{LOGO}
NEW ENGLAND FUNDS
WHERE THE BEST MINDS MEET
ANNUAL REPORT AND PERFORMANCE UPDATE
NEW ENGLAND
VALUE FUND
[ARTWORK APPEARS HERE]
DECEMBER 31, 1995
<PAGE>
January 31, 1996
DEAR SHAREHOLDER,
ItOs a real pleasure to present to you the 1995 Annual Report for New
England Value Fund, containing your portfolio managerOs commentary and
complete financial information.
FAVORABLE ECONOMIC CONDITIONS IN 1995
In 1995 subdued economic growth with little or no inflation created a
very favorable backdrop for the bond and stock markets. Long term
interest rates dipped on the positive inflation news, with the yield
on the 30-year Treasury bond falling to a low of 5.95% at year end.
The stock market, fueled by lower interest rates and solid corporate
earnings growth, advanced 37.6%, as measured by the Standard & PoorOs
500 Index,* for its best showing since 1958. In July and in
December, the Federal Reserve Board lowered short term rates,
signaling its belief that the economy was indeed on a path towards
slow, non-inflationary growth.
NEW ENGLAND FUNDS - WHERE THE BEST MINDS MEET
Over this past year we launched our new corporate identity - Where the
Best Minds Meet -which we believe reflects the essence of New England
Funds. Our unique multiple adviser structure brings together some of
the best investment minds in the business. As recent examples,
consider New England Star Advisers Fund, managed by four prominent
equity advisers, and New England Star Worldwide Fund, a global fund
introduced this January which builds off the Star Advisers concept.
In addition, last May we launched New England Strategic Income Fund,
under the management of Dan Fuss of Loomis Sayles. One of the
industryOs most respected managers, Dan Fuss was named 1995Os OBond
Fund Manager of the YearO by Morningstar(TM) for his past record of
accomplishment in fund management at Loomis Sayles.**
* Standard & PoorOs 500 is an unmanaged index representing 500
major companies, the majority of which are listed on the New York
Stock Exchange.
** Morningstar is a third party, independent mutual fund rating
service.
<PAGE>
1995 DALBAR AWARD FOR SERVICE EXCELLENCE
Where the Best Minds Meet also refers to your financial adviser and
all the people at New England Funds who provide you with quality
service. We are proud to report that in recognition of our ongoing
quality initiatives, New England Funds has been named a 1995 Quality
Tested Service Seal Winner by DALBAR, an independent mutual fund
service rating company. The coveted DALBAR award was given to only
seven companies for Oproviding the highest tier of service excellence
in the mutual fund industry.O
OUTLOOK FOR 1996
Looking ahead, we believe interest rates are likely to remain flat as
the economy continues on its slow, steady, non-inflationary growth
path. While this scenario is extremely positive for the long term, it
is unlikely that 1996 will see a repeat of last yearOs stellar
performance. At this time itOs worth reiterating that long-term
investors should not focus on one yearOs performance. Instead, we
recommend that you review your asset allocation program with your
financial adviser, then remain committed to that program to carry out
its objectives.
We believe you will find your portfolio managerOs commentary
informative. If you have any questions or comments, please contact
your financial representative or New England Funds directly at 800-225-
5478. Also, please contact New England Funds for a prospectus on any
of the funds mentioned above. The prospectus details investment
objectives and risks, as well as management fees and expenses. You
should read it carefully before investing or sending money.
Sincerely,
/s/PETER S. VOSS /s/HENRY L.P. SCHMELZER
Peter S. Voss Henry L.P. Schmelzer
Chairman President
<PAGE>
NEW ENGLAND VALUE FUND
INVESTMENT RESULTS THROUGH DECEMBER 31, 1995
Putting Performance into Perspective
The graph comparing your FundOs 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 FundOs total return for the
period shown appears with and without sales charges and includes Fund
expenses and management fees. A securities index measures the perfor-
mance 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.
A $10,000 INVESTMENT IN CLASS A SHARES
COMPARED TO STANDARD & POOROS 500(R) INDEX(3)
[A Chart in the form of a line graph appears here, illustrating the
growth of a $10,000 investment in Class A Shares compared to Standard
& PoorOs 500 Index(3). The data points from the graph are as follows:]
New England Value Fund - Net Asset Value(1)
Date Amount
- ---- -----
1995 $32,480
1994 $24,546
1993 $24,893
1992 $21,277
1991 $18,245
1990 $14,354
1989 $16,619
1988 $13,559
1987 $13,861
1986 $12,419
12/31/85 $10,000
New England Value Fund - With Maximum Sales Charge(2)
Date Amount
- ---- -----
1995 $30,612
1994 $23,135
1993 $23,461
1992 $20,054
1991 $17,196
1990 $13,528
1989 $15,663
1988 $12,779
1987 $13,064
1986 $11,705
12/31/85 $9,425
Standard & PoorOs 500 Index(3)
Date Amount
- ---- -----
1995 $39,860
1994 $29,002
1993 $28,613
1992 $25,997
1991 $24,159
1990 $18,535
1989 $19,132
1988 $14,539
1987 $12,480
1986 $11,862
12/31/85 $10,000
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, Class C and Class Y 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 VALUE FUND
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS 12/31/95
CLASS A (6/5/70) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Net Asset Value(1) 32.32% 15.14% 17.74% 12.50%
With Max. Sales Charge(2) 24.76 12.91 16.36
11.84
Lipper Growth & Income Avg.(5) 30.82 13.30 15.47
12.78
CLASS B (INCEPTION 9/13/93) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 31.31% 14.60%
With CDSC(3) 27.31 13.50
Standard & PoorOs 500(4) 37.44 16.50
Lipper Growth & Income Avg.(5) 30.82 13.33
CLASS C (INCEPTION 12/30/94) 1 YEAR
Net Asset Value(1) 31.31%
Standard & PoorOs 500(4) 37.44
CLASS Y (INCEPTION 3/31/94) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 32.75% 19.16%
Standard & PoorOs 500(4) 37.44 23.39
<FN>
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. Class Y shares are
available only to certain institutional investors. Share price
and return may vary.
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 5.75% at
the time of purchase of Class A shares.
3 With Contingent Deferred Sales Charge (CDSC) performance assumes
a maximum 4% sales charge is 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 Standard & PoorOs 500 Index (S&P 500) is an unmanaged index
representing the performance of 500 major companies, most of
which are listed on the New York Stock Exchange. The S&P 500
performance has not been adjusted for ongoing management,
distribution and operating expenses and sales charges applicable
to mutual fund investments.
5 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.
</TABLE>
<PAGE>
NEW ENGLAND VALUE FUND
NEW ENGLAND VALUE FUND
Portfolio Managers: Doug Ramos, Carol McMurtie, Tricia Mills; Loomis,
Sayles & Co.
[PHOTO]
[PHOTO]
[PHOTO]
In a dramatic turnaround from 1994, 1995 was an excellent year for
stocks. Driven by lower interest rates and solid corporate earnings
growth, stocks, as measured by the Standard & PoorOs 500 Stock Index,
produced a 37.4% total rate of return, the best performance of the
decade.
HOW YOUR FUND PERFORMED
Against this backdrop, your Fund provided a total return at net asset
value of 32.32% for Class A shares.
HOW WE MANAGED YOUR FUND
The Fund produced very competitive returns given the large
capitalization growth bias influencing the markets last year. With
our low price-to-earnings approach, the Fund benefited from one of the
primary drivers of performance during the year: the outstanding
returns generated by the interest-rate sensitive sector of the market.
Lower interest rates helped boost the performance of insurance and
financial services stocks, while bank stocks enjoyed a boost from the
ongoing consolidation in the banking industry. In the insurance
industry, Ace Ltd. and American International Group were excellent
performers. In the financial services industry, Fannie Mae, Freddie
Mac, MBNA Corp., and Dean Witter/Discover also did well. Primary
examples of the positive influences impacting the banking industry
include Chemical Bank and First Interstate.
<PAGE>
In the industrial sector, performance was enhanced by the airline
holdings, AMR Corp. and Southwest Airlines, as well as Allied-Signal,
and ITT Corp. The capital goods sector was propelled by Case Corp.,
Lockheed Martin, Raytheon, and General Electric.While technology
stocks fell off significantly in the fourth quarter, the sector still
provided handsome returns for the year with holdings such as Intel
Corp., Texas Instruments, Hewlett-Packard, and Xerox participating
fully.
An under performer in the portfolio during the year was the energy
sector with most of the FundOs holdings concentrated in natural gas
(e.g., El Paso Natural Gas and Mapco) and refining and marketing
(e.g., Sun Company and Ultramar).
OUTLOOK FOR OUR SHAREHOLDERS
Looking ahead to 1996, we see a gradual pickup in the growth rate of
GDP, good news on the inflation front, and a solid chance for lower
interest rates. One other factor that could have a positive influence
on the economy and the financial markets is the upcoming presidential
election in November. The one concern that keeps us slightly
defensive, apart from the fact that we are closer to the end of the
economic cycle than the beginning, is the expected slowdown in
corporate earnings growth and the increased chance for earnings
disappointments.This development could add to the volatility of the
stock market during the first half of the year.Consequently, at the
margin, issue selection has become more critical and defensive
qualities more desirable.
<PAGE>
NEW ENGLAND VALUE FUND
YOUR FUNDOS FIVE LARGEST INVESTMENTS 12/31/95*
COMPANY PERCENTAGE
OF ASSETS
1. PRAXAIR, INC. 2.2%
Industrial gas and special coating manufacturer
2. FEDERAL NATIONAL MORTGAGE ASSOCIATES 2.2%
Provider of Federally backed mortgages
3. BARD (C.R.) 2.1%
Manufacturer of hospital and surgical supplies
4. CROWN CORK & SEAL 2.1%
Machinery manufacturer
5. UST, INC. 2.1%
Wine and tobacco manufacturer
YOUR FUNDOS TEN LARGEST STOCK SECTORS AS OF 12/31/95*
INDUSTRY PERCENTAGE OF ASSETS
Insurance 8.4%
Chemicals 7.5%
Banks 6.3%
Aerospace 5.2%
Tobacco 5.1%
Leisure 5.1%
Housing 4.8%
Financial Services 4.7%
Freight & Transportation 4.7%
Multi-Industry 4.1%
*Portfolio holdings and asset allocations will vary.
<PAGE>
[LOGO]
NEW ENGLAND FUNDS
WHERE THE BEST MINDS MEETTM
PORTFOLIO COMPOSITION, FINANCIAL STATEMENTS AND HIGHLIGHTS
NEW ENGLAND
VALUE FUND
DECEMBER 31, 1995
<PAGE>
PORTFOLIO COMPOSITION
Investments as of December 31, 1995
COMMON STOCKS-97.0% OF TOTAL NET ASSETS
<TABLE><CAPTION>
<C> <S> <C>
SHARES VALUE (A)
- ----------------------------------------------------------------------
- -
AEROSPACE-5.2%
6,000 Boeing Co. $470,250
63,300 Lockheed Martin Corp. 5,000,700
59,700 Northrop Grumman Corp. 3,820,800
106,500 Raytheon Co. 5,032,125
------------
14,323,875
------------
AIRLINES-0.2%
24,100 Southwest Airlines Co. 560,325
------------
AUTOMOBILE & RELATED-4.0%
77,457 Chrysler Corp. 4,289,181
41,400 Ford Motor Co. 1,200,600
90,500 General Motors Corp. . 4,785,188
16,000 Goodyear Tire & Rubber Co. 726,000
------------
11,000,969
------------
BANKS/SAVINGS & LOANS-6.3%
73,100 Bank of New York, Inc. 3,563,625
55,000 Chemical Banking Corp. 3,231,250
10,100 First Interstate Bancorp. 1,378,650
48,700 Fleet Financial Group 1,984,525
37,000 Golden West Financial Corp. 2,044,250
47,400 NationsBank Corp. 3,300,225
56,500 Norwest Corp 1,864,500
------------
17,367,025
------------
CHEMICALS-MAJOR-7.5%
26,500 Air Products & Chemicals, Inc. 1,397,875
76,500 E.I. Du Pont de Nemours & Co. 5,345,437
113,500 Georgia Gulf Corp. 3,490,125
101,300 PPG Industries, Inc. 4,634,475
180,500 Praxair, Inc. 6,069,313
------------
20,937,225
------------
ELECTRICAL EQUIPMENT-1.3%
23,600 General Electric Co. 1,699,200
37,000 Honeywell, Inc. 1,799,125
------------
3,498,325
------------
ELECTRONIC COMPONENTS-3.0%
59,800 Intel Corp. 3,393,650
28,900 Micron Technology, Inc. 1,145,162
72,100 Texas Instruments, Inc. 3,731,175
------------
8,269,987
- ------------
<PAGE>
PORTFOLIO COMPOSITION-Continued
Investments as of December 31, 1995
COMMON STOCKS-CONTINUED
SHARES VALUE (A)
- ----------------------------------------------------------------------
ENGINEERING AND CONSTRUCTION-1.2%
151,900 McDermott International, Inc. $ 3,341,800
------------
FINANCIAL SERVICES-4.7%
58,100 Federal Home Loan Mortgage Corp. 4,851,350
48,100 Federal National Mortgage Association 5,970,412
70,800 Green Tree Financial Corp. 1,867,350
7,500 MBNA Corp. 276,563
------------
12,965,675
------------
FOOD AGRIBUSINESS-0.6%
32,400 IBP Inc 1,636,200
------------
FREIGHT-TRANSPORTATION-4.7%
295,500 Canadian Pacific Ltd. 5,355,937
18,500 Conrail, Inc. 1,295,000
105,800 Consolidated Freightways, Inc. 2,803,700
49,200 Federal Express Corp. (c) 3,634,650
------------
13,089,287
------------
HEALTH CARE-DRUGS-1.1%
74,400 Glaxo Wellcome Holdings PLC ADR (d) 2,101,800
18,800 Smithkline Beecham PLC ADR (d) 1,043,400
------------
3,145,200
------------
HEALTH CARE-SERVICES-2.3%
392,400 Beverly Enterprises, Inc. (c) 4,169,250
48,200 U.S. Healthcare, Inc. 2,241,300
------------
6,410,550
------------
HEALTH CARE-MED TECH-2.1%
180,100 C. R. Bard, Inc. . 5,808,225
------------
HOME PRODUCTS-2.4%
14,400 Avon Products, Inc. 1,085,400
108,200 Premark International, Inc. . 5,477,625
------------
6,563,025
------------
HOUSING & BUILDING MATERIALS-4.8%
14,700 Armstrong World Industries, Inc 911,400
141,000 Black & Decker Corp. 4,970,250
179,000 Masco Corp. 5,616,125
33,900 Whirlpool Corp. 1,805,175
------------
13,302,950
------------
<PAGE>
PORTFOLIO COMPOSITION-Continued
Investments as of December 31, 1995
COMMON STOCKS-CONTINUED
SHARES VALUE (A)
- ----------------------------------------------------------------------
INSURANCE-8.4%
140,400 ACE Ltd. $ 5,580,900
37,650 American International Group, Inc. 3,482,625
55,400 Chubb Corp 5,359,950
121,900 First Colony Corp 3,093,213
21,600 Lincoln National Corp. 1,161,000
194,000 Prudential Reinsurance Hlds., Inc. 4,534,750
------------
23,212,438
------------
LEISURE-5.1%
168,900 American Greetings Corp. 4,665,862
222,400 Carnival Corp. 5,421,000
27,200 Eastman Kodak Co. 1,822,400
56,800 Hasbro, Inc. 1,760,800
20,600 Outboard Marine Corp. 419,725
------------
14,089,787
------------
MACHINERY-1.1%
55,800 Case Corp. 2,552,850
105,550 Consorcio G Grupo Dina S.A. De, ADR (d) 197,906
205,800 Consorcio G Grupo Dina S.A. De Series L, ADR (d) 282,975
------------
3,033,731
------------
METALS-1.0%
19,700 AK Steel Holding Corp. 674,725
35,700 Reynolds Metals Co. 2,021,512
------------
2,696,237
------------
MULTI-INDUSTRY-4.1%
66,500 Allied Signal, Inc. 3,158,750
145,400 Philips Electronics N.V. 5,216,225
16,500 Tenneco, Inc 818,813
32,300 Textron, Inc 2,180,250
------------
11,374,038
------------
NATURAL GAS-PIPELINES-2.4%
115,093 El Paso Natural Gas Co. 3,265,764
60,700 Mapco, Inc 3,315,737
------------
6,581,501
------------
OFFICE EQUIPMENT-3.1%
262,900 EMC Corp. (c). 4,042,087
30,300 International Business Machines. 2,780,025
13,200 Xerox Corp 1,808,400
------------
8,630,512
------------
<PAGE>
PORTFOLIO COMPOSITION-Continued
Investments as of December 31, 1995
COMMON STOCKS-CONTINUED
SHARES VALUE (A)
- ----------------------------------------------------------------------
OIL-MAJOR INTEGRATED-3.3%
93,200 Repsol S.A., ADR (d) $ 3,063,950
3,900 Royal Dutch Petroleum Co., ADR (d) 550,388
19,569 Sun, Inc. 535,701
50,800 Tosco Corp. 1,936,750
119,600 Ultramar Corp 3,079,700
------------
9,166,489
------------
PAPER PRODUCTS-2.2%
137,200 Crown Cork & Seal, Inc. (c) 5,728,100
6,500 Mead Corp 339,625
------------
6,067,725
------------
REAL ESTATE INVESTMENT TRUST-1.0%
84,200 Meditrust SBI 2,936,475
------------
RETAIL-FOOD & DRUG-2.0%
122,100 Eckerd Corp 5,448,713
------------
TELECOMMUNICATIONS-4.1%
71,000 Ameritech Corp. 4,189,000
18,300 Bellsouth Corp. 796,050
8,700 DSC Communications Corp. (c) 320,813
47,300 GTE Corp. 2,081,200
122,300 Telefonos De Mexico S.A., ADR (d) 3,898,313
------------
11,285,376
------------
TEXTILE & APPAREL-0.2%
21,800 Reebok International, Ltd. . 615,850
------------
TOBACCO-5.1%
38,600 Loews Corp. 3,025,275
61,100 Philip Morris Companies Inc. . 5,529,550
171,500 UST, Inc. 5,723,812
------------
14,278,637
------------
UTILITIES-ELECTRIC-2.5%
115,500 Pacific Gas & Electric Co. . 3,277,313
211,600 SCE Corp. 3,755,900
------------
7,033,213
------------
Total Common Stocks
(Identified Cost $214,454,284) 268,671,365
------------
PREFERRED STOCKS-1.3%
OIL-MAJOR INTEGRATED-0.5%
43,931 Sun, Inc. Series A 1,219,085
------------
<PAGE>
PORTFOLION COMPOSITION-Continued
Investments as of December 31, 1995
PREFERRED STOCKS-CONTINUED
SHARES VALUE (A)
- ----------------------------------------------------------------------
TOBACCO-0.8%
361,500 RJR Nabisco Holdings $ 2,304,563
-------------
Total Preferred Stock
(Identified Cost $3,515,329) 3,523,648
-------------
SHORT-TERM INVESTMENTS-1.7%
FACE
AMOUNT
- ----------------------------------------------------------------------
$4,669,000 Associates Corp. of North America 5.953%,
1/02/96 4,669,000
-------------
Total Short Term Investments
(Identified Cost $4,669,000) 4,669,000
-------------
Total Investments-100% (Identified Cost
$222,638,613) (b) 276,864,013
Cash, receivables and other assets 3,893,129
Liabilities (3,815,486)
-------------
Total Net Assets-100% $276,941,656
=============
<FN>
(a) See Note 1A
(b) Federal Tax Information: At December 31, 1995 the net unrealized
appreciation on investments based on cost of $222,711,016 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 $61,208,467
Aggregate gross unrealized depreciation for all
investments in which there is an excess
of tax cost over value (7,055,470)
------------
Net unrealized appreciation. $54,152,997
============
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a
U.S. bank representing the right to receive securities of the
foreign issuer described. The value of ADRs are significantly
influenced by trading on exchanges not located in the United
States or Canada.
</TABLE>
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Investments at value $276,864,013
Cash. 177
Receivable for:
Fund shares sold 780,393
Securities sold. 2,461,506
Dividends and interest. 636,870
Foreign taxes. 6,183
Prepaid registration expense. 8,000
--------------
280,757,142
LIABILITIES
Payable for:
Securities purchased $2,536,947
Fund shares redeemed 866,667
Dividends declared 83,614
Accrued expenses:
Management fees. 171,362
Deferred trustees' fees 55,707
Accounting and administrative 4,127
Other expenses 97,062
----------
3,815,486
--------------
$276,941,656
==============
NET ASSETS
Net Assets consist of:
Capital paid in. $212,091,138
Undistributed net investment income 91,904
Accumulated net realized gains. 10,533,214
Unrealized appreciation on investments 54,225,400
--------------
NET ASSETS $276,941,656
==============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($241,038,428 divided by 27,439,832 shares of
beneficial interest) $8.78
==============
Offering price per share (100/94.25 of $8.78). $9.32*
==============
Net asset value and offering price of Class B shares
($27,941,336 divided by 3,211,374 shares of
beneficial interest) $8.70**
==============
Net asset value and offering price
of Class C shares ($1,223,642 divided by
140,681 shares of beneficial interest) $8.70
==============
Net asset value and offering price of Class Y
shares ($6,738,250 divided by
770,431 shares of beneficial interest) $8.75
==============
Identified cost of investments $222,638,613
==============
<FN>
*Based upon single purchases of less than $50,000. Reduced sales
charges apply for purchases in excess of these amounts.
**Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charges.
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends $6,001,566(a)
Interest. 336,830
----------------
6,338,396
Expenses
Management fees $1,811,567
Service fees-Class A 545,439
Service and distribution fees-Class B. 206,005
Service and distribution fees-Class C. 3,915
Trustees' fees and expenses 23,446
Accounting and administrative 48,646
Custodian 124,266
Transfer agent. 546,745
Audit and tax services 41,000
Legal 20,147
Printing. 55,616
Registration. 44,607
Miscellaneous 25,054
----------
Total expenses 3,496,453
----------------
Net investment income. 2,841,943
----------------
REALIZED and UNREALIZED GAIN on INVESTMENTS
Realized gain on Investments-net. 31,424,701
Unrealized appreciation on Investments-net 33,283,879
----------------
Net gain on investment transactions 64,708,580
----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $67,550,523
================
<FN>
(a) Net of foreign taxes of $42,262.
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
------------- -------------
FROM OPERATIONS
Net investment income. $2,012,017 $2,841,943
Net realized gain on investments. 10,942,333 31,424,701
Unrealized appreciation (depreciation)
on investments (15,995,953) 33,283,879
------------- -------------
Increase (decrease) in net assets from
operations (3,041,603) 67,550,523
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A (1,952,257) (2,497,665)
Class B (89,024) (159,658)
Class C 0(6,440)
Class Y (46,639) (86,275)
Net realized gain on investments
Class A (10,228,784) (18,292,636)
Class B (724,627) (1,952,478)
Class C 0 (53,531)
Class Y (209,790) (467,103)
------------- -------------
(13,251,121) (23,515,786)
------------- -------------
Increase in net assets derived from
capital share transactions 33,034,790 24,206,907
------------- -------------
Total increase in net assets. 16,742,066 68,241,644
NET ASSETS
Beginning of the year. 191,957,946 208,700,012
------------- -------------
End of the year. $208,700,012 $276,941,656
============= =============
(OVER)/UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the year $115,335 $(12,653)
============= =============
End of the year. $(12,653) $91,904
============= =============
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS A
-------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
Net Asset Value,
Beginning of Year $5.44 $6.69 $7.28 $7.87 $7.27
--------- --------- --------- --------- ---------
Income From Investment
Operations
Net Investment Income 0.13 0.09 0.07 0.08 0.10
Net Realized and
Unrealized Gain (Loss) on
Investments. 1.35 1.02 1.16 (0.19) 2.21
--------- --------- --------- --------- ---------
Total From Investment
Operations 1.48 1.11 1.23 (0.11) 2.31
--------- --------- --------- --------- ---------
Less Distributions
Dividends From Net
Investment Income (0.13) (0.09) (0.07) (0.08) (0.09)
Distributions From
Net Realized Capital
Gains (0.10) (0.43) (0.57) (0.41) (0.71)
--------- --------- --------- --------- ---------
Total Distributions (0.23) (0.52) (0.64) (0.49) (0.80)
--------- --------- --------- --------- ---------
Net Asset Value,
End of Year. $6.69 $7.28 $7.87 $7.27 $8.78
========= ======= ======= ======== ========
Total Return (%) 27.1 16.6 17.0 (1.4) 32.3
Ratio of Operating
Expenses to Average Net
Assets (%) 1.28 1.32 1.34 1.37 1.37
Ratio of Net
Investment Income
to Average Net
Assets (%) 1.84 1.26 0.83 1.00 1.22
Portfolio Turnover Rate (%) 51 38 40 29 52
Net Assets,
End of Year (000). $145,790 $156,240 $189,779 $190,869 $241,038
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS-Continued
<TABLE><CAPTION>
CLASS B CLASS C CLASS Y
------------------------------------ --------- -------------------
SEPTEMBER 13(*) YEAR YEAR YEAR MARCH 31(*) YEAR
THROUGH ENDED ENDED ENDED THROUGH ENDED
DECEMBER 31,DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1995 1994 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $7.97 $7.85 $7.23 $7.23 $7.57 $7.24
------ ------ ------ ------ ------ ------
Income From Investment
Operations
Net Investment Income 0.11 0.04 0.05 0.05 0.10 0.12
Net Realized and
Unrealized Gain
(Loss) on
Investments. 0.39 (0.20) 2.18 2.18 0.08 2.21
------ ------ ------ ------ ------ ------
Total From Investment
Operations 0.50 (0.16) 2.23 2.23 0.18 2.33
------ ------ ------ ------ ------ ------
Less Distributions
Dividends From Net
Investment Income (0.05) (0.05) (0.05) (0.05) (0.10) (0.11)
Distributions From Net
Realized Capital
Gains. (0.57) (0.41) (0.71) (0.71) (0.41) (0.71)
------ ------ ------ ------ ------ ------
Total Distributions (0.62) (0.46) (0.76) (0.76) (0.51) (0.82)
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period $7.85 $7.23 $8.70 $8.70 $7.24 $8.75
====== ===== ====== ===== ====== =====
Total Return (%) 6.5*** (2.0) 31.3 31.3 2.4*** 32.8
Ratio of Operating
Expenses to Average
Net Assets (%) 2.16** 2.12 2.12 2.12 1.54** 1.12
Ratio of Net Investment
Income to Average
Net Assets (%) 0.05** 0.25 0.47 0.47 1.05** 1.47
Portfolio Turnover
Rate (%) 40 29 52 52 29 52
Net Assets, End of
Period (000) $2,182 $13,830 $27,941 $1,224 $4,001 $6,738
<FN>
* Commencement of operations.
** Computed on an annualized basis.
***Not computed on an annualized basis.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. The Fund is a Series of New England Funds Trust I, 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 such series of shares a "Fund").
The Fund offers Class A, Class B, Class C and Class Y shares. The Fund
commenced its public offering of Class B shares on September 13, 1993,
of Class C shares on December 30, 1994 and of its Class Y shares on
March 31, 1994. Class A shares are sold with a maximum front end sales
charge of 5.75%. 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. Class C
shares do not pay front end or contingent deferred sales charges and
do not convert to any class of shares, but they do pay a higher
ongoing distribution fee than Class A shares. Class Y shares do not
pay a front end sales charge, a contingent deferred sales charge or
distribution fee. They are intended for institutional investors with a
minimum of $1,000,000 to invest. Expenses of the Fund are borne pro-
rata by the holders of each class 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. Equity securities are valued on the basis of
valuations furnished by a pricing service, authorized by the Board of
Trustees, which service provides the last reported sale price for
securities listed on an applicable securities exchange or on the
NASDAQ national market system, or, if no sale was reported and in the
case of over-the counter securities not so listed, the last reported
bid price. Short-term obligations with a remaining maturity of less
than sixty days are stated at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security
transactions are accounted for on the trade date (the date the buy or
sell is executed). Dividend
<PAGE>
NOTES TO FINANCIAL STATEMENTS-Continued
December 31, 1995
income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Interest income for the Fund is
increased by the accretion of discount. In determining net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
C. 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.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions are recorded on the ex-dividend date. 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 will result in reclassification to the capital
accounts.
E. 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. The
Fund's adviser 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.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term
investments) for the Fund for year ended December 31, 1995 were
$124,709,975 and $122,556,121, respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. During the
year ended December 31, 1995, the Fund incurred management fees
payable to its investment adviser, Loomis, Sayles & Company, L.P.
("Loomis, Sayles"). Certain officers and directors of the adviser and
its affiliated companies are also officers or trustees of the Fund.
Loomis, Sayles is a wholly owned subsidiary of New England Investment
Companies, L.P., ("NEIC") which is a majority owned subsidiary of New
England Mutual Life Insurance Company. The management agreement for
the Fund in effect during the year ended December 31, 1995 provided
for fees as set forth below:
FEES EARNED ANNUAL PERCENTAGE RATE ANNUAL NET ASSET VALUE LEVELS
- ----------- ---------------------- ----------------------------------
$1,811,567 0.750% the first $200
million
0.700% the next $300 million
0.650% the excess over $500 million
<PAGE>
NOTES TO FINANCIAL STATEMENTS-Continued
December 31, 1995
Effective January 1, 1996, New England Funds Management, L.P. became
the adviser for the Fund with the aforementioned adviser being
retained as the Fund's sub-adviser.
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 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, 1995 these expenses amounted to $48,646 and are
shown separately in the financial statements as accounting and
administrative.
C. TRANSFER AGENT FEES. New England Funds is the transfer and
shareholder servicing agent for the Fund. For the year ended December
31, 1995, the Fund paid New England Funds $411,284 as compensation for
its services in that capacity.
D. 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 Service and Distribution Plans
relating to the Fund's Class B and Class C shares (the "Class B and
Class C Plans").
Under the Class A 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 A shares, as reimbursement for
expenses (including certain payments to securities dealers, who may be
affiliated with New England Funds) incurred by the 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, 1995, the Fund paid New England Funds $545,439 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 at December 31, 1995 is $1,651,994.
Under the Class B and Class C 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS-Continued
December 31, 1995
attributable to the Fund's Class B and Class C 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 and Class C shares and/or the maintenance of
shareholder accounts. For the year ended December 31, 1995, the Fund
paid New England Funds $51,501 and $979 in service fees under the
Class B and Class C plans, respectively.
Also under the Class B and Class C Plans, the Fund pays New England
Funds monthly distribution fees at the annual rate of up to 0.75% of
the average daily net assets attributable to the Fund's Class B and
Class C 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 and Class C shares.
For the year ended December 31,1995, the Fund paid New England Funds
$154,504 and $2,936 in distribution fees under the Class B and Class C
plans, respectively.
Commissions (including contingent deferred sales charges) on Fund
shares paid to New England Funds by investors in shares of the Fund
during the year ended December 31, 1995 amounted to $589,700.
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 Loomis, Sayles, New England Funds, NEIC or their
affiliates, other than registered investment companies. Each other
trustee is compensated by the Fund as follows:
Annual Retainer $2,400
Meeting Fee $125/meeting
Committee Meeting Fee $75/meeting
Committee Chairman Retainer $125/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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS-Continued
December 31, 1995
4. CAPITAL SHARES. At December 31, 1995 there was an unlimited number
of shares of beneficial interest authorized, divided into four
classes, Class A, Class B, Class C and Class Y capital stock.
Transactions in capital shares were as follows:
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------- -----------------
CLASS A SHARES AMOUNT SHARES AMOUNT
Shares sold 5,053,840 $39,866,883 3,546,403 $29,882,286
Shares issued in
connection with the
reinvestment of:
Dividends from net
investment income 262,206 1,907,262 283,157 2,443,644
Distributions
from net realized gain 1,385,386 10,034,646 2,099,871 18,018,417
---------- ---------- --------- ----------
6,701,432 51,808,791 5,929,431 50,344,347
Shares repurchased (4,561,136) (35,742,457)(4,749,976) (39,580,212)
Net increase 2,140,296 16,066,334 1,179,455 10,764,135
---------- ---------- --------- ----------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------- -----------------
CLASS B SHARES AMOUNT SHARES AMOUNT
Shares sold. 1,606,356 $12,543,677 1,279,784 $10,347,316
Shares issued in
connection with the
reinvestment of:
Dividends from net
investment income 11,655 84,017 16,925 144,710
Distributions from
net realized gain 96,006 691,445 219,538 1,861,128
---------- ---------- --------- ----------
1,714,017 13,319,139 1,516,247 12,353,154
Shares repurchased (77,767) (597,062) (218,772) (1,820,967)
---------- ---------- --------- ----------
Net increase 1,636,250 12,722,077 1,297,475 10,532,187
---------- ---------- --------- ----------
YEAR ENDED
DECEMBER 31, 1995
---------------------------
CLASS C SHARES AMOUNT
--------- --------
Shares sold 149,041 $1,267,129
Shares issued in connection with the
reinvestment of:
Dividends from net investment income 678 5,797
Distributions from net realized gain 5,998 50,896
-------- --------
155,717 1,323,822
Shares repurchased (15,036) (131,777)
------------ --------------
Net increase 140,681 1,192,045
------------ --------------
FOR THE PERIOD
MARCH 31* THROUGH YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
--------------------------- -------------------------
CLASS Y SHARES AMOUNT SHARES AMOUNT
---------- ---------- --------- ----------
Shares sold 528,311 $4,081,248 370,103 $2,990,140
Shares issued in
connection with the
reinvestment of:
Dividends from net
investment income 6,446 46,639 10,044 86,275
Distributions from
net realized gain 29,091 209,789 54,580 467,103
------------ -------------- ------------ ----------
563,848 4,337,676 434,727 3,543,518
Shares repurchased (11,648) (91,297) (216,496) (1,824,978)
------------ -------------- ------------ ----------
Net increase 552,200 4,246,379 218,231 1,718,540
------------ -------------- ------------ ----------
Increase derived
from capital shares
transactions 4,328,746 $33,034,790 2,835,842 $24,206,907
============ ============== ============ ==========
<FN>
* Commencement of operations.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of NEW ENGLAND VALUE FUND.
In our opinion, the accompanying statement of assets & liabilities,
including the portfolio composition, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
New England Value Fund (the "Fund") at December 31, 1995, the results
of its operations for the year then ended, the changes in its net
assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and the financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at December 31, 1995 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 7, 1996
<PAGE>
At a special shareholders' meeting held on December 28, 1995, shareholders of
the Value Fund voted for the following proposals:
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C>
VOTED ABSTAINED BROKER
VOTED FOR AGAINST VOTES NON-VOTES TOTAL VOTES
---------- --------- ------- --------- -----------
1. To approve new
investment advisory
arrangements to be
effective upon the merger
of New England Mutual
Life Insurance Company
into Metropolitan Life
Insurance Company, such
arrangements to be
substantially identical to
the investment advisory
arrangements in effect for
the Fund immediately prior
to such merger 15,654,499.645 359,234.999 609,896.904 16,623,631.548
============== =========== ===========
2. To approve a new
Advisory Agreement
between the Fund an
New England Funds
Management, L.P.
("NEFM"). 15,387,369.874 541,164.246 669,062.428 26,035.00016,623,631.548
============== =========== =========== ==========
3. To approve a related
Sub-Advisory Agreement
between NEFM and such
Fund's current investment
adviser. 15,368,788.320 541,652.856 687,155.372 26,035.00016,623,631.548
============== =========== =========== ==========
REGULAR INVESTING PAYS
FIVE GOOD REASONS TO INVEST REGULARLY
1. ItOs an easy way to build assets
2. ItOs convenient and effortless
3. It requires a low minimum to get started
4. It can help you reach important long-term goals like retirement
or college funding
5. It can help you benefit from the ups and downs of the market
With Investment Builder, New England FundsO automatic investment
program, you can invest as little as $50 a month in your New
England Fund automatically - without even writing a check. And,
as you can see from the chart below, your monthly investments can
really add up over time.
THE POWER OF MONTHLY INVESTING
[A line graph appears here, illustrating the hypothetical accumulation
of monthly investments at an 8% annual rate of return. The data points
of the graph are as follows:]
Monthly investments of $50
Years Growth of Monthly Investments
0 $0
5 $3,661
10 $9,040
15 $16,943
20 $28,555
25 $45,618
Monthly investments of $100
Years Growth of Monthly Investments
0 $0
5 $7,322
10 $18,079
15 $33,886
20 $57,111
25 $91,236
Monthly investments of $200
Years Growth of Monthly Investments
0 $0
5 $14,643
10 $36,158
15 $67,772
20 $114,222
25 $182,472
Monthly investments of $500
Years Growth of Monthly Investments
0 $0
5 $36,608
10 $90,396
15 $169,429
20 $285,555
25 $456,181
For illustrative purposes only. These figures represent hypothetical
accumulation at an 8% annual rate of return, and are not indicative of
future performance of any New England Fund. The value of a New England
Fund will fluctuate with changing market conditions.
This program cannot assure a profit nor protect against a loss in a
declining market. It does, however, ensure that you buy more shares
when the price is low and fewer shares when the price is high.
You can start an Investment Builder program with your current New
England Fund account, or with any of our other funds. To open an
Investment Builder account today, call your financial representative
or New England Funds at 1-800-225-5478.
<PAGE>
INFORMATION ON CALL
YOU CAN CALL NEW ENGLAND FUNDS DAY OR NIGHT
Do you like to keep on top of your New England Funds but canOt always
call us during regular business hours? With Tele#Facts, New England
FundsO 24-hours a day automated telephone system, you can call us any
time thatOs convenient for you - day or night!
By calling 1-800-346-5984 from any Touch-Tone(R) telephone, you can:
- - Check the current value of your New England Fund account
- - Find out the current yield and total return on any New England Fund
- - Buy, sell or exchange fund shares
Just remember to have these four items with you before calling:
1.YOUR PERSONAL IDENTIFICATION NUMBER which is the last four digits of
your Social Security number
2.THE FUND NUMBER - two- or three-digit number listed on the
Tele#Facts
wallet card
3.FUNCTION NUMBER - listed on the Tele#Facts wallet card
4.ACCOUNT NUMBER - listed on all your statements
You can get the information you need to use Tele#Facts from the back
of your statement. If you need another Tele#Facts wallet card or have
questions about getting started, please call us at 1-800-225-5478.
So go ahead and give Tele#Facts a try. We think youOll enjoy this easy-
to-use and convenient service from New England Funds!
<PAGE>
NEW ENGLAND FUNDS
STOCK FUNDS
Growth Fund of Israel
International Equity Fund
Star Worldwide Fund
Growth Fund
Star Advisers Fund
Capital Growth Fund
Value Fund
Growth Opportunities Fund
Balanced Fund
BOND FUNDS
High Income Fund
Strategic Income Fund
Government Securities Fund
Bond Income Fund
Limited Term U.S. Government Fund
Adjustable Rate U.S. Government Fund
TAX EXEMPT FUNDS
Municipal Income Fund
Massachusetts Tax Free Income Fund
Intermediate Term Tax Free Fund of California
Intermediate Term Tax Free Fund of New York
MONEY MARKET FUNDS
Cash Management Trust
- Money Market Series
- U.S. Government Series
Tax Exempt Money Market Trust
To learn more, and for a free prospectus,
contact your financial representative.
New England Funds, L.P.
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors
when it is preceded or accompanied by the FundOs current prospectus,
which contains information about distribution charges, management and
other items of interest. Investors are advised to read the prospectus
carefully before investing.
<PAGE>
[LOGO]
NEW ENGLAND FUNDS
Where The Best Minds MeetTM
399 Boylston Street
Boston, Massachusetts
02116
[LOGO]
Quality
Tested Service
1996
Dalbar
Honors Commitment To:
Investors
VL56
[LOGO] Printed On Recycled Paper
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and OSee accompanying to financial statementsO) are
omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points, leaders and similar graphic symbols are omitted.
(7) Page numbering is different.
</TABLE>
