SEMIANNUAL REPORT
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[LOGO] Nvest Funds(SM)
Where The Best Minds Meets (R)
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Nvest Money Market Funds
Where
The Best
Minds Meet (R)
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December 31, 1999
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<PAGE>
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February 2000
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[PHOTO]
John T. Hailer
President and Chief
Executive Officer
Nvest Funds
"We expect 2000 to be a year of innovation, as we work on new investment options
for you, our shareholders, and your financial advisers."
After serving as Executive Vice President for Sales and Marketing since 1998, I
became President of Nvest Funds late last year. Bruce Speca, my predecessor, has
moved on to head up a new Internet venture affiliated with the parent company of
our funds. It's especially exciting for me to be assuming my new
responsibilities as we begin a new century and introduce a new identity for our
fund family.
We expect 2000 to be a year of innovation, as we work on new investment options
for you, our shareholders, and your financial advisers. At the same time, our
commitment to bringing you funds led by some of the Best Minds in the industry
remains our core business principle.
A new name, the same Best Minds
On February 1, New England Funds became Nvest Funds. We chose this new name
primarily to emphasize our affiliation with Nvest Companies, L.P., our corporate
parent and a major financial organization with over $133 billion in assets under
management (as of 12/31/99) through 18 affiliated companies.
The companies that comprise Nvest represent a breadth of investment resources
and experience that is difficult to match. As an Nvest affiliate, we call on an
impressive roster of Best Minds to manage our funds. The recent addition of the
Kobrick Funds to our fund family extends that tradition.
1999 in review
Last year, the market focused on technology companies and large-capitalization
growth stocks. Value-oriented equity investors are still waiting for a shift in
investor sentiment, and bond investors felt the negative price impact of rising
interest rates. The following pages discuss how your fund's managers addressed
those challenges. Short-term results notwithstanding, I believe most investors
would do well to own an array of investment types in a well thought-out asset
allocation plan.
I look forward to working with you and your financial adviser as you invest
toward your personal goals. For our part, we are committed to supporting you
with quality investment products and outstanding customer service.
/s/ John T. Hailer
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
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Annualized Seven-Day Yields -- 12/31/99
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Class A,B & C Class Y
Cash Management Trust -- Money Market Series 5.58% 5.17%
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Class A & B
Tax Exempt Money Market Trust 3.67% --
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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 returns.
Average Annual Total Returns -- 12/31/99
Cash Management Trust -- Money Market Series
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Class A (Inception 7/10/78) 6 Months 1 Year 5 Years 10 Years
Net Asset Value(1) 2.36% 4.51% 4.88% 4.75%
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Class B (Inception 9/13/93) 6 Months 1 Year 5 Years Since Inception
Net Asset Value(1) 2.36% 4.51% 4.88% 4.54%
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Class C (Inception 3/1/98) 6 Months 1 Year 5 Years Since Inception
Net Asset Value(1) 2.36% 4.51% -- 4.70%
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Class Y (Inception 2/27/98) 6 Months 1 Year 5 Years Since Inception
Net Asset Value(1) 2.29% 4.40% -- 4.63%
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Tax Exempt Money Market Trust
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Class A (Inception 4/21/83) 6 Months 1 Year 5 Years 10 Years
Net Asset Value(1) 1.44% 2.77% 3.17% 3.25%
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Class B (Inception 9/13/93) 6 Months 1 Year 5 Years Since Inception
Net Asset Value(1) 1.44% 2.77% 3.17% 3.05%
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(1) Investment results in this table represent annual returns including
reinvestment of distributions. Figures quoted above represent past
performance and are not a guarantee of future results.
1
<PAGE>
NVEST MONEY MARKET FUNDS
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Interview with Your Portfolio Manager
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Robust economic growth and rising interest rates were the main stories in the
money markets in the second half of 1999. The strength of the economy was
evidenced by solid retail and vehicle sales, a vibrant housing market and
fervent industrial activity. In addition, employment and income posted solid
growth throughout the year.
The Federal Reserve Board, faced with this evidence demonstrating growth above
the level at which inflation pressures are usually expected to surface, embarked
on a steady program of tightening monetary policy by raising short-term interest
rates. While most inflationary measures remained relatively benign, the Fed
hoped to slow the economy just enough to soften growth and head off any chance
that inflation would appear. To do so, the Fed raised key short-term interest
rates a total of three times, in June just before the beginning of the period
covered by this report, in August and again in November.
As we closed 1999, the market's somewhat volatile performance belied two
conflicting sentiments. On the one hand, there was comfort: We had reached a
plateau when the Fed brought back rates to where they had been before the three
rate cuts of 1998. On the other hand, growth remained strong enough to convince
most market observers that the Fed would probably continue implementing rate
hikes in the first part of the year 2000.
Cash Management Trust
[PHOTO]
John Maloney
Back Bay Advisors, L.P.
Q. How did Cash Management Trust perform during the six months ending December
31, 1999?
Cash Management Trust maintained a constant $1.00(1) share price throughout the
period and was able to provide a total return of 2.36% (based on the net asset
value of Class A shares) for the six months ending December 31, 1999. The Fund's
return included the reinvestment of $0.0221 per share in income distributions
during the past six months. As of December 31, 1999, Cash Management Trust's
seven-day yield was 5.58%.
2
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NVEST MONEY MARKET FUNDS
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Q. What was your strategy?
We extended the Fund's average maturity whenever market rates increased in order
to take advantage of emerging attractive yields. The money market typically
experiences year-end selling pressure, with corresponding increases in yields to
attract buyers. As this transpired, we took the opportunity to pick up
additional yield by investing more of the Fund's assets in securities maturing
in the year 2000.
Q. What is your outlook?
The Federal Reserve Board has sent clear signals it remains concerned that
continued strong economic growth could result in a build-up in inflationary
pressures. As a result, we believe the Fed could raise rates again early in
2000. Therefore, we will look to invest in securities that will mature in the
first quarter of 2000 with the intent of reinvesting those assets at higher
rates if the Fed decides to continue to hike rates further.
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
Portfolio Mix -- 12/31/99
Commericial Paper 72.3%
Certicates of Deposit 25.5%
Bankers Note & Other 2.2%
Portfolio holdings and asset allocation will vary.
(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.
3
<PAGE>
NVEST MONEY MARKET FUNDS
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Tax Exempt Money Market Trust
Q. How did Tax Exempt Money Market Trust perform during the six months that
ended December 31, 1999?
Tax Exempt Money Market Trust maintained its $1.00(1) share price throughout the
period and was able to provide a total return of 1.44% (based on the net asset
value of Class A shares) for the six months ending December 31, 1999. The Fund's
return included the reinvestment of $0.0136 per share in income distributions
over the past six months. As of December 31, 1999, the Fund's seven-day yield
was 3.67%, which translates into a taxable equivalent yield of 6.07% for
investors in the highest federal tax bracket of 39.6%.(2)
Q. What was your strategy?
Seasonal supply and demand factors affect the short-term tax-exempt market. In
June most issuers come to market with new securities to meet their funding
needs. At that time, we took the opportunity to purchase one-year, fixed-rate
securities that enabled us to lock in attractive yields. In December, variable
rate securities typically experience increases in yields because of mutual fund
redemptions and increased pressure on securities dealers to eliminate inventory
from their books by the end of the year. As a result, the Fund looked for yield
opportunities in variable-rate securities toward the end of the year.
Q. What is your outlook?
Apparently, the Federal Reserve Board remains concerned that the economy is
still growing at a rate that normally spurs inflation. Therefore, we expect to
see additional Fed rate hikes early in 2000. We plan to take advantage of any
and all rate increases, as well as the seasonal factors that reveal
opportunities in our market.
(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 portfolio manager's commentary reflects the conditions and actions taken
during the reporting period, which are subject to change. A shift in opinion
many result in strategic and other portfolio changes.
4
<PAGE>
CASH MANAGEMENT TRUST MONEY MARKET SERIES
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Investments as of December 31, 1999
(unaudited)
Investments--99.0% of Total Net Assets
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANK NOTE--1.2%
$ 10,000,000 Travelers Insurance Co., 6.476%, 1/01/2000 (b) .................................. $ 10,000,000
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Total Bank Note (Cost $10,000,000) .............................................. 10,000,000
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CERTIFICATES OF DEPOSIT--22.7%
5,000,000 Deutsche Bank AG New York, 5.000%, 1/06/2000 .................................... 4,998,897
8,000,000 Toronto Dominion Bank, 4.990%, 1/07/2000 ........................................ 7,999,962
17,000,000 Commerzbank AG New York, 5.010%, 1/10/2000 ...................................... 16,999,823
6,200,000 Svenska Handelsbanken, 6.060%, 1/14/2000 ........................................ 6,199,192
10,000,000 Dresdner Bank AG, 6.120%, 1/19/2000 ............................................. 10,000,093
9,000,000 Royal Bank of Canada, 4.980%, 1/24/2000 ......................................... 8,994,767
5,000,000 Svenska Handelsbanken, 6.060%, 1/24/2000 ........................................ 5,000,190
9,000,000 Canadian Imperial Bank of Commerce, 5.000%, 1/27/2000 ........................... 8,996,866
3,000,000 Commerzbank AG New York, 4.975%, 2/01/2000 ...................................... 2,996,567
1,000,000 Deutsche Bank AG New York, 4.970%, 2/02/2000 .................................... 998,938
8,000,000 Canadian Imperial Bank of Commerce, 5.010%, 2/07/2000 ........................... 7,999,687
18,000,000 Deutsche Bank AG New York, 5.050%, 2/09/2000 .................................... 17,997,631
10,000,000 Toronto Dominion Bank, 5.050%, 2/14/2000 ........................................ 9,996,920
3,000,000 Commerzbank AG New York, 5.085%, 2/16/2000 ...................................... 2,999,872
10,000,000 Rabobank Nederland NV, 5.125%, 2/18/2000 ........................................ 9,999,900
2,000,000 Toronto Dominion Bank, 5.270%, 3/02/2000 ........................................ 1,999,637
8,000,000 Canadian Imperial Bank of Commerce, 5.270%, 3/03/2000 ........................... 8,000,719
3,000,000 Societe Generale, 6.000%, 3/14/2000 ............................................. 2,998,757
10,000,000 Bank of Montreal Chicago, 5.170%, 3/15/2000 ..................................... 9,999,414
10,000,000 Societe Generale, 5.200%, 3/15/2000 ............................................. 10,000,001
1,000,000 Commerzbank AG New York, 5.230%, 5/11/2000 ...................................... 999,926
5,000,000 Bank of Montreal Chicago, 5.200%, 5/12/2000 ..................................... 4,999,130
6,000,000 Commerzbank AG New York, 5.295%, 5/19/2000 ...................................... 5,998,792
5,000,000 UBS AG Stamford, 5.700%, 7/27/2000 .............................................. 4,998,635
15,000,000 UBS AG Stamford, 6.240%, 12/06/2000 ............................................. 14,992,012
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Total Certificates of Deposit (Cost $187,166,328) ............................... 187,166,328
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CERTIFICATES OF DEPOSIT (EURODOLLARS)--2.8%
20,000,000 Barclays Bank PLC, 5.030%, 1/04/2000 ............................................ 19,997,867
3,000,000 ABN Amro Bank NV London, 5.790%, 1/18/2000 ...................................... 2,999,759
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Total Certificates of Deposit (Eurodollars) (Cost $22,997,626) .................. 22,997,626
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COMMERCIAL PAPER--72.3%
Agriculture--1.2%
5,000,000 Monsanto Co., 5.750%, 1/24/2000 ................................................. 4,981,632
5,000,000 Monsanto Co., 6.000%, 3/21/2000 ................................................. 4,933,333
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9,914,965
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Asset Backed--1.3%
3,000,000 Clipper Receivables Corp., 6.550%, 1/14/2000 .................................... 2,992,904
8,100,000 Clipper Receivables Corp., 6.120%, 2/10/2000 .................................... 8,044,920
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11,037,824
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</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CASH MANAGEMENT TRUST MONEY MARKET SERIES -- continued
================================================================================
Investments as of December 31, 1999
(unaudited)
Investments--continued
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automotive--8.2%
$ 15,000,000 Ford Motor Credit Corp. Canada, 5.940%, 1/12/2000 ............................... $ 14,972,775
22,000,000 General Motors Acceptance Corp., 5.410%, with various maturities to 2000(c) ..... 21,940,791
2,000,000 General Motors Acceptance Corp., 5.780%, 1/25/2000 .............................. 1,992,293
10,000,000 General Motors Acceptance Corp., 5.220%, 1/28/2000 .............................. 9,960,850
5,000,000 General Motors Acceptance Corp., 5.990%, 1/28/2000 .............................. 4,977,538
5,200,000 Ford Motor Credit Corp. Canada, 5.750%, 2/11/2000 ............................... 5,165,947
1,000,000 General Motors Acceptance Corp., 6.280%, 2/14/2000 .............................. 992,324
4,000,000 American Honda Finance Corp., 5.850%, 2/15/2000 ................................. 3,970,750
3,400,000 American Honda Finance Corp., 5.850%, 2/18/2000 ................................. 3,373,480
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67,346,748
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Banks--16.2%
10,000,000 UBS Finance Delaware, Inc., 4.000%, 1/03/2000 ................................... 9,997,778
10,000,000 Dresdner Bank AG, 5.890%, 1/06/2000 ............................................. 9,991,819
7,000,000 Bank of Nova Scotia, 5.720%, 1/07/2000 .......................................... 6,993,327
4,000,000 Dresdner Bank AG, 6.270%, 1/07/2000 ............................................. 3,995,820
5,000,000 Societe Generale Canada, 6.100%, 1/07/2000 ...................................... 4,994,917
11,000,000 Bank of Nova Scotia, 5.960%, 1/14/2000 .......................................... 10,976,325
10,000,000 Dresdner Bank AG, 5.820%, 1/18/2000 ............................................. 9,972,517
6,705,000 Dresdner Bank AG, 5.850%, 1/18/2000 ............................................. 6,686,477
6,000,000 Citicorp, 5.750%, 1/19/2000 ..................................................... 5,982,750
10,000,000 Commerzbank AG, 5.780%, 1/21/2000 ............................................... 9,967,889
15,000,000 Svenska Handelsbanken, 6.000%, 2/03/2000 ........................................ 14,917,500
10,000,000 Wells Fargo & Co., 5.990%, 2/08/2000 ............................................ 9,936,772
20,000,000 Wells Fargo & Co., 6.000%, 2/10/2000 ............................................ 19,866,667
5,000,000 Wells Fargo & Co., 5.760%, 2/22/2000 ............................................ 4,958,400
5,000,000 Wells Fargo & Co., 6.000%, 3/17/2000 ............................................ 4,936,667
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134,175,625
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Diversified Conglomerates--1.8%
10,000,000 USAA Capital Corp., 5.750%, 1/18/2000 ........................................... 9,972,847
5,000,000 USAA Capital Corp., 6.200%, 2/09/2000 ........................................... 4,966,417
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14,939,264
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Finance--21.0%
2,500,000 Household Finance Corp., 6.000%, 1/13/2000 ...................................... 2,495,000
10,000,000 Household Finance Corp., 6.000%, 1/14/2000 ...................................... 9,978,333
10,000,000 Household Finance Corp., 6.050%, 1/20/2000 ...................................... 9,968,069
7,000,000 Household Finance Corp., Ltd. Canada, 5.920%, 1/20/2000 ......................... 6,978,129
10,000,000 CIT Group Holdings, Inc., 6.010%, 1/21/2000 ..................................... 9,966,611
5,000,000 Associates Corp. Canada, 6.000%, 1/24/2000 ...................................... 4,980,833
12,000,000 Transamerica Finance Corp. Canada, 6.050%, 1/24/2000 ............................ 11,953,617
5,000,000 General Electric Capital Corp., 5.970%, 1/25/2000 ............................... 4,980,100
1,814,000 Transamerica Financial Group, 6.000%, 1/26/2000 ................................. 1,806,442
5,000,000 General Electric Capital Corp., 5.980%, 1/27/2000 ............................... 4,978,406
5,000,000 General Electric Capital Corp., 5.970%, 1/28/2000 ............................... 4,977,613
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
CASH MANAGEMENT TRUST MONEY MARKET SERIES -- continued
================================================================================
Investments as of December 31, 1999
(unaudited)
Investments--continued
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finance--continued
$ 5,000,000 General Electric Capital Corp., 5.780%, 1/31/2000 ............................... $ 4,975,917
5,000,000 American Express Credit Corp., 5.970%, 2/01/2000 ................................ 4,974,296
10,000,000 Associates Corp. Canada, 6.000%, 2/04/2000 ...................................... 9,943,333
2,400,000 General Electric Capital Corp., 5.820%, 2/07/2000 ............................... 2,385,644
5,000,000 Household Finance Corp., Ltd. Canada, 5.950%, 2/08/2000 ......................... 4,968,597
5,000,000 CIT Group Holdings, Inc., 5.850%, 2/10/2000 ..................................... 4,967,500
11,000,000 American Express Credit Corp., 5.850%, 2/11/2000 ................................ 10,926,713
15,000,000 CIT Group Holdings, Inc., 5.850%, 2/11/2000 ..................................... 14,900,062
5,000,000 Household Finance Corp., Ltd. Canada, 5.940%, 2/11/2000 ......................... 4,966,175
1,900,000 General Electric Capital Corp., 6.370%, 2/14/2000 ............................... 1,885,207
1,500,000 General Electric Capital Corp., 6.280%, 2/17/2000 ............................... 1,487,702
10,000,000 Transamerica Financial Group, 5.850%, 2/17/2000 ................................. 9,923,625
3,100,000 Transamerica Financial Group, 5.850%, 2/18/2000 ................................. 3,075,820
7,000,000 General Electric Capital Corp., 5.780%, 2/23/2000 ............................... 6,940,434
6,600,000 American Express Credit Corp., 5.790%, 2/24/2000 ................................ 6,542,679
8,000,000 General Electric Capital Corp., 5.850%, 2/25/2000 ............................... 7,928,500
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173,855,357
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Insurance--8.2%
5,000,000 Prudential Funding Corp., 5.760%, 1/10/2000 ..................................... 4,992,800
4,000,000 Prudential Funding Corp., 6.030%, 1/21/2000 ..................................... 3,986,600
7,000,000 Prudential Funding Corp., 5.730%, 1/24/2000 ..................................... 6,974,374
10,000,000 Prudential Funding Corp., 6.000%, 1/25/2000 ..................................... 9,960,000
5,000,000 Prudential Funding Corp., 6.020%, 1/25/2000 ..................................... 4,979,934
5,000,000 Prudential Funding Corp., 6.020%, 1/27/2000 ..................................... 4,978,261
2,000,000 Prudential Funding Corp., 5.790%, 2/01/2000 ..................................... 1,990,028
25,000,000 American General Corp., 5.900%, 2/15/2000 ....................................... 24,815,625
5,000,000 American General Corp., 5.900%, 2/17/2000 ....................................... 4,961,486
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67,639,108
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Pharmaceutical--1.1%
5,000,000 American Home Products Corp., 5.980%, 1/28/2000 ................................. 4,977,575
3,815,000 American Home Products Corp., 5.720%, 1/31/2000 ................................. 3,796,815
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8,774,390
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Securities--13.3%
5,000,000 J.P. Morgan & Co., 6.000%, 1/14/2000 ............................................ 4,989,167
8,000,000 J.P. Morgan & Co., 5.400%, 1/18/2000 ............................................ 7,979,600
5,000,000 J.P. Morgan & Co., 5.970%, 1/19/2000 ............................................ 4,985,075
10,000,000 J.P. Morgan & Co., 5.950%, 1/20/2000 ............................................ 9,968,597
10,000,000 J.P. Morgan & Co., 5.950%, 1/21/2000 ............................................ 9,966,944
10,000,000 Goldman Sachs Group, Inc., 5.760%, 1/26/2000 .................................... 9,960,000
10,000,000 Goldman Sachs Group, Inc., 5.990%, 1/27/2000 .................................... 9,956,739
5,000,000 Goldman Sachs Group, Inc., 6.000%, 1/28/2000 .................................... 4,977,500
3,000,000 Goldman Sachs Group, Inc., 6.400%, 1/31/2000 .................................... 2,984,000
7,000,000 Goldman Sachs Group, Inc., 6.430%, 1/31/2000 .................................... 6,962,492
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
CASH MANAGEMENT TRUST MONEY MARKET SERIES -- continued
================================================================================
Investments as of December 31, 1999
(unaudited)
Investments--continued
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Securities--continued
$ 5,000,000 Merrill Lynch & Co., Inc., 5.060%, 2/01/2000 .................................... $ 4,978,214
10,000,000 Merrill Lynch & Co., Inc., 6.150%, 2/02/2000 .................................... 9,945,333
3,000,000 Merrill Lynch & Co., Inc., 6.270%, 2/03/2000 .................................... 2,982,758
5,000,000 Goldman Sachs Group, Inc., 6.000%, 2/04/2000 .................................... 4,971,667
7,000,000 Merrill Lynch & Co., Inc., 5.930%, 2/04/2000 .................................... 6,960,796
6,000,000 Merrill Lynch & Co., Inc., 6.150%, 2/04/2000 .................................... 5,965,150
1,500,000 Goldman Sachs Group, Inc., 6.130%, 3/29/2000 .................................... 1,477,523
------------
110,011,555
------------
Total Commercial Paper (Cost $597,694,836) ...................................... 597,694,836
------------
Total Investments--99.0% (Identified Cost $817,858,790) (d) ..................... 817,858,790
Other assets less liabilities ................................................... 8,409,404
------------
Total Net Assets--100% .......................................................... $826,268,194
============
</TABLE>
(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 Funds investments in General Motors Acceptance Corp., which have the
same coupon rate, have been aggregated for the purpose of presentation in
the schedule of investments.
(d) The aggregate cost for federal income tax purposes was $817,858,790.
Percentage of net assets invested in obligations of foreign banks or foreign
branches of U.S. banks at December 31, 1999:
Germany 12.7% Sweden 3.2%
Canada 10.5% England 2.4%
United States 5.5% France 2.2%
Switzerland 3.6% Netherlands 1.6%
See accompanying notes to financial statements.
8
<PAGE>
TAX EXEMPT MONEY MARKET TRUST
================================================================================
Investments as of December 31, 1999
(unaudited)
Tax Exempt Obligations-- 104.2%
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alabama--1.3%
$ 1,000,000 City Medical, 3.800%, 2/01/2000 ................................................. $ 1,000,000
------------
Alaska--9.0%
2,400,000 North Slope Borough, 4.600%, 1/01/2000 .......................................... 2,400,000
500,000 Matanuska Susitna Borough, 4.000%, 3/01/2000 .................................... 500,315
3,850,000 Alaska Industrial Development & Export Authority, 5.550%, (b) ................... 3,850,000
------------
6,750,315
------------
Arizona--6.5%
1,000,000 Meza Industrial Development Authority Revenue, 4.000%, 1/01/2000 ................ 1,000,000
1,150,000 Mesa Municipal Development Corp. Series 1985, 3.850%, 2/07/2000 ................. 1,150,000
1,700,000 Mesa Municipal Development Corp. Series 1985, 3.950%, 2/17/2000 ................. 1,700,000
1,000,000 Tempe Excise Tax Revenue, 3.750%, 7/01/2000 ..................................... 1,001,810
------------
4,851,810
------------
Colorado--1.6%
1,195,000 Douglas County School District Number 1, 4.500%, 6/30/2000 ...................... 1,200,159
------------
District of Columbia--3.2%
400,000 District of Columbia, 7.250%, 6/01/2000 ......................................... 413,955
2,000,000 District of Columbia, 4.500%, (b) ............................................... 2,000,000
------------
2,413,955
------------
Florida--3.3%
300,000 Florida State Board of Regents University Improvements, 5.000%, 7/01/2000 ....... 302,323
400,000 Orlando & Orange County Expressway, 7.000%, 7/01/2000 ........................... 414,943
740,000 Palm Beach County Industrial Development, 5.900%, (b) ........................... 740,000
1,000,000 Collier County Industrial Development Authority, 5.500%, (b) .................... 1,000,000
------------
2,457,266
------------
Hawaii--1.3%
1,000,000 Honolulu City & County, 5.100%, 1/01/2000 ....................................... 1,000,000
------------
Illinois--11.9%
500,000 Illinois State, 4.250%, 6/01/2000 ............................................... 501,817
1,500,000 Chicago, Illinois, 3.900%, 12/07/2000 ........................................... 1,500,000
3,600,000 Illinois Educational Facilities Authority Revenues, 5.700%, (b) ................. 3,600,000
3,300,000 McCook Revenue, 5.450%, (b) ..................................................... 3,300,000
------------
8,901,817
------------
Iowa--5.0%
3,700,000 Iowa Finance Authority Revenue, 5.600%, (b) ..................................... 3,700,000
------------
Kentucky--2.2%
1,615,000 Mayfield Multi City Lease, 5.600%, (b) .......................................... 1,615,000
------------
Louisiana--4.6%
3,400,000 Caddo Parish Industrial Development Board, 5.550%, (b) .......................... 3,400,000
------------
Maryland--0.7%
500,000 Montgomery County, 6.900%, 4/01/2000 ............................................ 514,225
------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
TAX EXEMPT MONEY MARKET TRUST -- continued
================================================================================
Investments as of December 31, 1999
(unaudited)
Tax Exempt Obligations -- continued
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts--5.4%
$ 1,000,000 Massachusetts Bay State Transportation Authority, 5.000%, 3/01/2000 ............. $ 1,003,170
1,000,000 Massachusetts State Housing Finance Agency, 6.000%, 5/15/2000 ................... 1,006,522
2,000,000 New England Education Loan Marketing Student Loan, 6.200%, 9/01/2000 ............ 2,028,443
------------
4,038,135
------------
Michigan--0.7%
510,000 Saginaw Hospital Finance Authority Revenue, 4.000%, 7/01/2000 ................... 510,737
------------
Nebraska--3.7%
500,000 American Public Energy Agency Gas, 4.000%, 6/01/2000 ............................ 501,008
2,265,000 American Public Energy Agency Gas, 3.600%, 9/01/2000 ............................ 2,259,120
------------
2,760,128
------------
Nevada--2.5%
1,000,000 Nevada State, 5.800%, 5/01/2000 ................................................. 1,008,071
860,000 Las Vegas Convention & Visitors Authority, 4.500%, 7/01/2000 .................... 863,742
------------
1,871,813
------------
New York--1.3%
1,000,000 Nassau County, 4.250%, 3/15/2000 ................................................ 1,001,283
------------
North Carolina--1.1%
800,000 North Carolina Medical Care Hospital, 4.700%, (b) ............................... 800,000
------------
Ohio--2.7%
2,000,000 County of Montgomery, Series 1998B, 3.550%, 1/14/2000 ........................... 2,000,000
------------
Pennsylvania--7.0%
1,500,000 Washington County Authority Lease, 7.450%, 6/15/2000 ............................ 1,569,087
3,700,000 Washington County Authority Lease, 5.550%, (b) .................................. 3,700,000
------------
5,269,087
------------
South Carolina--3.3%
2,500,000 Florence County Hospital Revenue, 5.450%, (b) ................................... 2,500,000
------------
Tennessee--11.2%
1,000,000 Memphis, 4.200%, 5/01/2000 ...................................................... 1,003,057
2,900,000 Metro Government Nashville Electric, 5.200%, 5/15/2000 .......................... 2,919,541
555,000 Maury County Health and Educational, 4.200%, (b) ................................ 555,000
3,900,000 Blount County Industrial Development Board, 5.750%, (b) ......................... 3,900,000
------------
8,377,598
------------
Texas--11.3%
675,000 West Texas Municipal Power Agency Revenue, 4.050%, 2/15/2000 .................... 675,646
3,000,000 Texas, 4.500%, 8/31/2000 ........................................................ 3,015,399
500,000 Grapevine Industrial Development Corporation Revenue, 4.800%, (b) ............... 500,000
1,725,000 Nueces County Health Facilities, 5.550%, (b) .................................... 1,725,000
2,500,000 San Antonio Airport Systems Revenue, 5.550%, (b) ................................ 2,500,000
------------
8,416,045
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
TAX EXEMPT MONEY MARKET TRUST -- continued
================================================================================
Investments as of December 31, 1999
(unaudited)
Tax Exempt Obligations -- continued
<TABLE>
<CAPTION>
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Washington--1.3%
$ 1,000,000 Clark County Public Utility District, 6.000%, 1/01/2000 ......................... $ 1,000,000
------------
Wisconsin--2.1%
1,600,000 Wisconsin Health & Educational Facilities, 5.500%, (b) .......................... 1,600,000
------------
Total Investments--104.2% (Identified Cost $77,949,373) (c) ..................... 77,949,373
Other assets less liabilities ................................................... (3,154,997)
------------
Total Net Assets--100% .......................................................... $ 74,794,376
============
</TABLE>
(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 specified
date (such as 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 $77,949,373.
See accompanying notes to financial statements.
11
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
================================================================================
December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Cash Management Trust Tax Exempt
Money Market Money Market
Series Trust
--------------------- -------------
<S> <C> <C>
ASSETS
Investments at value ...................................................... $ 817,858,790 $ 77,949,373
Cash ...................................................................... 148,977 0
Receivable for:
Shares sold ............................................................ 9,555,141 59,071
Interest ............................................................... 8,003,942 639,607
------------- -------------
835,566,850 78,648,051
LIABILITIES
Payable for:
Securities purchased ................................................... 0 1,500,000
Shares redeemed ........................................................ 7,638,638 2,141,816
Dividends declared ..................................................... 963,817 57,939
Custodial bank ......................................................... 0 21,410
Accrued expenses:
Management fees ........................................................ 294,256 41,495
Deferred trustees' fees ................................................ 79,588 36,539
Accounting and administrative .......................................... 34,018 6,296
Other expenses ......................................................... 288,339 48,180
------------- -------------
9,298,656 3,853,675
------------- -------------
NET ASSETS ................................................................... $ 826,268,194 $ 74,794,376
============= =============
Net assets consist of:
Capital paid in Class A shares ......................................... $ 630,827,114 $ 74,502,908
Capital paid in Class B shares ......................................... 25,873,074 291,468
Capital paid in Class C shares ......................................... 2,681,473 0
Capital paid in Class Y shares ......................................... 166,724,230 0
Undistributed net investment income .................................... 165,857 0
Accumulated net realized gains (losses) ................................ (3,554) 0
------------- -------------
NET ASSETS ................................................................... $ 826,268,194 $ 74,794,376
============= =============
Shares of beneficial interest outstanding, no par value
Class A shares ......................................................... 630,827,114 74,502,908
Class B shares ......................................................... 25,873,074 291,468
Class C shares ......................................................... 2,681,473 0
Class Y shares ......................................................... 166,724,230 0
------------- -------------
Shares of beneficial interest outstanding .................................... 826,105,891 74,794,376
============= =============
Net asset value per share Class A, Class B, Class C and Class Y shares* $ 1.00 $ 1.00
============= =============
Cost of investments .......................................................... $ 817,858,790 $ 77,949,373
============= =============
</TABLE>
* Shares of the series are sold and redeemed at net asset value (net assets /
shares of beneficial interest outstanding).
See accompanying notes to financial statements.
12
<PAGE>
STATEMENTS OF OPERATIONS
================================================================================
Six Months Ended December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Cash Management Trust Tax Exempt
Money Market Money Market
Series Trust
--------------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Interest .................................................................. $ 23,190,327 $ 1,480,880
------------ ------------
Expenses
Management fees ........................................................ 1,763,023 168,728
Trustees' fees ......................................................... 19,093 5,635
Accounting and administrative .......................................... 112,479 16,297
Custodian .............................................................. 81,697 23,698
Transfer agent ......................................................... 1,186,855 64,839
Service Fees - Class Y ................................................. 196,270 0
Audit and tax services ................................................. 12,230 12,600
Legal .................................................................. 15,530 2,087
Printing ............................................................... 39,770 4,927
Registration ........................................................... 35,622 30,021
Miscellaneous .......................................................... 65,812 4,834
------------ ------------
Total expenses ............................................................ 3,528,381 333,666
------------ ------------
Less - waiver of fee by investment adviser and distributor ................ 0 (59,611)
------------ ------------
Net expenses .............................................................. 3,528,381 274,055
------------ ------------
Net investment income ..................................................... 19,661,946 1,206,825
REALIZED GAIN (LOSS) on INVESTMENTS
Realized gain (loss) on investments - net ................................. (1,111) (7,746)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ........................ $ 19,660,835 $ 1,199,079
============ ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Cash Management Trust Tax Exempt
Money Market Series Money Market Trust
----------------------------------- ------------------------------------
Six Months Six Months
Ended Ended
Year Ended December 31, Year Ended December 31,
June 30, 1999 June 30, 1999
1999 (unaudited) 1999 (unaudited)
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income ........................... $ 34,641,250 $ 19,661,946 $ 2,145,371 $ 1,206,825
Net realized gain (loss) on investments ......... 2,470 (1,111) 0 (7,746)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets
from operations ............................. 34,643,720 19,660,835 2,145,371 1,199,079
--------------- --------------- --------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (a)
Class A ..................................... (27,834,505) (15,474,360) (2,145,371) (1,199,079)
Class B ..................................... (723,507) (529,567) 0 0
Class C ..................................... (67,961) (59,528) 0 0
Class Y ..................................... (6,017,747) (3,550,457) 0 0
--------------- --------------- --------------- ---------------
(34,643,720) (19,613,912) (2,145,371) (1,199,079)
--------------- --------------- --------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from the sale of shares ................ 2,516,699,035 1,153,250,361 120,150,365 57,579,443
Net asset value of shares issued in
connection with the reinvestment
of dividends from net investment
income and distributions from
net realized gains ........................... 33,335,258 18,000,676 2,119,382 1,118,773
Cost of shares redeemed ......................... (2,449,436,758) (1,156,893,309) (111,188,492) (68,782,620)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets
derived from capital share transactions ......... 100,597,535 14,357,728 11,081,255 (10,084,404)
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets ......... 100,597,535 14,404,651 11,081,255 (10,084,404)
NET ASSETS
Beginning of the period ...................... 711,266,008 811,863,543 73,797,525 84,878,780
--------------- --------------- --------------- ---------------
End of the period (b) ........................ $ 811,863,543 $ 826,268,194 $ 84,878,780 $ 74,794,376
=============== =============== =============== ===============
</TABLE>
(a) Amounts distributed include a net realized gain (loss) of $2,470 and
($1,111) for the Cash Management Trust Money Market Series for the year
ended June 30, 1999 and the six months ended December 31, 1999,
respectively, and ($7,746) for the Tax Exempt Money Market Trust for the
six months ended December 31, 1999.
(b) Including undistributed (overdistributed) net investment income of $116,821
and $119,034 for the Cash Mnanagement Trust Money Market Series for the
year ended June 30, 1999 and the six months ended December 31, 1999,
respectively.
See accompanying notes to financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
Cash Management Trust Money Market Series -- Classes A, B, C
---------------------------------------------------------------------------------
Six Months
Ended
Year Ended June 30, December 31,
------------------------------------------------------------------ 1999
1995 1996 1997 1998(a) 1999 (unaudited)
------------------------------------------------------------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) ................ 0.0469 0.0482 0.0467 0.0488 0.0445 0.0221
Net Realized and Unrealized Gain
(Loss) on Investments ..................... 0.0000 0.0002 0.0000 0.0000 0.0000 0.0000
--------- --------- --------- --------- --------- ---------
Total From Investment Operations ............ 0.0469 0.0484 0.0467 0.0488 0.0445 0.0221
--------- --------- --------- --------- --------- ---------
Less Distributions
Dividends From Net Investment Income ........ (0.0469) (0.0484)(b) (0.0465)(b) (0.0488) (0.0445)(b) (0.0221)(b)
Distributions From Net Realized Capital Gains 0.0000 0.0000 (0.0002) 0.0000 0.0000 0.0000
--------- --------- --------- --------- --------- ---------
Total Distributions ......................... (0.0469) (0.0484) (0.0467) (0.0488) (0.0445) (0.0221)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of the Period .......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= ========= =========
Total Return (%) ............................ 4.8 5.0 4.8 5.0 4.6 2.4
Ratio of Operating Expenses to
Average Net Assets (%) .................... 0.88 0.90 0.88 0.84 0.84 0.83(c)
Ratio of Net Investment Income to
Average Net Assets (%) .................... 4.67 4.85 4.66 4.88 4.46 4.66(c)
Net Assets, End of the Period (000) ......... $ 649,808 $ 663,621 $ 698,659 $ 607,406 $ 664,609 $ 659,511
</TABLE>
(a) Class C shares commenced operations March 1, 1998.
(b) Including net realized gain (loss) on investments.
(c) Computed on an annualized basis.
<TABLE>
<CAPTION>
Cash Management Trust Money Market Series -- Class Y
-----------------------------------------------------
Six Months
February 27(a) Year Ended
through Ended December 31, 1999
June 30, 1998 June 30,1999 (unaudited)
------------- ------------ -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .......................... $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) .................................. 0.0169 0.0448 0.0216
Net Realized and Unrealized Gain
(Loss) on Investments ....................................... 0.0000 0.0000 0.0000
--------- --------- ---------
Total From Investment Operations .............................. 0.0169 0.0448 0.0216
--------- --------- ---------
Less Distributions
Dividends From Net Investment Income .......................... (0.0169) (0.0448)(b) (0.0216)(b)
Distributions From Net Realized Capital Gains ................. 0.0000 0.0000 0.0000
--------- --------- ---------
Total Distributions ........................................... (0.0169) (0.0448) (0.0216)
--------- --------- ---------
Net Asset Value, End of the Period ............................ $ 1.0000 $ 1.0000 $ 1.0000
========= ========= =========
Total Return (%) .............................................. 1.7 4.6 2.3
Ratio of Operating Expenses to Average Net Assets (%) ......... 0.74(c) 0.82 0.82(c)
Ratio of Net Investment Income to Average Net Assets (%) ...... 4.98(c) 4.44 4.66(c)
Net Assets, End of the Period (000) ........................... $ 103,860 $ 147,254 $ 166,757
</TABLE>
(a) Commencement of operations.
(b) Including net realized gain (loss) on investments.
(c) Computed on an annualized basis.
See accompanying notes to financial statements.
15
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
Tax Exempt Money Market Trust -- Classes A & B
-----------------------------------------------------------------------------
Six Months
Ended
Year Ended June 30, December 31,
---------------------------------------------------------------- 1999
1995 1996 1997 1998 1999 (unaudited)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) ....... 0.0314 0.0327 0.0314 0.0323 0.0276 0.0136
Net Realized and Unrealized Gain
(Loss) on Investments ............ 0.0000 0.0000 0.0001 0.0000 0.0000 0.0000
--------- --------- --------- --------- --------- ---------
Total From Investment Operations ... 0.0314 0.0327 0.0315 0.0323 0.0276 0.0136
--------- --------- --------- --------- --------- ---------
Less Distributions
Dividends From Net Investment Income (0.0314) (0.0327) (0.0315)(a) (0.0323) (0.0276) (0.0136)(a)
--------- --------- --------- --------- --------- ---------
Total Distributions ................ (0.0314) (0.0327) (0.0315) (0.0323) (0.0276) (0.0136)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of the Period . $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= ========= =========
Total Return (%) ................... 3.2 3.3 3.2 3.3 2.8 1.4
Ratio of Operating Expenses to
Average Net Assets (%) (b) ....... 0.56 0.56 0.56 0.60 0.65 0.65(c)
Ratio of Net Investment Income to
Average Net Assets (%) ........... 3.15 3.29 3.17 3.23 2.76 4.45(c)
Net Assets, End of the Period (000) $ 67,797 $ 64,897 $ 67,736 $ 73,798 $ 84,879 $ 74,794
(a) Including net realized gain (loss)
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 0.80(c)
(c) Computed on an annualized basis.
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
For the Six Months Ended December 31, 1999
(unaudited)
1. Significant Accounting Policies. Nvest Funds (formerly known as New England
Funds) Cash Management Trust Money Market Series and Nvest Funds 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.
Nvest 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 Nvest 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.
Nvest 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 Nvest 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 accounting principles generally accepted in the United States
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 thereafter 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.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
For the Six Months Ended December 31, 1999
(unaudited)
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 the securities is determined on the
identified cost basis.
d. 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 six months ended December 31, 1999, as tax exempt
for federal income tax purposes.
e. Dividends and Distributions 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.
f. 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.
Nvest Cash Management Trust Money Market Series -- Purchases and sales or
maturities of short-term obligations, including securities purchased subject to
repurchase agreements, aggregated $3,578,680,333 and $3,593,036,547,
respectively.
Nvest Tax Exempt Money Market Trust -- Purchases and sales or maturities of
short-term obligations aggregated $119,184,560 and $128,405,600, respectively.
3. Investment Advisory Fees and Other Transactions with Affiliates.
a. Management Fees and Other Transactions with Affiliates. During the six months
ended December 31, 1999, the Trusts incurred management fees payable to the
Trusts' investment adviser, Nvest Funds Management L.P. ("Nvest Management") and
subadviser, Back Bay Advisors L.P. ("Back Bay"). Certain officers and directors
of Nvest Management are also officers and trustees of the Trusts. Nvest
Management and Back Bay are wholly-owned subsidiaries of Nvest Companies, L.P.
("Nvest"), which is a subsidiary of Metropolitan Life Insurance Company.
Nvest Cash Management Trust Money Market Series -- Under the management
agreement, the Trust pays
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
For the Six Months Ended December 31, 1999
(unaudited)
to its investment adviser, Nvest Management, 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, Nvest Management 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:
<TABLE>
<CAPTION>
Annual Percentage Annual Percentage
Rate of Rate of Advisory Fees
Advisory Fees Paid by Nvest Management
Paid to Nvest Management to the Subadviser, Back Bay
------------------------ ---------------------------
<S> <C> <C>
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%
</TABLE>
Fees Earned
-----------
Nvest Management $ 935,099
Back Bay $ 827,924
The effective annualized management fee for the six months ended December 31,
1999 was 0.41%.
Nvest Tax Exempt Money Market Trust -- The Trust pays management fees to its
investment adviser, Nvest Management, 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. Nvest Management 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 Nvest Management and Back Bay under the management
agreements in effect during the six months ended December 31, 1999 are as
follows:
Fees Earned (a)
---------------
Nvest Management $ 84,364
Back Bay $ 84,364
(a) Before reduction pursuant to expense limitations.
The effective annualized management fee for the six months ended December 31,
1999 was 0.40%.
Effective January 1, 1998 Nvest Management 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
six months ended December 31, 1999 Nvest Management and Back Bay reduced their
fees by $29,806 and $29,805 respectively.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
For the Six Months Ended December 31, 1999
(unaudited)
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 six months ended December 31, 1999,
these expenses amounted to $ 112,479 for the Cash Management Trust Money Market
Series and $16,297 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 six months ended December 31, 1999, the Cash Management
Trust Money Market Series and Tax Exempt Money Market Trust paid $736,875 and
$32,928 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.
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 six months ended December 31, 1999 the Fund
paid $196,270 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 Nvest
Management, Nvest 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 Nvest 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 the Trustees on a voluntary basis.
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 or
certain other Nvest Funds on the normal payment date. Deferred amounts remain in
the Fund until distributed in accordance with the Plan.
4. Concentration of Credit. The Tax Exempt Money Market Trust had the following
industry concentrations in excess of 10% on December 31, 1999 as a percentage of
the Trust's total net assets: General Obligations (15.6%) and Hospitals (27.9%).
The Trust also had more than 10% of its total net assets backed by letters of
credit with American Municipal Bond Assurance Corp. (11.4%) and Municipal Bond
Investors Assurance Corp. (10.9%).
20
<PAGE>
NVEST FUNDS
================================================================================
LARGE-CAP EQUITY FUNDS GLOBAL/INTERNATIONAL EQUITY
Capital Growth Fund Star Worldwide Fund
Kobrick Growth Fund International Equity Fund
Growth Fund
Growth and Income Fund CORPORATE INCOME FUNDS
Balanced Fund Short Term Corporate Income Fund
Value Fund Bond Income Fund
High Income Fund
Strategic Income Fund
ALL-CAP EQUITY FUNDS
Star Advisers Fund GOVERNMENT INCOME FUNDS
Kobrick Capital Fund Limited Term U.S. Government Fund
Bullseye Fund Government Securities Fund
Equity Income Fund
MONEY MARKET FUNDS*
SMALL-CAP EQUITY FUNDS Cash Management Trust
Star Small Cap Fund Tax Exempt Money Market Trust
Kobrick Emerging Growth Fund *An investment in the Fund is not insured
or guaranteed by the FDIC
or any other government agency
TAX-FREE INCOME FUNDS
Municipal Income Fund
Intermediate Term Tax Free
Fund of California
Massachusetts Tax Free Income Fund
To learn more, and for a free prospectus, contact your financial representative.
Visit our Web site at www.nvestfunds.com
Nvest Funds Distributor, L.P.
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors when it
is preceded or accompanied by the Fund's current prospectus, which contains
information about distribution charges, management and other items of interest.
Investors are advised to read the prospectus carefully before investing.
Nvest Funds Distributor, L.P., and other firms selling shares of Nvest 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.
<PAGE>
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Boston, Massachusetts
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