<PAGE>
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SEMIANNUAL REPORT AND PERFORMANCE UPDATE
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[LOGO]
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
New England
Money Market Funds
[GRAPHIC OMITTED]
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DECEMBER 31, 1996
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<PAGE>
FEBRUARY 1997
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[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 MONEY MARKET FUNDS
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AWARD WINNING SERVICE -- TWO YEARS RUNNING
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[graphic omitted]
For two years running we're proud to announce that DALBAR, an independent
evaluator of mutual fund service, has awarded New England Funds its Quality
Tested Service Seal for "providing the highest tier of service excellence in
the mutual fund industry." New England Funds is one of just three mutual fund
companies to earn this distinction in each of the last two years -- another
reason why we are becoming known as the mutual fund company Where The Best
Minds Meet(TM).
<PAGE>
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NEW ENGLAND MONEY MARKET FUNDS
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QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGERS
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[PHOTO OF SCOTT NICHOLSON, BACK BAY ADVISORS, L.P.]
Q. How did New England Money Market Funds perform during the second half of
1996?
The Funds continued to provide shareholders a stable cash reserve,
maintaining a constant share price of $1.00* while delivering competitive
money market yields. As was the case in the first half of the year,
short-term interest rates remained volatile as the markets debated the
strength of the economy and the outlook for inflation. Although short rates
ended the year moderately below their early July highs, the Funds' dividend
distributions remained fairly stable throughout the period. For the six-month
period ended December 31, 1996, the Money Market Series and the U.S.
Government Series generated total returns of 4.73% and 4.49%, respectively.
The Funds' seven-day effective yields on December 31, 1996, were 4.65% and
4.49% respectively.
Q. How did you manage the Funds during the period?
Although interest rates were volatile during the period, the actual indicator
of the direction of short-term interest rates -- the overnight Federal Funds
level -- remained unchanged. In this environment, we attempted to extend the
portfolio's average days to maturity when interest rates rose and,
conversely, to shorten that figure when rates reversed direction.
* Money market funds are neither insured nor guaranteed by the U.S.
government. These funds seek but cannot assure a stable net asset value of
$1.00.
Q. What is your investment outlook for the months ahead?
After a weak third quarter, Gross Domestic Product appears to have rebounded
significantly in the last three months of the year. Despite few signs of
rising inflation, fixed income investors continue to be concerned from time
to time about the economy overheating. At this juncture, however, we do not
foresee a significant sustained rise in short-term rates, and thus our recent
investment strategy remains in place.
Q. How did New England Tax Exempt Money Market Trust perform during the second
half of 1996?
[Photo of John Maloney, Back Bay Advisors, L.P.]
New England Tax Exempt Money Market Trust posted strong performance for the
six months ending December 31, 1996. The Fund's tax exempt seven-day yield on
December 31, 1996 was 3.52%, which matches a taxable yield of 5.83% for an
investor in the maximum federal income tax bracket of 39.6%. The seven-day
effective SEC yield of 3.58% was equivalent to a taxable yield of 5.93%, for
investors in the same tax bracket. The Fund continued to provide shareholders
a stable cash reserve, maintaining a constant share price of $1.00*.
* Money market funds are neither insured nor guaranteed by the U.S.
government. These funds seek but cannot assure a fixed share price of $1.00.
Some shareholders may be subject to the Alternative Minimum Tax (AMT).
Q. What was the investment backdrop for the Fund during the past six months?
Moderate economic growth and well-contained inflation provided the foundation
for a steady interest rate environment, which worked to the Fund's advantage.
This type of climate provides a favorable setting for fixed-income
investments in general, but supply and demand characteristics tend to have a
greater impact on tax exempt money market performance than on the performance
of other fixed-income funds.
Seasonal factors influence the market's supply. Issuance of new securities
typically peaks in June and July, forcing tax exempt money market rates
higher. In December and January, these rates often rise again for two
reasons: Supply increases and sellers try to reduce their inventories before
year-end by raising rates to attract buyers.
Q. How did these factors affect your strategy?
We sought to maximize the Fund's return by capitalizing on these seasonal
occurrences. Going into June, we shortened the Fund's average maturity to 19
days and then extended it to 62 days by the end of July. Specifically, we
invested in one-year notes while interest rates rose during these months.
These are among the longest maturities in which the portfolio is permitted to
invest. Instruments with longer maturities helped the Fund capture higher
yields for the greatest length of time, while still maintaining its
flexibility.
In December, we increased the Fund's holdings in floating rate notes --
specifically, those with yields that adjust daily or weekly. The rates on
these issues rose in comparison to alternative investments, again because of
seasonal factors. In our opinion, they offered attractive relative value.
Q. What's your outlook for the months ahead?
We are cautiously optimistic as we head into 1997. We expect the economy will
continue to grow at a moderate pace and inflation to stay under control.
While we are watchful for signs of inflation, we do not anticipate a
significant rise and look for interest rates to remain relatively stable.
We will continue to seek opportunity to maximize your Fund's tax-free yield
while investing only in high quality short-term municipal securities. New
England Tax Exempt Money Market Trust is managed in an effort to provide
shareholders a secure and liquid anchor to a well-rounded investment
portfolio and a competitive level of income that is free from federal tax.
<PAGE>
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NEW ENGLAND MONEY MARKET FUNDS
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AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 12/31/96*
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6-MONTH 1-YEAR 5-YEAR
(CLASS A&B) (CLASS A&B) (CLASS A)
NEW ENGLAND CASH MANAGEMENT TRUST-- 4.73% 4.70% 3.90%
MONEY MARKET SERIES
NEW ENGLAND CASH MANAGEMENT TRUST-- 4.49 4.52 3.80
U.S. GOVERNMENT SERIES
NEW ENGLAND TAX EXEMPT 3.17 3.17 2.76
MONEY MARKET TRUST
* 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. Yields will fluctuate
with changes in market conditions. The Trust's annualized yields for Class A
and B for the 7-day period ended December 31, 1996 were 4.65% (Money Market
Series), 4.49% (U.S. Government Series) and 3.52% (Tax Exempt Money Market
Trust).
<PAGE>
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CASH MANAGEMENT TRUST -- MONEY MARKET SERIES
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Investments as of December 31, 1996
(Unaudited)
INVESTMENTS--99.5% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE
AMOUNT DESCRIPTION VALUE (a)
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<C> <S> <C>
BANK NOTE--1.5%
$ 10,000,000 First Union National Bank of North Carolina 4.89% 1/02/97 (b) $ 10,000,000
------------
Total Bank Note (Cost $10,000,000) ......................... 10,000,000
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BANKERS ACCEPTANCE--1.5%
10,000,000 Dai-Ichi Kangyo Bank, Ltd. 5.660%, 2/18/97 ................. 9,924,533
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Total Bankers Acceptance (Cost $9,924,533) ................. 9,924,533
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CERTIFICATES OF DEPOSIT--11.3%
5,000,000 Sumitomo Bank, Ltd. New York 5.640%, 1/06/97 ............... 4,999,884
4,000,000 Bank of Montreal Chicago 5.420%, 1/10/97 ................... 3,999,364
5,000,000 Commerzbank AG New York 5.470%, 1/10/97 .................... 5,000,012
10,000,000 Sumitomo Bank, Ltd. New York 5.670%, 1/13/97 ............... 9,999,997
5,000,000 Deutsche Bank AG New York 5.620%, 1/15/97 .................. 5,000,066
6,000,000 Canadian Imperial 5.390%, 2/03/97 .......................... 5,999,766
5,000,000 Deutsche Bank AG New York 5.570%, 2/03/97 .................. 4,999,394
5,000,000 Sumitomo Bank, Ltd. New York 5.580%, 2/10/97 ............... 4,999,025
5,000,000 Swiss Bank New York 5.300%, 3/04/97 ........................ 4,996,274
7,000,000 ABN Amro 5.500%, 4/15/97 ................................... 6,999,983
5,000,000 Commerzbank AG New York 5.660%, 4/24/97 .................... 4,998,744
7,000,000 Societe Generale New York 5.730%, 10/15/97 ................. 7,007,459
7,000,000 Deutsche Bank AG New York 5.550%, 11/10/97 ................. 6,996,921
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Total Certificates Of Deposit (Cost $75,996,889) ........... 75,996,889
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CERTIFICATES OF DEPOSIT (EURODOLLARS)--5.7%
10,000,000 Sanwa Bank 5.490%, 1/21/97 ................................. 9,997,858
10,000,000 National Westminster Bank PLC 5.395%, 4/02/97 .............. 9,999,197
8,000,000 Commerzbank AG London 5.540%, 4/04/97 ...................... 7,996,375
10,000,000 Deutsche Bank 6.065%, 9/12/97 .............................. 10,031,781
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Total Certificates Of Deposit (Eurodollars) (Cost $38,025,211) 38,025,211
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COMMERCIAL PAPER--81.0%
AIRLINES--0.7%
5,000,000 International Lease Finance Corp. 5.330%, 2/03/97 .......... 4,975,571
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AUTOMOTIVE & RELATED--9.3%
5,000,000 General Motors Acceptance Corp. 5.650%, 1/02/97 ............ 4,999,215
2,000,000 General Motors Acceptance Corp. 5.830%, 1/07/97 ............ 1,998,057
5,000,000 General Motors Acceptance Corp. 5.340%, 1/16/97 ............ 4,988,875
5,000,000 American Honda Finance 5.700%, 1/23/97 ..................... 4,982,583
4,500,000 General Motors Acceptance Corp. 5.400%, 1/27/97 ............ 4,482,645
5,000,000 Ford Motor Credit Co. 5.520%, 1/28/97 ...................... 4,979,300
3,500,000 American Honda Finance 5.700%, 1/30/97 ..................... 3,483,929
6,000,000 General Motors Acceptance Corp. 5.340%, 1/30/97 ............ 5,974,190
5,000,000 General Motors Acceptance Corp. 5.340%, 1/31/97 ............ 4,977,750
5,000,000 General Motors Acceptance Corp. 5.380%, 2/06/97 ............ 4,973,100
5,000,000 Ford Motor Credit Co. 5.310%, 2/27/97 ...................... 4,957,963
5,000,000 Ford Motor Credit Co. 5.340%, 3/28/97 ...................... 4,936,217
7,000,000 Ford Motor Credit Co. 5.280%, 8/27/97 ...................... 6,755,653
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62,489,477
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BANKS--20.9%
10,000,000 UBS Finance Delaware, Inc. 8.000%, 1/02/97 ................. 9,997,778
10,000,000 Barclays Bank PLC 5.440%, 1/03/97 .......................... 9,996,978
5,000,000 BNP Canada 5.400%, 1/06/97 ................................. 4,996,250
3,500,000 BNP Canada 5.450%, 1/09/97 ................................. 3,495,761
7,000,000 Societe Generale Canada 5.370%, 1/22/97 .................... 6,978,072
4,000,000 BNP Canada 5.620%, 1/31/97 ................................. 3,981,267
5,000,000 Norwest Corp. 5.300%, 2/07/97 .............................. 4,972,764
9,650,000 Svenska Handelsbanken, Inc. 5.340%, 2/12/97 ................ 9,589,880
5,000,000 Commerzbank AG New York 5.400%, 3/03/97 .................... 4,954,250
13,000,000 Societe Generale Canada 5.420%, 3/05/97 .................... 12,876,695
4,000,000 BNP Canada 5.440%, 3/18/97 ................................. 3,954,062
4,700,000 Svenska Handelsbanken 5.450%, 3/24/97 ...................... 4,641,655
10,000,000 National Westminster Bank PLC 5.420%, 3/26/97 .............. 9,873,533
5,000,000 Svenska Handelsbanken, Inc. 5.330%, 3/26/97 ................ 4,937,817
10,000,000 National Westminster Bank PLC 5.460%, 4/01/97 .............. 9,863,500
3,000,000 Societe Generale Canada 5.400%, 4/07/97 .................... 2,956,800
5,000,000 Svenska Handelsbanken 5.330%, 4/30/97 ...................... 4,911,907
8,000,000 BNP Canada 5.320%, 5/01/97 ................................. 7,858,133
5,000,000 ABN Amro 5.420%, 5/30/97 ................................... 4,887,836
8,000,000 BNP Canada 5.350%, 6/10/97 ................................. 7,809,778
7,000,000 ABN Amro Bank NV New York 5.410%, 9/19/97 .................. 6,725,444
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140,260,160
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DIVERSIFIED CONGLOMERATES--2.5%
3,000,000 USAA Capital Corp. 5.320%, 2/03/97 ......................... 2,985,370
7,000,000 USAA Capital Corp. 5.450%, 2/21/97 ......................... 6,945,954
6,500,000 USAA Capital Corp. 5.320%, 2/25/97 ......................... 6,447,170
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16,378,494
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DRUGS--1.6%
6,000,000 American Home Products Corp. 5.330%, 1/28/97 ............... 5,976,015
5,000,000 American Home Products Corp. 5.320%, 2/10/97 ............... 4,970,445
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10,946,460
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FINANCE--22.1%
5,000,000 Household Finance Corp. 5.430%, 1/07/97 .................... 4,995,475
5,000,000 Heller Financial, Inc. 5.400%, 1/09/97 ..................... 4,994,000
6,000,000 General Electric Capital Corp. 5.390%, 1/10/97 ............. 5,991,915
8,000,000 Transamerica Financial Group 5.410%, 1/14/97 ............... 7,984,371
5,000,000 General Electric Capital Corp. 5.580%, 1/16/97 ............. 4,988,375
5,000,000 Avco Financial Services, Inc. 5.330%, 1/17/97 .............. 4,988,156
10,000,000 Barclays Bank PLC New York 5.620%, 1/21/97 ................. 10,000,040
5,000,000 Household Finance Corp. 5.370%, 1/21/97 .................... 4,985,083
6,525,000 Transamerica Financial Group 5.550%, 1/22/97 ............... 6,503,875
5,000,000 Heller Financial, Inc. 5.430%, 1/24/97 ..................... 4,982,654
7,000,000 Household Finance Corp. 5.320%, 1/24/97 .................... 6,976,208
5,000,000 Household Finance Corp. 5.320%, 1/27/97 .................... 4,980,789
6,000,000 Heller Financial, Inc. 5.530%, 1/29/97 ..................... 5,974,193
5,000,000 Household Finance Corp. 5.350%, 2/06/97 .................... 4,973,250
5,000,000 General Electric Capital Corp. 5.600%, 2/10/97 ............. 4,968,889
5,000,000 Beneficial Corporation 5.470%, 2/24/97 ..................... 4,958,975
4,000,000 General Electric Capital Corp. 5.600%, 2/24/97 ............. 3,966,400
5,000,000 Avco Financial Services, Inc. 5.310%, 2/28/97 .............. 4,957,225
8,000,000 Heller Financial, Inc. 5.440%, 2/28/97 ..................... 7,929,885
8,000,000 Avco Financial Services, Inc. 5.290%, 3/24/97 .............. 7,903,604
5,000,000 Beneficial Corporation 5.300%, 3/31/97 ..................... 4,934,486
5,000,000 American Express Credit Corp. 5.280%, 4/11/97 .............. 4,926,667
8,000,000 American Express Credit Corp. 5.280%, 6/16/97 .............. 7,805,227
7,000,000 General Electric Capital Corp. 5.360%, 6/16/97 ............. 6,826,991
6,000,000 American Express Credit Corp. 5.280%, 6/24/97 .............. 5,846,880
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148,343,613
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FOOD-AGRIBUSINESS--1.5%
10,000,000 Canadian Wheat Board 5.430%, 3/13/97 ....................... 9,892,907
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GAS EXPLORATION--0.9%
6,000,000 BP America, Inc. 6.750%, 1/02/97 ........................... 5,998,875
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INSURANCE--1.5%
5,000,000 Prudential Funding Corp. 5.430%, 1/15/97 ................... 4,989,441
5,000,000 American General Corp. 5.410%, 1/17/97 ..................... 4,987,978
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9,977,419
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SECURITIES--15.1%
5,000,000 Merrill Lynch & Co. 5.600%, 1/06/97 ........................ 4,996,111
5,000,000 Lehman Brothers Holdings, Inc. 5.500%, 1/13/97 ............. 4,990,833
7,000,000 Lehman Brothers Holdings, Inc. 5.500%, 1/14/97 ............. 6,986,097
7,000,000 Merrill Lynch & Co. 5.440%, 1/23/97 ........................ 6,976,729
5,000,000 Merrill Lynch & Co. 5.450%, 1/23/97 ........................ 4,983,347
6,000,000 Merrill Lynch & Co. 5.440%, 1/24/97 ........................ 5,979,147
5,000,000 Lehman Brothers Holdings, Inc. 5.700%, 1/27/97 ............. 4,979,417
4,500,000 Merrill Lynch & Co. 5.350%, 1/29/97 ........................ 4,481,275
5,000,000 Lehman Brothers Holdings, Inc. 5.700%, 1/30/97 ............. 4,977,042
10,000,000 Morgan Stanley Group, Inc. 5.320%, 2/05/97 ................. 9,948,278
10,000,000 Goldman Sachs Group 5.420%, 2/07/97 ........................ 9,944,294
5,000,000 Goldman Sachs Group 5.330%, 2/14/97 ........................ 4,967,428
5,383,000 Lehman Brothers Holdings, Inc. 5.700%, 2/14/97 ............. 5,345,498
5,000,000 Merrill Lynch & Co. 5.300%, 3/19/97 ........................ 4,943,319
7,000,000 Goldman Sachs Group 5.300%, 5/05/97 ........................ 6,872,211
10,000,000 Goldman Sachs Group 5.320%, 7/07/97 ........................ 9,723,656
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101,094,682
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TRUCKING & FREIGHT FORWARDING--1.5%
5,000,000 Paccar Financial Corp. 5.430%, 2/24/97 ..................... 4,959,275
5,000,000 Paccar Financial Corp. 5.400%, 6/13/97 ..................... 4,877,750
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9,837,025
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UTILITIES--1.9%
5,500,000 Bell Atlantic Financial Services 5.850%, 1/08/97 ........... 5,493,744
7,000,000 Southern California Edison Co. 5.330%, 1/13/97 ............. 6,987,563
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12,481,307
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Total Commercial Paper (Cost $532,675,990) ................. 532,675,990
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Total Investments-99.5% (Cost $666,622,623) (b) ............. 666,622,623
Other assets less liabilities .............................. 3,477,677
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Total Net Assets-100% ....................................... $670,100,300
============
(a) See Note 1a.
(b) The aggregate cost for federal income tax purposes was $666,622,623.
</TABLE>
Percentage of Net Assets invested in obligations of foreign banks or foreign
branches of U.S. Banks at December 31, 1996:
Canada 1.49% Japan 5.96%
France 9.24% Netherlands 2.78%
Germany 7.46% Sweden 3.59%
Great Britain 7.24% Switzerland 2.24%
See accompanying notes to financial statements.
<PAGE>
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CASH MANAGEMENT TRUST -- U.S. GOVERNMENT SERIES
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Investments as of December 31, 1996
(Unaudited)
INVESTMENTS--100.6% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE
AMOUNT DESCRIPTION VALUE (A)
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<C> <S> <C>
U.S. GOVERNMENT--52.2%
$ 9,000,000 United States Treasury Bills 5.265%, 1/09/97 ............... $ 8,989,470
2,500,000 United States Treasury Bills 4.980%, 1/16/97 ............... 2,494,813
5,000,000 United States Treasury Bills 5.295%, 3/20/97 ............... 4,942,637
3,000,000 United States Treasury Bills 5.445%, 5/29/97 ............... 2,932,845
4,000,000 United States Treasury Bills 5.090%, 7/24/97 ............... 3,884,627
3,000,000 United States Treasury Bills 5.145%, 10/16/97 .............. 2,876,520
4,000,000 United States Treasury Bills 5.140%, 11/13/97 .............. 3,819,529
3,000,000 United States Treasury Bills 5.190%, 11/13/97 .............. 2,863,330
-----------
32,803,771
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REPURCHASE AGREEMENTS--48.4%
15,400,000 Repurchase agreement with Goldman Sachs dated 12/31/96 at
6.450% to be repurchased at $15,405,518 on 1/02/97.
Collateralized by $14,120,000 U.S. Treasury Bonds 4.625%
due 11/15/22 valued at $15,728,000 ....................... 15,400,000
15,000,000 Repurchase agreement with Merrill Lynch dated 12/31/96 at
6.400% to be repurchased at $15,005,333 on 1/02/97.
Collateralized by $15,075,000 U.S. Treasury Note 5.875% due
3/31/99 valued at $15,308,000 ............................ 15,000,000
-----------
30,400,000
-----------
Total Investments--100.6% (Identified Cost $63,203,771) (b) 63,203,771
Other assets less liabilities .............................. (360,131)
-----------
Total Net Assets--100% ...................................... $62,843,640
===========
(a) See Note 1a.
(b) The aggregate cost for federal income tax purposes was $63,203,771.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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TAX EXEMPT MONEY MARKET TRUST
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Investments as of December 31, 1996
(Unaudited)
TAX EXEMPT OBLIGATIONS -- 99.2% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
FACE
AMOUNT DESCRIPTION VALUE (a)
- ---------------------------------------------------------------------------------------------
<C> <S> <C>
ALABAMA--1.1%
$ 800,000 Athens Industrial Development Board Revenue, Floating Rate
4.300% (b) ............................................... $ 800,000
-----------
CALIFORNIA--8.1%
1,200,000 San Bernadino Multifamily, Floating Rate 4.250% (b) ........ 1,200,000
2,000,000 California State, 4.500%, 6/30/97 .......................... 2,005,027
2,500,000 Contra Costa Community College, 4.500%, 6/30/97 ............ 2,508,308
-----------
5,713,335
-----------
DISTRICT OF COLUMBIA--4.4%
3,100,000 District of Columbia, Floating Rate 5.100% (b) ............. 3,100,000
-----------
FLORIDA--13.1%
3,100,000 Broward County Multi Family Housing, Floating Rate 4.300% (b) 3,100,000
2,500,000 Dade County Special Obligation, Floating Rate 4.450% (b) ... 2,500,000
500,000 Alachua County Health Facilities Authority, 3.900%, 1/06/97 500,000
500,000 Florida Municipal Power Agency, 3.700%, 1/08/97 ............ 500,000
600,000 Alachua County Health Facilities Authority, 3.600%, 2/10/97 600,000
600,000 Alachua County Health Facilities Authority, 3.700%, 3/07/97 600,000
500,000 Alachua County Health Facilities Authority, 3.550%, 4/04/97 500,000
1,000,000 Alachua County Health Facilities Authority, 3.600%, 4/07/97 1,000,000
-----------
9,300,000
-----------
HAWAII--8.2%
2,410,000 Hawaii State Department of Budget & Finance, Floating Rate
4.750% (b) ............................................... 2,410,000
3,400,000 Hawaii State Housing Finance & Development Corp., Floating
Rate 4.200% (b) .......................................... 3,400,000
-----------
5,810,000
-----------
ILLINOIS--13.4%
600,000 Elmhurst Revenue, Floating Rate 4.300% (b) ................. 600,000
3,000,000 Illinois Health Facilities Authority Revenue, Floating Rate
4.750% (b) ............................................... 3,000,000
1,000,000 Illinois Health Facilities Authority Revenue Series D,
Floating Rate 4.150% (b) ................................. 1,000,000
1,900,000 Jackson/Union Counties, Floating Rate 4.150% (b) ........... 1,900,000
3,000,000 Saint Charles Industrial Development Revenue, Floating Rate
4.150% (b) ............................................... 3,000,000
-----------
9,500,000
-----------
INDIANA--5.4%
1,300,000 Fort Wayne Hospital Authority Revenue, Floating Rate 4.150%(b) 1,300,000
1,500,000 Fort Wayne Hospital Authority Revenue Series B, Floating Rate
4.150% (b) ............................................... 1,500,000
1,035,000 Rockport Pollution Control Revenue, Floating Rate 4.150% (b) 1,035,000
-----------
3,835,000
-----------
IOWA--7.6%
3,000,000 Iowa School Corps Warrant Certificates, 4.750%, 6/27/97 .... 3,011,187
2,365,000 Iowa Municipalities Workers Bond Anticipation Notes, 4.100%,
7/01/97 .................................................. 2,365,000
-----------
5,376,187
-----------
KENTUCKY--1.4%
1,000,000 Mayfield Multi City Lease, Floating Rate 4.300% (b) ........ 1,000,000
-----------
LOUISIANA--4.4%
3,100,000 Louisiana Public Facilities Hospital Authority, Floating Rate
4.450% (b) ............................................... 3,100,000
-----------
MARYLAND--3.5%
2,500,000 Maryland State Health & Higher Educational Facilities,
Floating Rate 4.000% (b) ................................. 2,500,000
-----------
MINNESOTA--6.6%
1,770,000 Mendota Heights, Floating Rate 4.350% (b) .................. 1,770,000
1,185,000 Mendota Heights Housing Mortgage Revenue, Floating Rate
4.350% (b) ............................................... 1,185,000
1,700,000 St. Paul Housing & Redevelopment Authority, Floating Rate
4.350% (b) ............................................... 1,700,000
-----------
4,655,000
-----------
MISSISSIPI--1.5%
1,015,000 Tupelo Mississippi Water & Sewer Revenue, 6.250%, 8/01/97 .. 1,029,847
-----------
MONTANA--1.7%
1,200,000 Forsyth Pollution Control Revenue, Floating Rate 4.700% (b) 1,200,000
-----------
NEW YORK--0.9%
600,000 New York City, Floating Rate 4.500% (b) .................... 600,000
-----------
OHIO--3.5%
2,500,000 Montgomery County Hospital Revenue, Floating Rate 3.550% (b) 2,500,000
-----------
OKLAHOMA--0.8%
570,000 Norman Regional Hospital Authority Hospital, 3.850%, 9/01/97 570,000
-----------
PENNSYLVANIA--4.2%
3,000,000 Emmaus General Authority Revenue, Floating Rate 4.150% (b) . 3,000,000
-----------
SOUTH CAROLINA--0.8%
600,000 Charleston County Industrial Revenue, Floating Rate 5.000%(b) 600,000
-----------
TEXAS--4.7%
1,325,000 Nueces County Health Facilities, Floating Rate 4.150% (b) .. 1,325,000
2,000,000 Texas State, 4.750%, 8/29/97 ............................... 2,010,114
-----------
3,335,114
-----------
WASHINGTON--2.1%
1,500,000 Snohomish County Public Utilities, 4.450%, 1/01/97 ......... 1,500,000
-----------
WEST VIRGINIA--0.4%
295,000 West Virginia State, 5.000%, 11/01/97 ...................... 297,616
-----------
WISCONSIN--1.4%
1,000,000 Wisconsin State Health & Educational Facilities, 4.250%,
6/01/97 .................................................. 1,001,602
-----------
Total Investments--99.2% (Cost $70,323,701) (c) ............. $70,323,701
Other assets less liabilities ............................... 547,464
-----------
Total Net Assets-100% ....................................... $70,871,165
===========
(a) See Note 1a.
(b) Floating rate notes are instruments whose interest rates vary with changes in a designated base
rate (such as the prime interest rate) 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 $70,323,701.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
------------------------------------- TAX EXEMPT
MONEY MARKET U.S. GOVERNMENT MONEY MARKET
SERIES SERIES TRUST
---------------- ------------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments at value
Securities .............................. $666,622,623 $32,803,771 $70,323,701
Repurchase agreements ................... -- 30,400,000 --
------------ ----------- -----------
Total investments ......................... 666,622,623 63,203,771 70,323,701
Cash ...................................... 839,942 48,430 39,992
Receivable for:
Shares of the Trust sold ................ 8,012,418 82,346 314,395
Accrued Interest ........................ 1,957,081 5,425 497,684
Prepaid registration ...................... 2,000 2,000 7,000
------------ ----------- -----------
677,434,064 63,341,972 71,182,772
------------ ----------- -----------
LIABILITIES
Payable for:
Shares of the Trust redeemed ............ 6,440,242 394,016 184,686
Dividends declared ...................... 342,909 31,992 27,101
Accrued expenses:
Management fees ......................... 237,784 22,294 --
Deferred trustees' fees ................. 32,538 29,931 34,729
Accounting and administrative fees ...... 7,773 -- 1,944
Other expenses .......................... 272,518 20,099 63,147
------------ ----------- -----------
7,333,764 498,332 311,607
------------ ----------- -----------
NET ASSETS .................................. $670,100,300 $62,843,640 $70,871,165
============ =========== ===========
Net Assets consist of:
Capital paid in Class A shares .......... $660,424,931 $61,819,215 $70,407,169
Capital paid in Class B shares .......... 9,560,463 963,484 463,996
Undistributed realized gain ............. 114,906 60,941 --
------------ ----------- -----------
NET ASSETS .................................. $670,100,300 $62,843,640 $70,871,165
============ =========== ===========
Shares of beneficial interest outstanding,
no par value
Class A shares ............................ 660,424,770 61,819,215 70,407,168
Class B shares ............................ 9,560,463 963,484 463,996
------------ ----------- -----------
Shares of beneficial interest outstanding ... 669,985,233 62,782,699 70,871,164
============ =========== ===========
Net asset value per share Class A and Class
B shares* $1.00 $1.00 $1.00
===== ===== =====
Cost of investments ......................... $666,622,623 $63,203,771 $70,323,701
============ =========== ===========
* Shares of the Series are sold and redeemed at net asset value (Net assets/Shares of beneficial
interest outstanding).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
Year Ended December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
------------------------------------- TAX EXEMPT
MONEY MARKET U.S. GOVERNMENT MONEY MARKET
SERIES SERIES TRUST
---------------- ------------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest .................................. $18,612,793 $1,470,587 $1,239,370
----------- ---------- ----------
Expenses
Management fees ......................... $ 1,413,071 $ 117,372 $ 135,361
Trustees' fees .......................... 12,143 8,424 8,345
Accounting and Administrative ........... 80,338 21,804 1,656
Custodian ............................... 57,415 11,525 17,753
Transfer agent .......................... 1,291,119 56,401 60,576
Audit and tax services .................. 13,500 13,500 14,500
Legal ................................... 12,863 12,171 12,863
Printing ................................ 116,292 5,572 5,034
Registration ............................ 32,241 33,346 23,864
Insurance ............................... 4,169 375 439
Miscellaneous ........................... 65,389 5,653 2,554
----------- ---------- ----------
Total Expenses .......................... 3,098,540 286,143 282,945
Less -- waiver of fee by investment adviser
or distributor -- (21,804) (92,589)
----------- ---------- ----------
REALIZED LOSS ON INVESTMENTS - NET .......... (158) 0 0
----------- ---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .. $15,514,095 $1,206,248 $1,049,014
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
CASH MANAGEMENT TRUST
------------------------------------------------------------------- TAX EXEMPT
MONEY MARKET SERIES U.S. GOVERNMENT MONEY MARKET TRUST
---------------------------------- ------------------------------- -----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 1996 1996 1996 1996 1996
----------------- -------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income .... $ 32,127,993 $ 15,514,253 $ 2,750,073 $ 1,206,248 $ 2,186,497 $ 1,049,014
Net realized gain (loss)
from investments ....... 118,639 (158) 60,941 0 (44) 0
--------------- ------------- ------------- ------------ ------------- ------------
Increase in net assets
from operations ........ 32,246,632 15,514,095 2,811,014 1,206,248 2,186,453 1,049,014
--------------- ------------- ------------- ------------ ------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .. (32,127,993) (15,514,092) (2,750,073) (1,206,248) (2,186,453) (1,049,013)
Realized loss on
investments .......... (3,574) 0 0 0 0 0
--------------- ------------- ------------- ------------ ------------- ------------
(32,131,567) (15,514,092) (2,750,073) (1,206,248) (2,186,453) (1,049,013)
--------------- ------------- ------------- ------------ ------------- ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from the sale of
shares ................. 1,049,919,978 526,902,746 96,446,537 52,011,200 96,882,833 46,948,771
Net asset value of shares
issued in connection
with the reinvestment of
dividends from net
investment income ...... 31,392,637 14,818,593 2,691,937 1,148,763 2,152,160 1,007,591
Cost of shares redeemed .. (1,067,615,550) (535,241,628) (106,394,965) (42,863,266) (101,935,023) (41,982,481)
--------------- ------------- ------------- ------------ ------------- ------------
Increase (decrease) in net
assets derived from
capital share
transactions ........... 13,697,065 6,479,711 (7,256,491) 10,296,697 (2,900,030) 5,973,881
--------------- ------------- ------------- ------------ ------------- ------------
Total increase (decrease)
in net assets .......... 13,812,130 6,479,714 (7,195,550) 10,296,697 (2,900,030) 5,973,882
NET ASSETS
Beginning of the period .. 649,808,456 663,620,586 59,742,493 52,546,943 67,797,313 64,897,283
--------------- ------------- ------------- ------------ ------------- ------------
End of the period ........ $ 663,620,586 $ 670,100,300 $ 52,546,943 $ 62,843,640 $ 64,897,283 $ 70,871,165
=============== ============= ============= ============ ============= ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM INVESTMENT OPERATIONS
----------------------------------
NET NET
ASSET REALIZED AND TOTAL
VALUE AT NET UNREALIZED FROM
BEGINNING INVESTMENT GAIN ON INVESTMENT
OF YEAR INCOME INVESTMENTS OPERATIONS
------------- -------------- ------------------ --------------
<S> <C> <C> <C> <C>
CASH MANAGEMENT TRUST--MONEY MARKET SERIES
Year Ended June 30,
1992 .............................. $1.00 $0.0450 -- $0.0450
1993 .............................. 1.00 0.0275 -- 0.0275
1994 .............................. 1.00 0.0264 -- 0.0264
1995 .............................. 1.00 0.0469 -- 0.0469
1996 .............................. 1.00 0.0482 $0.0002 0.0484
Six Months Ended December 31, 1996 1.00 0.0226 -- 0.0226
CASH MANAGEMENT TRUST--U.S. GOVERNMENT SERIES
Year Ended June 30,
1992 .............................. 1.00 0.0449 -- 0.0449
1993 .............................. 1.00 0.0271 -- 0.0271
1994 .............................. 1.00 0.0257 -- 0.0257
1995 .............................. 1.00 0.0454 -- 0.0454
1996 .............................. 1.00 0.0465 0.001 0.0475
Six Months Ended December 31, 1996 1.00 0.0215 -- 0.0215
TAX EXEMPT MONEY MARKET TRUST
Year Ended June 30,
1992 .............................. 1.00 0.0337 -- 0.0337
1993 .............................. 1.00 0.0214 -- 0.0214
1994 .............................. 1.00 0.0208 -- 0.0208
1995 .............................. 1.00 0.0314 -- 0.0314
1996 .............................. 1.00 0.0327 -- 0.0327
Six Months Ended December 31, 1996 1.00 0.0152 -- 0.0152
(a) Including net realized gain on investments.
(b) In the case of the Tax Exempt Money Market Trust 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 0.76%, 0.83%, 0.89%,
0.85% and 0.90% for the years ended June 30, 1992, 1993, 1994, 1995, 1996 and 0.84% for the
six months ended December 31, 1996.
(c) Computed on an annualized basis.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- continued
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------
LESS DISTRIBUTIONS RATIO OF RATIO OF
- ------------------------------------------- NET NET OPERATING NET
DIVIDENDS ASSET ASSETS EXPENSES TO INCOME TO
FROM NET VALUE AT TOTAL END OF AVERAGE AVERAGE
INVESTMENT TOTAL END OF RETURN YEAR NET ASSETS NET ASSETS
INCOME DISTRIBUTIONS YEAR (%) (000) (%)(B) (%)
- ------------------------ ----------------- ------------ ---------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$(0.0450) $(0.0450) $1.00 4.58 $925,077 0.73 4.56
(0.0275) (0.0275) 1.00 2.84 775,914 0.79 2.78
(0.0264) (0.0264) 1.00 2.68 699,369 0.84 2.65
(0.0469) (0.0469) 1.00 4.79 649,808 0.88 4.67
(0.0484)(a) (0.0484) 1.00 4.95 663,621 0.90 4.85
(0.0226) (0.0226) 1.00 4.73(c) 670,100 0.92(c) 4.67(c)
(0.0449) (0.0449) 1.00 4.57 79,218 0.73 4.50
(0.0271) (0.0271) 1.00 2.80 64,595 0.78 2.73
(0.0257) (0.0257) 1.00 2.60 58,963 0.84 2.54
(0.0454) (0.0454) 1.00 4.64 59,742 0.92 4.53
(0.0475) (0.0475) 1.00 4.86 52,547 0.93 4.80
(0.0215) (0.0215) 1.00 4.49(c) 62,844 0.96(c) 4.63(c)
(0.0337) (0.0337) 1.00 3.41 65,753 0.56 3.38
(0.0214) (0.0214) 1.00 2.20 56,555 0.56 2.14
(0.0208) (0.0208) 1.00 2.10 66,620 0.56 2.08
(0.0314) (0.0314) 1.00 3.18 67,797 0.56 3.15
(0.0327) (0.0327) 1.00 3.32 64,897 0.56 3.29
(0.0152) (0.0152) 1.00 3.17(c) 70,781 0.56(c) 3.13(c)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
December 31, 1996
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES. New England Cash Management Trust and New
England Tax Exempt Money Market Trust (the "Trusts") are registered under the
Investment Company Act of 1940, as amended, as diversified, open-end
investment companies.
NEW ENGLAND CASH MANAGEMENT TRUST -- The Trust's Agreement and Declaration of
Trust permits the issuance of an unlimited number of shares of beneficial
interest, no par value, in separate Series, with shares of each Series
representing interests in a separate portfolio of assets. Effective September
13, 1993, each Series began offering two classes of shares, Class A and Class
B, in order to enable investors in either class of the New England Stock or
Bond Funds to invest in money market shares. Class A and B shares are
identical except that Class B shares may be subject to a contingent deferred
sales charge upon redemption if the shares were acquired by exchange of Class
B shares of a stock or bond fund. Each Series is separately managed and has
its own objectives and policies. The Trust is comprised of the Money Market
Series and the U.S. Government Series.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- The Trust's Agreement and
Declaration of Trust permits the issuance of an unlimited number of shares of
beneficial interest, no par value. Effective September 13, 1993, the Trust
began offering two classes of shares, Class A and Class B, in order to enable
investors in either class of the New England Stock or Bond Funds to invest in
money market shares. Class A and B shares are identical except that Class B
shares may be subject to a contingent deferred sales charge upon redemption if
the shares were acquired by exchange of Class B shares of a stock or bond
fund.
The following is a summary of significant accounting policies followed by the
Trusts in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
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 amortizing any
discount or premium on a straight-line basis.
B. REPURCHASE AGREEMENTS. The Trusts, through their custodian, receive
delivery of the underlying securities collateralizing repurchase agreements.
It is the Trusts' policy that the market value of the collateral be at least
equal to 100% of the repurchase price. Back Bay Advisors, L.P. ("Back Bay
Advisors") is responsible for determining that the value of the collateral is
at all times at least equal to the repurchase price. In connection with
transactions in repurchase agreements, if the seller defaults and the value of
the collateral declines or if the seller enters an insolvency proceeding,
realization of the collateral by the Trusts may be delayed or limited.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed) and interest income is recorded on the accrual basis. In determining
the net gain or loss on securities sold, the cost of securities is determined
on the identified cost basis.
D. WHEN-ISSUED SECURITIES. Delivery and payment for securities purchased on a
when-issued or delayed delivery basis can take place one month or more after
the date of the transaction. The securities so purchased are subject to market
fluctuation during this period. At December 31, 1996, there were no when
issued securities.
E. FEDERAL INCOME TAXES. Each Series of the Cash Management Trust and the Tax
Exempt Money Market Trust intends to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies, and to distribute
to its shareholders all of its taxable and tax exempt income. Accordingly, no
provision for federal income tax has been made.
The Tax Exempt Money Market Trust has designated 100% of dividends paid from
net investment income during the fiscal year as tax exempt for federal income
tax purposes.
The Form 1099 you receive in January 1997 shows the tax status of all
distributions paid to your account in calendar year 1996.
F. DIVIDENDS TO SHAREHOLDERS. Dividends are declared daily to shareholders of
record at the time and are paid monthly. Long term gain distributions, if any,
will be made annually.
G. OTHER. Each of the Trusts invests primarily in a portfolio of money market
instruments maturing in 397 days or less whose ratings are within the two
highest ratings categories of a nationally recognized rating agency or, if not
rated, are believed to be of comparable quality. The ability of the issuers of
the securities held by the Trusts to meet their obligations may be affected by
foreign economic, political and legal developments in the case of foreign
banks or foreign branches or subsidiaries of U.S. banks, or domestic economic
developments in a specific industry, state or region.
2. INVESTMENT TRANSACTIONS
For the six months ended December 31, 1996:
NEW ENGLAND CASH MANAGEMENT TRUST -- Purchase and sales or maturities of
short-term obligations, including securities purchased subject to repurchase
agreements, aggregated $2,344,629,647 and $2,355,274,703, respectively, for
the Money Market Series. Purchases and sales or maturities of United States
government obligations, including securities purchased subject to repurchase
agreements, aggregated $3,106,319,612 and $3,095,650,000, respectively, for
the U.S. Government Series.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- Purchases and sales or maturities
of short-term obligations aggregated $103,266,023 and $99,785,000,
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, 1996, the Trusts incurred management
fees payable to the Trusts' investment adviser, New England Funds Management
L.P. ("NEFM") and Subadviser, Back Bay Advisors. Certain officers and
directors of NEFM are also officers and trustees of the Trusts. 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").
NEW ENGLAND CASH MANAGEMENT TRUST
Under the management agreements, each series pays to its investment adviser,
NEFM, a monthly fee based on the annual percentage rates of the corresponding
levels of that series' average daily net asset values set forth below:
Under the same management agreements, NEFM pays to its investment subadviser,
Back Bay Advisors, a monthly fee based on the annual percentage rates of the
corresponding levels of that series' average daily net asset values set forth
below:
<TABLE>
<CAPTION>
ADVISORY FEES PAID BY NEFM TO THE SUBADVISER, BBA
ADVISORY FEES PAID BY ----------------------------------------------------
THE SERIES TO NEFM CASH MANAGEMENT TRUST CASH MANAGEMENT TRUST
ANNUAL PERCENTAGE RATE MONEY MARKET SERIES U.S. GOVERNMENT SERIES
---------------------- ------------------- ----------------------
<S> <C> <C> <C>
the first $500 million ..... .4250% .2050% .2125%
the next $500 million ...... .4000% .1800% .2000%
the next $500 million ...... .3500% .1600% .1750%
the next $500 million ...... .3000% .1400% .1500%
amounts in excess of
$2 billion ...... .2500% .1200% .1250%
</TABLE>
FEES EARNED FROM MONEY MARKET SERIES
$742,531 New England Funds Management, L.P.
$670,540 Back Bay Advisors, L.P.
FEES EARNED FROM U.S. GOVERNMENT SERIES
$58,686 New England Funds Management, L.P.
$58,686 Back Bay Advisors, L.P.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
The Trust pays management fees to its investment adviser, NEFM at the annual
rate of 0.40% of the first $100 million of the Trust's average daily net
assets and 0.30% of such assets in excess of $100 million. NEFM pays the
Trust's investment subadviser, Back Bay Advisors, at the rate of 0.20% of the
first $100 million of the Trust's average daily net assets and 0.15% of such
assets in excess of $100 million. Fees earned by NEFM and Back Bay Advisors
under the management agreements in effect during the six months ended December
31, 1996 are as follows:
FEES EARNED
- -----------
$67,680 New England Funds Management, L.P.
$67,681 Back Bay Advisors, L.P.
NEFM and Back Bay Advisors have voluntarily agreed, until further notice, to
reduce the management fee and, if necessary, to assume Trust expenses in order
to limit the expenses to 0.5625 of 1% of average net assets per year. As a
result of exceeding the expense limitation, management fees for the six months
ended December 31, 1996 were reduced by $46,295 and $46,294, respectively.
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds, L.P. ("New
England Funds"), the Trusts' distributor, is a wholly owned subsidiary of NEIC
and performs certain accounting and administrative services for the Trusts.
Each Trust 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 clerical functions relating to the Trusts,
(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 Trusts 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 six months ended December 31, 1996, these
expenses amounted to $80,338 for the Cash Management Trust Money Market, and
$1,656 for the Tax Exempt Money Market Trust.
New England Funds has voluntarily agreed to waive accounting and
administrative fees for the Cash Management Trust U.S. Government Series until
further notice. As a result of this voluntary waiver, New England Funds waived
its entire fee of $21,804 for the six months ended December 31, 1996.
C. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder
servicing agent for the Trusts. For the six months ended December 31, 1996,
the New England Cash Management Trust Money Market Series, U.S. Government
Series and Tax Exempt Money Market Trust paid $856,852, $41,249 and $37,158,
respectively, to New England Funds as compensation for its services in that
capacity.
4. TRUSTEES FEES AND EXPENSES. The Trusts do not pay any compensation to
officers or trustees who are directors, officers, or employees of NEFM, NEIC,
New England Funds or their affiliates, other than registered investment
companies.
Each disinterested trustee is compensated by each series of the Cash
Management Trust and by the Tax Exempt Money Market Trust as follows:
<TABLE>
<CAPTION>
U.S. GOV'T TAX EXEMPT MONEY
MONEY MARKET SERIES SERIES MARKET TRUST
------------------- ------ ------------
<S> <C> <C> <C>
Annual Retainer .................... $2,412 $1,451 $1,455
Meeting Fee ........................ $114/meeting $114/meeting $114/meeting
Committee Meeting Fee .............. $68/meeting $68/meeting $68/meeting
Committee Chairman
Annual Retainer .................. $314 $26 $31
</TABLE>
A deferred compensation plan is available to members of the boards of trustees.
A trustee's participation in the plan is voluntary. Each participating trustee
will receive an amount equal to the value that such deferred compensation would
have been, had it been invested in the relevant series or Trust on the normal
payment date.
5. CONCENTRATION OF CREDIT. The Tax Exempt Money Market Trust had the
following industry concentrations in excess of 10% on December 31, 1996 as a
percentage of the Trust's total net assets: Education (12.69%), Government
(14.61%), Hospitals (28.93%), and Housing (17.43%). The Trust also had more
than 10% of its total net assets invested in Florida (13.1%), Illinois (13.4%)
and had more than 10% of its net assets backed by letters of credit with
Sumitomo Bank (15.18%).
<PAGE>
(Logo)
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
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399 Boylston Street
Boston, Massachusetts
02116
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[Logo] [Logo]
QUALITY QUALITY
TESTED SERVICE TESTED SERVICE
1995 1996
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DALBAR DALBAR
HONORS COMMITMENT TO: HONORS COMMITMENT TO:
INVESTORS INVESTORS
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MM56-1296
[recycle symbol] Printed On Recycled Paper
