott
----------------------------- -----------------------------
Kenneth J. Cowan James H. Scott
/s/ Joseph M. Hinchey /s/ John A. Shane
----------------------------- -----------------------------
Joseph M. Hinchey John A. Shane
/s/ Richard S. Humphrey, Jr. /s/ Joseph F. Turley
----------------------------- -----------------------------
Richard S. Humphrey, Jr. Joseph F. Turley
/s/ Robert B. Kittredge /s/ Peter S. Voss
----------------------------- -----------------------------
Robert B. Kittredge Peter S. Voss
/s/ Laurens MacLure /s/ Pendleton P. White
----------------------------- -----------------------------
Laurens MacLure Pendleton P. White
/s/ Sandra O. Moose
-----------------------------
Sandra O. Moose
<PAGE>
TNE CASH MANAGEMENT TRUST
Amendment No. 2 to Fourth Amended and Restated
Agreement and Declaration of Trust
The undersigned, being at least a majority of the Trustees of TNE Cash
Management Trust (the "Trust"), having determined it to be consistent with the
fair and equitable treatment of all shareholders of the Trust, hereby amend the
Trust's Fourth Amended and Restated Agreement and Declaration of Trust, as
amended by Amendment No. 1 thereto (the "Declaration of Trust"), a copy of which
is on file in the office of the Secretary of State of The Commonwealth of
Massachusetts, as follows:
The phrase "TNE Cash Management Trust" is hereby deleted in each and
every place where it appears in the Declaration of Trust, and the phrase "New
England Cash Management Trust" is hereby inserted in lieu thereof in each and
every such place.
The foregoing amendment shall become effective as of the time it is
filed with the Secretary of State of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
for our successors and assigns as of this 28th day of January, 1994.
/s/ Sandra O. Moose /s/ Henry L. P. Schmelzer
----------------------------- -----------------------------
Sandra O. Moose Henry L. P. Schmelzer
/s/ Kenneth J. Cowan /s/ James H. Scott
----------------------------- -----------------------------
Kenneth J. Cowan James H. Scott
/s/ Joseph M. Hinchey /s/ John A. Shane
----------------------------- -----------------------------
Joseph M. Hinchey John A. Shane
/s/ Richard S. Humphrey, Jr. /s/ Joseph F. Turley
----------------------------- -----------------------------
Richard S. Humphrey, Jr. Joseph F. Turley
/s/ Robert B. Kittredge /s/ Peter S. Voss
----------------------------- -----------------------------
Robert B. Kittredge Peter S. Voss
/s/ Laurens MacLure /s/ Pendleton P. White
----------------------------- -----------------------------
Laurens MacLure Pendleton P. White
<PAGE>
EXHIBIT 99.B6(a)
NEW ENGLAND CASH MANAGEMENT TRUST -- MONEY MARKET SERIES
DISTRIBUTION AGREEMENT
AGREEMENT made this 30th day of August, 1996 by and between NEW ENGLAND CASH
MANAGEMENT TRUST, a Massachusetts business trust (the "Trust"), and NEW ENGLAND
FUNDS, L.P., a Delaware limited partnership (the "Distributor").
W I T N E S S E T H:
In consideration of the covenants hereinafter contained, the Trust and the
Distributor agree as follows:
1. Distributor. The Trust hereby appoints the Distributor as general
distributor of shares of beneficial interest ("Series shares") of the
Trust's Money Market Series (the "Series") during the term of this
Agreement. The Trust reserves the right, however, to refuse at any time or
times to sell any Series shares hereunder for any reason deemed adequate by
the Board of Trustees of the Trust.
2. Sale and Payment. Under this agreement, the following provisions shall apply
with respect to the sale of and payment for Series shares:
(a) The Distributor shall have the right, as principal, to purchase Series
shares from the Trust at their net asset value and to sell such shares
to the public against orders therefor and to dealers against orders
therefor, all at net asset value per share in accordance with the
provisions of the Trust's agreement and declaration of trust, and
by-laws and the current prospectus of the Trust relating to the Series
shares. No commission or other compensation for selling or obtaining
subscriptions for Series shares shall be paid by the Trust or charged as
a part of the subscription or selling price on any sale or subscription.
(b) Prior to the time of delivery of any shares by the Trust to, or on the
order of, the Distributor, the Distributor shall pay or cause to be paid
to the Trust or to its order an amount in Boston or New York clearing
house funds equal to the applicable net asset value of such shares. The
Distributor shall retain so much of any sales charge or underwriting
discount as is not allowed by it as a concession to dealers.
3. Trust Issuance of Series Shares. The delivery of Series shares shall be made
promptly by a credit to a shareholder's open account for the Series. The
Trust reserves the right (a) to issue Series shares at any time directly to
the shareholders of the Series as a stock dividend or stock split, (b) to
issue to such shareholders shares of the Series, or rights to subscribe to
shares of the Series, as all or part of any dividend that may be distributed
to shareholders of the Series or as all or part of any optional or
alternative dividend that may be distributed to shareholders of the Series,
and (c) to sell Series shares in accordance with the current applicable
prospectus of the Trust relating to the Series shares.
4. Repurchase. The Distributor shall act as agent for the Trust in connection
with the repurchase of Series shares by the Trust to the extent and upon the
terms and conditions set forth in the current applicable prospectus of the
Trust relating to the Series shares, and the Trust agrees to reimburse the
Distributor, from time to time upon demand, for any reasonable expenses
incurred in connection with such repurchases.
5. Undertaking Regarding Sales. The Distributor shall use reasonable efforts to
sell Series shares but does not agree hereby to sell any specific number of
Series shares and shall be free to act as distributor of the shares of other
investment companies. Series shares will be sold by the Distributor only
against orders therefor. The Distributor shall not purchase Series shares
from anyone except in accordance with Section 4 and shall not take "long" or
"short" positions in Series shares contrary to the agreement and declaration
of trust or by-laws of the Trust.
6. Compliance. The Distributor shall conform to the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. (the "NASD") and the
sale of securities laws of any jurisdiction in which it sells, directly or
indirectly, any Series shares. The Distributor agrees to make timely
filings, with the Securities and Exchange Commission in Washington, D.C.
(the "SEC"), the NASD, and such other regulatory authorities as may be
required, of any sales literature relating to the Series and intended for
distribution to prospective investors. The Distributor also agrees to
furnish to the Trust sufficient copies of any agreements or plans it intends
to use in connection with any sales of Series shares in adequate time for
the Trust to file and clear them with the proper authorities before they are
put in use (which the Trust agrees to use its best efforts to do as
expeditiously as reasonably possible), and not to use them until so filed
and cleared.
7. Registration and Qualification of Series Shares. The Trust agrees to execute
such papers and to do such acts and things as shall from time to time be
reasonably requested by the Distributor for the purpose of qualifying and
maintaining qualification of the Series shares for sale under the so-called
Blue Sky Laws of any state or for maintaining the registration of the Trust
and of the Series shares under the federal Securities Act of 1933 and the
federal Investment Company Act of 1940 (the "1940 Act"), to the end that
there will be available for sale from time to time such number of Series
shares as the Distributor may reasonably be expected to sell. The Trust
shall advise the Distributor promptly of (a) any action of the SEC or any
authorities of any state or territory, of which it may be advised, affecting
registration or qualification of the Trust or the Series shares, or rights
to offer Series shares for sale, and (b) the happening of any event which
makes untrue any statement or which requires the making of any change in the
Trust's registration statement or its prospectus relating to the Series
shares in order to make the statements therein not misleading.
8. Distributor Independent Contractor. The Distributor shall be an independent
contractor and neither the Distributor nor any of its officers or employees
as such is or shall be an employee of the Trust. The Distributor is
responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to
others through its agents or employees. The Distributor assumes full
responsibility for its agents and employees under applicable statutes and
agrees to pay all employer taxes thereunder.
9. Expenses Paid by Distributor. While the Distributor continues to act as
agent of the Trust to obtain subscriptions for and to sell Series shares,
the Distributor shall pay the following:
(a) all expenses of printing (exclusive of typesetting) and distributing any
prospectus for use in offering Series shares for sale, and all other
copies of any such prospectus used by the Distributor, and
(b) all other expenses of advertising and of preparing, printing and
distributing all other literature or material for use in connection with
offering Series shares for sale.
10. Interests in and of Distributor. It is understood that any of the
shareholders, trustees, officers, employees and agents of the Trust may be a
shareholder, director, officer, employee or agent of, or be otherwise
interested in, the Distributor, any affiliated person of the Distributor,
any organization in which the Distributor may have an interest or any
organization which may have an interest in the Distributor; that the
Distributor, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest
shall not affect the validity hereof or of any transaction hereunder except
as otherwise provided in the agreement and declaration of trust or by-laws
of the Trust, in the articles of organization or by-laws of the Distributor
or by specific provision of applicable law.
11. Words "New England" and Logo. New England Life Insurance Company ("The New
England"), the parent of the Distributor, retains proprietary rights in the
words "New England" and the ship logos, both of which may be used by the
Trust and the Series only with the consent of the Distributor, which is
authorized by The New England to give such consent as provided herein. The
Distributor consents to the use by the Trust of the name "New England Cash
Management Trust" or any other name embodying the words "New England" and of
The New England's ship logos, in such forms as the Distributor shall in
writing approve, but only on condition and so long as (i) this Agreement
shall remain in full force and (ii) the Trust shall fully perform, fulfill
and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by
the Trust or the Series at any time or in any place or for any purposes or
under any conditions except as in this section provided. The foregoing
authorization by the Distributor as agent of The New England to the Trust
and the Series to use said words and ship logos as part of a business or
name is not exclusive of the right of the Distributor itself to use, or to
authorize others to use, the same; the Trust acknowledges and agrees that as
between the Distributor and the Trust and the Series, the Distributor has
the exclusive right so to use, or authorize others to use, said words and
logos, and the Trust agrees to take such action as may reasonably be
requested by the Distributor to give full effect to the provisions of this
section (including, without limitation, consenting to such use of said words
and logos). Without limiting the generality of the foregoing, the Trust
agrees that, upon any termination of this Agreement by either party or upon
the violation of any of its provisions by the Trust, the Trust will, at the
request of the Distributor made within six months after the Distributor has
knowledge of such termination or violation, use its best efforts to change
the name of the Trust and the Series so as to eliminate all reference, if
any, to the words "New England" and will not thereafter transact any
business in a name containing the words "New England" in any form or
combination whatsoever, or designate itself as the same entity as or
successor to any entity of such name, or otherwise use the words "New
England" or any other reference to the Distributor. Such covenants on the
part of the Trust and the Series shall be binding upon it, its trustees,
officers, shareholders, creditors and all other persons claiming under or
through it.
12. Effective Date and Termination. This Agreement shall become effective as of
the date of its execution, and
(a) Unless otherwise terminated, this Agreement shall continue in effect
with respect to the shares of the Series so long as such continuation is
specifically approved at least annually (i) by the Board of Trustees of
the Trust or by the vote of a majority of the votes which may be cast by
shareholders of the Series and (ii) by a vote of a majority of the Board
of Trustees of the Trust who are not interested persons of the
Distributor or the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may at any time be terminated on sixty days' notice to
the Distributor either by vote of a majority of the Trust's Board of
Trustees then in office or by the vote of a majority of the votes which
may be cast by shareholders of the Series.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) This Agreement may be terminated by the Distributor on ninety days'
written notice to the Trust.
Termination of this Agreement pursuant to this section shall be without payment
of any penalty.
13. Definitions. For purposes of this Agreement, the following definitions shall
apply:
(a) The "vote of a majority of the votes which may be cast by shareholders
of the Series" means (1) 67% or more of the votes of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the
holders of more than 50% of the outstanding shares of the Series
entitled to vote at such meeting are present; or (2) the vote of the
holders of more than 50% of the outstanding shares of the Series
entitled to vote at such meeting, whichever is less.
(b) The terms "affiliated person", "interested person" and "assignment"
shall have their respective meanings as defined in the 1940 Act subject,
however, to such exemptions as may be granted by the SEC under the 1940
Act.
14. Amendment. This Agreement may be amended at any time by mutual consent of
the parties, provided that such consent on the part of the Series shall be
approved (i) by the Board of Trustees of the Trust or by vote of a majority
of the votes which may be cast by shareholders of the Series and (ii) by a
vote of a majority of the Board of Trustees of the Trust who are not
interested persons of the Distributor or the Trust cast in person at a
meeting called for the purpose of voting on such approval.
15. Applicable Law and Liabilities. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
All sales hereunder are to be made, and title to the Series shares shall
pass, in Boston, Massachusetts.
16. Limited Recourse. The Distributor hereby acknowledges that the Trust's
obligations hereunder with respect to the shares of the Series are binding
only on the assets and property belonging to the Series.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
NEW ENGLAND CASH MANAGEMENT TRUST
By /s/ Frank Nesvet
-------------------------------
Frank Nesvet, Treasurer
NEW ENGLAND FUNDS, L.P.
By NEF Corporation, its general partner
By /s/ Bruce R. Speca
-------------------------------
Bruce R. Speca, Executive Vice President
A copy of the Agreement and Declaration of Trust establishing New England
Cash Management Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the trustees, officers or shareholders of the Trust individually but
are binding only upon the assets and property of the Series.
<PAGE>
EXHIBIT 99.B6(B)
NEW ENGLAND CASH MANAGEMENT TRUST -- U.S. GOVERNMENT SERIES
DISTRIBUTION AGREEMENT
AGREEMENT made this 30th day of August, 1996 by and between NEW ENGLAND CASH
MANAGEMENT TRUST, a Massachusetts business trust (the "Trust"), and NEW ENGLAND
FUNDS, L.P., a Delaware limited partnership, a Massachusetts corporation (the
"Distributor").
W I T N E S S E T H:
In consideration of the covenants hereinafter contained, the Trust and the
Distributor agree as follows:
1. Distributor. The Trust hereby appoints the Distributor as general
distributor of shares of beneficial interest ("Series shares") of the
Trust's U.S. Government Series (the "Series") during the term of this
Agreement. The Trust reserves the right, however, to refuse at any time or
times to sell any Series shares hereunder for any reason deemed adequate by
the Board of Trustees of the Trust.
2. Sale and Payment. Under this agreement, the following provisions shall apply
with respect to the sale of and payment for Series shares:
(a) The Distributor shall have the right, as principal, to purchase Series
shares from the Trust at their net asset value and to sell such shares
to the public against orders therefor and to dealers against orders
therefor, all at net asset value per share in accordance with the
provisions of the Trust's agreement and declaration of trust, and
by-laws and the current prospectus of the Trust relating to the Series
shares. No commission or other compensation for selling or obtaining
subscriptions for Series shares shall be paid by the Trust or charged as
a part of the subscription or selling price on any sale or subscription.
(b) Prior to the time of delivery of any shares by the Trust to, or on the
order of, the Distributor, the Distributor shall pay or cause to be paid
to the Trust or to its order an amount in Boston or New York clearing
house funds equal to the applicable net asset value of such shares. The
Distributor shall retain so much of any sales charge or underwriting
discount as is not allowed by it as a concession to dealers.
3. Trust Issuance of Series Shares. The delivery of Series shares shall be made
promptly by a credit to a shareholder's open account for the Series. The
Trust reserves the right (a) to issue Series shares at any time directly to
the shareholders of the Series as a stock dividend or stock split, (b) to
issue to such shareholders shares of the Trust, or rights to subscribe to
shares of the Series, as all or part of any dividend that may be distributed
to shareholders of the Series or as all or part of any optional or
alternative dividend that may be distributed to shareholders of the Series,
and (c) to sell Series shares in accordance with the current applicable
prospectus of the Trust relating to the Series shares.
4. Repurchase. The Distributor shall act as agent for the Trust in connection
with the repurchase of Series shares by the Trust to the extent and upon the
terms and conditions set forth in the current applicable prospectus of the
Trust relating to the Series shares, and the Trust agrees to reimburse the
Distributor, from time to time upon demand, for any reasonable expenses
incurred in connection with such repurchases.
5. Undertaking Regarding Sales. The Distributor shall use reasonable efforts to
sell Series shares but does not agree hereby to sell any specific number of
Series shares and shall be free to act as distributor of the shares of other
investment companies. Series shares will be sold by the Distributor only
against orders therefor. The Distributor shall not purchase Series shares
from anyone except in accordance with Section 4 and shall not take "long" or
"short" positions in Series shares contrary to the agreement and declaration
of trust or by-laws of the Trust.
6. Compliance. The Distributor shall conform to the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. (the "NASD") and the
sale of securities laws of any jurisdiction in which it sells, directly or
indirectly, any Series shares. The Distributor agrees to make timely
filings, with the Securities and Exchange Commission in Washington, D.C.
(the "SEC"), the NASD, and such other regulatory authorities as may be
required, of any sales literature relating to the Series and intended for
distribution to prospective investors. The Distributor also agrees to
furnish to the Trust sufficient copies of any agreements or plans it intends
to use in connection with any sales of Series shares in adequate time for
the Trust to file and clear them with the proper authorities before they are
put in use (which the Trust agrees to use its best efforts to do as
expeditiously as reasonably possible), and not to use them until so filed
and cleared.
7. Registration and Qualification of Series Shares. The Trust agrees to execute
such papers and to do such acts and things as shall from time to time be
reasonably requested by the Distributor for the purpose of qualifying and
maintaining qualification of the Series shares for sale under the so-called
Blue Sky Laws of any state or for maintaining the registration of the Trust
and of the Series shares under the federal Securities Act of 1933 and the
federal Investment Company Act of 1940 (the "1940 Act"), to the end that
there will be available for sale from time to time such number of Series
shares as the Distributor may reasonably be expected to sell. The Trust
shall advise the Distributor promptly of (a) any action of the SEC or any
authorities of any state or territory, of which it may be advised, affecting
registration or qualification of the Trust or the Series shares, or rights
to offer Series shares for sale, and (b) the happening of any event which
makes untrue any statement or which requires the making of any change in the
Trust's registration statement or its prospectus relating to the Series
shares in order to make the statements therein not misleading.
8. Distributor Independent Contractor. The Distributor shall be an independent
contractor and neither the Distributor nor any of its officers or employees
as such is or shall be an employee of the Trust. The Distributor is
responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to
others through its agents or employees. The Distributor assumes full
responsibility for its agents and employees under applicable statutes and
agrees to pay all employer taxes thereunder.
9. Expenses Paid by Distributor. While the Distributor continues to act as
agent of the Trust to obtain subscriptions for and to sell Series shares,
the Distributor shall pay the following:
(a) all expenses of printing (exclusive of typesetting) and distributing any
prospectus for use in offering Series shares for sale, and all other
copies of any such prospectus used by the Distributor, and
(b) all other expenses of advertising and of preparing, printing and
distributing all other literature or material for use in connection with
offering Series shares for sale.
10. Interests in and of Distributor. It is understood that any of the
shareholders, trustees, officers, employees and agents of the Trust may be a
shareholder, director, officer, employee or agent of, or be otherwise
interested in, the Distributor, any affiliated person of the Distributor,
any organization in which the Distributor may have an interest or any
organization which may have an interest in the Distributor; that the
Distributor, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest
shall not affect the validity hereof or of any transaction hereunder except
as otherwise provided in the agreement and declaration of trust or by-laws
of the Trust, in the articles of organization or by-laws of the Distributor
or by specific provision of applicable law.
11. Words "New England" and Logo. New England Life Insurance Company ("The New
England"), the parent of the Distributor, retains proprietary rights in the
words "New England" and the ship logos, both of which may be used by the
Trust and the Series only with the consent of the Distributor, which is
authorized by The New England to give such consent as provided herein. The
Distributor consents to the use by the Trust of the name "New England Cash
Management Trust" or any other name embodying the words "New England" and of
The New England's ship logos, in such forms as the Distributor shall in
writing approve, but only on condition and so long as (i) this Agreement
shall remain in full force and (ii) the Trust shall fully perform, fulfill
and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by
the Trust or the Series at any time or in any place or for any purposes or
under any conditions except as in this section provided. The foregoing
authorization by the Distributor as agent of The New England to the Trust
and the Series to use said words and ship logos as part of a business or
name is not exclusive of the right of the Distributor itself to use, or to
authorize others to use, the same; the Trust acknowledges and agrees that as
between the Distributor and the Trust and the Series, the Distributor has
the exclusive right so to use, or authorize others to use, said words and
logos, and the Trust agrees to take such action as may reasonably be
requested by the Distributor to give full effect to the provisions of this
section (including, without limitation, consenting to such use of said words
and logos). Without limiting the generality of the foregoing, the Trust
agrees that, upon any termination of this Agreement by either party or upon
the violation of any of its provisions by the Trust, the Trust will, at the
request of the Distributor made within six months after the Distributor has
knowledge of such termination or violation, use its best efforts to change
the name of the Trust and the Series so as to eliminate all reference, if
any, to the words "New England" and will not thereafter transact any
business in a name containing the words "New England" in any form or
combination whatsoever, or designate itself as the same entity as or
successor to any entity of such name, or otherwise use the words "New
England" or any other reference to the Distributor. Such covenants on the
part of the Trust and the Series shall be binding upon it, its trustees,
officers, shareholders, creditors and all other persons claiming under or
through it.
12. Effective Date and Termination. This Agreement shall become effective as of
the date of its execution, and
(a) Unless otherwise terminated, this Agreement shall continue in effect
with respect to the shares of the Series so long as such continuation is
specifically approved at least annually (i) by the Board of Trustees of
the Trust or by the vote of a majority of the votes which may be cast by
shareholders of the Series and (ii) by a vote of a majority of the Board
of Trustees of the Trust who are not interested persons of the
Distributor or the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may at any time be terminated on sixty days' notice to
the Distributor either by vote of a majority of the Trust's Board of
Trustees then in office or by the vote of a majority of the votes which
may be cast by shareholders of the Series.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) This Agreement may be terminated by the Distributor on ninety days'
written notice to the Trust.
Termination of this Agreement pursuant to this section shall be without payment
of any penalty.
13. Definitions. For purposes of this Agreement, the following definitions shall
apply:
(a) The "vote of a majority of the votes which may be cast by shareholders
of the Series" means (1) 67% or more of the votes of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the
holders of more than 50% of the outstanding shares of the Series
entitled to vote at such meeting are present; or (2) the vote of the
holders of more than 50% of the outstanding shares of the Series
entitled to vote at such meeting, whichever is less.
(b) The terms "affiliated person", "interested person" and "assignment"
shall have their respective meanings as defined in the 1940 Act subject,
however, to such exemptions as may be granted by the SEC under the 1940
Act.
14. Amendment. This Agreement may be amended at any time by mutual consent of
the parties, provided that such consent on the part of the Series shall be
approved (i) by the Board of Trustees of the Trust or by vote of a majority
of the votes which may be cast by shareholders of the Series and (ii) by a
vote of a majority of the Board of Trustees of the Trust who are not
interested persons of the Distributor or the Trust cast in person at a
meeting called for the purpose of voting on such approval.
15. Applicable Law and Liabilities. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
All sales hereunder are to be made, and title to the Series shares shall
pass, in Boston, Massachusetts.
16. Limited Recourse. The Distributor hereby acknowledges that the Trust's
obligations hereunder with respect to the shares of the Series are binding
only on the assets and property belonging to the Series.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
NEW ENGLAND CASH MANAGEMENT TRUST
By /s/ Frank Nesvet
--------------------------------
Frank Nesvet, Treasurer
NEW ENGLAND FUNDS, L.P.,
By NEF Corporation, its general partner
By /s/ Bruce R. Speca
--------------------------------
Bruce R. Speca, Executive Vice President
A copy of the Agreement and Declaration of Trust establishing New England
Cash Management Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the trustees, officers or shareholders of the Trust individually but
are binding only upon the assets and property of the Series.
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EXHIBIT 99.B6(C)
NEW ENGLAND FUNDS, L.P.
399 Boylston Street
Boston, Massachusetts 02116
DEALER AGREEMENT
As dealer for our own account, we offer to sell to you shares of each of the
Funds listed on Exhibit A hereto as from time to time revised by us (the "Funds"
and each a "Fund"), of each which Funds we are a principal underwriter as
defined in the Investment Company Act of 1940 (the "Act") and from which we have
the right to purchase shares.
With respect to each of the Funds (except for paragraph 4, which applies only
with respect to each Fund having in effect from time to time a service plan or
service and distribution plan adopted pursuant to Rule 12b-1 under the Act):
1. In all sales of shares of the Fund to the public you shall act as dealer for
your own account, and in no transaction shall you have any authority to act as
agent for any of the Funds or for us.
2. Orders received from you will be accepted by us only at the public offering
price applicable to each order, except for transactions to which a reduced
offering price applies as provided in the then current Prospectus (which term as
used herein shall include the Statement of Additional Information) of the Fund.
The minimum dollar purchase of shares of each Fund by any investor shall be the
applicable minimum amount described in the then current Prospectus of the fund
and no order for less than such amount will be accepted hereunder. The public
offering price shall be the net asset value per share plus the sales charge, if
any, applicable to the transaction, expressed as a percentage of the public
offering price, as determined and effective as of the time specified in the then
current Prospectus of the Fund. The procedures relating to the handling of
orders shall be subject to any instructions that we shall forward from time to
time to you. All orders are subject to acceptance or rejection by us in our sole
discretion. You hereby agree to comply with the attached Policies and Procedures
with Respect to the Sales of Shares of New England Funds Offering Multiple
Classes of Shares.
3. The sales charge applicable to any sale of Fund shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Fund shares accepted by us shall be set forth in the then current Prospectus of
the Fund. You may be deemed to be an underwriter in connection with sales by you
of shares of the fund where you receive all or substantially all of the sales
charge as set forth in the Fund's Prospectus, and therefore you may be subject
to applicable provisions of the Securities Act of 1933.
We are entitled to a contingent deferred sales charge ("CDSC") on redemptions
within five years of purchase on any Class B shares sold and within one year of
purchase of certain Class A shares sold as described in the Prospectus. You
agree that you will sell shares subject to a CDSC and that are to be held in
omnibus accounts only if you are a NETWORKING participant with the National
Securities Clearing Corporation and if such accounts are pursuant to a
NETWORKING Agreement.
Reduced sales charges or no sales charge may apply to certain transactions under
letter of intent, combined purchases or investments, reinvestment of dividends
and distributions, repurchase privilege, unit investment trust distribution
reinvestment or other programs, as described in the then current Prospectus of
the Fund.
4. RULE 12B-1 PLANS. The substantive provisions of this Paragraph 4 have been
adopted pursuant to Rule 12-b1 under the Act by certain funds, under plans
pursuant to such Rule (each a "Plan")
(a) You agree to provide (i) for the Funds with a Service Plan, personal
services to investors in shares of the Funds and/or the maintenance of
shareholder accounts and (ii) for those Funds with a Service and Distribution
Plan, both personal services to investors in shares of the funds and/or the
maintenance of shareholder accounts and also distribution and marketing services
in the promotion of Fund shares. As compensation for these services, we shall
pay you, with respect to Fund shares which are owned of record by your firm as
nominee for your customers or which are owned by those shareholders whose
records, as maintained by the Fund or its agent, designate your firm as the
shareholder's dealer of record, a quarterly services fee or services fee and
distribution fee based on the average daily net asset value of such Fund shares
at the rate set forth with respect to the Fund in Exhibit A hereto as from time
to time revised by us. No such fee will be paid to you with respect to shares
purchased by you and redeemed or repurchased by the Fund or by us as an agent
within seven (7) business days after the date of our confirmation of such
purchase. No such fee will be paid to you with respect to any of your customers
if the amount of such fee based upon the value of such customer's Fund shares
will be less than $5.00 Normally, payment of such fee to you shall be made
within forty-five(45) days after the close of each quarter for which such fee is
payable.
(b) You shall furnish us and the Fund with such information as shall reasonably
be requested by the Trustees or Directors of the Fund with respect to the fees
paid to you pursuant to this paragraph 4.
(c) The provisions of this Paragraph 4 may be terminated by the vote of a
majority of the Trustees or Directors of the Fund who are not interested persons
of the fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan, or by a vote of
a majority of the Fund's outstanding shares, on sixty (60) days' written notice,
without payment of any penalty. Such provisions will be terminated also by any
act that terminates either the Fund's Distributor's Contract or Underwriting
Agreement with us or this Dealer Agreement and shall terminate automatically in
the event of the assignment (as that term is defined in the Act) of this dealer
Agreement.
(d) The provisions of the Distributor's Contract or Underwriting Agreement
between the Fund and us, insofar as they relate to the Plan, are incorporated
herein by reference. The provisions of this paragraph of this paragraph 4 shall
continue in full force and effect only so long as the continuance of the Plan,
the Distributor's Contract or Underwriting Agreement and these provisions is
approved at least annually by a vote of the Trustees or Directors, including a
majority of the Trustees or Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in he operation of the
plan or in any agreements related tot he plan, cast in person at a meeting
called for the purpose of voting thereon.
5. You agree to purchase shares only from us or from your customers. If you
purchase shares from us, you agree that all such purchases shall be made only:
(a) to cover orders already received by you from your customers; (b) for shares
being acquired by your customers pursuant to either Exchange privilege or the
Reinvestment Privilege, as described in the then current prospectus of the Fund;
(c) for your own bona fide investment; or (d) for investments by any IRS
qualified pension, profit sharing or other trust established for the benefit of
your employees or for investments in Individual Retirement Accounts established
by your employees, and if you so advise us in writing prior to any sale of Fund
shares pursuant to this subparagraph (d), you agree to waive all your dealer
concessions to all sales of Fund shares pursuant to this subparagraph (d). If
you purchase shares from your customers, you agree to pay such customers not
less than the applicable redemption price as established by the then current
Prospectus of the Fund. We agree that we will not purchase any securities from
the Fund except for our own bona fide investment purposes for the purpose of
covering purchase orders that we have already received or for shares to be
acquired by our customers pursuant to either exchange privilege or the
repurchase privilege, as described in the then current prospectus of the Fund.
6. You sell shares only:(a) to customers at the applicable public offering
price, except for shares being acquired by your customers at net asset value
pursuant to either the exchange privilege or the repurchase privilege as
described in the then current Prospectus of the Fund, and (b) to us agent for
the Fund at the redemption price. In such a sale to us, you may act as either as
principal for your own account or as agent for your customer. If you act as
principal for your own account in purchasing shares for resale to us, you agree
to pay your customer not less than the price that you receive from us. If you
act as an agent for your customer in selling shares to us, you agree not to
charge your customer more than a fair commission for handling the transaction,
except that you agree to receive no compensation of any kind based on the
reinvestment of redemption or repurchase proceeds pursuant to the repurchase
privilege, as described in the current Prospectus of the Fund.
7. You hereby certify that all of your customers' taxpayer identification
numbers ("TIN") or social security numbers ("SSN") furnished to us by you are
correct and that you will not open an account without providing the customer's
TIN or SSN.
8. You shall not withhold placing with us orders received from your customers so
as to profit yourself as a result of such withholding; e.g., by a change in the
net asset value from that used in determining the public offering price to your
customers.
9. We will not accept from you any conditional orders for shares.
10. If any Fund shares sold to you under the terms of this Agreement are
redeemed by the Fund or repurchased by us as agent for the Fund within seven (7)
business days after the date of our confirmation of the original purchase by
you, it is agreed that you shall forfeit your right to the dealer concession or
commission received by you on such Fund shares.
We will notify you of any such repurchase or redemption within ten (10) business
days after the date thereof and you shall forthwith refund to us the entire
concession or commission allowed or paid to you on such sale. We agree, in the
event of any such repurchase or redemption, to refund to the Fund the shares of
the sales charge if any, retained by us an upon receipt from you of the
concession allowed to you on Class A Shares, to pay such refund forthwith to the
Fund.
11. Payment for Fund shares sold to you shall be made on or before the
settlement date specified in our confirmation, at the office of our clearing
agent, and by check payable to the order or the Fund, which reserves the right
to delay issuance, redemption or transfer of shares until such check has
cleared. If such payment is not received by us, we reserve the right, without
notice, forthwith either to cancel the sale, or at our option, to sell the
shares ordered back to the Fund, resulting your failure to make payment as
aforesaid.
12. You will also act as principal in all purchases by a shareholder for whom
you are the dealer of record of fund shares with payments sent directly by such
shareholder by such shareholder to the Shareholder Services and Transfer agent
(the "Agent") specified in the then current Prospectus of the Fund, and you
authorize and appoint the Agent to execute and confirm such purchases to such
shareholder on your behalf. The Agent will remit monthly to you the amount of
any concessions due with respect to such purchases, except that no concessions
will be paid to you on any transaction for which your net sales concession is
less than the total of $5.00 in any one month. You also represent that with
respect to all such direct purchases by such shareholder, you may lawfully sell
shares of such Fund in the state designated as such shareholder's record
address.
13. Stock certificates for shares sold to you shall be issued only if
specifically requested and upon terms specified from time-to-time by the
Trustees of the Fund. If no open account registration or transfer instructions
are received by the Agent within 20 days after payment by you for shares sold to
you, an open account for such shares will be established in your name. You agree
to hold harmless and indemnify us, the Agent and the Fund, for any loss or
expenses resulting from such open account registration of such shares.
14. No person is authorized to make any representations concerning shares of the
Fund except those contained in the then current Prospectus of the Fund and in
sales literature issued by us supplemental to such Prospectus. In purchasing
shares from us, you shall rely solely on the representations contained in such
Prospectus and such sales literature. We will furnish you with additional copies
such Prospectus and such sales literature and other releases and information
issued by us in reasonable quantities upon request.
If, with permission from us, you use any advertisement or sales literature which
has not been supplied by us, you are responsible for ensuring that the material
complies with all applicable regulations and has been filed with the appropriate
authorities. Also, you will send us copies of all such materials within (10)
days of first use.
15. The Fund reserves the right in its discretion and we reserve the right in
our discretion, without notice, to suspend sales or withdraw the offering of
Fund shares entirely. We reserve the right, by written notice to you, to amend,
modify or cancel this Dealer Agreement. Notice for all purposes shall be deemed
to be given when mailed or electronically transmitted to you.
16. This Dealer Agreement shall replace any prior agreement between you and us
and is conditioned upon your representation and warranty that you are a member
of the National Association of Securities Dealers, Inc. Or, in the alternative,
that you are a foreign sealer not eligible for membership in that Association,
in which case you agree that, in making any sales to purchasers within the
United States of securities acquired from us, you will conform to the provisions
of paragraphs (a) and (b) of Rule 25 of Article III of that Association's Rules
of Fair Practice. You and we agree to abide by the Rules and Regulations of the
National Association of Securities Dealers, Inc. Including without limitation
Rules 2,21, and 26 of Article III of its Rules of Fair Practice, and all
applicable state and federal laws, rules and regulations.
You will not offer Fund shares for sale in any state (a) where they are not
qualified for sale under the blue sky laws and regulations of such state of (b)
where you are not qualified to act as a dealer.
In the event that you offer fund shares outside the United States, you agree to
comply with the applicable laws, rules and regulations of the foreign government
having jurisdiction over such sales, including any regulations of United States
military authorities applicable to solicitations to military personnel.
17. All communications to us should be sent to the above address. Any notice to
you shall be duly given if mailed or telegraphed to you at the address specified
by you below. This Agreement shall be effective when accepted by you below and
shall be construed under the laws of the Commonwealth of Massachusetts.
Accepted: New England Funds, L.P.
By:
- -------------------------------------- -----------------------------------
Dealer's Name
Address
- --------------------------------------
By:
- --------------------------------------
Authorized Signature of Dealer
- --------------------------------------
(Please print name)
Date:
- --------------------------------------
<PAGE>
DEALER AGREEMENT ADDENDUM I
The following is a supplement to item number 3 in your current Agreement with
New England Funds, L.P.
We are entitled to a contingent deferred sales charge ("CDSC") on redemptions
within five years of purchase on any Class B shares sold and within one year of
purchase of certain Class A shares sold as described in the prospectus. You
agree that you will sell shares subject to CDSC and that are to be held in
omnibus accounts only if you are a NETWORKING participant with the National
Securities Clearing Corporation and if such accounts are pursuant to a
NETWORKING Agreement.
<PAGE>
EXHIBIT B8(A)
CUSTODIAN AGREEMENT
AGREEMENT made as of this 30th day of September, 1980 by and between
NEL CASH MANAGEMENT TRUST, a Massachusetts business trust having its principal
place of business at 501 Boylston Street, Boston, Massachusetts (herinafter
called the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
banking corporation, having its principal place of business at 225 Franklin
Street, Boston, Massachusetts (heinafter called "State Street").
WITNESSTH THAT:
In consideration of the mutual agreements herein contained, the Fund
and State Street, intending to be legally bound, hereby agree as follows:
I. DEPOSITORY
The Fund agrees to and does hereby appoint State Street its depository
subject to the provisions hereof, and likewise agrees to deliver to State Street
certified or authenticated copies of its Agreement and Declaration of Trust and
By-Laws, all amendments thereto, a certified copy of the resolution of the
Trustees appointing State Street to act in the capacities covered by this
Agreement and authorizing the signing of this Agreement and copies of such
resolutions of its Trustees, contracts and other documents as may be required by
State Street in the performance of its duties hereunder.
II. CUSTODIAN
1. The Fund agrees to and does hereby appoint State Street its
Custodian, subject to the provisions hereof, and likewise, subject to the
provisions hereof, agrees that State Street shall retain all securities and cash
now owned or hereafter acquired by the Fund, and the Fund also agrees to deliver
and pay or cause to be delivered and paid to State Street, as Custodian, all
securities and cash hereafter acquired by the Fund.
2. All securities delivered to State Street (other than in bearer form)
shall be properly endorsed and in form for transfer or in the name of State
Street or of a nominee of State Street or in the name of the Fund or of a
nominee of the Fund.
3. As Custodian, State Street shall have and perform the following
powers and duties:
A. Safekeeping. To keep safely in a separate account the securities of
the Fund and on behalf of the Fund, from time to time, to receive delivery of
certificates for safekeeping and to keep such certificates physically segregated
at all times from those of any other person. State Street shall maintain records
of all receipts, deliveries and locations of such securities, together with a
current inventory thereof and shall conduct periodic physical inspections of
certificates representing bonds and other securities held by it under this
Agreement in such manner as State Street shall determine from time to time to be
advisable in order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Paragraph 6-C of Section II
hereof, and with respect to securities held by an Sub-Custodian appointed
pursuant to paragraph 6-D of Section II hereof, State Street may rely upon
certificates from such agent as to holdings of such agent and from such
Sub-Custodian as the holdings of such Sub-Custodian, it being understood that
such reliance in no way relieves State Street of its responsibilities under this
Agreement. State Street will promptly report to the Fund the results of such
inspections, indicating any shortages or discrepancies uncovered thereby, and
take appropriate action to remedy any such shortages or discrepancies.
B. Deposit of Fund Assets in Securities Systems. State Street may, upon
approval of the Fund, deposit and/or maintain securities owned by the Fund in a
clearing agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to hereinas
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any and subject to
the following provisions:
1.) State Street may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of State Street in the Securities System which shall
not include any assets of State Street other than assets held as a
fiduciary, custodian or otherwise for customers;
2.) The records of State Street with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3.) State Street shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of State Street to reflect such
payment and transfer for the account of the Fund. State Street
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of State Street to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by
State Street and be provided to the Fund at its request. State
Street shall furnish the Fund confirmation of each transfer to from
the account of the Fund in the form of a written advice or notice
and shall furnish to the Fund copies of the daily transactions
sheets reflecting each day's transactions in the Securities System
for the account of the Fund on the next business day;
4) State Street shall provide the Fund with any report obtained by
State Street on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) Anything to the contrary in this Agreement notwithstanding, State
Street shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of State Street or any of its
agents or any of its or their employees or from failure of State
Street or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of State
Street with respect to any claim against the Securities System or
any other person which State Street may have as a consequence of
any such loss or damage if and to the extent that the Fund has not
been made whole for any such loss or damage.
C. Registered Name, Nominee. To register securities of the Fund held by
State Street in the name of the Fund or of any nominee of the Fund or in the
name of State Street or of any nominee of State Street or in the name of any
agent or any nominee of such agent pursuant to Paragraph 6-C of Section II
hereof or in the name of any Sub-Custodian or any nominee of any such
Sub-Custodian or any nominee of any such Sub-Custodian appointed pursuant to
Paragraph 6-D Section II hereof.
D. Purchases. Upon receipt of proper instructions, and insofar as cash
is available for the purpose, to pay for and receive all securities purchased
for the account of the Fund, payment being made only upon receipt of the
securities by State Street (or by any bank, banking firm, responsible commercial
agent or trust company doing business in the United States and/or any foreign
country and appointed by State Street pursuant to Paragraph 6-C of Section II
hereof as State Street's agent for this purpose or appointed as Sub-Custodian
pursuant to Paragraph 6-D of Section II hereof), registered as provided in
Paragraph 3-C of Section II hereof or in form for transfer satisfactory to State
Street, or in the case of repurchase agreements entered into between the Fund
and State Street, or another bank, (i) against delivery of the securities either
in certificate form or through an entry crediting State Street's account at the
Federal Reserve Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Fund of securities owned by State Street
along with written evidence of the agreement by State Street to repurchase such
securities from the Fund. All securities accepted by State Street shall be
accompanied by payment of, or a "due bill" for, any dividends, interest or other
distributions of the issuer, due the purchaser. Except as otherwise provided
with respect to repurchase agreements in this Paragraph 3-D of Section II
hereof, in any and every case of a purchase of securities for the account of the
Fund where payment is made by state Street in advance of receipt of the
securities purchased, State Street shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received by
State Street.
E. Exchanges. Upon receipt of proper instructions, to exchange
securities or interim receipts or temporary securities held by it or by any
agent appointed by it pursuant to Paragraph 6-C of Section II hereof or any
Sub-Custodian appointed pursuant to Paragraph 6-D of Section II hereof for the
account of the Fund for other securities alone or for other securities and cash,
and to expend cash insofar as cash is available, in connection with any merger,
consolidation, reorganization, recapitalization, split-up of shares, charges of
par value, conversion or in connection with the exercise of warrants,
subscription or purchase rights or otherwise; to deposit any such securities and
case in accordance with the terms of any reorganization or protective plan or
otherwise, and to deliver securities to the designated depository or their
receiving agent in response to tender offers or similar offers to purchase
received in writing. Except as instructed by proper instructions received in
timely enough fashion for State Street to act thereon prior to any expiration
date (which shall be presumed to be three business days prior to such date
unless State Street has advised the Fund of a different period) and giving full
details of the time and method of submitting securities in response to any
tender or similar offer, exercising any subscription or purchase right or making
any exchange pursuant to this Paragraph and subject to State Street having
fulfilled its obligations under Paragraph 6-G of Section II hereof pertaining to
notices or announcements, State Street shall be under no obligation regarding
any tender or similar offer, subscription or purchase or exchange except to
exercise its best efforts. When such securities are in the possession of an
agent appointed by State Street pursuant to Paragraph 6-C of Section II hereof,
the proper instructions referred to in the preceding sentence must be received
by State Street in timely enough fashion (which shall be presumed to be four
business days unless State Street has advised the Fund of a different period)
for State Street to notify the agent in sufficient time to permit such agent to
act prior to any expiration date. When the securities are in the possession of a
Sub-Custodian appointed pursuant to Paragraph 6-D of Section II hereof, the
proper instructions must be received by the Sub-Custodian in timely enough
fashion as advised to the Fund by State Street or the Sub-Custodian to permit
the Sub-Custodian to act prior to any expiration date.
F. Sales. Upon receipt of proper instructions and upon receipt of
payment therefor to make delivery of securities which have been sold for the
account of the Fund. All such payments are to be made in cash, by a certified
check upon or a treasurer's or cashier's check of a bank, by effective bank wire
transfer through Federal Reserve Wire System or, if appropriate, outside of the
Federal Reserve Wire System and subsequent credit to the Fund's Custodian
account, or, in the case of delivery through a stock clearing company, by
book-entry credit by the stock clearing company in accordance with the then
current street custom.
G. Purchases by issuer. Upon receipt of proper instructions to release
and deliver securities owned by the Fund to the Issuer thereof or its agent when
such securities are called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other consideration is to be
delivered to State Street.
H. Changes of Name and Denomination. Upon receipt of proper
instructions to release and deliver securities owned by the Fund to the Issuer
thereof or its agent for transfer into the name of the Fund or State Street or
nominee of either, or for exchange for a different number of bonds,
certificates, or other evidence representing the same aggregate face amount or
number of units bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the new securities are to
be delivered to State Street.
I. Street Delivery. Upon receipt of proper instructions, which in the
case of registered securities may be standing instructions, to release and
deliver securities owned by the Fund to the broker selling the same for
examination in accordance with the then current "street delivery" custom.
J. Release of Securities for Use as Collateral. Upon receipt of proper
instructions, to release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to State Street of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for that purpose.
Upon receipt of proper instructions, to pay such loan upon redelivery to it of
the securities pledged or hypothecated therefor an upon surrender of the note or
notes evidencing the loan.
K. Release or Delivery of Securities for Other Purposes. Upon receipt
of proper instructions, to release or deliver any securities held by it for the
account of the Fund for any other purpose (in addition to those specified in
Paragraphs 3-E,3-F, 3-G,3-H, 3-I, and 3-J of Section II hereof) which the Fund
declares is a proper corporate purpose pursuant to the proper instructions
described in Paragraph 5-A of Section II hereof.
L. Miscellaneous. In general, to attend to all nondiscretionary details
in connection with the sale, exchange, substitution, purchase, transfer or other
dealing with such securities or property of the Fund except as otherwise from
time to time directed by proper instructions. State Street shall render to the
Fund an itemized statement of the securities for which it is accountable to the
Fund under this Agreement as of the end of each month, as well as a list of all
security transactions that remain unsettled at such time.
4. As Custodian, State Street shall have and perform the following
additional powers and duties:
A. Bank Account. To retain all cash, other than cash maintained by the
Fund in a bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940, of the Fund in the banking department of
State Street in a separate account or accounts in the name of the Fund, subject
only to draft or order by State Street acting pursuant to the terms of this
agreement. If and when authorized by proper instructions in accordance with a
vote of the majority of the Trustees of the Fund, State Street may open and
maintain an additional account or accounts in such other bank or trust companies
as may be designated by such instructions, such account or accounts, however, to
be in the name of State Street in its capacity as Custodian and subject only to
its draft or order in accordance with the Terms of this Agreement. If requested
by the Fund, State Street shall furnish the Fund, not later than twenty (20)
calendar days after the last business day of each month, a statement reflecting
the current status of its internal reconciliation of the closing balance as of
that day in all accounts described in this Paragraph to the balance shown on the
daily cash report for that day rendered to the Fund.
B. Collections. Unless otherwise instructed by receipt of proper
instructions, to collect, receive and deposit in the bank account or accounts
maintained pursuant to Paragraph 4-A of Section II hereof all income and other
payments with respect to the securities held hereunder, and to execute ownership
and other certificates and affidavits for all Federal and State tax purposes in
connection with the collection of bond and note coupons, and to do all other
things necessary or proper in connection with the collection of such income, and
without waiving the generality of the foregoing, to:
(1) present for payment on the date of payment all coupons and
other income items requiring presentation;
(2) present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable on the date
such securities become payable;
(3) endorse and deposit for collection, in the name of the Fund,
checks, drafts or other negotiable instruments on the same day as
received.
In any case in which State Street does not receive any such due and unpaid
income within a reasonable time after it has made proper demands for the same
(which shall be presumed to consist of at least three demand letters and at
least one telephonic demand), it shall so notify the fund in writing, including
copies of all demand letters, any written responses thereto, and memoranda of
all oral responses thereto and to telephonic demands, and await proper
instructions; State Street shall not be obligated to take legal action for
collection unless and until reasonably indemnified to its satisfaction. It shall
also notify the Fund as soon as reasonably practicable whenever income due on
securities is not collected in due course.
C. Sale of Shares of the Fund. To make such arrangements with the
Transfer Agent of the Fund, which may be State Street, as will enable State
Street to make certain it receives the cash consideration due to the Fund for
shares of the Fund as may be issued or sold from time to time by the Fund, all
in accordance with the Trust's Agreement and Declaration of Trust. In connection
with such issuance of shares of the Fund, State Street shall make arrangements
with the Transfer Agent as shall insure the timely notification to the Transfer
Agent and to the Fund of receipt of Federal funds by State Street by means of
the Federal Reserve Wire System or of the receipt of funds by other bank wire
transfers in payment for the issuance of such shares.
At 9:00 a.m. on the second business day after the deposit of a check
into the Fund's account, State Street agrees to make Federal funds available to
the Fund in the amount of the check.
D. Dividends and Distributions. Upon receipt of proper instructions,
which may be continuing instructions when deemed ppropriate by the parties, to
release or otherwise apply cash insofar as available, for the payment of
dividends or other distributions to stockholders of the Fund.
E. Redemption of Shares of the Fund. From such funds as may be
available for the purpose but subject to the limitations of Agreement and
Declaration of Trust, and applicable resolutions of the Trustees of the Fund
pursuant thereto, to make funds available for payment to shareholders who have
delivered to the Transfer Agent a request for redemption of their shares by the
Fund pursuant to said Agreement and Declaration of Trust.
In connection with the redemption of shares of the Fund pursuant to the
Agreement and Declaration of Trust, State Street is authorized and directed upon
receipt of instructions from the Transfer Agent for the Fund to make funds
available for transfer through the Federal Reserve Wire System or by other bank
wire to a commercial bank account designated by the redeeming shareholder.
F. Disbursements. Upon receipt of proper instructions, to make or cause
to be made, insofar as cash is available for the purpose, disbursements for the
payment on behalf of the Fund of interest, taxes, management or supervisory fees
and operating expenses, including registration and qualification costs and other
expenses of issuing and selling shares or changing its capital structure,
whether or not such expenses shall be in whole or in part capitalized or treated
as deferred expenses.
G. Other Proper Corporate Purposes. Upon receipt of proper
instructions, to make or cause to be made, insofar as cash is available,
disbursements for any other purpose (in addition to the purposes specified in
paragraphs 3-D, 3-E, 4-D, 4-E and 4-F of this Agreement) which the Fund declares
is a proper corporate purpose pursuant to the proper instructions described in
paragraph 5-A below.
H. Records. To create, maintain and retain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations under this Agreement in such manner as will meet the obligations of
the Fund under the Investment Company Act of 1940, particularly Section 31
thereof and Rules 31a-1 and 31a-2 thereunder, applicable Federal and State tax
laws and any other law or administrative rules or procedures which may be
applicable to the Fund. All records maintained by State Street in connection
with the performance of its duties under this Agreement will remain the property
of the Fund and in the event of termination of this Agreement will be delivered
in accordance with the terms of Paragraph 8 below.
I. Accounts. To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof
from time to time as requested by the Treasurer or any Executive Officer of the
Fund.
J. Appraisals. Unless otherwise directed by receipt of proper
instructions, to compute and determine, as of the close of business of the New
York Stock Exchange, the "net asset value" of a share in the Fund, such
computation and determination to be made pursuant to the provisions of the
Agreement and the Declaration of Trust of the Fund, by a vice president,
assistant vice president or assistant secretary of the Custodian; and promptly
to notify the Fund of the result of such computation and determination. In
computing the "net asset value" State Street shall rely upon security quotations
received by telephone or otherwise from sources designated by the Fund by proper
instruction and may further rely upon information furnished to it by any officer
of the Fund thereunto duly authorized relative (a) to liabilities of the Fund
not appearing on its books of account, (b) to the existence, status and proper
treatment of any reserve or reserves and (c) to the fair value of any security
of any other property for which market quotations are not readily available.
K. Determination of Net Income. Upon receipt of proper instructions,
which may be continuing instructions of when deemed appropriate by the parties,
State Street shall calculate daily the "net income" of the Fund in a manner
consistent with the Agreement and Declaration of Trust and in accordance with
the then current prospectus of the Fund, and shall advise the fund and the
Transfer Agent daily of the total amount of such "net income".
L. Miscellaneous. To assist generally in the preparation of routine
reports to holders of shares of the Fund, to the Securities and Exchange
Commission, including forms N-1R and N-1Q, to State "Blue Sky" authorities and
to others in the auditing of accounts and in other matters of like nature.
5. A. Proper Instructions. State Street shall be deemed to have
received proper instructions upon receipt of written instructions signed by a
majority of the Trustees of the Fund or by one or more person or persons as the
Trustees shall have from time to time authorized to give the particular class of
instructions in question. Different persons may be authorized to give
instructions for different purposes. A certified copy of a resolution or action
of the Trustees may be received and accepted by State Street as conclusive
evidence of the authority of any such person or persons to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms.
B. Investments, Limitations. In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Fund, State Street may take cognizance of the
provisions of the Agreement and Declaration of Trust of the Fund as from time to
time amended; however, except as otherwise expressly provided herein, it may
assume unless and until notified in writing to the contrary that instructions
purporting to be proper instructions received by it are not in conflict with or
in any way contrary to any provision of the Agreement and Declaration of Trust
and By-Laws of the Fund as amended, or resolutions or proceedings of the
Trustees of the Fund.
6. State Street and the Fund further agree as follows:
A. Indemnification. State Street, as Depository and Custodian, shall be
entitled to receive and act upon advice of counsel (who may be counsel for the
Fund) and shall be without liability for any action reasonable taken or thing
reasonable done pursuant to such advice, provided that such action is not in
violation of applicable Federal or State laws or regulations, and shall be kept
indemnified by the Fund and be without liability for any action taken or thing
done by it in good faith and without negligence. In order that the
indemnification provision contained in this Paragraph 6-A of Section II shall
apply, however, it is understood that if any case the Fund may be asked to
indemnify or save State Street harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that State Street will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund. The Fund shall have the option to defend State Street against any
claim which may be the subject of this indemnification, and in the event that
the Fund so elects it will so notify State Street, and thereupon the Fund shall
take over complete defense of the claim, and State Street shall in such
situations initiate no further legal or other expenses for which it shall seek
indemnification under this Paragraph 6-A of Section II. II. State Street shall
in no case confess any claim or make any compromise in any case in which the
Fund will be asked to indemnify except with the Funds prior written consent.
B. Expense Reimbursement. State Street shall be entitled to receive
from the Fund on demand reimbursement for its cash disbursements, expenses and
charges in connection with its duties as Depository and Custodian as aforesaid,
but excluding salaries and usual overhead expenses.
C. Appointment of Agents. State Street, as Custodian, may at any time
or times appoint (and may at any time remove) any other bank, trust company or
responsible commercial agent as its agent to carry out such of the provisions of
this Agreement as State Street may from time to time direct, provided, however,
that the appointment of any of its responsibilities under this Agreement.
D. Appointments of Sub-Custodian. State Street, as the Custodian, may
form time to time employ one or more Sub-Custodians meeting the terms and
conditions set forth in Section 9.4(a) of the Fund's By-Laws, subject to prior
approval by the Fund, and provided that State Street shall have no more
responsibility or liability to the Fund on account of any actions or omissions
of any Sub-Custodian so employed, than any such Sub-Custodian has to State
Street.
E. Reliance on Documents. So long as and to the extent that it is in
the exercise of reasonable care, State Street as Depository and Custodian, shall
not be responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to this
Agreement, and shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonable believed
by it to be genuine and to have been properly executed in accordance with
Paragraph 5-A of Section II hereof and shall, except as otherwise specifically
provided in this Agreement, be entitled to receive as conclusive proof any fact
or matter required to be ascertained by it hereunder a certificate signed by any
Trustee or Secretary of the Fund or any other person authorized by the Trustees.
F. Access to Records. Subject to security requirements of State Street
applicable to its own employees having access to similar records within State
Street and such regulations as to the conduct of such monitors as may be
reasonable imposed by State Street after prior consultation with an officer of
the Fund, the books and records of State Street pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times by the
Trustees of, attorneys for, and auditors employed by, the Fund.
G. Forwarding of Notices. State Street shall promptly forward to the
Fund all tender offers, exchange offers, notices and announcements received by
it relating to any securities held by it as Custodian for the Fund.
H. Record Keeping. State Street shall maintain such records as will
enable the Fund to comply with the requirements of all Federal and State Laws
and regulations applicable to the Fund with respect to the matters covered by
this Agreement, including but not limited to the requirements of Item 28 of Form
N-1R.
7. The Fund shall pay to State Street as Depository and Custodian, the
compensation set forth on Exhibit A hereto until a different compensation
schedule shall be agreed upon in writing between the parties.
8. State Street and the Fund further agrees as follows:
A. Effective Period, Termination and Amendment, and Interpretive and
Additional Provisions. This Agreement shall become effective as of the date of
its execution, shall continue in full force and effect until terminated as
herinafter provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an instrument in writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect not sooner than sixty (60) days after the date of such delivery or
mailing; provided, however, that the Fund shall not amend or terminate this
Agreement in contravention of any applicable Federal or State laws or
regulations, or any provision of the Agreement and Declaration of Trust or
By-Laws as the same may at any time by action of its Trustees substitute another
bank or trust company for State Street by giving notice as above to State
Street.
In connection with the operation of this Agreement, State Street and
the Fund may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion to be
consistent with the general tenor of this Agreement, any such interpretive or
additional provisions to be signed by both parties and annexed hereto, provided
that no such interpretive or additional provisions shall contravene any
applicable Federal or State laws or regulations, or any provision of the
Agreement and Declaration of Trust or By-Laws as the same may from time to time
be amended. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
B. Successor Custodian. Upon termination hereof the Fund shall pay to
State Street such compensation as may be due as of the date of such termination
and shall likewise reimburse State Street for its costs, expenses and
disbursements incurred prior to such termination in accordance with Section 6-B
of Section II hereof and such reasonable costs, expenses and disbursements as
may be incurred by State Street in connection with such termination.
If a successor custodian is appointed by the Trustees in accordance
with the By-Laws, State Street shall, upon termination, deliver to such
successor custodian at the office of State Street, duly endorsed and in form for
transfer, all securities then held hereunder and all funds or other properties
of the Fund deposited with or held by it hereunder.
If no such successor custodian is appointed, State Street shall, in
like manner at its office, upon receipt of a certifies copy of resolution of the
shareholders pursuant to the By-Laws, deliver such securities, funds and other
properties in accordance with such resolution.
In the event that no written order designating a successor custodian or
certified copy of a resolution of the shareholders shall have been delivered to
State Street on or before the date when such termination shall become effective,
then State Street shall have the right to deliver to a bank or trust company
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report of not less than $25,000,000, all securities, funds and other
properties held by State Street and all instruments held by it relative thereto
and all other property held by it under this Agreement. Thereafter, such bank or
trust company shall be the successor of State Street under this Agreement.
In the event that securities, funds and other properties remain in the
possession of State Street after the date of termination hereof owing to failure
of the Fund to procure the certified copy above referred to , or of the Trustees
to appoint a successor custodian, State Street shall be entitled to fair
compensation for its services during such period and the provisions of this
Agreement relating to the duties and obligations of State Street shall remain in
full force and effect.
9. The Fund shall not circulate any printed matter which contains any
reference to State Street without the prior written approval of State Street,
except solely such printed matter as merely identifies State Street as
Depository and/or Custodian. The Fund will submit printed matter requiring
approval to State Street in draft form, allowing sufficient time for review by
State Street and its counsel prior to any deadline for printing.
10. This instrument is executed and delivered in the Commonwealth of
Massachusetts and shall be subject to and be construed according to laws of said
Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to
the Fund at 501 Boylston Street, Boston, Massachusetts, or to State Street at
225 Franklin Street, Boston, Massachusetts, 02110 or to such other address as
the Fund or State Street may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
12. This Agreement shall be binding on and shall inure to the benefit
of the Fund and State Street and their respective successors.
13. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: NEL CASH MANAGEMENT TRUST
/s/HENRY L.P. SCHMELZER /s/ DONALD C. DAY
Secretary Vice President
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ ILLEGIBLE /s/ ILLEGIBLE
Assistant Secretary Vice President
A copy of the Agreement and Declaration of Trust establishing NEL CASH
MANAGEMENT TRUST is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Fund by officers of the Fund as officers and not individually and
that the obligations of or arising out of this Agreement are not binding upon
any of the Trustees, officers or shareholders individually but are binding only
upon the assets and property of the Fund.
<PAGE>
EXHIBIT A
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
NEL CASH MANAGEMENT TRUST
- -------------------------------------------------------------------------------
I. Administration
Full Accounting Service- Custody of assets, maintain investment
ledgers, determine and collect income; maintain general ledgers; maintain
capital stock balance; prepare daily trial balance; compute net asset value
daily; make cash disbursements as required.
Annual Fee
Fund Net Assets Custody & Full
Accounting Service
First 20 million 1/20 of 1%
Next 80 million 1/40 of 1%
Excess 1/100 of 1%
Minimum monthly charge:
First Year $500
Second Year 1,000
Thereafter 1,500
An annual fee, billed and payable monthly: based on average net assets, computed
the same as the fund management fee.
II. Portfolio Trades
For each portfolio trade......................................$12.00
State Street Bank repurchase agreements.......................$6.00 each way
III. Interest Accrual and Appraisal Charge
For each issue- monthly charge................................$5.00
IV. Special Services
Fees for activities of an non-recurring nature such as fund consolidations or
reorganizations, extraordinary security shipments and the preparation of special
reports will be subject to negotiation.
V. Out-of Pocket Expenses
A billing for the recovery of the following expenses will be made as of the end
of each month.
Wire charges ($2.50 per wire in and out)
Postage and Insurance
Telephone
Armored carrier costs
Legal Fees
Supplies related to fund records
NEL CASH MANAGEMENT TRUST
/s/ DONALD C. DAY
Date: September 30, 1980
STATE STREET BANK AND TRUST COMPANY
/s/ ILLEGIBLE
Date: September 29, 1980
<PAGE>
EXHIBIT 99.B8(B)
June 1, 1982
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Re: The Custodian Agreement dated September 30, 1980 (the "Custodian
Agreement") between NEL Cash Management Trust, a Massachusetts business
trust (the "Trust"), and State Street Bank and Trust Company, a
Massachusetts banking corporation (the "Custodian").
Gentlemen:
Pursuant to the terms of Section I of the Custodian Agreement, enclosed
please find (i) a copy of the Trust's Second Amended and Restated Agreement and
Declaration of Trust (the "Declaration") which became effective upon filing with
the Secretary of The Commonwealth of Massachusetts on March 23, 1982 and (ii) a
copy of the Trust's Bylaws as amended to date.
Pursuant to the power of the Trustees of the Trust (the "Trustees") to
convert the Trust into a series company (as described in Section 18 (f)(2) of
the Investment Company Act of 1940), the Trustees have established and
designated two Series (individually a "Series", collectively, the "Series") of
shares of the Trust (the "Shares"), viz., the "Money Market Series" and the
"U.S. Government Series", such establishment and designation to be effective on
the date as of which the Trust has received from New England Mutual Life
Insurance Company, a Massachusetts corporation, or any affiliate thereof, tender
for one or more Shares of the Series to be designated the U.S. Government
Series. Except as otherwise specifically set forth herein, the Trust does hereby
confirm that the terms and conditions of the Custodian Agreement shall apply,
mutatis mutandis, to each Series as though the assets and liabilities belonging
to (within the meaning of the Declaration) such Series alone constituted the
assets and liabilities of the entire Trust and Shares of such Series were the
only Shares of the Trust. Without limiting the generality of the foregoing, the
Trust does hereby confirm that (i) the administration fees set forth in Exhibit
A to the Custodian Agreement and referred to in Paragraph 7 of Section II of the
Custodian Agreement shall be calculated by reference to the assets belonging to
(within the meaning of the Declaration) each individual Series and not by
reference to the aggregate assets of the Trust;(ii) the securities in the
physical possession of the Custodian and belonging to any one Series shall be
kept in a separate account and shall be physically segregated at all times from
those of any other Series or any other person;(iii) transactions involving
securities or cash belonging to (within the meaning of the Declaration) any
Series shall be carried out solely for the account of that Series; (iv)
securities belonging to (within the meaning of the Declaration) any Series
maintained in a Securities System pursuant to Paragraph 3-B of Section II of the
Custodian Agreement shall be identified on the records of the Custodian as
belonging to such Series and separately from transactions involving such
securities shall be recorded separately from transactions involving securities
belonging to other persons, including other Series; (v) consideration received
in connection with the sale of Shares of any Series shall be credited to the
account of that Series only; (vi) distributions to the holders of Shares of any
Series and redemption of the Shares of any Series shall be made only from the
assets belonging to (within the meaning of the Declaration) the relevant Series;
(vii) the net asset value of the shares of any Series and the net income of any
Series shall be calculated without regard to the assets or liabilities belonging
to (within the meaning of the Declaration) any other Series; (viii) the
Custodian will keep books of account and render statements for each Series
separately; and (ix) notice given to the Trust with respect to any matter
affecting one Series only shall indicate in such notice the Series with respect
to which such matter pertains.
It is the intention of the Trust, and its Second Amended and Restated
Agreement and Declaration of Trust so provides, that every note, bond, contract,
instrument or undertaking made or issued on behalf the Trust shall be binding
only upon the assets and property of the assets belonging to the series for the
benefit of which the Trust has caused such note, bond, contract, instrument,
certificate, or undertaking to be made or issued. Accordingly, the Custodian
shall bill each Series separately on account of those custodian fees determined
in accordance with Exhibit A to the Custodian Agreement which are attributable
to the administration, portfolio trades, interest accrual and appraisals or
other activities of such Series and the assets of such Series alone shall be
chargeable with those fees. In addition, with respect to any action taken or
thing done by the Custodian giving rise to a claim by the Custodian for
indemnification pursuant to Paragraph 6 of Section II of the Custodian
Agreement, the only assets available for indemnification of such claim shall be
the assets of the Series for the benefit of which such action was taken or thing
was done.
If the foregoing is in accordance with your understanding of your
agreement with the Trust, kindly sign and return to the Trust the enclosed
counterpart hereof, whereupon it will constitute an amendment to the Custodian
Agreement and, as such, a binding agreement between the Trust and the Custodian
in accordance with its terms.
Very truly yours,
NEL Cash Management Trust
By /s/ DONALD C. DAY
----------------------
Vice President
The foregoing is hereby accepted.
State Street Bank and Trust Company
Date: MAY 14, 1982 By /s/ E.D. HAWKES, JR.
-------------------------
Title: Vice President
A Copy of the Agreement and Declaration of Trust establishing NEL Cash
Management Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this letter is executed on behalf
of the Trust by an officer of the Trustees and not individually and that the
obligations of or arising out of this letter and the Custodian Agreement
referred to herein are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but are binding only upon the respective
assets belonging to the Series of Shares for the benefit of which the terms of
this letter and the Custodian Agreement have been agreed to.
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
NEL Cash Management Trust- U.S. Government Series
- -------------------------------------------------------------------------------
I. Administration
Full Accounting Service- Custody of assets, maintain investment ledgers,
determine and collect income; maintain general ledgers; maintain capital stock
balance; prepare daily trial balance; compute net asset value daily; make cash
disbursements as required.
Annual Fee
Fund Net Assets Custody & Full Accounting Service
First 20 million 1/20 of 1%
Next 80 million 1/40 of 1%
Excess 1/100 of 1%
Minimum Monthly Charge:
First Six Months $500
Second Six Months 1000
Thereafter 1500
An annual fee, billed and payable monthly: based on average net assets, computed
the same as the fund management fee.
II. Portfolio Trades
For each portfolio trade........................................$12.00
State Street Bank repurchase agreements.........................$6.00 each way
III. Interest Accrual and Appraisal Charge
For each issue-Monthly Charge...................................$5.00
IV. Special Services
Fees for activities of a non-recurring nature such as Fund consolidations or
reorganizations, extraordinary security shipments and the preparation of special
reports will be subject to negotiation.
V. Out of Pocket Expenses
A billing for the recovery of the following expenses will be made as of
the end of each month:
Wire charges ($3.65 per wire in and $3.50 per wire out)
Postage and insurance
Telephone
Armored carrier costs
Legal fees
Supplies related to Fund records
NEL Cash Management Trust- State Street Bank and Trust Co.
U.S. Government Series
By /s/ JOSEPH A. GLAVICKAS By /s/ E.D. HAWKES, JR.
------------------------- --------------------
Treasurer Vice President
Date 6/7/82 Date June 1, 1982
<PAGE>
EXHIBIT 99.B8(C)
AMENDMENT TO THE
CUSTODIAN AGREEMENT
AGREEMENT made this 12 day of September, 1991 by and between STATE
STREET BANK AND TRUST COMPANY ("Custodian") and NEW ENGLAND CASH MANAGEMENT
TRUST, formerly NEL CASH MANAGEMENT TRUST, (the "Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a Custodian
Agreement dated September 30, 1980 (as amended to date, the "Agreement") which
governs the terms and conditions under which the Custodian maintains custody of
the securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
Replace paragraph 3.I of Section II Custodian with the following new
paragraph 3.I:
I. Street Delivery. Upon receipt of proper instructions, which in the
case of registered securities may be standing instructions, to release and
deliver securities for the account of the Fund, to the broker or its clearing
agent, against a receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST NEW ENGLAND CASH MANAGEMENT TRUST
/s/ SHEILA M. BARRY /s/ HENRY L.P. SCHMELZER
- -------------------------- ---------------------------
Assistant Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ M. FITZGERALD /s/ T.B. HAGERTY
- -------------------------- ---------------------------
Assistant Secretary Vice President
<PAGE>
AMENDMENT TO THE
CUSTODIAN AGREEMENT
AGREEMENT made this 12 day of September, 1991 by and between STATE
STREET BANK AND TRUST COMPANY ("Custodian") and NEW ENGLAND CASH MANAGEMENT
TRUST, formerly NEL CASH MANAGEMENT TRUST, (the "Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a Custodian
Agreement dated September 30, 1980 (as amended to date, the "Agreement") which
governs the terms and conditions under which the Custodian maintains custody of
the securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
Insert as the final paragraph under Section II.6.A. Indemnification:
The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed
against it or its nominee in connection with the performance of this
Contract, except such as may arise from it or its nominee's own
negligent action, negligent failure to act or willful misconduct. The
Custodian is authorized to charge any account of the Fund for such
items and its fees. To secure any such authorized charges and any
advances of cash or securities made by the Custodian to or for the
benefit of the Fund for any purposes which result in the Fund incurring
an overdraft at the end of any business day or for the extraordinary or
emergency purposes during any business day, the Fund hereby grants to
the Custodian a security interest in and pledges to the Custodian
securities held for it by the Custodian, in an amount not to exceed the
lesser of the dollar amounts borrowed or ten percent of the Fund's
gross assets, the specific securities to be designated in writing from
time to time by the Fund or its investment adviser; provided, however,
that (1) if from time to time neither the Fund nor its investment
adviser shall have designated in writing specific securities in an
amount at least equal to the lesser of the dollar amount borrowed or
ten percent of the Fund's gross assets, or (2) if as a result of the
delivery by the Custodian out of its custody, pursuant to Proper
Instructions, of any securities previously so designated, the remaining
amount of securities so designated shall be less than the lesser of the
dollar amounts borrowed or ten percent of the Fund's gross assets then
the Custodian shall have a security interest in the Fund's securities;
in an amount that, taken together with amounts of securities from time
to time designated in writing by the Fund or its investment adviser
that have not been delivered out of the custody of the Custodian
pursuant to Proper Instructions, does not exceed the lesser of the
dollar amounts borrowed or ten percent of the Fund's gross assets.
Should the Fund fail to repay promptly any advances of cash or
securities, the Custodian shall be entitled to use available cash and
to dispose of pledged securities and property as is necessary to repay
any such advances.
IN WITNESS WHEREOF, each of the parties has caused this
Amendment to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST NEW ENGLAND CASH MANAGEMENT TRUST
/s/ SHEILA M. BARRY /s/ HENRY L.P. SCHMELZER
- -------------------------- ---------------------------
Assistant Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ M. FITZGERALD /s/ T.B. HAGERTY
- -------------------------- ---------------------------
Assistant Secretary Vice President
<PAGE>
EXHIBIT 99.B9(A)
SHAREHOLDER SERVICING AND TRANSFER AGENT AGREEMENT
AGREEMENT made as of the 1st day of September, 1993, by and between
each of the TNE Funds listed in Appendix A hereto (as the same may from time to
time be amended to add one or more additional TNE Funds or to delete one or more
of such Funds), each of such Funds acting severally on its own behalf and not
jointly with any of such other Funds (each of such Funds being hereinafter
referred to as the "Fund"), and TNE Investment Services Corporation (the
"Agent").
W I T N E S S E T H:
WHEREAS, the Fund is an investment company registered under the
Investment Company Act of 1940, as amended; and
WHEREAS, the Fund desires to engage the Agent to provide all services
required by the Fund in connection with the establishment, maintenance and
recording of shareholder accounts, including without limitation all related tax
and other reporting requirements, and the implementation of investment and
redemption arrangements offered in connection with the sale of the Fund's
shares; and
WHEREAS, the Agent is willing to provide such services on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. APPOINTMENT.
The Fund hereby appoints the Agent as its "Investor Servicing Agent" on
the terms and conditions set forth herein. In such capacity the Agent shall act
as transfer, distribution disbursing and redemption agent for the Fund and shall
act as agent for the shareholders of the Fund in connection with the various
shareholder investment and/or redemption plans from time to time made available
to shareholders. The Agent hereby accepts such appointment and agrees to perform
the respective duties and functions of such offices in accordance with the terms
of this agreement and in a manner generally consistent with the practices and
standards customarily followed by other high quality investor servicing agents
for registered investment companies. The Agent may subcontract certain
shareholder accounting and administrative servicing functions to State Street
Bank and Trust Company, pursuant to an agreement substantially in the form
attached hereto as Appendix B, or to such other entity and pursuant to such
agreement as approved by the Fund's Trustees.
2. GENERAL AUTHORITY AND DUTIES.
By its acceptance of the foregoing appointment, the Agent shall be
responsible for performing all functions and duties which, in the reasonable
judgment of the Fund, are necessary or desirable in connection with the
establishment, maintenance and recording of the Fund's shareholder accounts and
the conduct of its relations with shareholders with respect to their accounts.
Without limiting the generality of the foregoing, the Agent shall be
responsible:
(a) as transfer agent, for performing all functions customarily
performed by transfer agents for registered investment companies, including
without limitation all functions necessary or desirable to establish and
maintain accounts evidencing the ownership of securities issued by the Fund and,
to the extent applicable, the issuance of certificates representing such
securities, the recording of all transactions pertaining to such accounts, and
effecting the issuance and redemption of securities issued by the Fund;
(b) as distribution disbursing agent, for performing all functions
customarily performed by distribution disbursing agents for registered
investment companies, including without limitation all functions necessary or
desirable to effect the payment to shareholders of distributions declared from
time to time by the Trustees of the Fund;
(c) as redemption agent for the Fund, for performing all functions
necessary or desirable to effect the redemption of securities issued by the Fund
and payment of the proceeds thereof; and
(d) as agent for shareholders of the Fund, for performing all functions
necessary or desirable to maintain all plans or arrangements from time to time
made available to shareholders to facilitate the purchase or redemption of
securities issued by the Fund.
In performing its duties hereunder, in addition to the provisions set
forth herein, the Agent shall comply with the terms of the Declaration of Trust,
the Bylaws and the current Prospectus and Statement of Additional Information of
the Fund, and with the terms of votes adopted from time to time by the Trustees
and shareholders of the Fund, relating to the subject matters of this Agreement,
all as the same may be amended from time to time.
3. STANDARD OF SERVICE; COMPLIANCE WITH LAWS.
The Agent will use its best efforts to provide high quality services to
the Fund's shareholders and in so doing will seek to take advantage of such
innovations and technological improvements as may be appropriate or desirable
with a view to improving the quality and, where possible, reducing the cost of
its services to the Fund. In performing its duties hereunder, the Agent shall
comply with the provisions of all applicable laws and regulations and shall
comply with the requirements of any governmental authority having jurisdiction
over the Agent or the Fund with respect to the duties of the Agent hereunder.
4. COMPENSATION.
The Fund shall pay to the Agent, for its services rendered and its
costs incurred in connection with the performance of its duties hereunder, such
compensation and reimbursements as may from time to time be approved by vote of
the Trustees of the Fund.
5. DUTY OF CARE; INDEMNIFICATION.
The Agent will at all times act in good faith and exercise reasonable
care in performing its duties hereunder. The Agent shall indemnify and hold the
Fund harmless from and against any and all losses, damages, costs, charges,
reasonable counsel fees, payments, expenses and liability arising out of or
attributable to any action or failure or omission to act by the Agent as a
result of the Agent's lack of good faith, negligence or willful misconduct. The
Agent will not be liable or responsible for delays or errors resulting from
circumstances beyond its control, including acts of civil or military
authorities, national emergencies, labor difficulties, fire, mechanical
breakdown beyond its control, flood or catastrophe, acts of God, insurrection,
war, riots or failure beyond its control of transportation, communication or
power supply.
The Agent may rely on certifications of the Secretary, the President,
the Chairman, a Senior Vice President or the Treasurer of the Fund as to any
action taken by the shareholders or trustees of the Fund, and upon instructions
not inconsistent with this Agreement received from the President, the Chairman,
a Senior Vice President, the Treasurer or any other officer of the Fund
authorized by the Fund's Trustees to give such instructions. If any officer of
the Fund shall no longer be vested with authority to give instructions for the
Fund, written notice thereof shall forthwith be given to the Agent by the Fund
and, until receipt of such notice by it, the Agent shall be entitled to
recognize and act in good faith upon certificates or other instruments bearing
the signatures or facsimile signatures of such officers. The Agent may request
advice of counsel for the Fund, at the expense of the Fund, with respect to the
performance of its duties hereunder.
The Fund will indemnify and hold the Agent harmless from any and all
losses, claims, damages, liabilities and expenses (including reasonable fees and
expenses of counsel) arising out of (i) any action taken by the Agent in good
faith consistent with the exercise of reasonable care in accordance with such
certifications, instructions or advice, (ii) any action taken by the Agent in
good faith consistent with the exercise of reasonable care in reliance upon any
instrument or certificate for securities believed by it (a) to be genuine, and
(b) to be executed by any person or persons authorized to execute the same;
provided, however, that the Agent shall not be so indemnified in the event of
its failure to obtain a proper signature guarantee to the extent the same is
required by the Declaration of Trust, Bylaws, current Prospectus or Statement of
Additional Information of the Fund or a vote of the Trustees of the Fund, and
such requirement has not been waived by vote of the Trustees of the Fund, or
(iii) any other action taken by the Agent in good faith consistent with the
exercise of reasonable care in connection with the performance of its duties
hereunder.
In the event that the Agent proposes to assert the right to be
indemnified under this Section 5 in connection with any action, suit or
proceeding against it, the Agent shall promptly after receipt of notice of
commencement of such action, suit or proceeding notify the Fund of the same,
enclosing a copy of all papers served. In such event, the Fund shall be entitled
to participate in such action, suit or proceeding, and, to the extent that it
shall wish, to assume the defense thereof, and the Fund shall not be liable to
the Agent for any legal or other expenses incurred after notice from the Fund to
the Agent of its election so to assume the defense thereof. The parties shall
cooperate with each other in the defense of any such action, suit or proceeding.
In no event shall the Fund be liable for any settlement of any action or claim
effected without its consent.
6. MAINTENANCE OF RECORDS.
The Agent will maintain and preserve all records relating to its duties
under this Agreement in compliance with the requirements of applicable statutes,
rules and regulations, including, without limitation, Rule 31a-1 under the
Investment Company Act of 1940. Such records shall be the property of the Fund
and shall at all times be available for inspection and use by the officers and
agents of the Fund. The Agent shall furnish to the Fund such information
pertaining to the shareholder accounts of the Fund and the performance of its
duties hereunder as the Fund may from time to time request. The Agent shall
notify the Fund promptly of any request or demand by any third party to inspect
the records of the Fund maintained by it and will act upon the instructions of
the Fund in permitting or refusing such inspection.
7. FUND ACCOUNTS.
All moneys of the Fund from time to time made available for the payment
of distributions to shareholders or redemptions of shares, or otherwise coming
into the possession or control of the Agent or its officers, shall be deposited
and held in one or more accounts maintained by the Agent solely for the benefit
of the Funds.
8. INSURANCE.
The Agent will at all times maintain in effect insurance coverage,
including, without limitation, Errors and Omissions, Fidelity Bond and
Electronic Data Processing coverages, at levels of coverage consistent with
those customarily maintained by other high quality investor servicing agents for
registered investment companies and with such policies as the Trustees of the
Fund may from time to time adopt.
9. EMPLOYEES.
The Agent shall be responsible for the employment, control and conduct
of its agents and employees and for injury to such agents or employees or to
others caused by such agents or employees. The Agent shall assume full
responsibility for its agents and employees under applicable statutes and agrees
to pay all applicable employer taxes thereunder with respect to such agents and
employees, and such agents and employees shall in no event be considered to be
agents or employees of the Fund.
10. TERMINATION.
This Agreement shall continue indefinitely until terminated by not less
than ninety (90) days prior written notice given by the Fund to the Agent, or by
not less than six months prior written notice given by the Agent to the Fund.
Upon termination hereof, the Fund shall pay the Agent such compensation as may
be due to the Agent as of the date of such termination.
In the event that in connection with any such termination a successor
to any of the Agent's duties or responsibilities hereunder is designated by the
Fund by written notice to the Agent, the Agent will cooperate fully in the
transfer of such duties and responsibilities, including provision for assistance
by the Agent's personnel in the establishment of books, records and other data
by such successor. The Fund will reimburse the Agent for all expenses incurred
by the Agent in connection with such transfer.
11. MISCELLANEOUS.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of The Commonwealth of Massachusetts.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions of this
Agreement or otherwise affect their construction or effect. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
A copy of the Declaration of Trust (including any amendments thereto)
of the Fund is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed in behalf of the
Trustees of the Fund as Trustees and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees or
officers or shareholders individually, but binding only upon the assets and
property of the Fund.
TNE Investment Services anticipates that it will be reorganized, on or
about September 15, 1993, into a new entity called TNE Investment Services, L.P.
Effective at the date of the reorganization, any and all benefits,
responsibilities and obligations of TNE Investment Services Corporation under
this Agreement will be assumed by TNE Investment Services, L.P.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date and year first above
written.
TNE FUNDS
By /s/HENRY L.P. SCHMELZER
-----------------------------
Henry L.P. Schmelzer
President
TNE Investment Services Corporation
By /s/BRUCE R. SPECA
-----------------------------
Bruce R. Speca
Senior Vice President
<PAGE>
APPENDIX A
NEW ENGLAND FUNDS
o New England Growth Fund
o New England International Equity Fund
o New England Capital Growth Fund
o New England Value Fund
o New England Growth Opportunities Fund
o New England Balanced Fund
o New England Star Advisers Fund
o Growth Fund of Israel
o New England Star Worldwide Fund
o New England Equity Income Fund
o New England High Income Fund
o New England Government Securities Fund
o New England Bond Income Fund
o New England Limited Term U.S. Government Fund
o New England Adjustable Rate U.S. Government Fund
o New England Strategic Income Fund
o New England Tax Exempt Income Fund
o New England Massachusetts Tax Free Income Fund
o New England Intermediate Term Tax Free Fund of California
o New England Intermediate Term Tax Free Fund of New York
o New England Cash Management Trust
o Money Market Series
o U.S. Government Series
o New England Tax Exempt Money Market Trust
<PAGE>
EXHIBIT 99.B9(B)
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
TNE INVESTMENT SERVICES CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment;Duties of the Bank ................ 2
Article 2 Fees and Expenses ...................................... 6
Article 3 Representations and Warranties of the Bank ............. 7
Article 4 Representations and Warranties of the Transfer Agent ... 8
Article 5 Data Access and Proprietary Information ................ 9
Article 6 Indemnification ........................................ 11
Article 7 Standard of Care ....................................... 14
Article 8 Covenants of the Fund and the Transfer Agent ........... 14
Article 9 Termination of Agreement ............................... 16
Article 10 Assignment ............................................. 16
Article 11 Amendment .............................................. 17
Article 12 Massachusetts Law to Apply ............................. 17
Article 13 Force Majeure .......................................... 17
Article 14 Consequential Damages .................................. 18
Article 15 Merger of Agreement .................................... 18
Article 16 Counterparts ........................................... 18
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of September, 1993, by and between TNE
INVESTMENT SERVICES CORPORATION, a Massachusetts corporation, having its
principal office and place of business at 399 Boylston Street, Boston,
Massachusetts 02116 (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Transfer Agent has been appointed by each of the
investment companies (including each series thereof) listed on Schedule A (the
"Fund(s)"), each an open-end management investment company registered under the
Investment Company Act of 1940, as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Shareholder Servicing
and Transfer Agent Agreement with each of the Funds (including each series
thereof) listed on Schedule A pursuant to which the Transfer Agent is
responsible for certain transfer agency and dividend disbursing functions and
the Transfer Agent is authorized to subcontract for the performance of its
obligations and duties thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent is desirous of having the Bank perform
certain shareholder accounting, administrative and servicing functions
(collectively "Shareholder and Record-Keeping Services");
WHEREAS, the Transfer Agent desires to appoint the Bank as its agent,
and the Bank desires to accept such appointment; NOW, THEREFORE, in
consideration of the mutual covenants herein contained, the parties hereto agree
as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement,
the Transfer Agent hereby employs and appoints the Bank to act as, and the Bank
agrees to act as, the agent of the Transfer Agent for the Shares of each of the
Funds in connection with any accumulation, open-account, retirement plan or
similar plan provided to the shareholders of each Fund ("Shareholders") and set
out in the currently effective prospectus and statement of additional
information ("Prospectus") of each such Fund, including without limitation any
periodic investment plan or periodic withdrawal program. As used herein, the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each of the Funds (including
each class thereof) enumerated in Schedule A hereto (as the same may from time
to time be amended to add one or more Funds or to delete one or more Funds).
1.02 The Bank agrees that it will perform the following Shareholder and
Record-Keeping services:
(a) In accordance with procedures established from time to time by
agreement between the Transfer Agent and the Bank, the Bank shall:
(i) Receive for acceptance, order for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the Articles
of Incorporation or Declaration of Trust of each Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with the
Funds' principal underwriter (the "Distributor") or with broker-
dealers authorized by the Distributor who shall thereby be
deemed to be acting on behalf of the Funds;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders, and calculate the
amount of and pay over or cause to be paid over to the
Distributor any applicable contingent deferred sales charges;
(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by each Fund;
(viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank
and each Fund, and the Bank, at its option, may issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise each Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of each Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares of
each Fund which are authorized, based upon data provided to it
by each Fund, and issued and outstanding. The Bank shall also
provide each Fund on a regular basis with the total number of
shares which are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take cognizance of any
laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Distributor.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing and tabulating proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable each Fund to monitor the total number of Shares sold in each State.
(c) In addition, each Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by each Fund and the reporting of
such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by agreement between the Transfer
Agent and the Bank per the attached service responsibility schedule. The Bank
may at times perform only a portion of these services and the Transfer Agent,
the Funds or their agent may perform these services on each Fund's behalf.
(e) The Bank shall provide additional services on behalf of the
Transfer Agent (i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent will be reimbursed by the Transfer Agent.
2.03 The Transfer Agent agrees to pay all fees and reimbursable
expenses within five days following the receipt of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all shareholder accounts shall be advanced to the Bank by the
Transfer Agent at least seven (7) days prior to the mailing date of such
materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It has and will at all times maintain in effect insurance
coverage, including, without limitation, errors and omissions, fidelity bond and
electronic data processing coverage at levels of coverage consistent with those
customarily maintained by other high quality servicing agents for registered
investment companies.
Article 4 Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 Each Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended, for each Fund is currently effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of each Fund being offered for sale.
Article 5 Data Access and Proprietary Information
5.01 The Transfer Agent acknowledges that the data bases, computer
programs, screen formats, report formats, interactive design techniques, and
documentation manuals furnished to the Transfer Agent by the Bank as part of the
Fund's ability to access certain Fund-related data ("Customer Data") maintained
by the Bank on data bases under the control and ownership of the Bank or other
third party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Transfer Agent agrees to
treat all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Transfer Agent agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to - any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform the Bank in a timely manner of such fact and
dispose of such information in accordance with the Bank's
instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility
or other location, except with the prior written consent of the
Bank;
(e) that the Transfer Agent shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under
other federal or state law.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Transfer Agent notifies the Bank that any of the Data
Access Services do not operate in material compliance with the most recently
issued user documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible for the
contents of such data and the Transfer Agent agrees to make no claim against the
Bank arising out of the contents of such third-party data, including, but not
limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS
AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Transfer Agent include the
ability to originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information then in such event the Bank shall be entitled
to rely on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time.
Article 6 Indemnification
6.01 The Bank shall not be responsible for, and the Transfer Agent
shall indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The Transfer Agent's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Transfer Agent hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors
of information, records, documents or services which (i) are received by the
Bank or its agents or subcontractors, and (ii) have been prepared, maintained or
performed by the Transfer Agent or each Fund or any other person or firm on
behalf of the Transfer Agent or each Fund including but not limited to any
previous transfer agent or registrar (other than the Bank).
(d) The carrying out by the Bank or its agents or subcontractors of any
instructions or requests of the Transfer Agent or each Fund, provided that such
instructions or requests are undertaken in conformity with security procedures
established by the Bank from time to time.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or by any
state with respect to the offer or sale of such Shares in such state.
6.02 At any time the Bank may apply to any officer of the Transfer
Agent for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Bank under
this Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Transfer Agent for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of such
counsel. The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Transfer Agent or each Fund, reasonably believed to be genuine and to have
been signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents or
subcontractors by machine readable input, telex, CRT data entry or other similar
means authorized by the Transfer Agent and reasonably believed to be genuine,
and shall not be held to have notice of any change of authority of any person,
until receipt of written notice thereof from the Transfer Agent. The Bank, its
agents and subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of each Fund, and the proper
countersignature of the Transfer Agent or any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Transfer
Agent may be required to indemnify the Bank, the Bank shall promptly notify the
Transfer Agent of such assertion, and shall keep the Transfer Agent advised with
respect to all developments concerning such claim. The Transfer Agent shall have
the option to participate with the Bank in the defense of such claim or to
defend against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in which
the Transfer Agent may be required to indemnify the Bank except with the
Transfer Agent's prior written consent.
Article 7 Standard of Care
7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its employees.
Article 8 Covenants of the Transfer Agent and the Bank
8.01 The Transfer Agent shall promptly furnish to the Bank the
following:
(a) A certified copy of the resolution of the Board of Directors of the
Transfer Agent authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to each Fund on and in accordance with its request.
8.04 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of any of the Funds, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person whenever it is advised by its
counsel that it may be held liable for the failure to exhibit the Shareholder
records to such person.
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Notwithstanding the foregoing,
this Agreement shall terminate concurrently with the termination of the
Shareholder Servicing and Transfer Agent Agreement in effect between the
Transfer Agent and the Funds.
9.02 Should the Transfer Agent exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Transfer Agent. Additionally, the Bank reserves the right to
charge for any other reasonable expenses associated with such termination.
Article 10 Assignment
10.01 Except as provided in Section 10.03 and 10.04 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Transfer
Agent for the acts and omissions of any subcontractor as it is for its own acts
and omissions.
10.04 The Transfer Agent may, without further consent on the part of
the Bank, and upon written notice to the Bank assign this Agreement to any other
entity that (i) is then under common control with the Transfer Agent, (ii) is
acting or has been appointed to act as Transfer Agent for the Funds and (iii) is
duly registered as a Transfer Agent pursuant to Section 17A(c)(1).
Article 11 Amendment
11.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Transfer Agent.
Article 12 Massachusetts Law to Apply
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Article 16 Counterparts
16.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
TNE INVESTMENT SERVICES CORPORATION
BY: /s/ BRUCE R. SPECA
----------------------------
ATTEST:
- ----------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ RONALD E. LOGUE
----------------------------
Executive Vice President
ATTEST:
/s/D. HUFNAGLE
- ----------------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase X Add-ons X New
of Shares.
2. Issue Shares and hold Shares in X
Shareholders accounts.
3. Receive redemption requests. X X
4. Effect transactions 1-3 above
directly with broker-dealers. X X
5. Pay over monies to redeeming X
Shareholders.
6. Effect transfers of Shares. X
7. Prepare and transmit dividends X
and distributions.
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and X
accurate control book for each
issue of securities.
12. Mail proxies. OTI
13. Mail Shareholder reports. X
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident
and non-resident alien accounts. X
16. Prepare and file U.S. Treasury X
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders. X
18. Provide Shareholder account
information. X
19. Blue sky reporting. X
* Such services are more fully described in Article 1.02 (a),
(b) and (c) of the Agreement.
TNE INVESTMENT SERVICES CORPORATION
----------------------------
BY: /s/ BRUCE R. SPECA
ATTEST:
- ----------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ RONALD E. LOGUE
----------------------------
Executive Vice President
ATTEST:
/s/D. HUFNAGLE
- ----------------------------
<PAGE>
EXHIBIT 99.11
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. 32 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated August 8, 1997 relating to the financial
statements and the financial highlights appearing in the June 30, 1997 Annual
Report to Shareholders of New England Cash Management Trust, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
August 14, 1997
<PAGE>
EXHIBIT 99.B14(b)
================================================================================
NEW ENGLAND FUNDS, L.P. SIMPLE IRA EMPLOYEE DISCLOSURE STATEMENT
================================================================================
IMPORTANT
This disclosure statement describes the rules applicable to SIMPLE Individual
Retirement Accounts. These are IRAs established to operate as part of an
employer SIMPLE IRA plan established by your employer. This disclosure statement
does not describe regular IRAs that you can establish and make contributions to
within IRS limits. State Street Bank and Trust Company, the SIMPLE IRA
Custodian, also has a different kit of materials that may be used to establish a
regular IRA.
Be sure to establish the correct kind of IRA.
SIMPLE IRA PLAN INFORMATION FROM YOUR EMPLOYER
As part of operating a SIMPLE IRA plan, your employer is required to give you
two kinds of information (these may be combined in a single pamphlet or notice).
First, your employer should give you a "summary description" of the main
features of the employer's SIMPLE IRA plan, including information about any
eligibility requirements your employer imposes. This summary description may
include a photocopy of IRS Form 5305-SIMPLE or 5304-SIMPLE as completed by your
employer to establish its SIMPLE IRA plan, or it may be in a different format.
Also, your employer should give you a copy of a notice stating how much the
employer will contribute to participants' SIMPLE IRAs for the plan year.
ESTABLISHING YOUR IRA
This disclosure statement contains information about your SIMPLE Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. Your IRA gives you several tax benefits. Within IRS limits,
contributions under your employer's SIMPLE IRA plan to your IRA are not taxable
income to you until withdrawn. Earnings on the assets held in your IRA are not
subject to federal income tax until withdrawn by you. State income tax treatment
of your IRA may differ from federal treatment; ask your state tax department or
your personal tax advisor for details.
All IRAs must meet certain requirements. Contributions generally must be made in
cash. The IRA trustee or custodian must be a bank or other person who has been
approved by the Secretary of the Treasury. Your contributions may not be
invested in life insurance or collectibles or be commingled with other property
except in a common trust or investment fund. Your interest in the account must
be nonforfeitable at all times. You may obtain further information on IRAs from
any district office of the Internal Revenue Service.
To the extent required by the IRS under its rules for SIMPLE IRAs, you are
permitted to revoke a newly established IRA at any time within any IRS time
limits. If permitted, to revoke your IRA, mail or deliver a written notice of
revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your IRA within the seven-day
period, the amount contributed into your IRA will be returned as provided under
the IRS rules.
FEES AND EXPENSES
CUSTODIAN'S FEES
The following is a list of the fees charged by the Custodian for maintaining
your IRA.
Account Installation Fee .................. $0
Annual Maintenance Fee per mutual fund .... $10 per participant
Termination of Account .................... $0
GENERAL FEE POLICIES
- - The termination fee will not be charged if you transfer the contributions to
your SIMPLE IRA, if made to the Custodian as "designated financial
institution" of your employer's SIMPLE IRA plan, to another SIMPLE IRA with a
different custodian or trustee in accordance with the IRS rules for SIMPLE
IRA arrangements unless IRS rules specifically allow charging this fee. (See
below for more information.)
- - Fees may be paid by you directly or the Custodian may deduct them from your
IRA.
- - Fees may be changed upon 30 days written notice to you.
- - The full annual maintenance fee will be charged for any calendar year during
which you have an IRA with us. This fee is not prorated for periods of less
than one full year.
- - Termination fees are charged when your account is closed and the funds are
distributed to you or beneficiary. Termination fees will also be charged when
your account is closed and the funds are transferred to a successor custodian
or trustee (to the extent permitted under IRS rules for SIMPLE IRA
arrangements).
- - The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
OTHER CHARGES
- - There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your IRA is invested. Be sure to read
carefully the current prospectus of any Fund you are considering as an
investment for your IRA for a description of applicable charges.
ELIGIBILITY
WHICH EMPLOYERS MAY HAVE SIMPLE IRA PLANS?
SIMPLE IRA plans are only for small employers. This is defined as an employer
with 100 or fewer employees in the previous calendar year who had $5,000 or more
in total pay from the employer. (There are certain additional rules; these are
described in the summary description of its SIMPLE IRA plan that your employer
should give you.)
Your employer determines if it is eligible to establish a SIMPLE IRA plan.
An employer may have a SIMPLE IRA plan only if it has no other retirement plan
at any time when the SIMPLE IRA plan is in operation. "Retirement plans" for
this purpose include profit sharing, 401(k) retirement and other kinds of plans
that receive tax benefits.
WHICH EMPLOYEES PARTICIPATE IN THE SIMPLE IRA?
Generally speaking, all of the employer's employees must participate in the
SIMPLE IRA plan. However, the employer may decide to exclude
- - an employee who did not receive at least $5,000 in pay from the employer in at
least two prior calendar years (not necessarily consecutive);
- - an employee who is not reasonably expected to receive at least $5,000 in pay
from the employer for the current calendar year;
- - union employees, provided that there was good faith bargaining over the issue
of retirement benefits;
- - employees who are non-resident aliens and receive no U.S. source income.
The summary description of its SIMPLE IRA plan that your employer should give
you will indicate whether these groups of employees will be included or excluded
from the employer's SIMPLE IRA plan.
CONTRIBUTIONS
Two kinds of contributions are permitted: (i) employee contributions and (ii)
employer contributions, which may be either matching or nonmatching
contributions.
HOW MUCH CAN I CONTRIBUTE TO MY IRA?
If you are an eligible employee, you may elect to have a percentage of your pay
contributed by the employer to your SIMPLE IRA, as long as the amount does not
exceed $6,000 for a calendar year. The $6,000 limit is indexed for future
cost-of-living increases.
You elect the desired percentage of pay to contribute on a salary reduction
agreement (your employer will have a form for you to use). Salary reductions may
be made only from pay you earn after signing the salary reduction agreement.
Your salary reduction contributions must be transferred to your SIMPLE IRA as
soon as the employer can reasonably do so. The outside deadline is the 30th day
of the month following the month when you would have received the pay amount
except for the salary reduction.
HOW MUCH WILL MY EMPLOYER CONTRIBUTE?
For each year that it operates its SIMPLE IRA plan, your employer must make
contributions on behalf of participants. The employer may choose either matching
or nonmatching contributions for a particular calendar year.
If the employer makes matching contributions, you must make salary reduction
contributions from your own pay in order to receive pay matching contribution
from your employer. Your employer will match your contributions, dollar for
dollar, up to a cap of 1% to 3% of your pay for the calendar year. Your employer
decides the cap (subject to certain IRS requirements).
If your employer decides to make nonmatching contributions, it must contribute
2% of your pay for the calendar year (provided that you receive $5,000 or more
in pay from the employer for the calendar year). For this purpose only, the pay
is subject to an IRS limit. The limit is $160,000 for 1997 (this amount is
indexed for future cost-of-living changes).
The employer must notify you of the contribution approach it has elected for a
particular calendar year. Employer contributions must be transferred to your
SIMPLE IRA no later than the due date (including any extension) for the employer
to file its federal income tax return for the year.
TRANSFERS/ROLLOVERS
CAN I TRANSFER MY SIMPLE IRA TO ANOTHER IRA?
Yes. The IRS rules for SIMPLE IRAs say that you may transfer to another SIMPLE
IRA, or to a regular IRA you have established. However, during the first two
years after your participation in the SIMPLE IRA plan begins, you may transfer
only to another SIMPLE IRA (not a regular IRA).
The transfer rules depend on whether your employer has established its SIMPLE
IRA plan with a "designated financial institution" or not. The summary
description (or other information) provided to you by your employer should
indicate whether your employer's SIMPLE IRA plan uses a designated financial
institution or not).
With a designated financial institution, all contributions are initially paid to
that institution. However, you have the right to elect to have contributions to
your SIMPLE IRA account with the designated financial institution transferred to
another SIMPLE IRA you have established where the contributions will be invested
in accordance with your directions. If your election is made during the 60-day
period when you elect your salary reduction contributions to the plan for a
calendar year, then contributions for that calendar year will be transferred
without a transfer fee or other cost or penalty. Pending transfer from the
designated financial institution to the SIMPLE IRA you have established to
receive transferred contributions, the contributions for you may be invested in
a specified investment, such as a money market fund or a deposit account, and
you will have no choice of investments. Other transfers may be made to another
SIMPLE IRA or regular IRA, but they will be subject to normal fees of the
Custodian as well as to redemption or other charges imposed by the mutual fund
in which contributions are invested (as described in its prospectus). More
information on this subject is found in the summary description of your
employer's SIMPLE IRA plan.
Your employer may decide to operate its SIMPLE IRA plan without a designated
financial institution. In this case, each eligible employee sets up a SIMPLE IRA
with a financial institution of his or her choice. Contributions on your behalf
will be sent to your SIMPLE IRA account, wherever you have set it up, and
invested according to your instructions.
CAN I MAKE A REGULAR ROLLOVER FROM MY SIMPLE IRA TO ANOTHER IRA?
You may make a regular rollover from one IRA (including a SIMPLE IRA) to
another. However, such a rollover may be done only once in any 365-day period.
This rule applies to each individual IRA.
INVESTMENTS
HOW ARE CONTRIBUTIONS TO MY SIMPLE IRA INVESTED?
You control the investment and reinvestment of contributions to this SIMPLE IRA.
Investments must be in one or more of the Fund(s) available from time to time as
listed in the Adoption Agreement for your SIMPLE IRA or in an investment
selection form included with your SIMPLE IRA Adoption Agreement. You direct the
investment of your SIMPLE IRA by giving your investment instructions to the
Distributor or Service Company for the Fund(s). Since you control the investment
of your SIMPLE IRA, you are responsible for any losses; neither the Custodian,
the Distributor nor the Service Company has any responsibility for any loss or
diminution in value occasioned by your exercise of investment control.
Transactions for your SIMPLE IRA will generally be effected at the applicable
public offering price or net asset value for shares of the Fund(s) involved next
established after the Distributor or the Service Company (whichever may apply)
receives proper investment instructions from you; consult the current prospectus
for the Fund(s) involved for additional information.
Before making any investment, read carefully the current prospectus for any Fund
you are considering as an investment for your SIMPLE IRA. The prospectus will
contain information about the Fund's investment objectives and policies, as well
as any minimum initial investment or minimum balance requirements and any sales,
redemption or other charges.
Because you control the selection of investments for your SIMPLE IRA and because
mutual fund shares fluctuate in value, the growth in value of your SIMPLE IRA
cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY SIMPLE IRA ASSETS?
The tax-exempt status of your SIMPLE IRA will be revoked if you engage in any of
the prohibited transactions listed in Section 4975 of the tax code. The fair
market value of your SIMPLE IRA will be includible in your taxable income in the
year in which such prohibited transaction takes place. The fair market value of
your SIMPLE IRA may also be subject to a penalty tax as a premature withdrawal
if you have not yet reached the age of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your SIMPLE IRA is
treated as a taxable withdrawal; the only exception involves certain types of
government-sponsored coins.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in your
SIMPLE IRA. Some examples of prohibited transactions are:
- - Direct or indirect sale or exchange of property between you and your SIMPLE
IRA.
- - Transfer of any property from your SIMPLE IRA to yourself or from yourself to
your SIMPLE IRA.
Your SIMPLE IRA could lose its tax exempt status if you use all or part of your
interest in your SIMPLE IRA as security for a loan or borrow any money from your
SIMPLE IRA. Any portion of your SIMPLE IRA used as security for a loan will be
taxed as ordinary income in the year in which the money is borrowed. If you are
under age 59 1/2, this amount will also be subject to a penalty tax as a
premature distribution.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY SIMPLE IRA?
You may withdraw from your SIMPLE IRA at any time. However, withdrawals before
age 59 1/2 may be subject to a penalty tax in addition to regular income taxes
(see below).
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn your entire SIMPLE IRA by the April 1 following the
year in which you reach 70 1/2, you must make minimum withdrawals in order to
avoid penalty taxes. The rule allowing most employees to postpone distributions
from an employer qualified plan until actual retirement (even if this is after
age 70 1/2) does not apply to SIMPLE IRAs.
The minimum withdrawal amount is determined by dividing the balance in your
SIMPLE IRA (for this purpose all your IRAs - SIMPLE IRAs and regular IRAs - are
added together) by your life expectancy or the combined life expectancy of you
and your designated beneficiary. The minimum withdrawal rules are complex.
Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum withdrawal amount
and your actual withdrawals during a year. The IRS may waive or reduce the
penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.
HOW ARE WITHDRAWALS FROM MY SIMPLE IRA TAXED?
Amounts withdrawn by you are includible in your gross income in the taxable year
that you receive them, and are taxable as ordinary income. Lump sum withdrawals
from SIMPLE IRAs are not eligible for averaging treatment currently available to
certain lump sum distributions from qualified employer retirement plans.
Since the purpose of the SIMPLE IRA is to accumulate funds for retirement, your
receipt or use of any portion of your SIMPLE IRA before you attain age 59 1/2
generally will be considered as an early withdrawal and subject to a penalty
tax. For withdrawals from your SIMPLE IRA during the first two years after the
date of the first contribution to your SIMPLE IRA account under your employer's
SIMPLE IRA plan, the penalty is 25% of the amount withdrawn. After that, the
penalty is 10% of the amount withdrawn.
The penalty tax for early withdrawal will not apply if:
- - The distribution was a result of your death or disability.
- - The distribution is one of a scheduled series of substantially equal periodic
payments for your life or life expectancy (or the joint lives or life
expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the penalty tax
will apply. For example, if you begin receiving payments at age 50 under a
withdrawal program providing for substantially equal payments over your life
expectancy, and at age 58 you elect to receive the remaining amount in your IRA
in a lump-sum, the penalty tax will apply to the lump sum and to the amounts
previously paid to you before age 59 1/2.
- - The distribution does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 7 1/2% of your adjusted gross
income for that year), or
- - The distribution does not exceed the amount you paid for health insurance
coverage for yourself, your spouse and dependents. This exception applies
only if you have been unemployed and received federal or state unemployment
compensation payments for at least twelve weeks; this exception applies to
distributions during the year in which you received the unemployment
compensation and during the following year, but not to any distributions
received after you have been reemployed for at least 60 days.
In addition, certain taxpayers with very large accumulations in tax-favored
arrangements (including SIMPLE and regular IRAs, 403(b) arrangements and
employer qualified plans) may be subject to a 15% penalty tax (in addition to
regular income taxes) if distributions during a year from all such arrangements
exceed a certain amount. This amount is $160,000 for 1997 (and is indexed for
future cost-of-living changes). Distributions from all tax-favored arrangements
during a year are counted in determining whether any distributions are above the
floor amount and are subject to the 15% penalty tax. There are special rules for
grandfathered amounts and for lump sum distributions from qualified plans. Under
current law, this 15% penalty tax will not apply during calendar years 1997,
1998 and 1999 (however, a related estate tax 15% penalty tax on certain excess
amounts remaining in tax-favored arrangements upon your death continues to apply
during these years). Consult your tax advisor for additional information on
these penalty tax rules.
A loss in your IRA investment may be deductible. You should consult your tax
advisor for further details on the appropriate calculation for this deduction if
applicable.
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on the
appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your account and the
amount of any contributions made or other transactions during a calendar year.
WHAT TAX INFORMATION MUST I REPORT TO THE IRS?
You must file Form 5329 with the IRS for each taxable year for which you take a
premature withdrawal, or you withdraw less than the required minimum amount from
your SIMPLE IRA.
ARE SIMPLE IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax will be withheld at a flat rate of 10% from any withdrawal
from your SIMPLE IRA, unless you elect not to have tax withheld. Withdrawals
from a SIMPLE IRA are not subject to the mandatory 20% income tax withholding
that applies to most distributions from qualified plans or 403(b) accounts that
are not directly rolled over to another plan or IRA.
ARE THE EARNINGS ON MY SIMPLE IRA FUNDS TAXED?
Any earnings on investments held in your SIMPLE IRA are generally exempt from
federal income taxes and will not be taxed until withdrawn by you, unless the
tax exempt status of your SIMPLE IRA is revoked.
ACCOUNT TERMINATION
You may terminate your SIMPLE IRA at any time after its establishment by sending
a complete withdrawal form, or a transfer authorization form, to:
STATE STREET BANK AND TRUST COMPANY
P.O. Box
Boston, MA
Your SIMPLE IRA with State Street Bank will terminate upon the first to occur of
the following:
- - The date your properly executed withdrawal form (as described above)
withdrawing your total SIMPLE IRA balance is received and accepted by the
Custodian or, if later, the termination date specified in the withdrawal
form.
- - The date the SIMPLE IRA ceases to qualify under the tax code. This will be
deemed a termination.
- - The transfer of the SIMPLE IRA to another custodian/trustee.
- - The rollover of the amounts in the SIMPLE IRA to another custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your SIMPLE IRA will be treated as a withdrawal, and
thus the rules relating to SIMPLE IRA withdrawals will apply. For example, if
the SIMPLE IRA is terminated before you reach age 59 1/2, the early withdrawal
penalty may apply on the amount you receive. IRA DOCUMENTS The terms contained
in Articles I to VII of the State Street Bank and Trust Company Employee SIMPLE
Individual Retirement Custodial Account document have been promulgated by the
IRS in Form 5305-SA for use in establishing an IRA custodial account that meets
the requirements of the tax laws for a valid SIMPLE IRA. This IRS approval
relates only to the form of Articles I to VII and is not an approval of the
merits of the SIMPLE IRA or of any investment permitted by the SIMPLE IRA. See
Section 25 of Article VIII of the document for additional information.
NEW ENGLAND FUNDS, L.P.
P.O. Box 8551
Boston, MA 02266-8551
- --------------------------------------------------------------------------------
NOTE: The information in this Disclosure Statement reflects the best information
available at the time of preparation. However, SIMPLE IRAs are governed by new
provisions of the Internal Revenue Code and the IRS has not issued regulations
on SIMPLE IRA plans or answered many of the questions about SIMPLE IRAs. Consult
your professional tax adviser or the IRS on any questions you have about a
SIMPLE IRA or about the most recent IRS developments.
<PAGE>
================================================================================
NEW ENGLAND FUNDS, L.P. EMPLOYEE SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
================================================================================
The following provisions of Articles I to VII are in the form promulgated by the
Internal Revenue Service in Form 5305-SA for use in establishing an individual
retirement custodial account.
- --------------------------------------------------------------------------------
ARTICLE I.
The custodian will accept cash contributions made on behalf of the participant
by the participant's employer under the terms of a SIMPLE plan described in
section 408(p). In addition, the custodian will accept transfers or rollovers
from other SIMPLE IRAs of the participant. No other contributions will be
accepted by the custodian.
ARTICLE II.
The participant's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins
issued under the laws of any state.
ARTICLE IV.
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the participant's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise
comply with section 408(a)(6) and Proposed Regulations section 1.408-8,
including the incidental death benefit provisions of Proposed Regulations
section 1.401(a)(9)-2, the provisions of which are incorporated by
reference.
2. Unless otherwise elected by the time distributions are required to begin to
the participant under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to the
participant and the surviving spouse and shall apply to all subsequent
years. The life expectancy of a nonspouse beneficiary may not be
recalculated.
3. The participant's entire interest in the custodial account must be, or begin
to be, distributed by the participant's required beginning date, the April 1
following the calendar year end in which the participant reaches age 701/2.
By that date, the participant may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the participant's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy
of the participant and his or her designated beneficiary.
4. If the participant dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the participant dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the participant dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
participant or, if the participant has not so elected, at the election
of the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the participant's death. If, however, the beneficiary is
the participant's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
participant would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
participant's required beginning date, even though payments may actually
have been made before that date.
(d) If the participant dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each
year, divide the participant's entire interest in the Custodial account as
of the close of business on December 31 of the preceding year by the life
expectancy of the participant (or the joint life and last survivor
expectancy of the participant and the participant's designated beneficiary,
or the life expectancy of the designated beneficiary, whichever applies.) In
the case of distributions under paragraph 3, determine the initial life
expectancy (or joint life and last survivor expectancy) using the attained
ages of the participant and designated beneficiary as of their birthdays in
the year the Participant reaches age 701/2. In the case of a distribution in
accordance with paragraph 4(b)(ii), determine life expectancy using the
attained age of the designated beneficiary as of the beneficiary's birthday
in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits
an individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for
another.
ARTICLE V.
1. The participant agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the participant as prescribed by the Internal Revenue Service.
3. The Custodian also agrees to provide the participant's employer the summary
description described in section 408(l)(2) unless this SIMPLE IRA is a
transfer SIMPLE IRA.
ARTICLE VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and 408(p) and
the related regulations will be invalid.
ARTICLE VII.
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Adoption Agreement.
ARTICLE VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Custodian" means State Street Bank and Trust Company.
"Fund" means a mutual fund or registered investment company which is
specified in the Adoption Agreement, or which is designated by the
Distributor named in the Adoption Agreement, as being available as an
investment for the custodial account; provided, however, that such a mutual
fund or registered investment company must be legally offered for sale in
the state of the Participant's residence in order to be a Fund hereunder.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s). In any case where there
is no Distributor, the duties assigned hereunder to the Distributor may be
performed by the Fund(s) or by an entity that has a contract to perform
management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform
various administrative duties of either the Custodian or the Distributor. In
any case where there is no Service Company, the duties assigned hereunder to
the Service Company will be performed by the Distributor (if any) or by an
entity specified in the second preceding paragraph.
2. To the extent required by regulations or rulings pertaining to SIMPLE IRA
accounts under Code Section 408(p), the participant may revoke the custodial
account established hereunder by mailing or delivering a written notice of
revocation to the Custodian within such time limits as may be specified in
such regulations or rulings. Mailed notice is treated as given to the
Custodian on date of the postmark (or on the date of Post Office
certification or registration in the case of notice sent by certified or
registered mail). Upon timely revocation, the participant's initial
contribution will be returned as provided in such regulations or rulings.
3. All contributions to the custodial account shall be invested and reinvested
in full and fractional shares of one or more Funds. Such investments shall
be made in such proportions and/or in such amounts as participant from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may
direct (but subject to the provisions of Section 25).
The Service Company shall be responsible for promptly transmitting all
investment directions by the participant for the purchase or sale of shares
of one or more Funds hereunder to the Funds' transfer agent for execution.
However, if investment directions with respect to the investment of any
contribution hereunder are not received from the participant as required or,
if received, are unclear or incomplete in the opinion of the Service
Company, the contribution will be returned to the participant (or the
participant's employer) without liability for interest or for loss of income
or appreciation. If any directions or other orders by the participant with
respect to the sale or purchase of shares of one or more Funds for the
custodial account are unclear or incomplete in the opinion of the Service
Company, the Service Company will refrain from carrying out such investment
directions or from executing any such sale or purchase, without liability
for loss of income or for appreciation or depreciation of any asset, pending
receipt of clarification or completion from the participant.
All investment directions by participant will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a
Fund as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the participant's account shall be retained in
the account and (unless received in additional shares) shall be reinvested
in full and fractional shares of such Fund.
4. Subject to the minimum initial or additional investment, minimum balance and
other exchange rules applicable to a Fund, the participant may at any time
direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the participant's account for shares and fractional
shares of one or more other Funds. The participant shall give such
directions by written, telephonic or other form of notice acceptable to the
Service Company, and the Service Company will process such directions as
soon as practicable after receipt thereof (subject to the first and second
paragraphs of Section 3 of this Article VIII.
5. Any purchase or redemption of shares of a Fund for or from the participant's
account will be effected at the public offering price or net asset value of
such Fund (as described in the then effective prospectus for such Fund) next
established after the Service Company has transmitted the participant's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the participant's account will be subject to any applicable sales,
redemption or other charge as described in the then effective prospectus for
such Fund.
6. The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the participant's custodial
account. Any account maintained in connection herewith shall be in the name
of the Custodian for the benefit of the participant. All assets of the
custodial account shall be registered in the name of the Custodian or of a
suitable nominee. The books and records of the Custodian shall show that all
such investments are part of the custodial account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the custodial account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the
account hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the
Custodian with any information the Custodian requires to carry out the
Custodian's recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
custodial account will have any responsibility for rendering advice with
respect to the investment and reinvestment of participant's custodial
account, nor shall such parties be liable for any loss or diminution in
value which results from participant's exercise of investment control over
his custodial account. Participant shall have and exercise exclusive
responsibility for and control over the investment of the assets of his
custodial account, and neither Custodian nor any other such party shall have
any duty to question his directions in that regard or to advise him
regarding the purchase, retention or sale of shares of one or more Funds for
the custodial account.
8. The participant may appoint an investment advisor with respect to the
custodial account on a form acceptable to the Custodian and the Service
Company. The investment advisor's appointment will be in effect until
written notice to the contrary is received by the Custodian and the Service
Company. While an investment advisor's appointment is in effect, the
investment advisor may issue investment directions or may issue orders for
the sale or purchase of shares of one or more Funds to the Service Company,
and the Service Company will be fully protected in carrying out such
investment directions or orders to the same extent as if they had been given
by the participant.
The participant's appointment of any investment advisor will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the custodial
account hereunder without additional authorization by the participant or the
Custodian.
9. Distribution of the assets of the custodial account shall be made at such
time and in such form as Participant (or the Beneficiary if participant is
deceased) shall elect by written order to the Custodian (or other form of
instructions acceptable to the Custodian). Participant acknowledges that any
distribution (except for distribution on account of participant's disability
or death, return of an "excess contribution" referred to in Code Section
408(d), or a "rollover" from this custodial account) made earlier than age
59 1/2 may subject participant to an "additional tax on early distributions"
under Code Section 72(t). For that purpose, participant will be considered
disabled if participant can prove, as provided in Code Section 72(m)(7),
that participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite
duration. It is the responsibility of the participant (or the Beneficiary)
by appropriate distribution instructions to the Custodian to insure that the
distribution requirements of Code Section 401(a)(9) and Article IV above are
met. If the participant (or Beneficiary) does not direct the Custodian to
make distributions from the custodial account by the time that such
distributions are required to commence in accordance with such distribution
requirements, the Custodian (and Service Company) shall assume that the
Participant (or Beneficiary) is meeting the minimum distribution
requirements from another individual retirement arrangement maintained by
the participant (or Beneficiary) and the Custodian and Service Company shall
be fully protected in so doing. The participant (or the participant's
surviving spouse) may elect to comply with the distribution requirements in
Article IV using the recalculation of life expectancy method, or may elect
that the life expectancy of the Participant (and/or the participant's
surviving spouse) will not be recalculated; any such election may be in such
form as the participant (or surviving spouse) provides (including the
calculation of minimum distribution amounts in accordance with a method that
does not provide for recalculation of the life expectancy of one or both of
the participant and surviving spouse and instructions to the Custodian in
accordance with such method). Neither Custodian nor any other party
providing services to the custodial account assumes any responsibility for
the tax treatment of any distribution from the custodial account; such
responsibility rests solely with the person ordering the distribution.
10. Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order (or other acceptable form of
instructions) of participant (or Beneficiary if participant is deceased)
containing such information as the Custodian may reasonably request. Also,
before making any distribution or honoring any assignment of the custodial
account, Custodian shall be furnished with any and all applications,
certificates, tax waivers, signature guarantees and other documents
(including proof of any legal representative's authority) deemed necessary
or advisable by Custodian, but Custodian shall not be responsible for
complying with an order which appears on its face to be genuine, or for
refusing to comply if not satisfied it is genuine, and Custodian has no duty
of further inquiry. Any distributions from the account may be mailed,
first-class postage prepaid, to the last known address of the person who is
to receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the
Custodian's liability for such payment.
11. (a) The term "Beneficiary" means the person or persons designated as such
by the "designating person" (as defined below) on a form acceptable to
the Custodian for use in connection with the custodial account, signed
by the designating person, and filed with the Custodian. The form may
name individuals, trusts, estates, or other entities as either primary
or contingent beneficiaries. However, if the designation does not
effectively dispose of the entire custodial account as of the time
distribution is to commence, the term "Beneficiary" shall then mean the
designating person's estate with respect to the assets of the custodial
account not disposed of by the designation form. The form last accepted
by the Custodian before such distribution is to commence, provided it
was received by the Custodian (or deposited in the U.S. Mail or with a
delivery service) during the designating person's lifetime, shall be
controlling and, whether or not fully dispositive of the custodial
account, thereupon shall revoke all such forms previously filed by that
person. The term "designating person" means participant during his/her
lifetime; after participant's death, it also means participant's spouse
if the spouse begins to receive a portion of the custodial account
(pursuant to such a designation by participant) under a form of
distribution permitted by Article IV. A designation by participant's
spouse shall relate solely to the balance remaining in the spouse's
portion of the custodial account after the death of the spouse.
(b) When and after distributions from the custodial account to participant's
Beneficiary commence, all rights and obligations assigned to participant
hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of participant.
12. (a) The participant agrees to provide information to the Custodian at
such time and in such manner as may be necessary for the Custodian to
prepare any reports required under Section 408(i) of the Code and the
regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the Internal
Revenue Service and the participant at such time and manner and
containing such information as is prescribed by the Internal Revenue
Service.
(c) The participant, Custodian and Service Company shall furnish to each
other such information relevant to the custodial account as may be
required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder or as may otherwise be necessary for
the administration of the custodial account.
(d) The participant shall file any reports to the Internal Revenue Service
which are required of him by law (including Form 5329), and neither the
Custodian nor Service Company shall have any duty to advise participant
concerning or monitor participant's compliance with such requirement.
13. (a) Participant retains the right to amend this custodial account
document in any respect at any time, effective on a stated date which
shall be at least 60 days after giving written notice of the amendment
(including its exact terms) to Custodian by registered or certified
mail, unless Custodian waives notice as to such amendment. If the
Custodian does not wish to continue serving as such under this custodial
account document as so amended, it may resign in accordance with Section
17 below.
(b) Participant delegates to the Custodian the participant's right so to
amend, provided the Custodian amends in the same manner all agreements
comparable to this one, having the same Custodian, permitting comparable
investments, and under which such power has been delegated to it; this
includes the power to amend retroactively if necessary or appropriate in
the opinion of the Custodian in order to conform this custodial account
to pertinent provisions of the Code and other laws or successor
provisions of law, or to obtain a governmental ruling that such
requirements are met, to adopt a prototype or master form of agreement
in substitution for this Agreement, or as otherwise may be advisable in
the opinion of the Custodian. Such an amendment by the Custodian shall
be communicated in writing to participant, and participant shall be
deemed to have consented thereto unless, within 30 days after such
communication to participant is mailed, participant either (i) gives
Custodian a written order for a complete distribution or transfer of the
custodial account, or (ii) removes the Custodian and appoints a
successor under Section 17 below.
Pending the adoption of any amendment necessary or desirable to conform
this custodial account document to the requirements of any amendment to
the Internal Revenue Code or regulations or rulings thereunder, the
Custodian and the Service Company may operate the participant's
custodial account in accordance with such requirements to the extent
that the Custodian and/or the Service Company deem necessary to preserve
the tax benefits of the account.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by Section 16 below,
and no such substitution shall be deemed to be an amendment of this
Agreement.
14. (a) Custodian shall terminate the custodial account if this Agreement is
terminated or if, within 30 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 17,
Participant has not appointed a successor which has accepted such
appointment. Termination of the custodial account shall be effected by
distributing all assets thereof in a single payment in cash or in kind
to participant, subject to Custodian's right to reserve funds as
provided in Section 17.
(b) Upon termination of the custodial account, this custodial account
document shall have no further force and effect, and Custodian shall be
relieved from all further liability hereunder or with respect to the
custodial account and all assets thereof so distributed.
15. (a) In its discretion, the Custodian may appoint one or more contractors
or service providers to carry out any of its functions and may
compensate them from the custodial account for expenses attendant to
those functions.
(b) The Service Company shall be responsible for receiving all instructions,
notices, forms and remittances from participant and for dealing with or
forwarding the same to the transfer agent for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Custodian or
Service Company (or any other party providing services to the custodial
account), and none shall be implied. Neither shall be liable (or assumes
any responsibility) for the collection of contributions, the proper
amount, time or deductibility of any contribution to the custodial
account or the propriety of any contributions under this Agreement, or
the purpose, time, amount (including any minimum distribution amounts)
or propriety of any distribution hereunder, which matters are the
responsibility of participant and participant's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or after
the Custodian's resignation or removal), or such shorter time as may be
required under applicable regulations or rulings, the Custodian and
Service Company shall each file with participant a written report or
reports reflecting the transactions effected by it during such period
and the assets of the custodial account at its close. Upon the
expiration of 60 days after such a report is sent to participant (or
Beneficiary), the Custodian and Service Company shall be forever
released and discharged from all liability and accountability to anyone
with respect to transactions shown in or reflected by such report except
with respect to any such acts or transactions as to which Participant
shall have filed written objections with the Custodian or Service
Company within such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to
participant all notices, prospectuses, financial statements and other
reports to shareholders, proxies and proxy soliciting materials relating
to the shares of the Funds(s) credited to the custodial account. No
shares shall be voted, and no other action shall be taken pursuant to
such documents, except upon receipt of adequate written instructions
from Participant.
(f) Participant shall always fully indemnify Service Company, Distributor,
the Fund(s) and Custodian and save them harmless from any and all
liability whatsoever which may arise either (i) in connection with this
Agreement and the matters which it contemplates, except that which
arises directly out of the Service Company's, Distributor's or
Custodian's negligence or willful misconduct, or (ii) with respect to
making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with Section 10. Neither Service Company nor Custodian shall
be obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless
agreed upon by that party and participant, and unless fully indemnified
for so doing to that party's satisfaction.
(g) The Custodian and Service Company shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement,
and neither assumes any responsibility as to duties assigned to anyone
else hereunder or by operation of law.
(h) Custodian and Service Company may each conclusively rely upon and shall
be protected in acting upon any written order from participant or
Beneficiary, or any investment advisor appointed under Section 8, or any
other notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed, and so
long as it acts in good faith, in taking or omitting to take any other
action in reliance thereon. In addition, Custodian will carry out the
requirements of any apparently valid court order relating to the
custodial account and will incur no liability or responsibility for so
doing.
16. (a) The Custodian, in consideration of its services under this Agreement,
shall receive the fees specified on the applicable fee schedule. The fee
schedule originally applicable shall be the one specified in the
Disclosure Statement furnished to the participant. The Custodian may
substitute a different fee schedule at any time upon 30 days' written
notice to participant. The Custodian shall also receive reasonable fees
for any services not contemplated by any applicable fee schedule and
either deemed by it to be necessary or desirable or requested by
participant.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection with
the investment or reinvestment of the assets of the custodial account,
that may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties (including fees for legal services rendered to it in
connection with the custodial account) shall be charged to the custodial
account.
(c) All such fees and taxes and other administrative expenses charged to the
custodial account shall be collected either from the amount of any
contribution or distribution to or from the account, or (at the option
of the person entitled to collect such amounts) to the extent possible
under the circumstances by the conversion into cash of sufficient shares
of one or more Funds held in the custodial account (without liability
for any loss incurred thereby). Notwithstanding the foregoing, the
Custodian or Service Company may make demand upon the Participant for
payment of the amount of such fees, taxes and other administrative
expenses. Fees which remain outstanding after 60 days may be subject to
a collection charge.
17. (a) Upon 30 days' prior written notice to the Custodian, participant may
remove it from its office hereunder. Such notice, to be effective, shall
designate a successor custodian and shall be accompanied by the
successor's written acceptance. The Custodian also may at any time
resign upon 30 days' prior written notice to participant, whereupon the
participant shall appoint a successor to the Custodian (provided that,
in connection with its resignation, the Custodian may designate a
successor custodian and so notify the participant, and participant will
be deemed to have consented thereto unless, within 30 days after the
date of such notice, the participant establishes another individual
retirement account and transfers the amount in his account hereunder to
such other individual retirement account).
(b) The successor custodian shall be a bank, insured credit union, or other
person satisfactory to the Secretary of the Treasury under Code Section
408(a)(2). Upon receipt by Custodian of written acceptance by its
successor of such successor's appointment, Custodian shall transfer and
pay over to such successor the assets of the custodial account and all
records (or copies thereof) of Custodian pertaining thereto, provided
that the successor custodian agrees not to dispose of any such records
without the Custodian's consent. Custodian is authorized, however, to
reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the
assets of the custodial account or on or against the Custodian, with any
balance of such reserve remaining after the payment of all such items to
be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of its
predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including
successors to such sections.
19. Except where otherwise specifically required in this Agreement, any notice
from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Participant or Participant's Beneficiary shall not have the right or power
to anticipate any part of the custodial account or to sell, assign,
transfer, pledge or hypothecate any part thereof. The custodial account
shall not be liable for the debts of participant or participant's
Beneficiary or subject to any seizure, attachment, execution or other legal
process in respect thereof. At no time shall it be possible for any part of
the assets of the custodial account to be used for or diverted to purposes
other than for the exclusive benefit of the participant or his/her
Beneficiary.
21. When accepted by the Custodian, this agreement is accepted in and shall be
construed and administered in accordance with the laws of the Commonwealth
of Massachusetts. Any action involving the Custodian brought by any other
party must be brought in a state or federal court in such Commonwealth.
This Agreement is intended to qualify under Code Section 408(a) as an
individual retirement custodial account and to meet the applicable
requirements of Code Section 408(p), and if any provision hereof is subject
to more than one interpretation or any term used herein is subject to more
than one construction, such ambiguity shall be resolved in favor of that
interpretation or construction which is consistent with that intent.
However, Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Participant is
referred to participant's attorney for any such assurances.
22. Participant should seek advice from participant's attorney regarding the
legal consequences (including but not limited to federal and state tax
matters) of entering into this Agreement, contributions to the custodial
account, and ordering Custodian to make distributions from the account.
Participant acknowledges that Custodian and Service Company (and any company
associated therewith) are prohibited by law from rendering such advice.
23. Articles I through VII of this Agreement are in the form promulgated by the
Internal Revenue Service as Form 5305-SA. It is anticipated that if and when
the Internal Revenue Service promulgates changes to Form 5305-SA, the
Custodian will amend this Agreement correspondingly.
24. The participant acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her account is invested and
the Individual Retirement Account Disclosure Statement related to the
Account. The participant represents under penalties of perjury that his or
her Social Security number (or other Taxpayer Identification Number) as
stated in the Adoption Agreement is correct.
25. (a) At the direction of the participant, the Custodian will transfer
contributions to the participant's custodial account to another
individual retirement account designated by the participant, the
custodian or trustee of which agrees to accept such transfer, or to an
individual retirement annuity contract, the issuer of which agrees to
accept such transfer. If such transfer is made within two years after
the date of the first contribution by the employer to the participant's
SIMPLE IRA account under the employer's SIMPLE IRA plan, the Custodian
will have the right to a representation from the successor custodian or
trustee that the successor IRA is a SIMPLE IRA if required under
applicable law.
If the participant's SIMPLE IRA account operates under an employer
SIMPLE IRA plan that uses the "designated financial institution" rules
of Code Section 408(p), the rules in this paragraph will apply. Any
transfer instructions by the participant must be filed with and received
by the Custodian during the following 60-day period. For contributions
for the calendar year in which the employer first establishes its SIMPLE
IRA plan, the 60-day period designated by the employer during which
eligible employees (including the participant) may make salary reduction
elections with respect to such calendar year; for contributions for
subsequent calendar years, the period November 2 through December 31 of
the preceding year. Such instructions may be limited to contributions to
the participant's SIMPLE IRA account of the calendar year, or may be
effective with respect to all future contributions to the participant's
SIMPLE IRA account until revoked. Contributions to the electing
participant's SIMPLE IRA account will be transferred to the other IRA
specified by the participant with reasonable frequency (but not less
frequently than monthly). Pending transfer to the other IRA,
contributions will be held in the investment fund specified in the
Adoption Agreement for the participant's SIMPLE IRA account. Any such
transfer will be made without cost of penalty to the participant imposed
by the Custodian (other than any annual maintenance fee charged to all
SIMPLE IRA accounts maintained by the Custodian, and any other fee or
costs specifically allowed under regulations or rulings of the Internal
Revenue Service.)
Transfers from the participant's SIMPLE IRA account that are not
described in the preceding paragraphs (including situations where the
participant's SIMPLE IRA operates under an employer SIMPLE IRA plan that
does not use the "designated financial institution" rules) will be made
to a successor individual retirement account or annuity designated by
the participant in a written transfer of IRA assets form or other
acceptable written instructions to the Custodian. Any such other
transfer will be subject to normal Custodian fees (including any
transfer or account termination fee) and to normal redemption charges or
other fees or charges imposed by a Fund as described in its then
effective prospectus.
The Custodian, the Service Company, the Distributor and the Fund(s) will
have no responsibility for compliance with the requirements of Code
Section 408(p) and any other applicable requirements (including whether
such transferee individual retirement account or annuity meets the
requirements to be a SIMPLE IRA or whether the transferee financial
institution properly carries out the participant's investment
directions) in connection with such transfer have been satisfied, or for
any penalty taxes that may be payable in connection therewith, which
matters shall be the sole responsibility of the Participant.
(b) This Agreement is intended to establish a valid SIMPLE individual
retirement account operating in conjunction with a SIMPLE IRA plan
operated by the participant's employer, and to meet all applicable
requirements of Code Section 408(p) (and other applicable legal
requirements for SIMPLE IRAs). This Agreement will be interpreted and
the custodial account hereunder administered in a manner that carries
out such intent. In addition, if future regulations or rulings provide
guidance concerning the requirements for a valid SIMPLE IRA, this
Agreement will be interpreted and the custodial account hereunder will
be administered in a manner that complies with such regulations or
rulings pending the adoption of any required amendment to this
Agreement.
<PAGE>
[Graphic Omitted]
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
- -------------------------------------------------------------------------------
SIMPLE
IRA
- -----------------------
NEW ENGLAND FUNDS
SIMPLE IRA
Employer Booklet
<PAGE>
[Graphic Omitted]
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
TABLE OF CONTENTS
Page 3 Instructions on establishing a SIMPLE IRA plan with
New England Funds
Page 4 IRS General Instructions
Page 7 IRS Model Notification to Eligible Employees &
Model Salary Reduction Agreement
Page 8 Instructions on completing the 5304-SIMPLE form
Page 9 5304-SIMPLE form
Page 11 New England Funds Transmittal form
<PAGE>
[Graphic Omitted]
NEW ENGLNAD FUNDS
Where The Best Minds Meet(TM)
- -------------------------------------------------------------------------------
NEW ENGLAND FUNDS SIMPLE IRA
EMPLOYER FORMS BOOKLET
- -------------------------------------------------------------------------------
HOW TO ESTABLISH A SIMPLE IRA PLAN
- -------------------------------------------------------------------------------
[X] Complete the IRS Form 5304-SIMPLE (page 9) and Model Notification to
Eligible Employees (page 7), and provide a copy to all eligible
employees. Going forward you are required to distribute the notice
yearly, at least 60 days before the start of the calendar year.
[X] Employees should complete the bottom section of the Model Notification to
Eligible Employees, which is the Salary Reduction Agreement and return to
you. This form is for your records only, do not mail a copy of this form
to New England Funds.
[X] Distribute a NEW ENGLAND FUNDS EMPLOYEE SIMPLE IRA FORMS PACKAGE to all
eligible employees. Instruct employees to read all materials, complete
the Employee SIMPLE IRA Adoption Agreement, and return to you with the
Salary Reduction Agreement.
[X] Return the completed Employer Adoption Agreement to New England Funds,
along with an Employee Adoption Agreement for all employees who elect to
participate. If you are making nonmatching contributions all eligible
employees must complete an Adoption Agreement, even those who choose not
to make salary reduction contributions. If the employee does not complete
the form to open a SIMPLE IRA, you are entitled to complete the forms for
the employee.
- -------------------------------------------------------------------------------
HOW TO SUBMIT YOUR FIRST SIMPLE IRA PLAN CONTRIBUTION
- -------------------------------------------------------------------------------
[X] Before making a deposit you must be certain that all eligible employees
have received the materials indicated above and have made the decision to
participate.
[X] Using the Transmittal form provided, supply employee name along with each
fund and contribution amount. Be sure to separate employee and employer
contributions.
[X] Please provide the dollar amount to be deposited into each fund account.
Each deposit should be $25 or more.
[X] To confirm your contribution, New England Funds will mail a Group
Participant Statement to the address you provided on the Employer
Adoption Agreement. This statement can be used to remit future
contributions.
[X] If an eligible employee establishes a SIMPLE IRA with another financial
institution, the employee will need to give you the necessary information
for mailing those contributions. NEW ENGLAND FUNDS WILL NOT ACCEPT
CONTRIBUTIONS FOR ANY OTHER FINANCIAL INSTITUTION.
NEW ENGLAND FUNDS |_| P.O. BOX 8551 |_| BOSTON, MA 02266-8551
<PAGE>
[Graphic Omitted]
NEW ENGLNAD FUNDS
Where The Best Minds Meet(TM)
- -------------------------------------------------------------------------------
INSTRUCTIONS ON COMPLETING FORM 5304-SIMPLE
Establishing a SIMPLE IRA plan involves certain legal and financial obligations
for the employer. Consult your lawyer or other tax advisor if you have any
questions about the nature of these obligations or about how maintaining a
SIMPLE IRA plan will affect your business or your tax situation. Be sure to
provide a complete 5304-SIMPLE to New England Funds. See instructions on page 2
of this booklet.
Note: You along with your tax advisor are responsible for determining EACH YEAR,
if you are eligible to make contributions into the SIMPLE IRA plan.
ARTICLE I -- EMPLOYEE ELIGIBILITY REQUIREMENTS
You may choose to exclude employees based on compensation or their participation
in a collective bargaining agreement. Please select one.
Note: You are responsible for determining EACH YEAR, which employees are
eligible to participate in your SIMPLE IRA plan for the current calendar year
and for insuring that all required notices, summary descriptions and other
information are provided under the SIMPLE IRA plan rules.
ARTICLE II -- SALARY REDUCTION AGREEMENTS
Select how often you would like employees to have the ability to change and
terminate their elections.
Note: You are responsible for properly reporting salary reduction contributions
to the IRS on Form W-2, as well as for determining that salary reduction
contributions by eligible employees are within all limitations applicable to
such contributions, transferring such contributions to each participant's SIMPLE
IRA within the time limits provided by law, and determining and making employer
contributions in the amounts and by the times required by applicable legal
rules.
ARTICLE III -- CONTRIBUTIONS
As employer you are required to make either matching contributions or
nonmatching contributions. For nonmatching you must have each participant sign
an adoption agreement, even if they choose not to make salary reduction
contributions.
ARTICLE IV -- OTHER REQUIREMENT AND PROVISIONS
Read carefully
ARTICLE V -- DEFINITIONS
Read carefully
ARTICLE VI -- PROCEDURES FOR WITHDRAWAL
The IRS requires that you provide each employee with information about the
procedures of withdrawals of contributions received by the financial institution
that he or she has selected, and the financial institution's name and address.
However, this is not required if the financial institution's procedures are not
available, or if the financial institution provides the procedures directly to
the employee. New England Funds' name and address is provided in the employee
kit as well as pertinent withdrawal information.
ARTICLE VII -- EFFECTIVE DATE
For SIMPLE IRA plans started during 1997, the effective date cannot be earlier
than the date you sign the completed 5304-SIMPLE. Also for 1997 you must start
your SIMPLE IRA plan no later than October 1, otherwise you must wait until
1998. For 1998 and later years, you may start a new SIMPLE IRA plan effective on
any date from January 1 to October 1.
Note: If you want to change any of your selections, you must complete and sign a
new Form 5304-SIMPLE and designate the effective date if the changed form. After
you have started a SIMPLE IRA plan, the new Form 5304-SIMPLE containing the
changes must be effective as of January 1.
By establishing a SIMPLE IRA plan and executing the Form 5304-SIMPLE or other
document for your SIMPLE IRA plan, you, the employer, agree to indemnify and
hold harmless State Street Bank and Trust Company as custodian from and against
any losses, costs or liabilities arising out of your failure to carry out your
responsibilities as employer or otherwise arising out of the operation of your
SIMPLE IRA plan, except for losses, costs or liabilities arising directly out of
the negligence or willful misconduct of State Street Bank and Trust Company.
<PAGE>
[Graphic Omitted]
NEW ENGLNAD FUNDS NEW ENGLAND FUNDS
Where The Best Minds Meet(TM) SIMPLE IRA TRANSMITTAL FORM
- -------------------------------------------------------------------------------
Name of Employer:
-------------------------------------------------------------
Address:
---------------------------------------------------------------------
Phone Number:
-----------------------------------------------------------------
Contact Name:
-----------------------------------------------------------------
<TABLE>
PARTICIPANT'S TOTAL DOLLAR SIMPLE SALARY
PARTICIPANT'S PARTICIPANT'S NAME OF ACCOUNT AMOUNT OF EMPLOYER REDUCTION
NAME SOCIAL SECURITY NUMBER NEW ENGLAND FUND NUMBER CONTRIBUTION CONTRIBUTION CONTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Total Employer Contributions: $
--------------
Total Salary Reduction Contributions: $
--------------
Check Amount: $
--------------
If Employer Contribution, please specify year: 19
-----
NOTE:
o Contribution must be in dollars not percentages, and must meet Fund minimums.
o If additional lines are needed, please make multiple copies.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000317947
<NAME> NEW ENGLAND CASH MANAGEMENT TRUST
<SERIES>
<NUMBER> 011
<NAME> NEW ENGLAND CMT MONEY MARKET SERIES CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 695,071,436
<INVESTMENTS-AT-VALUE> 695,071,436
<RECEIVABLES> 24,405,279
<ASSETS-OTHER> 273,144
<OTHER-ITEMS-ASSETS> 2,000
<TOTAL-ASSETS> 719,751,859
<PAYABLE-FOR-SECURITIES> 10,000,086
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,092,818
<TOTAL-LIABILITIES> 21,092,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 687,503,223
<SHARES-COMMON-STOCK> 687,503,223
<SHARES-COMMON-PRIOR> 655,516,274
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 118,640
<ACCUMULATED-NET-GAINS> (3,573)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 698,658,955
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,472,876
<OTHER-INCOME> 0
<EXPENSES-NET> 5,960,112
<NET-INVESTMENT-INCOME> 31,512,764
<REALIZED-GAINS-CURRENT> (1,820)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 31,510,944
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31,392,304
<DISTRIBUTIONS-OF-GAINS> 118,639
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,265,900,028
<NUMBER-OF-SHARES-REDEEMED> 1,261,566,359
<SHARES-REINVESTED> 30,704,669
<NET-CHANGE-IN-ASSETS> 35,038,338
<ACCUMULATED-NII-PRIOR> 32,127,993
<ACCUMULATED-GAINS-PRIOR> 118,639
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,825,485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,960,112
<AVERAGE-NET-ASSETS> 675,121,250
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.047
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.047
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 4.77
<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
<CIK> 0000317947
<NAME> NEW ENGLAND CASH MANAGEMENT TRUST
<SERIES>
<NUMBER> 012
<NAME> NEW ENGLAND CASH MANAGEMENT (MONEY MARKET SERIES) CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 695,071,436
<INVESTMENTS-AT-VALUE> 695,071,436
<RECEIVABLES> 24,405,279
<ASSETS-OTHER> 273,144
<OTHER-ITEMS-ASSETS> 2,000
<TOTAL-ASSETS> 719,751,859
<PAYABLE-FOR-SECURITIES> 10,000,086
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,092,818
<TOTAL-LIABILITIES> 21,092,904
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,040,635
<SHARES-COMMON-STOCK> 11,040,635
<SHARES-COMMON-PRIOR> 7,989,246
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 118,640
<ACCUMULATED-NET-GAINS> (3,573)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 698,658,955
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,472,876
<OTHER-INCOME> 0
<EXPENSES-NET> 5,960,112
<NET-INVESTMENT-INCOME> 31,512,764
<REALIZED-GAINS-CURRENT> (1,820)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 31,510,944
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31,392,304
<DISTRIBUTIONS-OF-GAINS> 118,639
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,265,900,028
<NUMBER-OF-SHARES-REDEEMED> 1,261,566,359
<SHARES-REINVESTED> 30,704,669
<NET-CHANGE-IN-ASSETS> 35,038,388
<ACCUMULATED-NII-PRIOR> 32,127,993
<ACCUMULATED-GAINS-PRIOR> 118,639
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,825,485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,960,112
<AVERAGE-NET-ASSETS> 675,121,250
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.047
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.047
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 4.77
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000714528
<NAME> NEW ENGLAND CASH MANAGEMENT TRUST
<SERIES>
<NUMBER> 021
<NAME> NEW ENGLAND CMT (U.S. GOVERNMENT SERIES) CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 48,642,357
<INVESTMENTS-AT-VALUE> 48,642,357
<RECEIVABLES> 649,803
<ASSETS-OTHER> 29,392
<OTHER-ITEMS-ASSETS> 2,000
<TOTAL-ASSETS> 49,323,551
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187,600
<TOTAL-LIABILITIES> 187,600
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,243,855
<SHARES-COMMON-STOCK> 48,243,855
<SHARES-COMMON-PRIOR> 51,675,020
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 60,941
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 49,135,952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,988,280
<OTHER-INCOME> 0
<EXPENSES-NET> 531,441
<NET-INVESTMENT-INCOME> 2,456,839
<REALIZED-GAINS-CURRENT> 90
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,456,929
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,395,989
<DISTRIBUTIONS-OF-GAINS> 60,941
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,618,455
<NUMBER-OF-SHARES-REDEEMED> 101,434,636
<SHARES-REINVESTED> 2,405,190
<NET-CHANGE-IN-ASSETS> (3,410,991)
<ACCUMULATED-NII-PRIOR> 2,750,073
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 236,900
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 543,500
<AVERAGE-NET-ASSETS> 55,741,176
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.044
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.043
<PER-SHARE-DISTRIBUTIONS> 0.001
<RETURNS-OF-CAPITAL> 4.50
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000317947
<NAME> NEW ENGLAND CASH MANAGMENT TRUST
<SERIES>
<NUMBER> 022
<NAME> NEW ENGLAND CMT (U.S. GOVERNMENT SERIES) CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 48,642,357
<INVESTMENTS-AT-VALUE> 48,642,357
<RECEIVABLES> 649,803
<ASSETS-OTHER> 29,392
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,323,552
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187,600
<TOTAL-LIABILITIES> 187,600
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 831,157
<SHARES-COMMON-STOCK> 831,157
<SHARES-COMMON-PRIOR> 810,983
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 60,941
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 49,135,952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,988,280
<OTHER-INCOME> 0
<EXPENSES-NET> 531,441
<NET-INVESTMENT-INCOME> 2,456,839
<REALIZED-GAINS-CURRENT> 90
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,456,929
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,395,989
<DISTRIBUTIONS-OF-GAINS> 60,941
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,618,455
<NUMBER-OF-SHARES-REDEEMED> 101,434,636
<SHARES-REINVESTED> 2,405,190
<NET-CHANGE-IN-ASSETS> (3,410,991)
<ACCUMULATED-NII-PRIOR> 2,750,073
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 236,900
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 543,500
<AVERAGE-NET-ASSETS> 55,741,176
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.044
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.043
<PER-SHARE-DISTRIBUTIONS> 0.001
<RETURNS-OF-CAPITAL> 4.50
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
