<PAGE>
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA
NEW ENGLAND INTERMEDIATE TERM TAX FREE FUND OF NEW YORK
Supplement dated August 1, 1996 to Prospectus dated May 1, 1996
Effective August 1, 1996, the following paragraph is added under the caption
"Reduced Sales Charges (Class A Shares Only)" on page 14 of the prospectus:
o Shares of the Funds are available at net asset value to investors
purchasing shares of the Funds with redemption proceeds from other mutual
fund complexes on which the investor has paid a front-end sales charge or
was subject to a deferred sales charge, whether or not paid, if such
redemption has occurred no more than 90 days prior to such purchase. The
Distributor will require satisfactory evidence of your qualification for
this waiver. Please call the Distributor for more information.
Effective September 1, 1996, until further notice to the Funds, New England
Funds Management, L.P. ("NEFM"), the Funds' adviser, will modify its current
voluntary management fee waiver and operating expense reduction for the Funds,
described on page 10 of the prospectus, by raising the limit on each Fund's
expenses from an annual rate of 0.70% to an annual rate of 0.85% of average
daily net assets for the Fund's Class A shares and from an annual rate of 1.45%
to an annual rate of 1.60% of average daily net assets for the Fund's Class B
shares. Accordingly, in the Schedule of Fees section on page 1 of the
prospectus, the tables appearing under the captions "Annual Fund Operating
Expenses" and "Example" will be replaced with the following:
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of average net assets)
<TABLE>
<CAPTION>
CALIFORNIA FUND NEW YORK FUND
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CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees (after voluntary fee waiver and expense reduction)................0.00%*** 0.00%*** 0.00%**** 0.00%****
12b-1 Fees........................................................................0.25% 1.00%** 0.25% 1.00%**
Other Expenses (after voluntary fee waiver and expense reduction).................0.60%*** 0.60%*** 0.60%**** 0.60%****
Total Expenses (after voluntary fee waiver and expense reduction).................0.85%*** 1.60%*** 0.85%**** 1.60%****
<FN>
*The expense information contained in this table and its footnotes has been restated to reflect fees and expenses
currently in effect for the Funds.
**Because of the higher 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association of Securities Dealers, Inc.
***Without the voluntary fee waiver and expense reduction by the Fund's adviser, Management Fees and Other Expenses would be
0.53% and 0.60%, respectively, for both classes and Total Fund Operating Expenses would be 1.38% for Class A shares and
2.13% for Class B shares. The voluntary waiver and limitation can be terminated by the Fund's adviser at any time. See
"Fund Management" in the prospectus, as supplemented above.
****Without the voluntary fee waiver and expense reduction by the Fund's adviser, Management Fees and Other Expenses would be
0.53% and 1.25%, respectively, for both classes and Total Fund Operating Expenses would be 2.03% for Class A shares and
2.78% for Class B shares. The voluntary waiver and limitation can be terminated by the Fund's adviser at any time. See
"Fund Management" in the prospectus, as supplemented above.
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) a 5%
annual return and (2) unless otherwise noted, redemption at period end. The 5%
return and expenses in the Example should not be considered indicative of actual
or expected Fund performance or expenses, both of which will vary.
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CALIFORNIA FUND NEW YORK FUND
------------------------- -------------------------
CLASS A CLASS B CLASS A CLASS B
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(1) (2) (1) (2)
1 year....... $33 $56 $16 $33 $56 $16
3 years...... $51 $80 $50 $51 $80 $50
5 years...... $71 $97 $87 $71 $97 $87
10 years*....$127 $170 $170 $127 $170 $170
(1) Assumes redemption at end of period
(2) Assumes no redemption at end of period
* Class B shares automatically convert to Class A shares after 8 years;
therefore, Class B amounts are calculated using Class A expenses in years
9 and 10.
