<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT AND PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
(Logo)
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
- --------------------------------------------------------------------------------
New England Intermediate Term
Tax Free Fund of California
[graphic omitted]
December 31, 1996
<PAGE>
FEBRUARY 1997
- --------------------------------------------------------------------------------
[Photo of Henry L.P. Schmelzer]
Dear New England Funds Shareholder,
Taken together, 1995 and 1996 constituted the sixth strongest back-to-back years
for the U.S. stock market since 1915, as measured by percentage gain in the Dow
Jones Industrial Average (according to Bloomberg Business News).
Most New England Funds portfolio managers believe that the forces behind this
rally -- low inflation, relatively stable interest rates and strong corporate
profits -- will persist, at least for a time. Nevertheless, bull markets can
suddenly turn quiet; they can decline modestly; or they can reverse course
sharply. No one can predict what is ahead, nor can anyone guarantee whether the
market's strength will extend even further in 1997 and beyond.
Maintain a Long-Term Perspective
Whatever the market's direction, you should be prepared to consider any
short-term trends in the broader context of your long-term personal goals,
including the accumulation of financial assets. One way to manage this important
process is by diversifying your investments. While U.S. stocks have historically
been the strongest performers, you may, depending on your financial goals and
needs, also benefit from investing in various types of bond funds, and by
participating in growing overseas markets.
Remember that each investment has its own unique risks. What's more, no strategy
can assure a profit or protect against a loss. However, one time-tested approach
is to invest regularly and stay invested -- in good times and bad -- to avoid
the pitfall of guessing what the market might do in the short run.
Our Multiple-Adviser Approach Sets Us Apart
Many financial representatives recommend New England Funds to their clients
because of our distinctive multiple-adviser approach. For each fund, we
hand-pick a specific subadviser or subadvisers with significant experience and
demonstrated skill in selecting investments that are in tune with that fund's
stated objective. We call it matching the talent to the task.
Finally, it may interest you to learn that you are part of a major national
trend. In 1996, nearly 37 million U.S. households owned mutual funds, according
to the Investment Company Institute, an industry trade organization. Mutual
funds are now a cornerstone of retirement, college and other investment plans
for millions of Americans.
New England Funds has grown with the industry and is now over $6 billion in
size. We thank you for helping us reach this important milestone, and look
forward to serving your investment needs well into the future.
Sincerely,
/s/ Henry L.P. Schmelzer
Henry L.P. Schmelzer, President
For more information, including a prospectus for any
New England Fund, please contact your financial representative or call the
Investor Services and Marketing Group at 800-225-5478. Please read the
prospectus carefully, including the information on charges and expenses, before
you invest.
<PAGE>
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NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
- --------------------------------------------------------------------------------
AWARD WINNING SERVICE -- TWO YEARS RUNNING
- --------------------------------------------------------------------------------
- --------------------- For two years running we're proud to announce that
[Logo] DALBAR, an independent evaluator of mutual fund
QUALITY service, has awarded New England Funds its Quality
TESTED SERVICE Tested Service Seal for "providing the highest
1996 tier of service excellence in the mutual fund
- --------------------- industry." New England Funds is one of just three
DALBAR mutual fund companies to earn this distinction in
HONORS COMMITMENT TO: each of the last two years -- another reason why
INVESTORS we are becoming known as the mutual fund company
- --------------------- Where The Best Minds Meet(TM).
INVESTMENT RESULTS THROUGH DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. Your Fund's total return for the period shown appears with and without
sales charges and includes Fund expenses and management fees. A securities index
measures the performance of a theoretical portfolio. Unlike a fund, the index is
unmanaged; there are no expenses that affect the results. In addition, few
investors could purchase all of the securities necessary to match the index.
And, if they could, they would incur transaction costs and other expenses.
<PAGE>
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NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A $10,000 INVESTMENT IN CLASS A SHARES
- --------------------------------------------------------------------------------
[A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in the New England Intermediate Term Tax Free Fund of
California's Class A Shares compared to the Lehman Municipal Index and the Cost
of Living. The data points to this chart are as follows:]
COMPARED TO LEHMAN MUNICIPAL INDEX(4) AND THE COST OF LIVING INDEX(5)
Net With Lehman
Asset Maximum Municipal Cost of
Date Value(1) Sales Charge(2) Index(4) Living(5)
- -------- ------- ------------ --------- -------
4/23/93 $10,000 $9,750 $10,000 $10,000
12/31/93 $10,864 $10,592 $10,718 $10,125
12/31/94 $10,322 $10,064 $10,164 $10,396
12/31/95 $11,756 $11,462 $11,938 $10,668
12/31/96 $12,381 $12,071 $12,469 $11,022
This illustration represents past performance of Class A shares and cannot
predict future results. Investment return and principal value may vary,
resulting in a gain or loss on the sale of shares. Class B share performance
will be greater or less than that shown based on differences in inception date,
fees and sales charges. All Index and Fund performance assumes reinvested
distributions.
<PAGE>
- --------------------------------------------------------------------------------
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/96*
- --------------------------------------------------------------------------------
CLASS A (Inception 4/23/93) 1 YEAR 3 YEARS SINCE INCEPTION
Net Asset Value(1) 5.32% 4.45% 5.96%
With Max. Sales Charge(2) 2.64 3.58 5.24
Lipper CA Municipal Average(6) 4.05 4.23 5.20
- --------------------------------------------------------------------------------
CLASS B (Inception 9/13/93) 1 YEAR 3 YEARS SINCE INCEPTION
Net Asset Value(1) 4.55% 3.59% 3.50%
With CDSC(3) 0.55 2.68 2.96
Lehman Municipal(4) 4.44 5.18 5.22
Lipper CA Municipal Average(6) 4.05 4.23 n/a
YIELDS AS OF 12/31/96(7)
- --------------------------------------------------------------------------------
CLASS A CLASS B
SEC 30-day Yield 4.81% 4.21%
Taxable Equivalent Yield 8.78 7.69
*These returns represent past performance. Investment return and principal value
will fluctuate so that shares, upon redemption, may be worth more or less than
original cost.
NOTES TO CHARTS AND PERFORMANCE UPDATE
(1) Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect the payment of a sales charge at the time of purchase.
(2 With Maximum Sales Charge performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 2.5% at the time of
purchase of Class A shares.
(3) With Contingent Deferred Sales Charge (CDSC) performance assumes a maximum
4% sales charge applied to a redemption of Class B shares. The sales charge
will decrease over time, declining to zero five years after the purchase of
shares.
(4) Lehman Municipal Index is an unmanaged index of bonds issued by states,
municipalities and other governmental entities having maturities of more
than one year. The Index performance has not been adjusted for ongoing
management, distribution and operating expenses and sales charges applicable
to mutual fund investments.
(5) Cost of Living is based on the Consumer Price Index, a widely recognized
measure of the cost of goods and services in the United States, as
calculated by the U.S. Bureau of Labor Statistics.
(6) Lipper Average is an average of the total return performance (calculated on
the basis of net asset value) of funds with similar investment objectives as
calculated by Lipper Analytical Services, an independent mutual fund ranking
service.
(7) SEC Yield is based on the Fund's net investment income over a 30-day period
and is calculated in accordance with Securities and Exchange Commission
guidelines. Taxable equivalent yield is based on the maximum combined
federal and California state income tax bracket of 45.22%. The alternative
minimum tax and some federal and state taxes may apply.
<PAGE>
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NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
- --------------------------------------------------------------------------------
QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
Q. How did New England Intermediate Term Tax Free Fund of California perform in
1996?
[Photo of James Welch
Back Bay Advisors, L.P.]
The Fund's performance was very strong despite widely fluctuating interest
rates during the year. For the 12-month period, the Fund had a total return
of 5.32% for Class A shares, based on net asset value, well ahead of the
average return of 4.05% for the Lipper California Municipal Average.(6) The
Fund also generated attractive levels of tax-exempt income: As of December
31, 1996, the Fund's 30-day SEC yields(7) were 4.81% and 4.21% for Class A
and Class B shares, respectively, which translate into taxable equivalent
yields of 8.78% and 7.69% for a taxable investment for investors in the
maximum combined federal and California state income tax bracket of 45.22%.*
We're also pleased to report that Lipper Analytical Services, an independent
mutual fund ranking service, ranked your Fund #2 out of 28 intermediate
California tax free funds for the year ending December 31, 1996. Longer
term, the Fund was ranked #8 out of 20 peers for 3-year performance and #2
out of 12 peers from inception (4/23/93) through December 31, 1996.(6)
In addition, independent fund-rating service Morningstar awarded your Fund a
four-star rating for three-year performance and a five-star rating -- its
highest rating -- for one-year performance through December 31, 1996. These
ratings reflect the Fund's attractive blend of share price appreciation,
income and managed risk.** Although past performance is not predictive of
future return, performance to date as recognized by Lipper and Morningstar
lends credibility to the strategies and techniques used to manage your Fund.
Q. How did you manage the Fund during the year?
When unexpectedly strong economic activity early in the year caused interest
rates to move sharply higher, we reduced the Fund's sensitivity to interest
rate changes by decreasing its duration to 5.5 years. Duration measures a
portfolio's sensitivity to changes in interest rates; a lower duration
results in smaller price declines when interest rates rise. Because bond
prices and interest rates move in opposite directions, this move helped to
protect shareholders' asset value as interest rates were rising.
During the second half of the year, a moderating economy made the
environment for fixed income securities more appealing. We took advantage of
this improved investment environment by extending duration and adding to our
position in lower coupon discount bonds (bonds priced below par), which tend
to have stronger price gains when interest rates decline.
We substantially increased our holdings of California general obligation
bonds early in the year based on our improving outlook for the state. The
economy continued to post gains over the course of the year as the state's
job growth led the nation, its exports increased dramatically and its tax
revenue collections strengthened. This strategic move was rewarded in July
with an upgrade for these bonds by both Moody's Investors Service and
Standard & Poor's (independent bond rating services).
The Fund also emphasized revenue bonds issued for essential purposes, such
as utilities, transportation, education and public works, which we expected
to benefit from improving local and national economies.
An important event that will affect certain California municipal bonds took
place when the state's voters passed Proposition 218. This initiative
mandates that all tax-raising bills require a two-thirds majority voter
approval for enactment into law, retroactive to January 1, 1995. This means
that there will no longer be special assessment and tax allocation bond
issues in the state, creating uncertainty in the tax-supported sector of the
market as authorities determine which existing issues may be negatively
influenced by the Proposition. The Fund's focus on revenue bonds, which are
backed by a dedicated revenue stream and/or voter-approved state sales tax
allocations, is intended to insulate the portfolio from much of this
uncertainty.
Q. What is your investment outlook for the months ahead?
We believe that we will see continued moderate economic growth and low
levels of inflation, both positive factors for fixed income investments. Our
long-term outlook for the California municipal bond market is also positive
as supply and demand dynamics remain favorable. We expect low new issue
supply and strong demand for California tax-exempt bonds resulting from an
improved economy and heavy reinvestment cash flow as a large dollar volume
of securities matures early in 1997. These factors should influence a
favorable environment for California municipal bonds and for your Fund.
** Morningstar proprietary ratings reflect risk-adjusted performance through
12/31/96. The ratings are subject to change every month. Past performance is no
guarantee of future results. Morningstar ratings are calculated from the fund's
three- and one-year returns (with fee adjustments) in excess of 90-day T-bill
returns. The one-year rating is calculated using the same methodology, but is
not a component of the overall rating. The Fund received four stars for three
years and five stars for one year. It was rated among 1129 and 1739 funds,
respectively. Ten percent of the funds in a rating category receive five stars,
and the next 22.5% receive four stars.
<PAGE>
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NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT QUALITY COMPOSITION -- DECEMBER 31, 1996
- --------------------------------------------------------------------------------
AAA 30.95%
AA 4.79%
A 28.05%
BBB 31.48
NR 4.73
Average Portfolio Quality = A+ Average Portfolio Maturity = 10.5 Years
Quality rating provided by Standard & Poor's.
* Alternative minimum tax and some federal or state taxes may apply.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Investments as of December 31, 1996
<TABLE>
TAX EXEMPT OBLIGATIONS--101.1% OF TOTAL NET ASSETS
<CAPTION>
RATINGS (c)
(UNAUDITED)
-------------------------
FACE STANDARD
AMOUNT ISSUER MOODY'S & POOR'S VALUE (a)
- ----------------------------------------------------------------------------------------------------------
CALIFORNIA--92.1%
<S> <C> <C> <C>
$ 1,500,000 Berkeley California Health Facility, 6.500%,
12/01/11 ................................ Baa BBB+ $ 1,540,845
925,000 California Educational Facilities Authority,
5.000%, 9/01/15, (MBIA) ................. Aaa AAA 870,379
1,000,000 California Educational Facilities Authority,
6.125%, 6/01/09 ......................... Baa -- 1,019,970
1,000,000 California Educational Facilities Authority
(Stanford Univ.), 5.250%, 12/01/01 ...... Aaa AAA 1,043,790
1,000,000 California Educational Facilities Authority
(Stanford Univ.), 7.000%, 1/01/04 ....... Aaa AAA 1,073,210
1,000,000 California Health Facilities Financing,
5.000%, 7/01/14, (MBIA) ................. Aaa AAA 937,870
1,120,000 California Housing Finance Agency, 6.250%,
8/01/16 ................................. Aa AA- 1,138,379
1,000,000 California Pollution Control Financing
Authority, 5.900%, 6/01/14 .............. A2 A-1 1,050,110
1,000,000 California Pollution Control Financing
Authority, 6.900%, 9/01/06 .............. -- A+ 1,072,380
1,000,000 California Pollution Control Financing
Authority, 8.750%, 1/01/07 .............. A2 A 1,057,150
1,500,000 California Pollution Control Solid Waste,
5.800%, 12/01/16 ........................ A2 A 1,491,150
1,000,000 California State, 7.000%, 6/01/02 (FGIC) .. Aaa AAA 1,120,700
1,000,000 California State Department Water Resources
Valley, 5.125%, 12/01/13 ................ Aa AA 969,710
1,000,000 California State Public Works, 5.500%,
6/01/10 .................................. A1 A 1,012,250
1,000,000 California State Public Works, 6.400%,
9/01/08 .................................. A A 1,057,460
1,000,000 California State Public Works Lease,
5.375%, 11/01/13, (MBIA) ................ Aaa AAA 979,870
1,500,000 Duarte, CA Certificates of Participation,
6.125%, 4/01/13 ......................... Baa1 -- 1,510,905
1,295,000 Fresno United School District, 6.600%,
3/01/99 ................................. A -- 1,352,265
2,030,000 Fresno United School District, 7.250%,
3/01/07 ................................. A -- 2,201,169
1,000,000 Orange County, CA, 6.000%, 7/01/08 (MBIA) . Aaa AAA 1,081,110
975,000 Pleasanton Financing Authority, 5.600%,
9/02/00 ................................. Baa -- 1,006,405
1,000,000 Sacramento Utility District, 3.625%,
11/15/06 (d) (FSA) ...................... Aaa AAA 1,000,000
1,000,000 Sacramento Utility District, 6.895%,
11/15/06 (d) (FSA) ...................... Aaa AAA 1,060,200
1,000,000 Sacramento, CA Power Authority Project,
5.875%, 7/01/15 ......................... -- BBB- 990,540
1,155,000 San Bernardino, CA Joint Powers Financing,
5.500%, 10/01/10, (FSA) ................. Aaa AAA 1,163,270
2,000,000 San Diego Port Facilities, 6.600%, 12/01/02 -- -- 2,083,920
1,000,000 Southern California Rapid Transit District,
7.500%, 7/01/05, (MBIA) ................. Aaa AAA 1,124,970
1,000,000 Stanislaus Solid Waste Authority, 7.500%,
1/01/05 ................................. -- BBB+ 1,065,680
1,945,000 Stanislaus Solid Waste Authority, 7.625%,
1/01/10 ................................. -- BBB+ 2,077,688
775,000 Valley Health Systems, 6.250%, 5/15/99 .... -- BBB- 785,230
1,000,000 Valley Health Systems, 6.500%, 5/15/15 .... -- BBB- 1,012,710
2,000,000 West & Central Basin Financing Authority,
6.020%, 8/01/06, (AMBAC) ................ Aaa AAA 2,059,760
1,000,000 Whittier Health Facilities, 6.250%, 6/01/09. Aaa AAA 1,094,070
-----------
40,105,115
-----------
OTHER OBLIGATIONS--9.0%
1,000,000 Puerto Rico Commonwealth Aqueduct Sewer,
6.000%, 7/01/09 ......................... Baa1 A 1,074,690
1,750,000 Virgin Islands Public Finance Authority,
7.700%, 10/01/04 ........................ -- BBB 1,894,182
885,000 Virgin Islands Territory, Public Finance
Authority, 7.750%, 10/01/06 ............. -- -- 958,995
-----------
3,927,867
-----------
Total Tax Exempt Obligations
(Identified Cost $42,987,537) ............ 44,032,982
-----------
Total Investments--101.1%
(Identified Cost $42,987,537) (b) ........ 44,032,982
Other assets less liabilities ............ (470,695)
-----------
Total Net Assets--100% ..................... $43,562,287
===========
(a) See Note 1a.
(b) Federal Tax Information: At December 31, 1996 the net unrealized appreciation
on investments based on cost of $42,987,537 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in which there is
an excess of value over tax cost. ........................................... $ 1,115,296
Aggregate gross unrealized depreciation for all investments in which there is
an excess of tax cost over value. ........................................... (69,851)
-----------
Net unrealized appreciation. ................................................ $ 1,045,445
===========
As of December 31, 1996, the Fund had a net tax basis capital loss
carryforward as follows:
Expiring December 31, 2002 .................................................. $ 1,325,032
(c) The ratings shown are believed to be the most recent ratings available at
December 31, 1996. Securities are generally rated at the time of issuance.
The rating agencies may revise their ratings from time to time. As a result
there can be no assurance that the same ratings would be assigned if the
securities were rated at December 31, 1996. The Fund's adviser independently
evaluates the Fund's portfolio securities and in making investment decisions
does not rely solely on the ratings of agencies.
(d) Floating rate demand notes are instruments whose interest rates change on a
specific date (such as coupon date or interest payment date). These
instruments are payable on demand and are secured by a letter of credit or
other support agreements from banks. The rates shown were those in effect at
December 31, 1996.
Legend of Portfolio abbreviations:
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guarantee Insurance Company
FSA - Financial Security Assurance
MBIA - Municipal Bond Investors Assurance Corp.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
- ----------------------------------------------------------------------------------------------
December 31, 1996
<S> <C> <C>
ASSETS
Investments at value ...................................... $44,032,982
Cash ...................................................... 43,366
Receivable for:
Fund shares sold ........................................ 127,903
Securities sold ......................................... 977,462
Accrued interest ........................................ 715,439
Unamortized organization expense ........................ 12,433
Prepaid registration expense .............................. 5,000
-----------
45,914,585
LIABILITIES
Payable for:
Securities purchased .................................... $2,210,341
Fund shares redeemed .................................... 18,511
Dividends declared ...................................... 58,310
Due to investment adviser ............................... 20,357
Accrued expenses:
Deferred trustees' fees ................................. 3,453
Accounting and administrative ........................... 1,675
Other expenses .......................................... 39,651
----------
2,352,298
-----------
NET ASSETS .................................................. $43,562,287
===========
Net Assets consist of:
Capital paid in ......................................... $43,821,161
Undistributed net investment income ..................... 64,024
Accumulated net realized losses ......................... (1,368,343)
Unrealized appreciation on investments .................. 1,045,445
-----------
NET ASSETS .................................................. $43,562,287
===========
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($35,971,916 divided by 4,693,431 shares of beneficial
interest) ................................................. $7.66
Offering price per share (100/97.50 of $7.66) ............... $7.86*
=====
Net asset value and offering price of Class B shares
($7,590,371 divided by 993,289 shares of beneficial
interest) ................................................. $7.64**
=====
Identified cost of investments .............................. $42,987,537
===========
* Based upon single purchases of less than $100,000.
Reduced sales charges apply for purchases in excess of this amount.
**Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------
Year Ended December 31, 1996
<S> <C> <C>
INVESTMENT INCOME
Interest ................................................... $2,385,876
Expenses
Management fees .......................................... $210,469
Service fees - Class A ................................... 84,706
Service and distribution fees - Class B .................. 63,402
Trustees' fees and expenses .............................. 12,136
Accounting and administrative ............................ 19,945
Custodian ................................................ 59,703
Transfer agent ........................................... 38,160
Audit and tax services ................................... 18,000
Legal .................................................... 24,372
Printing ................................................. 20,066
Registration ............................................. 23,338
Amortization of organization expenses .................... 8,066
Miscellaneous ............................................ 4,811
--------
Total Expenses ............................................. 587,174
Less expenses waived by the investment adviser and
subadviser ............................................... (236,628) 350,546
-------- ----------
Net investment income ...................................... 2,035,330
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS AND FUTURES CONTRACTS
Realized gain (loss) on:
Investments - net ........................................ 126,853
Futures contracts - net .................................. 166,891
Options contracts - net .................................. (171,260)
--------
Net realized gain on investments ......................... 122,484
--------
Unrealized appreciation on:
Investments - net ........................................ 7,573
--------
Net gain on investment transactions ........................ 130,057
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................... $2,165,387
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1996
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income ...................................... $ 1,926,651 $ 2,035,330
Net realized gain on investments, options and
futures transactions ..................................... 80,972 122,484
Unrealized appreciation on investments, options and
futures transactions ..................................... 2,839,989 7,573
----------- -----------
Increase in net assets from operations ..................... 4,847,612 2,165,387
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A .................................................. (1,665,974) (1,717,606)
Class B .................................................. (260,677) (274,603)
In excess of net investment income
Class A .................................................. (9,744) 0
Class B .................................................. (1,589) 0
----------- -----------
(1,937,984) (1,992,209)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions ....................................... (591,705) 5,065,241
----------- -----------
Total increase in net assets ............................... 2,317,923 5,238,419
NET ASSETS
Beginning of the year ...................................... 36,005,945 38,323,868
----------- -----------
End of the year ............................................ $38,323,868 $43,562,287
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the year ...................................... $ 29,558 $ 20,903
=========== ===========
End of the year ............................................ $ 20,903 $ 64,024
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------
APRIL 23,(a) YEAR YEAR YEAR
THROUGH ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $7.50 $7.84 $7.08 $7.65
----- ----- ----- -----
Income From Investment Operations
Net Investment Income .................. 0.26 0.38 0.39 0.39
Net Realized and Unrealized Gain (Loss)
on Investments 0.38 (0.76) 0.57 0.00
----- ----- ----- -----
Total From Investment Operations ....... 0.64 (0.38) 0.96 0.39
----- ----- ----- -----
Less Distributions
Dividends From Net Investment Income ... (0.26) (0.38) (0.39) (0.38)
Distributions in Excess of Net
Investment Income .................... (0.04) 0.00 0.00 0.00
----- ----- ----- -----
Total Distributions .................... (0.30) (0.38) (0.39) (0.38)
----- ----- ----- -----
Net Asset Value, End of Period ......... $7.84 $7.08 $7.65 $7.66
===== ===== ===== =====
Total Return (%) (d) ................... 8.6 (4.9) 13.9 5.3
Ratio of Operating Expenses to Average
Net Assets (%)(b) 0.70(c) 0.70 0.70 0.75
Ratio of Net Investment Income to
Average Net Assets (%) ............... 4.88(c) 5.07 5.24 5.18
Portfolio Turnover Rate (%) ............ 121(c) 212 167 161
Net Assets, End of Period (000) ........ $28,938 $30,293 $32,707 $35,972
(a) Commencement of operations.
(b) Effective September 1, 1996 expenses were voluntarily limited to 0.85% of Class A average net assets.
Prior to September 1, 1996 expenses were voluntarily limited to 0.70% of Class A average net assets.
See Note 4. The ratio of operating expenses to average net assets without giving effect to this
expense limitation would have been 1.49% (annualized) for the period ended December 31, 1993, 1.33%,
1.31% and 1.34% for the years ended December 31, 1994, 1995, and 1996, respectively.
(c) Computed on an annualized basis.
(d) A sales charge is not reflected in total return calculations. Periods less than one year are not
annualized.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- continued
- ----------------------------------------------------------------------------------------------------------
CLASS B
------------------------------------------------------------------
SEPTEMBER 13,(a) YEAR YEAR YEAR
THROUGH ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $7.92 $7.84 $7.07 $7.63
----- ----- ----- -----
Income From Investment Operations
Net Investment Income ............... 0.10 0.32 0.33 0.33
Net Realized and Unrealized Gain
(Loss) on Investments ............. (0.04) (0.77) 0.56 0.01
----- ----- ----- -----
Total From Investment Operations .... 0.06 (0.45) 0.89 0.34
----- ----- ----- -----
Less Distributions
Dividends From Net Investment Income (0.10) (0.32) (0.33) (0.33)
Distributions in Excess of Net
Investment Income ................. (0.04) 0.00 0.00 0.00
----- ----- ----- -----
Total Distributions ................. (0.14) (0.32) (0.33) (0.33)
----- ----- ----- -----
Net Asset Value, End of Period ...... $7.84 $7.07 $7.63 $7.64
===== ===== ===== =====
Total Return (%)(d) ................. 0.8 (5.8) 12.9 4.6
Ratio of Operating Expenses to
Average Net Assets (%)(b) ......... 1.45(c) 1.45 1.45 1.50
Ratio of Net Investment Income to
Average Net Assets (%) ............ 3.68(c) 4.32 4.49 4.43
Portfolio Turnover Rate (%) ......... 121(c) 212 167 161
Net Assets, End of Period (000) ..... $1,849 $5,713 $5,617 $7,590
(a) Commencement of operations.
(b) Effective September 1, 1996 expenses were voluntarily limited to 1.60% of Class B average net assets.
Prior to September 1, 1996 expenses were voluntarily limited to 1.45% of Class B average net assets.
See Note 4. The ratio of operating expenses to average net assets without giving effect to this
expense limitation would have been 2.24% (annualized) for the period ended December 31, 1993, 2.08%,
2.06% and 2.09% for the years ended December 31, 1994, 1995, and 1996, respectively.
(c) Computed on an annualized basis.
(d) A contingent deferred sales charge is not reflected in total return calculations. Periods less than
one year are not annualized.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1996
1. The Fund is a series of The New England Funds Trust II, a Massachusetts
business trust (the "Trust"), and is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company. The Declaration of Trust permits the Trustees to issue an unlimited
number of shares of the Trust in multiple series (each series of shares a
"Fund").
The Fund offers both Class A and Class B shares. The Fund commenced its public
offering of Class B shares on September 13, 1993. Class A shares are sold with
a maximum front end sales charge of 2.50%. Class B shares do not pay a front
end sales charge, but pay a higher ongoing distribution fee than Class A
shares for eight years (at which point they automatically convert to Class A
shares), and are subject to a contingent deferred sales charge if those shares
are redeemed within five years of purchase. Expenses of the Fund are borne
pro-rata by the holders of both classes of shares, except that each class
bears expenses unique to that class (including the Rule 12b-1 service and
distribution fees applicable to such class), and votes as a class only with
respect to its own Rule 12b-1 Plan. Shares of each class would receive their
pro rata share of the net assets of the Fund, if the Fund were liquidated. In
addition, the Trustees approve separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its 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 Fund's investment subadviser, Back Bay Advisors,
L.P. ("Back Bay Advisors"), under the supervision of the Fund's trustees,
determines the value of the Fund's portfolio of securities, using valuations
provided by a pricing service selected by Back Bay Advisors and other
information with respect to transactions in securities, including quotations
from securities dealers. Valuations of securities and other assets owned by
the Fund for which market quotations are readily available are based on those
quotations. Short-term obligations that will mature in 60 days or less are
stated at amortized cost, which, when combined with accrued interest or
discount earned, approximates market value. All other securities and assets
are valued at their fair value as determined in good faith by Back Bay
Advisors under the supervision of the Fund's trustees.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date (the date the buy or sell is executed).
Interest income is recorded on the accrual basis. Interest income is increased
by the accretion of original issue discount. Interest income is reduced by the
amortization of premium. In determining net gain or loss on securities sold,
the cost of securities has been determined on the identified cost basis.
C. OPTIONS AND FUTURES. CALLS AND PUTS. The Fund may write (sell) call and
put options on securities to manage its exposure to interest rates and the
bond market. Buying futures, writing puts, and buying calls tend to increase
the Fund's exposure to the underlying instrument. Selling futures, buying
puts, and writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments. When a Fund writes a call or put
option, an amount equal to the premium received by the Fund is included in the
Fund's statement of assets and liabilities as an asset and as an equivalent
liability. The amount of the liability is subsequently marked-to-market to
reflect the current market value of the option written. The current value of a
written option is the closing price on the principal exchange on which such
option is traded. If an option which the Fund has written either expires on
its stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a call option which
the Fund has written is exercised, the Fund realizes a capital gain or loss
from the sale of the underlying security and the proceeds from such sale are
increased by the premium originally received. If a put option which the Fund
has written is exercised, the amount of the premium originally received will
reduce the cost of the security which the Fund purchases upon exercise of the
option.
The premium paid by a Fund for the purchase of a call or a put option is
included in the asset section of the Fund's statement of assets and
liabilities as an investment and subsequently adjusted to the current market
value of the option. The current value of a purchased option is the closing
price on the principal exchange on which such option is traded. If an option
which the Fund has purchased expires on the stipulated expiration date, the
Fund will realize a loss in the amount of the cost of the option. If the Fund
enters into a closing sale transaction, the Fund will realize a gain or loss,
depending on whether the sales proceeds from the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a purchased
put option, it will realize a gain or loss from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. If the Fund exercises a purchased call option, the cost of
the security which the Fund purchases upon exercise will be increased by the
premium originally paid.
The risk in writing a call option is that the Fund relinquishes the
opportunity to profit if the market price of the underlying security increases
and the option is exercised. In writing a put option, the Fund assumes the
risk of incurring a loss if the market price decreases and the option is
exercised. In addition, there is the risk the Fund may not be able to enter
into a closing transaction because of an illiquid secondary market.
INTEREST RATE FUTURES CONTRACTS. The Fund may purchase and sell interest rate
futures contracts to hedge against changes in the values of tax exempt
municipal securities the Fund owns or expects to purchase. An interest rate
futures contract is an agreement between two parties to buy and sell a
security for a set price (or to deliver an amount of cash) on a future date.
Upon entering into such a contract, the purchasing Fund is required to pledge
to the broker an amount of cash, U.S. Government securities or other high
quality debt securities equal to the minimum "initial margin" requirements of
the exchange, currently up to $3,000 per contract. Pursuant to the contract,
the Fund agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as "variation margin", and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a realized gain
or loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
The potential risk to the Fund is that the change in value of futures
contracts primarily corresponds with the value of underlying instruments which
may not correspond to the change in the value of the hedged instruments. In
addition, there is a risk that the Fund may not be able to close out its
futures positions due to an illiquid secondary market.
D. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute to its shareholders all of its income and any net realized capital
gains at least annually. Accordingly, no provision for federal income tax has
been made.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily
to shareholders of record at the time and are paid monthly.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. Permanent book and
tax basis differences relating to shareholder distributions will result in
reclassification to paid in capital.
F. REPURCHASE AGREEMENTS. The Fund, through its custodian, receives delivery
of the underlying securities collateralizing repurchase agreements. It is the
Fund's policy that the market value of the collateral be at least equal to
100% of the repurchase price. Back Bay Advisors 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 Fund's ability to dispose of the underlying securities.
G. ORGANIZATION EXPENSE. Costs incurred in 1993 in connection with the Fund's
organization and initial registration amounted to $26,500 and were paid by the
Fund. These costs are being amortized over 60 months beginning April 23, 1993.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for
the Fund for the year ended December 31, 1996 were $ 71,046,134 and
$63,660,950 respectively.
Investments in written options and futures contracts for the Fund for the year
ended December 31, 1996 are summarized as follows:
FUTURES CONTRACTS
-----------------------
AGGREGATE
NUMBER OF FACE VALUE
CONTRACTS OF CONTRACTS
--------- ------------
Open at December 31, 1995 ........................... 0 $ 0
Contracts opened .................................... 525 58,958,150
Contracts closed .................................... (525) (58,958,150)
---- -----------
Open at December 31, 1996 ........................... 0 $ 0
==== ===========
WRITTEN OPTIONS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Open at December 31, 1995 ........................... 0 $ 0
Contracts opened .................................... 625 220,400
Contracts closed .................................... (625) (220,400)
---- -----------
Open at December 31, 1996 ........................... 0 $ 0
==== ===========
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund pays
management fees to its investment adviser, New England Funds Management, L.P.
("NEFM") at the annual rate of 0.525% of the first $200 million of the Fund's
average daily net assets, 0.50% of the next $300 million and 0.475% of such
assets in excess of $500 million. NEFM pays the Fund's investment subadviser,
Back Bay Advisors at the rate of 0.2625% of the first $200 million of the
Fund's average daily net assets, 0.25% of the next $300 million and 0.2375% of
such assets in excess of $500 million. Certain officers and directors of NEFM
are also officers or trustees of the Fund. NEFM and Back Bay Advisors are
wholly owned subsidiaries of New England Investment Companies, L.P. ("NEIC"),
which is a subsidiary of Metropolitan Life Insurance Company ("MetLife"). Fees
earned by NEFM and Back Bay Advisors under the management agreement in effect
during the year ended December 31, 1996 are as follows:
FEES EARNED
-----------
$105,235 New England Funds Management, L.P.
$105,234 Back Bay Advisors, L.P.
(a) Before reduction pursuant to voluntary expense limitation. See note 4
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds L.P. ("New
England Funds"), the Fund's distributor, is a wholly owned subsidiary of NEIC
and performs certain accounting and administrative services for the Fund. The
Fund reimburses New England Funds for all or part of New England Funds'
expenses of providing these services which include the following: (i) expenses
for personnel performing bookkeeping, accounting, internal auditing and
financial reporting functions and related clerical functions relating to the
Fund, (ii) expenses for services required in connection with the preparation
of registration statements and prospectuses, shareholder reports and notices,
proxy solicitation material furnished to shareholders of the Fund or
regulatory authorities and reports and questionnaires for SEC compliance, and
(iii) registration, filing and other fees in connection with requirements of
regulatory authorities. For the year ended December 31, 1996 these expenses
amounted to $19,945 and are shown separately in the financial statements as
accounting and administrative.
C. SERVICE AND DISTRIBUTION FEES. Pursuant to Rule 12b-1 under the 1940 Act,
the Trust has adopted a Service Plan relating to the Fund's Class A shares
(the "Class A Plan") and a Service and Distribution Plan relating to the
Fund's Class B shares (the "Class B Plan").
Under the Class A Plan, the Fund pays New England Funds, L.P. ("New England
Funds") a monthly service fee at the annual rate of up to 0.25% of the average
daily net assets attributable to the Fund's Class A shares, as reimbursement
for expenses (including certain payments to securities dealers, who may be
affiliated with New England Funds) incurred by New England Funds in providing
personal services to investors in Class A shares and/or the maintenance of
shareholder accounts. For the year ended December 31, 1996, the Fund paid New
England Funds $84,706 in fees under the Class A Plan. If the expenses of New
England Funds that are otherwise reimbursable under the Class A Plan incurred
in any year exceed the amounts payable by the Fund under the Class A Plan, the
unreimbursed amount (together with unreimbursed amounts from prior years) may
be carried forward for reimbursement in future years in which the Class A Plan
remains in effect. The amount of unreimbursed expenses carried forward into
1997 is $179,456.
Under the Class B Plan, the Fund pays New England Funds a monthly service fee
at the annual rate of up to 0.25% of the average daily net assets attributable
to the Fund's Class B shares, as compensation for services provided and
expenses (including certain payments to securities dealers, who may be
affiliated with New England Funds) incurred by New England Funds in providing
personal services to investors in Class B shares and/or the maintenance of
shareholder accounts. For the year ended December 31, 1996, the Fund paid New
England Funds $15,850 in service fees under the Class B Plan.
Also under the Class B Plan, the Fund pays New England Funds a monthly
distribution fee at the annual rate of up to 0.75% of the average daily net
assets attributable to the Fund's Class B shares, as compensation for services
provided and expenses (including certain payments to securities dealers, who
may be affiliated with New England Funds) incurred by New England Funds in
connection with the marketing or sale of Class B shares. For the year ended
December 31, 1996, the Fund paid New England Funds $47,552 in distribution
fees under the Class B Plan.
Commissions (including contingent deferred sales charges) on Fund shares paid
to New England Funds by investors of shares of the Fund during the year ended
December 31, 1996 amounted to $118,453.
D. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder
servicing agent to the Fund. For the year ended December 31, 1996, the Fund
paid New England Funds $30,870 as compensation for its services in that
capacity.
E. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation
directly to its officers or trustees who are directors, officers, or employees
of NEFM, New England Funds, NEIC or their affiliates, other than registered
investment companies. Each other trustee is compensated by the Fund as
follows:
Annual Retainer $730
Meeting Fee $114/meeting
Committee Meeting Fee $68/meeting
Committee Chairman Retainer $18/year
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 had, had it been invested in the
Fund on the normal payment date.
4. EXPENSE LIMITATIONS. Effective September 1, 1996 until further notice to
the Fund, Back Bay Advisors and NEFM have voluntarily agreed to reduce
management fees in order to limit the Fund's expenses to an annual rate of
0.85% of the Fund's Class A average daily net assets and 1.60% of Class B
average daily net assets. Prior to September 1, 1996 Back Bay Advisors and
NEFM had voluntarily agreed to reduce management fees in order to limit the
Fund's expenses to an annual rate of 0.70% of the Fund's Class A average daily
net assets and, effective September 13, 1993, 1.45% of Class B average daily
net assets. As a result of the Fund's expenses exceeding the foregoing expense
limitations during the year ended December 31, 1996, Back Bay Advisors waived
its entire subadvisory fee of $105,234 and NEFM waived its entire advisory fee
of $105,235.
5. CONCENTRATION OF CREDIT. The Fund primarily invests in debt obligations
issued by the State of California and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Fund is
more susceptible to factors adversely affecting issuers of California
municipal securities than is a comparable municipal bond fund that is not so
concentrated. Uncertain economic and fiscal conditions may affect the ability
of issuers of California municipal securities to meet their financial
obligations.
6. CAPITAL SHARES. At December 31, 1996 there was an unlimited number of
shares of beneficial interest authorized, divided into two classes, Class A
and Class B capital stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
-------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- -------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold ........................... 788,727 $ 5,839,073 2,067,648 $15,581,682
Shares issued in connection with the
reinvestment of:
Distributions from net investment
income ............................ 125,283 929,591 122,617 929,169
------- ------------ --------- -----------
914,010 6,768,664 2,190,265 16,510,851
Shares repurchased .................... (922,790) (6,815,110) (1,769,674) (13,385,231)
------- ------------ --------- -----------
Net increase (decrease) ............... (8,780) $ (46,446) 420,591 $ 3,125,620
------- ------------ --------- -----------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
-------------------------- ----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- -------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold ........................... 93,955 $ 683,998 443,797 $ 3,344,406
Shares issued in connection with the
reinvestment of:
Distributions from net investment
income ............................ 14,354 106,386 17,906 135,371
------- ------------ --------- -----------
108,309 790,384 461,703 3,479,777
Shares repurchased .................... (180,341) (1,335,643) (204,258) (1,540,156)
------- ------------ --------- -----------
Net increase (decrease) ............... (72,032) $ (545,259) 257,445 $ 1,939,621
------- ------------ --------- -----------
Increase (decrease) derived from
capital shares transactions ......... (80,812) $ (591,705) 678,036 $ 5,065,241
======= ============ ========= ===========
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees of New England Funds Trust II and the Shareholders of
the NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
We have audited the accompanying statement of assets and liabilities,
including the schedule of portfolio investments, of New England Intermediate
Term Tax Free Fund of California as of December 31, 1996, and the related
statement of operations for the year then ended, and the statements of changes
in net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated herein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New England Intermediate Term Tax Free Fund of California as of December 31,
1996 the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 10, 1997
<PAGE>
--------------
(Logo) BULK RATE
NEW ENGLAND FUNDS U.S. POSTAGE
Where The Best Minds Meet(TM) PAID
BROCKTON, MA
PERMIT NO. 770
--------------
---------------------
399 Boylston Street
Boston, Massachusetts
02116
---------------------
- --------------------- ---------------------
[Logo] [Logo]
QUALITY QUALITY
TESTED SERVICE TESTED SERVICE
1995 1996
- --------------------- ---------------------
DALBAR DALBAR
HONORS COMMITMENT TO: HONORS COMMITMENT TO:
INVESTORS INVESTORS
- --------------------- ---------------------
CA56-1296
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