<PAGE>
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ANNUAL REPORT
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[Logo](R)
New England Funds(R)
Where The Best Minds Meet(R)
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New England
Money Market Funds
[Graphic Omitted]
WHERE
THE BEST
MINDS
MEET(R)
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Annual Report -- June 30, 1999
- -------------------------------
<PAGE>
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NEW ENGLAND MONEY MARKET FUNDS
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AUGUST 1999
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[Photo of Bruce R. Speca]
"Most investment
professionals
I know agree that proper
asset allocation
is a bedrock principle
of sound investing."
Dear Shareholder,
Performance results for the New England Family of Funds were driven mainly by
two important changes that took place in our financial markets during the first
half of 1999. First, the long, upward climb of large-capitalization stocks
slowed dramatically as attention turned to stocks with more reasonable
valuations. Then, bond investors grew fearful that our persistently strong
economy would lead the Federal Reserve Board to impose higher interest rates.
Your managers' commentary on the following pages details how these trends
affected your fund's strategy and performance.
As I watch investments come in and out of favor, I'm reminded of the importance
of asset allocation - the practice of dividing your portfolio among different
kinds of stocks and bonds. The idea is to own more or less of each investment
type according to your feelings about risk and your investment time horizon.
Most investment professionals I know agree that proper asset allocation is a
bedrock principle of sound investing. In addition to broadening diversification,
it seeks to avoid exposure to narrow market segments and can help reduce
volatility.
While a diversified portfolio may have given solid returns during the past year,
many investors were disappointed when they compared those returns to the
performance of large-company growth stocks or to the soaring returns of Internet
stocks. Suddenly, investors were asking: Is asset allocation dead?
Certainly not! Like so much in life, market cycles are inevitable. Different
categories of investments will be popular at different times, and a sensible
asset allocation program can help you as market trends change.
I know it can be tempting to jump on a bandwagon and go after "easy money." But
I encourage you, instead, to maintain a rational, long-term perspective and to
consult your financial representative regularly to review and fine-tune your
investments, including a well-diversified asset allocation program.
Thank you for your continued interest. We look forward to helping you achieve
your long-term financial objectives.
Sincerely,
/s/ Bruce R. Speca
Bruce R. Speca
President and CEO
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INVESTMENT IN THE FUNDS IS NOT FDIC INSURED NOR GUARANTEED BY A BANK
AND MAY LOSE VALUE
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<PAGE>
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NEW ENGLAND MONEY MARKET FUNDS
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ANNUALIZED SEVEN-DAY YIELDS -- 6/30/99
CLASS A, B & C CLASS Y
NEW ENGLAND CASH MANAGEMENT TRUST-- MONEY MARKET SERIES 4.3% 4.2%
CLASS A & B
New England Tax Exempt Money Market Trust 2.9%
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Yields will fluctuate with changes in market conditions.
The seven-day money market yield reflects the Funds' current earnings more
closely than total return.
Average Annual Total Returns -- 6/30/99
New England Cash Management Trust -- Money Market Series
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CLASS A 1 YEAR 5 YEARS 10 YEARS
Net Asset Value(1) 4.6% 4.8% 4.9%
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CLASS B (Inception 9/13/93) 1 YEAR 5 YEARS SINCE INCEPTION
Net Asset Value(1) 4.6% 4.8% 4.5%
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CLASS C (Inception 3/1/98) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 4.6% 4.7%
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CLASS Y (Inception 2/27/98) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 4.6% 4.7%
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New England Tax Exempt Money Market Trust
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CLASS A 1 YEAR 5 YEARS 10 YEARS
Net Asset Value(1) 2.8% 3.2% 3.4%
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CLASS B (Inception 9/13/93) 1 YEAR 5 YEARS SINCE INCEPTION
Net Asset Value(1) 2.8% 3.2% 3.0%
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(1) These returns include reinvestment of distributions, represent past
performance and do not predict future results. Class Y shares are only
available to certain institutional investors.
<PAGE>
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NEW ENGLAND MONEY MARKET FUNDS
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YOUR PORTFOLIO MANAGERS' 12-MONTH SUMMARY
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During the last six months of 1998, the investment environment was a volatile
though positive one for short-term securities. Investors' sentiment shifted
quickly from an expectation that the Federal Reserve Board would raise interest
rates to curb inflation to a fear that a credit crunch would cripple world
financial markets. Financial problems in Russia and other emerging markets
started this swing. Confronted by moderating strength in the U.S. economy, the
Fed calmed the financial markets by lowering short-term interest rates three
times in the fall of 1998. By doing so, the Fed helped to keep the U.S. economy
on track and help spark growth in other economies around the world.
In the first half of 1999, economic growth started to rekindle in many areas of
the world, helped by interest-rate cuts implemented by most major central banks.
In addition, the U.S. economy sustained its strong growth tendencies of the past
year. U.S. consumer confidence was high due to strong job and income growth.
Retail demand for homes, home furnishings, automobiles and electronics was high.
At the same time, strong productivity gains helped keep consumer price inflation
restrained.
More recently, however, signs of possible inflation problems began to appear. As
a result, the Federal Reserve Board changed from a neutral stance toward
interest rates to one leaning toward a short-term interest rate hike, in order
to slow growth and head off inflation. The Fed followed through with an increase
in a key short-term interest rate at the end of June.
QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGERS
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[Photo of Scott Nicholson]
Scott Nicholson
Back Bay Advisors, L.P.
NEW ENGLAND CASH MANAGEMENT TRUST
Q. How did New England Cash Management Trust perform during its fiscal year,
which ended June 30, 1999?
New England Cash Management Trust maintained a constant $1.00(1) share price
throughout the period and was able to provide a total return of 4.6% (Class A
shares calculated at NAV) for the 12 months ending June 30, 1999. The Fund's
return included the reinvestment of $0.0445 per share in income distributions.
As of June 30, 1999, the New England Cash Management Trust's seven-day yield was
4.3%.
Q. What strategies were used in managing the fund?
For most of the period, the Fund invested in securities with longer maturities
to benefit from the attractive yield advantage they offered versus shorter-term
alternatives. The Fund's average maturity remained in the 75- to 80-day range
for most of the period. In the second quarter of 1999, with the Fed changing to
a "tightening bias" -- an inclination to increase rates in order to dampen
economic growth and prevent inflation -- that strategy started to change. The
Fund will look to shorten its average maturity, allowing it to more quickly
reinvest in issues coming due at higher rates.
Q. What is your outlook for the next six months?
We are watching the Federal Reserve Board closely, keeping our strategy flexible
until we get a clearer sense of which way short-term rates are heading. Until
the Fed decides its course -- after having implemented one rate hike at the end
of June -- we plan to pursue an investment strategy that will keep the Fund
nimble, so that it can respond to events as they develop.
(1) An investment in the Fund is not guaranteed by the FDIC or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
The opinions expressed are those of the portfolio manager and are subject
to change. The occurence of forecasted events and predictions is not certain
and cannot be assured.
PORTFOLIO COMPOSITION AS OF 6/30/99
Commercial Paper 80.2%
Certificates of Deposit 17.9%
Eurodollar Certificates of Deposit 1.0%
Bank Note and Other 0.9%
<PAGE>
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NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
[Photo of John Maloney]
John Maloney
Back Bay Advisors, L.P.
Q. How did New England Tax Exempt Money Market Trust perform during its fiscal
year, which ended June 30, 1999?
maintained its $1.00(1) share price throughout the period and was able to
provide a total return of 2.8% (calculated at NAV) for the 12 months ending June
30, 1999. The Fund's return included the reinvestment of $0.0276 per share in
income distributions. As of June 30, 1999, the Fund's seven-day yield was 2.9%,
which translates into a taxable equivalent yield of 4.7% for investors in the
highest federal tax bracket of 39.6%.(2)
Q. What strategies did you use in managing the Fund?
The Fund focused on the seasonal factors that have been characteristic of the
short-term tax-exempt market. Heavy supply came to market in June; June 30 is
the fiscal year-end of many municipalities. The added supply nudged short-term
rates higher. Therefore, at the beginning of the fiscal year in July 1998, we
lengthened the Fund's maturity to lock in higher yields for the greatest period
of time.
As the end of 1998 approached, interest rates on short-term, variable-rate
securities experienced an upswing in yield. In order to take advantage of this
opportunity, we shortened the Fund's average maturity from 68 days at the
beginning of October and to 45 days at the end of December, by focusing 73% of
its assets in variable-rate securities by December 31, 1998. The Fund maintained
a neutral position in April and May 1999, a period when the Fund typically
experiences withdrawals as investors pay their taxes.
Q. How will you position the Fund going forward?
June, as usual, has proven to be the heaviest month for note issuance; it should
therefore be the cheapest time to buy one-year notes. As such, the Fund has been
adding to its note position during this time. We anticipate the usual run of
events in the short-term tax-exempt market going forward, and will keep an eye
on both these supply/demand issues as well as what course Federal Reserve Board
interest-rate policy will take after the Board's late June rate increase.
(1) An investment in the Fund is not insured or guaranteed by the FDIC or any
other government agency. Although the Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the Fund.
(2) A portion of income may be subject to state, federal and/or alternative
minimum tax. Capital gains, if any, are subject to capital gains tax.
The opinions expressed are those of the portfolio manager and are subject to
change. The occurrence of forecasted events and predictions is not certain and
cannot be assured.
<PAGE>
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CASH MANAGEMENT TRUST MONEY MARKET SERIES
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Investments as of June 30, 1999
INVESTMENTS -- 100.3% OF TOTAL NET ASSETS
PRINCIPAL
AMOUNT DESCRIPTION VALUE (A)
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BANK NOTE -- 1.2%
$10,000,000 Travelers Insurance Co., 4.930%, 9/01/1999 (b) .... $ 10,000,000
------------
Total Bank Note (Cost $10,000,000) ................ 10,000,000
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CERTIFICATES OF DEPOSIT -- 17.9%
5,000,000 Toronto Dominion, 5.640%, 7/08/1999 ............... 5,000,494
5,000,000 Royal Bank of Canada, 5.650%, 7/12/1999 ........... 5,000,862
3,000,000 Bank of Nova Scotia, 5.680%, 8/03/1999 ............ 3,001,606
5,000,000 Deutsche Bank AG New York, 4.900%, 8/18/1999 ...... 4,999,934
5,000,000 State Street Bank & Trust Co., 4.950%, 9/07/1999 .. 5,000,000
8,000,000 Toronto Dominion, 4.990%, 1/07/2000 ............... 7,998,795
17,000,000 Commerzbank AG New York, 5.010%, 1/10/2000 ........ 16,996,202
6,000,000 Canadian Imperial, 5.000%, 1/27/2000 .............. 5,997,337
8,000,000 Canadian Imperial, 5.010%, 2/07/2000 .............. 7,998,132
18,000,000 Deutsche Bank AG New York, 5.050%, 2/09/2000 ...... 17,986,456
10,000,000 Toronto Dominion, 5.050%, 2/14/2000 ............... 9,984,042
3,000,000 Commerzbank AG New York, 5.085%, 2/16/2000 ........ 2,999,362
10,000,000 Rabobank Nederland NV, 5.125%, 2/18/2000 .......... 9,999,514
2,000,000 Toronto Dominion, 5.270%, 3/02/2000 ............... 1,998,544
8,000,000 Canadian Imperial, 5.270%, 3/03/2000 .............. 8,002,852
10,000,000 Bank of Montreal Chicago, 5.170%, 3/15/2000 ....... 9,997,958
10,000,000 Societe Generale, 5.200%, 3/15/2000 ............... 10,000,002
1,000,000 Commerzbank AG New York, 5.230%, 5/11/2000 ........ 999,821
5,000,000 Bank of Montreal Chicago, 5.200%, 5/12/2000 ....... 4,997,917
6,000,000 Commerzbank AG New York, 5.295%, 5/19/2000 ........ 5,997,192
------------
Total Certificates of Deposit (Cost $144,957,022) . 144,957,022
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CERTIFICATES OF DEPOSIT (EURODOLLARS) -- 1.0%
8,000,000 Bank of Nova Scotia, 5.060%, 9/08/1999 ............ 8,001,461
------------
Total Certificates of Deposit (Eurodollars)
(Cost $8,001,461) ............................... 8,001,461
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COMMERCIAL PAPER -- 80.2%
AGRICULTURE -- 4.9%
5,000,000 Monsanto Co., 4.870%, 7/12/1999 ................... 4,992,560
2,400,000 Monsanto Co., 5.020%, 7/23/1999 ................... 2,392,637
3,076,000 Monsanto Co., 5.000%, 8/19/1999 ................... 3,055,066
7,500,000 Monsanto Co., 4.800%, 9/14/1999 ................... 7,425,000
6,000,000 Monsanto Co., 5.100%, 10/05/1999 .................. 5,918,400
8,500,000 Monsanto Co., 5.000%, 10/06/1999 .................. 8,385,486
7,415,000 Monsanto Co., 4.830%, 10/08/1999 .................. 7,316,510
------------
39,485,659
------------
AIRLINES -- 0.6%
5,000,000 International Lease Finance Corp.,
4.800%, 8/11/1999 ............................... 4,972,667
------------
ASSET BACKED -- 4.5%
2,000,000 Clipper Receivables Corp., 5.900%, 7/01/1999 ...... 2,000,000
10,000,000 Clipper Receivables Corp., 4.820%, 7/08/1999 ...... 9,990,628
10,000,000 Clipper Receivables Corp., 4.980%, 7/14/1999 ...... 9,982,017
5,000,000 Clipper Receivables Corp., 5.000%, 7/16/1999 ...... 4,989,583
10,000,000 Clipper Receivables Corp., 5.060%, 8/23/1999 ...... 9,925,505
------------
36,887,733
------------
AUTOMOTIVE -- 12.8%
5,000,000 Ford Motor Credit Co., 4.800%, 7/09/1999 .......... 4,994,667
10,000,000 General Motors Acceptance Corp., 4.800%, 7/09/1999. 9,989,333
7,500,000 General Motors Acceptance Corp., 4.800%, 7/13/1999. 7,488,000
5,000,000 General Motors Acceptance Corp., 4.810%, 7/14/1999. 4,991,315
5,000,000 Chevron USA, Inc., 5.010%, 7/16/1999 .............. 4,989,563
15,000,000 American Honda Finance, 4.850%, 7/19/1999 ......... 14,963,625
3,243,000 American Honda Finance, 4.900%, 7/19/1999 ......... 3,235,055
5,000,000 American Honda Finance, 5.000%, 8/03/1999 ......... 4,977,083
10,000,000 Ford Motor Credit Co., 4.950%, 8/19/1999 .......... 9,932,625
17,000,000 Ford Motor Credit Co., 4.920%, 8/20/1999 .......... 16,883,833
3,000,000 Ford Motor Credit Co., 4.740%, 9/27/1999 .......... 2,965,240
2,700,000 Ford Motor Credit Co., 5.060%, 10/05/1999 ......... 2,663,568
6,000,000 General Motors Acceptance Corp., 5.190%, 10/12/1999 5,910,905
10,000,000 General Motors Acceptance Corp., 5.220%, 1/28/2000 9,694,050
------------
103,678,862
------------
BANKS -- 15.3%
4,000,000 UBS Finance Delaware, Inc., 5.625%, 7/01/1999 ..... 4,000,000
10,000,000 Lloyds Bank plc, 4.800%, 7/07/1999 ................ 9,992,000
3,600,000 Svenska Handelsbanken, 5.380%, 7/12/1999 .......... 3,594,082
3,000,000 UBS Finance Delaware, Inc., 4.940%, 7/12/1999 ..... 2,995,472
7,000,000 Wells Fargo & Co., 4.810%, 7/15/1999 .............. 6,986,906
10,000,000 Wells Fargo & Co., 4.860%, 8/03/1999 .............. 9,955,450
9,000,000 Deutsche Bank Finance, 4.820%, 8/09/1999 .......... 8,953,005
2,000,000 Wells Fargo & Co., 4.820%, 8/09/1999 .............. 1,989,557
7,000,000 Wells Fargo & Co., 5.010%, 8/10/1999 .............. 6,961,033
10,000,000 Wells Fargo & Co., 5.040%, 9/01/1999 .............. 9,913,200
21,000,000 Bank of Nova Scotia, 4.950%, 9/03/1999 ............ 20,815,200
1,000,000 Wells Fargo & Co., 5.040%, 9/07/1999 .............. 990,480
8,000,000 Societe Generale Canada, 4.880%, 9/13/1999 ........ 7,919,751
5,000,000 Lloyds Bank plc, 4.800%, 10/04/1999 ............... 4,936,667
15,000,000 UBS Finance Delaware, Inc., 4.920%, 10/12/1999 .... 14,788,850
10,000,000 Svenska Handelsbanken, 4.860%, 12/20/1999 ......... 9,767,800
------------
124,559,453
------------
DIVERSIFIED CONGLOMERATES -- 3.3%
12,000,000 USAA Capital Corp., 4.780%, 7/13/1999 ............. 11,980,880
15,000,000 USAA Capital Corp., 4.850%, 8/17/1999 ............. 14,905,021
------------
26,885,901
------------
FINANCE -- 19.4%
10,000,000 American Express, 5.200%, 7/01/1999 ............... 10,000,000
10,000,000 American Express, 4.800%, 7/06/1999 ............... 9,993,333
5,000,000 Transamerica Financial Group, 4.820%, 7/07/1999 ... 4,995,983
5,000,000 CIT Group Holdings, 4.800%, 7/12/1999 ............. 4,992,667
3,000,000 American Express, 4.800%, 7/14/1999 ............... 2,994,800
5,000,000 General Electric Capital Corp., 4.780%, 7/16/1999 . 4,990,042
8,750,000 Transamerica Financial Group, 4.840%, 7/20/1999 ... 8,727,649
10,000,000 Commercial Credit Co., 4.950%, 7/21/1999 .......... 9,972,500
10,000,000 Commercial Credit Co., 4.950%, 7/22/1999 .......... 9,971,125
2,200,000 Transamerica Financial Group, 4.800%, 7/23/1999 ... 2,193,547
10,000,000 Transamerica Financial Group, 4.840%, 7/26/1999 ... 9,966,389
5,000,000 General Electric Capital Corp., 4.840%, 8/09/1999 . 4,973,783
14,000,000 Household Finance Corp., 5.030%, 8/13/1999 ........ 13,915,887
10,000,000 Associates Corp of N.A., 4.990%, 8/16/1999 ........ 9,936,239
5,000,000 Associates Corp of N.A., 4.830%, 8/23/1999 ........ 4,964,446
2,091,000 Transamerica Financial Group, 4.940%, 9/01/1999 ... 2,073,210
10,000,000 Household Finance Corp., 5.040%, 9/08/1999 ........ 9,903,400
10,000,000 Transamerica Financial Group, 5.040%, 9/17/1999 ... 9,890,800
5,000,000 General Electric Capital Corp., 4.830%, 9/30/1999 . 4,938,954
8,000,000 General Electric Capital Corp., 5.130%, 10/04/1999 7,891,700
10,000,000 General Electric Capital Corp., 5.000%, 10/07/1999 9,863,889
------------
157,150,343
------------
INSURANCE -- 3.1%
6,000,000 Prudential Funding Corp., 4.980%, 7/21/1999 ....... 5,983,400
2,500,000 Prudential Funding Corp., 5.000%, 8/04/1999 ....... 2,488,194
14,000,000 Prudential Funding Corp., 4.950%, 8/24/1999 ....... 13,896,050
3,000,000 Prudential Funding Corp., 5.040%, 8/31/1999 ....... 2,974,380
------------
25,342,024
------------
PHARMACEUTICAL -- 1.0%
8,000,000 American Home Products Corp., 4.870%, 8/05/1999 ... 7,962,122
------------
RETAIL -- 3.6%
4,500,000 Sears Roebuck Acceptance Corp., 4.850%, 7/14/1999 . 4,492,119
10,000,000 Sears Roebuck Acceptance Corp., 4.900%, 7/20/1999 . 9,974,139
10,000,000 Sears Roebuck Acceptance Corp., 5.000%, 7/23/1999 . 9,969,444
5,000,000 Sears Roebuck Acceptance Corp., 4.900%, 7/27/1999 . 4,982,306
------------
29,418,008
------------
SECURITIES -- 10.2%
10,000,000 Merrill Lynch & Co., 4.810%, 7/06/1999 9,993,320
2,000,000 Merrill Lynch & Co., 5.270%, 7/06/1999 1,998,536
10,000,000 Merrill Lynch & Co., 4.810%, 7/15/1999 ............ 9,981,294
1,500,000 Merrill Lynch & Co., 5.120%, 7/30/1999 ............ 1,493,813
10,000,000 Goldman Sachs Group, 4.810%, 9/01/1999 ............ 9,917,161
5,000,000 J.P. Morgan, 4.900%, 9/15/1999 .................... 4,948,278
6,000,000 Goldman Sachs Group, 4.840%, 9/16/1999 ............ 5,937,887
8,000,000 J.P. Morgan, 5.150%, 9/22/1999 .................... 7,905,011
4,000,000 Goldman Sachs Group, 4.910%, 10/01/1999 ........... 3,949,809
5,000,000 Goldman Sachs Group, 4.920%, 10/01/1999 ........... 4,937,133
7,000,000 J.P. Morgan, 4.820%, 10/04/1999 ................... 6,910,964
10,000,000 J.P. Morgan, 4.970%, 10/06/1999 ................... 9,866,086
5,000,000 Merrill Lynch & Co., 5.060%, 2/01/2000 ............ 4,848,903
------------
82,688,195
------------
TRUCKING & FREIGHT FORWARDING -- 1.5%
12,000,000 Paccar Financial Corp., 5.600%, 7/01/1999 ......... 12,000,000
------------
Total Commercial Paper (Cost $651,030,967) ........ 651,030,967
------------
Total Investments -- 100.3%
(Identified Cost $813,989,450)(c) ............... 813,989,450
Other assets less liabilities ..................... (2,125,907)
------------
Total Net Assets -- 100% .......................... $811,863,543
============
(a) See Note 1a of Notes to Financial Statements.
(b) Variable rate interest certificates are instruments whose interest rates
vary with changes in a designated base rate on a specific date. This
certificate resets interest daily based on the prime interest rate. The
maturity date shown is the next interest reset date.
(c) The aggregate cost for federal income tax purposes was $813,989,450.
Percentage of net assets invested in obligations of foreign banks or foreign
branches of U.S. banks at June 30, 1999:
Canada 13.14%
Switzerland 2.67
England 1.84
Germany 7.26
Sweden 1.65
France 1.23
Netherlands 1.23
See accompanying notes to financial statements.
<PAGE>
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TAX EXEMPT MONEY MARKET TRUST
- -------------------------------------------------------------------------------
Investments as of June 30, 1999
INVESTMENTS -- 103.0% OF TOTAL NET ASSETS
PRINCIPAL
AMOUNT DESCRIPTION VALUE (A)
- -------------------------------------------------------------------------------
ALABAMA -- 5.8%
$1,500,000 Alabama State Docks Department Facilities
Revenue, 5.250%, 10/01/1999 .................... $ 1,506,622
3,400,000 Athens Industrial Development Board Revenue,
4.550%, (b) .................................... 3,400,000
------------
4,906,622
------------
ALASKA -- 3.4%
2,400,000 North Slope Borough, 4.600%, 1/01/2000 ............ 2,417,714
500,000 Matanuska Susitna Borough, 4.000%, 3/01/2000 ...... 501,283
------------
2,918,997
------------
ARIZONA -- 2.4%
1,000,000 Meza Industrial Development Authority
Revenue, 4.000%, 1/01/2000 ...................... 1,004,430
1,000,000 Tempe Excise Tax Revenue, 3.750%, 7/01/2000 ..... 1,003,641
------------
2,008,071
------------
CALIFORNIA -- 0.5%
400,000 Los Angeles Regional Airport Lease, 3.850%, (b) ... 400,000
------------
DELAWARE -- 0.6%
500,000 Delaware State, 5.800%, 8/15/1999 ................. 501,443
------------
DISTRICT OF COLUMBIA -- 3.0%
400,000 District of Columbia, 7.250%, 6/01/2000 ........... 421,165
2,100,000 District of Columbia, 3.700%, (b) ................. 2,100,000
------------
2,521,165
------------
FLORIDA -- 3.7%
300,000 Florida State Board of Regents University
Improvement, 5.000%, 7/01/2000 .................. 304,671
400,000 Orlando & Orange County Expressway,
7.000%, 7/01/2000 ............................... 421,962
1,000,000 Collier County Industrial Development Authority,
3.750%, (b) .................................... 1,000,000
100,000 University Athletic Association, Inc., 3.600%, (b) 100,000
1,300,000 Dade County Special Obligation, 4.600%, (b) (e) ... 1,300,000
------------
3,126,633
------------
HAWAII -- 1.2%
1,000,000 Honolulu City & County, 5.100%, 1/01/2000 ......... 1,009,346
------------
ILLINOIS -- 9.8%
1,000,000 Chicago, 2.850%, 10/28/1999 ....................... 1,000,000
500,000 Illinois State, 4.250%, 6/01/2000 ................. 504,017
3,300,000 McCook Revenue, 3.850%, (b) ....................... 3,300,000
3,500,000 Illinois Educational Facilities Authority
Revenues, 3.300%, (b) ........................... 3,500,000
------------
8,304,017
------------
INDIANA -- 1.6%
1,400,000 Fort Wayne Hospital Authority Revenue, 3.500%, (b) 1,400,000
------------
IOWA -- 8.2%
3,900,000 Iowa Finance Authority Revenue, 3.300%, (b) ....... 3,900,000
3,100,000 West Des Moines Commercial Development,
3.450%, (b) ..................................... 3,100,000
------------
7,000,000
------------
KENTUCKY -- 4.1%
3,500,000 Mayfield Multi City Lease, 3.600%, (b) ............ 3,500,000
------------
LOUISIANA -- 13.7%
1,735,000 Louisiana Public Facilities Authority Hospital,
4.250%, 7/01/1999 ............................... 1,735,000
3,400,000 Caddo Parish Industrial Development Board,
3.550%, (b) ..................................... 3,400,000
3,400,000 Jefferson Parish Hospital, District 1, 3.600%, (b) 3,400,000
3,100,000 Louisiana Public Facilities Authority Hospital,
3.700%, (b) ..................................... 3,100,000
------------
11,635,000
------------
MARYLAND -- 4.5%
500,000 Montgomery County, 6.900%, 4/01/2000 .............. 522,766
3,300,000 Maryland Industrial Development Financing
Authority, 3.400%, (b) .......................... 3,300,000
------------
3,822,766
------------
MASSACHUSETTS -- 1.2%
1,000,000 Massachusetts Bay Transportation Authority,
5.000%, 3/01/2000 ............................... 1,012,891
------------
MICHIGAN -- 3.0%
1,000,000 Detroit City School District, 4.500%, 7/01/1999 ... 1,000,000
510,000 Saginaw Hospital Finance Authority Revenue,
4.000%, 7/01/2000 (d) ........................... 511,459
1,000,000 Detroit Sewage Disposal Revenue, 7.125%, 7/01/1999 1,000,000
------------
2,511,459
------------
MISSOURI -- 1.8%
1,500,000 Missouri State Environment Improvement Energy,
3.100%, 8/23/1999 ............................... 1,500,000
------------
NEBRASKA -- 0.6%
500,000 American Public Energy Agency Gas, 4.000%, 6/01/2000 502,229
------------
NEVADA -- 5.2%
2,480,000 Nevada State, 6.700%, 8/01/1999 ................... 2,536,259
1,000,000 Nevada State, 5.800%, 5/01/2000 ................... 1,020,346
860,000 Las Vegas Convertible & Vis Authority,
4.500%, 7/01/2000 ............................... 867,422
------------
4,424,027
------------
NEW MEXICO -- 1.4%
1,200,000 Farmington Pollution Control Revenue, 3.400%, (b) . 1,200,000
------------
NEW YORK -- 1.2%
900,000 New York State Dormitory Authority Revenues,
4.250%, 7/01/1999 ............................... 900,000
100,000 New York City, 4.000%, (b) ........................ 100,000
------------
1,000,000
------------
NORTH CAROLINA -- 3.0%
725,000 North Carolina Medical Care Commission,
4.000%, 10/01/1999 .............................. 725,979
1,845,000 University of North Carolina at Chapel Hill,
3.550%, (b) ..................................... 1,845,000
------------
2,570,979
------------
OHIO -- 1.8%
1,500,000 Ohio State Public Facilities Commission,
4.500%, 11/01/1999 .............................. 1,505,390
------------
OREGON -- 0.1%
100,000 Portland Pollution Control, 3.850%, (b) ........... 100,000
------------
SOUTH CAROLINA -- 2.9%
2,500,000 Florence County Hospital Revenue, 3.700%, (b) ..... 2,500,000
------------
TENNESSEE -- 5.8%
1,000,000 Chattanooga Health, Educational & Housing,
4.500%, 12/01/1999 .............................. 1,006,166
1,000,000 Memphis, 4.200%, 5/01/2000 ........................ 1,007,705
2,900,000 Metro Government Nashville Electric,
5.200%, 5/15/2000 ............................... 2,946,175
------------
4,960,046
------------
TEXAS -- 5.5%
500,000 Harris County, 7.100%, 8/15/1999 .................. 515,305
500,000 Texas State, 9.000%, 12/01/1999 ................... 511,783
675,000 West Texas Municipal Power Agency Revenue,
4.050%, 2/15/2000 ............................... 678,286
1,200,000 Grapevine Industrial Development Corp. Revenue,
3.850%, (b) ..................................... 1,200,000
1,725,000 Nueces County Health Facilities, 3.550%, (b) ...... 1,725,000
------------
4,630,374
------------
WASHINGTON -- 2.4%
1,000,000 Washington State Public Power Supply,
7.400%, 7/01/1999 ............................... 1,000,000
1,000,000 Clark County Public Utility District,
6.000%, 1/01/2000 ............................... 1,014,556
------------
2,014,556
------------
WISCONSIN -- 4.2%
3,600,000 Wisconsin State Health & Educational Facilities,
3.800%, (b) ..................................... 3,600,000
------------
WYOMING -- 0.4%
300,000 Lincoln County Pollution Control, 3.800%, (b) ..... 300,000
------------
Total Investments -- 103.0% (Identified Cost
$87,386,011) (c) ................................ 87,386,011
------------
Other assets less liabilities ..................... (2,507,231)
------------
Total Net Assets-- 100% ........................... $ 84,878,780
============
(a) See Note 1a of Notes to Financial Statements.
(b) Floating rate notes are instruments whose interest rates vary with changes
in a designated base rate (such as the prime interest rate) on a specific
date (such as a coupon date or interest payment date). These instruments are
payable on demand and are secured by letters of credit or other credit
support agreements from major banks.
(c) The aggregate cost for federal income tax purposes was $87,386,011.
(d) Purchased on a delayed delivery basis. See Note 1d to Financial Statements.
(e) This security is being used to collateralize the delayed delivery purchase
indicated in Note (d) above.
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
June 30, 1999
CASH MANAGEMENT
TRUST TAX EXEMPT
MONEY MARKET MONEY MARKET
SERIES TRUST
------------ -----------
ASSETS
Investments at value .......................... $813,989,450 $87,386,011
Cash .......................................... 257,295 250,961
Receivable for:
Shares of the Trust sold .................... 2,846,518 46,022
Interest .................................... 3,262,396 737,282
------------ -----------
820,355,659 88,420,276
LIABILITIES
Payable for:
Securities purchased ........................ -- 2,981,230
Shares of the Trust redeemed ................ 7,841,000 427,531
Dividends declared .......................... 50,877 --
Accrued expenses:
Management fees ............................. 280,272 48,983
Deferred trustees' fees ..................... 75,106 33,973
Accounting and administrative ............... 34,470 5,876
Other expenses .............................. 210,391 43,903
------------ -----------
8,492,116 3,341,496
------------ -----------
NET ASSETS ...................................... $811,863,543 $84,878,780
============ ===========
Net Assets consist of:
Capital paid in Class A shares .............. $635,490,793 $84,568,230
Capital paid in Class B shares .............. 18,968,782 310,550
Capital paid in Class C shares .............. 1,611,570 --
Capital paid in Class Y shares .............. 155,677,331 --
Undistributed net investment income ......... 116,821 --
Accumulated net realized gains (losses) ..... (1,754) --
------------ -----------
NET ASSETS ...................................... $811,863,543 $84,878,780
============ ===========
Shares of beneficial interest outstanding, no
par value
Class A shares .............................. 635,490,480 84,568,230
Class B shares .............................. 18,968,782 310,550
Class C shares .............................. 1,611,570 --
Class Y shares .............................. 155,677,331 --
------------ -----------
Shares of beneficial interest outstanding ....... 811,748,163 84,878,780
============ ===========
Net asset value per share Class A, Class B,
Class C and Class Y shares* ................. $1.00 $1.00
============ ===========
COST OF INVESTMENTS ........................... $813,989,450 $87,386,011
============ ===========
* Shares of the series are sold and redeemed at net asset value (net
assets/shares of beneficial interest outstanding).
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
Year Ended June 30, 1999
CASH MANAGEMENT
TRUST TAX EXEMPT
MONEY MARKET MONEY MARKET
SERIES TRUST
------------ -----------
INVESTMENT INCOME
Interest ...................................... $41,167,291 $ 2,650,753
----------- -----------
Expenses
Management fees ............................. $ 3,241,209 $ 310,993
Trustees' fees .............................. 42,765 9,193
Accounting and administrative ............... 191,303 32,738
Custodian ................................... 142,846 48,255
Transfer agent .............................. 2,256,160 117,560
Service Fees - Class Y ...................... 338,400 --
Audit and tax services ...................... 25,200 25,200
Legal ....................................... 46,828 3,970
Printing .................................... 93,904 8,015
Registration ................................ 128,114 59,780
Insurance ................................... 13,395 1,440
Miscellaneous ............................... 5,917 7,020
----------- -----------
TOTAL EXPENSES ................................ 6,526,041 624,164
----------- -----------
Less - waiver of fee by investment adviser
and subadviser .............................. -- (118,782)
----------- -----------
Net Expenses .................................. 6,526,041 505,382
----------- -----------
NET INVESTMENT INCOME ......................... 34,641,250 2,145,371
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on investments - net ... 2,470 --
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS .................................. $34,643,720 $2,145,371
=========== ==========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
June 30, 1999
<CAPTION>
CASH MANAGEMENT TRUST TAX EXEMPT
MONEY MARKET MONEY MARKET
SERIES TRUST
---------------------------------- ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1999 1998 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income ............................ $ 34,021,407 $ 34,641,250 $ 2,215,871 $ 2,145,371
Net realized gain (loss) on investments .......... (651) 2,470 -- --
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from operations 34,020,756 34,643,720 2,215,871 2,145,371
-------------- -------------- -------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (a)
Class A ........................................ (32,279,427) (27,834,505) (2,215,871) (2,145,371)
Class B ........................................ -- (723,507) -- --
Class C ........................................ -- (67,961) -- --
Class Y ........................................ (1,741,329) (6,017,747) -- --
-------------- -------------- -------------- --------------
(34,020,756) (34,643,720) (2,215,871) (2,145,371)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from the sale of shares ................... 1,671,676,546 2,516,699,035 104,256,210 120,150,365
Net asset value of shares issued in connection
with the reinvestment of dividends from net
investment income and distributions from net
realized gains ................................. 32,781,591 33,335,258 2,177,898 2,119,382
Cost of shares redeemed .......................... (1,691,851,054) (2,449,436,758) (100,372,725) (111,188,492)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS DERIVED
FROM CAPITAL SHARE TRANSACTIONS .................. 12,607,083 100,597,535 6,061,383 11,081,255
Total increase (decrease) in net assets ............ 12,607,083 100,597,535 6,061,383 11,081,255
NET ASSETS
Beginning of the year ............................ 698,658,925 711,266,008 67,736,142 73,797,525
-------------- -------------- -------------- --------------
End of the year (b) .............................. $ 711,266,008 $ 811,863,543 $ 73,797,525 $ 84,878,780
============== ============== ============== ==============
(a) Amounts distributed include a net realized gain (loss) of ($651) and $2,470 for the Cash Management Trust Money Market Series
for the years ended June 30, 1998 and 1999, respectively.
(b) Including undistributed net investment income of $119,291 and $116,821 for the Cash Management Trust Money Market Series for
the years ended June 30, 1998 and 1999, respectively.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
CASH MANAGEMENT TRUST -- MONEY MARKET SERIEs
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS A, B, C CLASS Y
-------------------------------------------------- -------------------------
FEBRUARY 27 (B) YEAR
YEAR ENDED JUNE 30, THROUGH ENDED
-------------------------------------------------- JUNE 30, JUNE 30,
1995 1996 1997 1998(A) 1999 1998 1999
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year .......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income ....................... 0.0469 0.0482 0.0467 0.0488 0.0445 0.0169 0.0448
Net Realized and Unrealized Gain (Loss) on
Investments ............................... 0.0000 0.0002 0.0000 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- -------- -------- --------
Total From Investment Operations ............ 0.0469 0.0484 0.0467 0.0488 0.0445 0.0169 0.0448
-------- -------- -------- -------- -------- -------- --------
Less Distributions Distributions From Net
Investment Income ........................... (0.0469) (0.0484)(c) (0.0465) (0.0488)(c) (0.0445) (0.0169)(c) (0.0448)
Distributions From Net Realized Capital Gains 0.0000 0.0000 (0.0002) 0.0000 0.0000 0.0000 0.0000
-------- -------- -------- -------- -------- -------- --------
Total Distributions ......................... (0.0469) (0.0484) (0.0467) (0.0488) (0.0445) (0.0169) (0.0448)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Year ................ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ======== ========
Total Return (%) ............................ 4.8 5.0 4.8 5.0 4.6 1.7 4.6
Ratio of Operating Expenses to
Average Net Assets (%) ...................... 0.88 0.90 0.88 0.84 0.84 0.74(d) 0.82
Ratio of Net Investment Income to
Average Net Assets (%) ...................... 4.67 4.85 4.66 4.88 4.46 4.98(d) 4.44
Net Assets, End of Year (000) ............... $649,808 $663,621 $698,659 $607,406 $664,609 $103,860 $147,254
(a) Class B shares commenced operations September 13, 1993 and Class C shares commenced operations March 1, 1998.
(b) Commencement of operations.
(c) Including net realized gain on investments.
(d) Computed on an annualized basis.
<PAGE>
<CAPTION>
TAX EXEMPT MONEY MARKET TRUST
--------------------------------------------------------
YEAR ENDED JUNE 30,
--------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ................................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income ................................................ 0.0314 0.0327 0.0314 0.0323 0.0276
Net Realized and Unrealized Gain (Loss) on Investments ............... 0.0000 0.0000 0.0001 0.0000 0.0000
-------- -------- -------- -------- --------
Total From Investment Operations ..................................... 0.0314 0.0327 0.0315 0.0323 0.0276
-------- -------- -------- -------- --------
Less Distributions Distributions From Net Investment Income .......... (0.0314) (0.0327) (0.0315)(a) (0.0323) (0.0276)
-------- -------- -------- -------- --------
Total Distributions .................................................. (0.0314) (0.0327) (0.0315) (0.0323) (0.0276)
-------- -------- -------- -------- --------
Net Asset Value, End of Year ......................................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ========
Total Return (%) ..................................................... 3.2 3.3 3.2 3.3 2.8
Ratio of Operating Expenses to Average Net Assets (%)(b) ............. 0.56 0.56 0.56 0.60 0.65
Ratio of Net Investment Income to Average Net Assets (%) ............. 3.15 3.29 3.17 3.23 2.76
Net Assets, End of Year (000) ........................................ $ 67,797 $ 64,897 $ 67,736 $ 73,798 $ 84,879
(a) Including net realized gain on investments.
(b) The ratio of operating expenses to average net assets without giving effect to the voluntary expense limitation and voluntary
fee waiver described in Note 3 to the financial statements would have
been (%) ......................................................... 0.85 0.90 0.85 0.85 0.80
See accompanying notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For the Year Ended June 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES. New England Cash Management Trust Money
Market Series and New England Tax Exempt Money Market Trust (the "Trusts") are
registered under the Investment Company Act of 1940, as amended, as diversified,
open-end investment companies. The Cash Management Trust Money Market Series
seeks maximum current income consistent with the preservation of capital and
liquidity. The Tax Exempt Money Market Trust seeks current income exempt from
federal income taxes consistent with preservation of capital and liquidity.
NEW ENGLAND CASH MANAGEMENT TRUST MONEY MARKET SERIES -- The Trust's Agreement
and Declaration of Trust permits the issuance of an unlimited number of shares
of beneficial interest, no par value. The Trust commenced its public offering of
Class B shares on September 13, 1993, Class C shares on March 1, 1998 and Class
Y shares on February 27, 1998. Class A, B and C shares were offered to enable
investors in each class of the New England Stock or Bond Funds to invest in
money market shares. Class A, B and C shares are identical and may be subject to
a contingent deferred sales charge upon redemption if the shares were acquired
by exchange of Class A, Class B or C shares of a stock or bond fund. Class Y
shares are intended for institutional investors with a minimum of $1 million to
invest.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- The Trust's Agreement and
Declaration of Trust permits the issuance of an unlimited number of shares of
beneficial interest, no par value. Effective September 13, 1993, the Trust began
offering two classes of shares, Class A and Class B, in order to enable
investors in either class of the New England Stock or Bond Funds to invest in
money market shares. Class A and B shares are identical and may be subject to a
contingent deferred sales charge upon redemption if the shares were acquired by
exchange of Class A or Class B shares of a stock or bond fund.
The following is a summary of significant accounting policies followed by the
Trusts in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
A. SECURITY VALUATION. The Trusts employ the amortized cost method of security
valuation as set forth in Rule 2a-7 under the Investment Company Act of 1940
which, in the opinion of the trustees of each Trust, represents the fair value
of the particular security. The amortized cost of a security is determined by
valuing it at original cost and there-after accreting any discount or amortizing
any premium on a straight-line basis.
B. REPURCHASE AGREEMENTS. The Trusts, through their custodian, receive delivery
of the underlying securities collateralizing repurchase agreements. It is the
Trusts' policy that the market value of the collateral be at least equal to 100%
of the repurchase price. The subadviser is responsible for determining that the
value of the collateral is at all times at least equal to the repurchase price.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the portfolio's ability to dispose of the underlying security.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date (date the order to buy or sell is executed)
and interest income is recorded on the accrual basis. In determining the net
gain or loss on securities sold, the cost of securities is determined on the
identified cost basis.
D. DELAYED DELIVERY SECURITIES. Delivery and payment for securities purchased on
a when-issued or delayed delivery basis can take place one month or more after
the date of the transaction. The securities so purchased are subject to market
fluctuation during this period. At June 30, 1999, the cost of delayed delivery
purchase commitments for the Tax Exempt Money Market Trust amounted to $511,459
E. FEDERAL INCOME TAXES. The Cash Management Trust Money Market Series and the
Tax Exempt Money Market Trust intend to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies, and to distribute to
their shareholders all of their taxable and tax exempt income. Accordingly, no
provision for federal income tax has been made.
The Tax Exempt Money Market Trust has designated 100% of dividends paid from net
investment income during the fiscal year as tax exempt for federal income tax
purposes.
F. DIVIDENDS TO SHAREHOLDERS. Dividends are declared daily to shareholders of
record at the time and are paid monthly. Long term gain distributions, if any,
will be made annually.
G. OTHER. Each of the Trusts invests primarily in a portfolio of money market
instruments maturing in 397 days or less whose ratings are within the two
highest ratings categories of a nationally recognized rating agency or, if not
rated, are believed to be of comparable quality. The ability of the issuers of
the securities held by the Trusts to meet their obligations may be affected by
foreign economic, political and legal developments in the case of foreign banks
or foreign branches or subsidiaries of U.S. banks, or domestic economic
developments in a specific industry, state or region.
2. INVESTMENT TRANSACTIONS. For the year ended June 30, 1999:
NEW ENGLAND CASH MANAGEMENT TRUST MONEY MARKET SERIES -- Purchases and sales or
maturities of short-term obligations, including securities purchased subject to
repurchase agreements, aggregated $5,599,662,097 and $5,513,284,725,
respectively.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- Purchases and sales or maturities
of short-term obligations aggregated $200,255,475 and $193,245,000,
respectively.
3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. During the year ended
June 30, 1999, the Trusts incurred management fees payable to the Trusts'
investment adviser, New England Funds Management L.P. ("NEFM") and subadviser,
Back Bay Advisors L.P. ("Back Bay"). Certain officers and directors of NEFM are
also officers and trustees of the Trusts. NEFM and Back Bay are wholly-owned
subsidiaries of Nvest Companies, L.P. ("Nvest"), which is a subsidiary of
Metropolitan Life Insurance Company ("MetLife").
NEW ENGLAND CASH MANAGEMENT TRUST MONEY MARKET SERIES -- Under the management
agreement, NEFM pays to its investment adviser, NEFM, a monthly fee based on the
annual percentage rates of its corresponding average daily net asset values set
forth below. The management fee is reduced by the amount of subadvisory fees
paid by the Trust directly to the subadviser as described below.
Under the same management agreement, the Trust pays to its investment
subadviser, Back Bay, a monthly fee based on the annual percentage rates of its
corresponding average daily net asset values set forth below:
ANNUAL PERCENTAGE ANNUAL PERCENTAGE
RATE OF RATE OF ADVISORY FEES
ADVISORY FEES PAID BY NEFM TO THE
PAID TO NEFM SUBADVISER, BACK BAY
---------------- --------------------
the first $500 million 0.425% 0.205%
the next $500 million 0.400% 0.180%
the next $500 million 0.350% 0.160%
the next $500 million 0.300% 0.140%
amounts in excess of $2 billion 0.250% 0.120%
Fees Earned
-----------
NEFM $ 1,713,918
Back Bay 1,527,291
The effective annualized management fee for the year ended June 30, 1999 was
0.42%.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- The Trust pays management fees to
its investment adviser, NEFM, at the annual rate of 0.40% of the first $100
million of the Trust's average daily net assets and 0.30% of such assets in
excess of $100 million. NEFM pays management fees to its investment subadviser,
Back Bay, at the rate of 0.20% of the first $100 million of the Trust's average
daily net assets and 0.15% of such assets in excess of $100 million. Fees earned
by NEFM and Back Bay under the management agreements in effect during the year
ended June 30, 1999 are as follows:
Fees Earned (a)
---------------
NEFM $ 155,497
Back Bay 155,496
(a) Before reduction pursuant to voluntary expense limitations.
The effective annualized management fee for the year ended June 30, 1999 was
0.40%.
Effective January 1, 1998 NEFM and Back Bay voluntarily agreed, until further
notice, to reduce the management fee and, if necessary, to assume Trust expenses
in order to limit the expenses to 0.65 of 1% of average daily net assets. As a
result of Trust expenses exceeding the expense limitation, for the year ended
June 30, 1999 NEFM and Back Bay reduced their fees by $59,391 and $ 59,391,
respectively.
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. Nvest Services Company, Inc. ("NSC")
is a wholly owned subsidiary of Nvest and performs certain accounting and
administrative services for the Trusts. Each Trust reimburses NSC for all or
part of NSC's expenses of providing these services which include the following
(i) expenses for personnel performing bookkeeping, accounting, and financial
reporting functions and clerical functions relating to the Trusts, and (ii)
expenses for services required in connection with the preparation of
registration statements and prospectuses, registration of shares in various
states, shareholder reports and notices, proxy solicitation material furnished
to shareholders of the Trusts or regulatory authorities and reports and
questionnaires for SEC compliance. For the year ended June 30, 1999, these
expenses amounted to $191,303 for the Cash Management Trust Money Market Series
and $32,738 for the Tax Exempt Money Market Trust.
C. TRANSFER AGENT FEES. NSC is the transfer and shareholder servicing agent for
the Trusts and Boston Financial Data Services serves as the sub-transfer agent
for the Trusts. For the year ended June 30, 1999, the New England Cash
Management Trust Money Market Series and Tax Exempt Money Market Trust paid
$1,672,122 and $ 69,140, respectively, to NSC as compensation for its services
in that capacity. Class Y shares of Cash Management Trust, Money Market Series
bear a sub-transfer agent fee of 0.10% of average daily net assets charged by
National Financial Services Corporation. For the year ended June 30, 1999, the
Cash Management Trust Money Market Series and Tax Exempt Money Market Trust
received $6,825 and $710, respectively, in transfer agent credits. The transfer
agent expense in the Statement of Operations is net of these credits.
D. SERVICE FEE. The Cash Management Trust Money Market Series Class Y shares
bear a service charge of 0.25% annually of the Class Y average daily net assets
which will be paid by the Fund to such investment advisers, financial planners
and broker-dealers, including New England Securities Corporation, for services
provided by them to service accounts on behalf of Class Y shares of the Fund
under a service agreement. For the year ended June 30, 1999 the Fund paid
$338,400 in service fees.
E. TRUSTEES FEES AND EXPENSES. The Trusts do not pay any compensation directly
to its officers or trustees who are directors, officers or employees of NEFM,
New England Funds, L.P., Nvest, NSC or their affiliates, other than registered
investment companies. Each other Trustee receives a retainer fee at the annual
rate of $40,000 and meeting attendance fees of $3,500 for each meeting of the
Board of Trustees attended. Each committee member receives an additional
retainer fee at the annual rate of $6,000 while each committee chairman receives
a retainer fee (beyond the $6,000 fee) at the annual rate of $4,000. These fees
are allocated to the various New England Funds based on a formula that takes
into account, among other factors, the relative net assets of each Trust.
A deferred compensation plan is available to members of the Boards of Trustees.
A Trustee's participation in the plan is voluntary. Each participating Trustee
will receive an amount equal to the value that such deferred compensation would
have been, had it been invested in the Trusts on the normal payment date.
4. CONCENTRATION OF CREDIT. The Tax Exempt Money Market Trust had the following
industry concentrations in excess of 10% on June 30, 1999 as a percentage of the
Trust's total net assets: General Obligations (16.7%) and Hospitals (32.6%). The
Trust also had more than 10% of its total net assets invested in Louisiana
(13.7%) and had more than 10% of its net assets backed by letters of credit with
MBIA (16.1%) and AMBAC (12.1%).
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of
New England Cash Management Trust Money Market Series
New England Tax Exempt Money Market Trust
In our opinion, the accompanying statements of assets and liabilities, including
the portfolio compositions, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the New England Cash Management
Trust Money Market Series and New England Tax Exempt Money Market Trust
(hereafter referred to as the "Trusts") at June 30, 1999, and the results of
their operations, the changes in each of their net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trusts' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 1999 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 11, 1999
<PAGE>
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NEW ENGLAND FUNDS
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LARGE-CAP EQUITY FUNDS GOVERNMENT INCOME FUNDS
Capital Growth Fund Limited Term U.S. Government Fund
Growth Fund Government Securities Fund
Growth and Income Fund
(formerly Growth Opportunities Fund) TAX-FREE INCOME FUNDS
Balanced Fund Municipal Income Fund
Value Fund Intermediate Term Tax Free
Fund of California
ALL-CAP EQUITY FUNDS Massachusetts Tax Free Income Fund
Star Advisers Fund
Star Worldwide Fund MONEY MARKET FUNDS
International Equity Fund Cash Management Trust - Money
Bullseye Fund Market Series
Equity Income Fund Tax Exempt Money Market Trust
SMALL-CAP EQUITY FUNDS
Star Small Cap Fund
CORPORATE INCOME FUNDS
Short Term Corporate Income Fund
(formerly Adjustable Rate U.S.
Government Fund)
Bond Income Fund
High Income Fund
Strategic Income Fund
To learn more, and for a free prospectus, contact your financial representative.
VISIT OUR WORLD WIDE WEB SITE AT WWW.MUTUALFUNDS.COM
New England Funds, L.P., Distributor
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors
when it is preceded or accompanied by the Fund's current prospectus,
which contains information about distribution charges, management and
other items of interest. Investors are advised to read the prospectus
carefully before investing.
New England Funds, L.P., and other firms selling shares of New England
Funds are members of the National Association of Securities Dealers,
Inc. (NASD). As a service to investors, the NASD has asked that we
inform you of the availability of a brochure on its Public Disclosure
Program. The program provides access to information about securities
firms and their representatives. Investors may obtain a copy by
contacting the NASD at 800-289-9999 or by visiting their web site at
www.NASDR.com.
- --------------------------------------------------------------------------------
Y2K Readiness Report: New England Funds is pleased to report that
preparation efforts for the Year 2000 are proceeding according to schedule,
and we are satisfied with progress to date. For more information about
Year 2000 readiness at New England Funds, visit our Web site at
www.mutualfunds.com.
This material represents Year 2000 Readiness Disclosure pursuant to the
Year 2000 Information and Readiness Disclosure Act.
- --------------------------------------------------------------------------------
<PAGE>
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NEW ENGLAND FUNDS(R) U.S. Postage
Where The Best Minds Meet(R) Paid
Brockton, MA
Permit No. 770
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399 Boylston Street
Boston, Massachusetts
02116
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