[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
Where the Best Minds Meet(TM)
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Annual Report and Performance Update
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NEW ENGLAND CAPITAL GROWTH FUND
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December 31, 1995
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<PAGE>
NEW ENGLAND
CAPITAL GROWTH FUND
December 31, 1995
DEAR SHAREHOLDER,
It's a real pleasure to present to you the 1995 Annual Report for New
England Capital Growth Fund, containing your portfolio manager's 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 & Poor's 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 industry's most respected managers, Dan Fuss was named
1995's "Bond Fund Manager of the Year" by Morningstartrademark for his past
record of accomplishment in fund management at Loomis Sayles.**
* Standard & Poor's 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,
Ne w 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 "providing the highest
tier of service excellence in the mutual fund industry."
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 year's stellar performance. At this time it's
worth reiterating that long-term investors should not focus on one year's
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 manager's 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
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New England Capital Growth Fund
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INVESTMENT RESULTS THROUGH DECEMBER 31, 1995
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. Your Fund's total return for the period shown appears with and without
sales charges and includes Fund expenses and management fees. A securities
index measures the performance of a theoretical portfolio. Unlike a fund, the
index is unmanaged; there are no expenses that affect the results. In addition,
few investors could purchase all of the securities necessary to match the index.
And, if they could, they would incur transaction costs and other expenses.
A $10,000 INVESTMENT IN CLASS A SHARES
COMPARED TO STANDARD & POOROS 500 INDEX(4)
[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
(4).
The data points from the graph are as follows:]
NEW ENGLAND CAPITAL GROWTH FUND - NET ASSET VALUE(1)
Year Amount
- ---- ------
1995 $15,937
1994 $12,194
1993 $12,398
1992 $11,491
8/3/92 $10,000
NEW ENGLAND CAPITAL GROWTH FUND - WITH MAXIMUM SALES CHARGE(2)
Year Amount
- ---- ------
1995 $15,020
1994 $11,493
1993 $11,685
1992 $10,830
8/3/92 $ 9,425
STANDARD & POOROS 500(4)
Year Amount
- ---- ------
1995 $15,979
1994 $11,626
1993 $11,470
1992 $10,422
8/3/92 $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 and Class C 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>
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New England Capital Growth Fund
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AVERAGE ANNUAL TOTAL RETURNS 12/31/95
<TABLE><CAPTION>
<S> <C> <C> <C>
CLASS A (Inception 8/3/92) 1 YEAR 3 YEAR SINCE INCEPTION
Net Asset Value(1) 30.68% 11.52% 14.64%
With Max. Sales Charge(2) 23.14 9.34 12.68
Lipper Growth & Income Avg.(5) 30.79 12.66 13.72
CLASS B (INCEPTION 9/13/93) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 29.73% 12.58%
With CDSC(3) 25.73 11.45
Standard & Poor's 500(4) 37.60 16.50
Lipper Growth & Income Avg.(5) 30.79 12.69
CLASS C (INCEPTION 12/30/94)
Net Asset Value(1) 29.66%
Standard & Poor's 500(4) 37.60
Lipper Growth(5) 30.79
<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.
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 & Poor's 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>
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New England Capital Growth Fund
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[PHOTO]
NEW ENGLAND CAPITAL GROWTH FUND
Portfolio Managers: Scott Pape and Richard Hurckes, Loomis, Sayles & Co.,
L.P.
In 1995, the economic environment was favorable for the stock market, and for
growth stocks in particular. A combination of steady growth, low labor and
capital costs and high productivity allowed American corporations to enjoy
expanding profit margins and strong earnings gains.
American companies doing business overseas benefited from the decline of the
U.S. dollar early in the year. Corporations with significant global sales
enjoyed healthy profits, thanks in part to favorable currency translations.
HOW YOUR FUND PERFORMED
New England Capital Growth Fund participated in the stock market's historic
rise in 1995. For the 12 months ended 12/31/95, the Fund achieved a total
return of 30.68% for Class A shares at net asset value.
Past performance does not guarantee future results.
<PAGE>
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New England Capital Growth Fund
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HOW WE MANAGED YOUR FUND
The Fund's successful performance was driven by our investment in premier
companies across a broad spectrum of industries. Holdings that delivered the
largest gains were those in the technology, medical technology and financial
sectors.
Early in the year, we anticipated the strength of technology stocks, and
increased our position in that sector. Among our best performers were Oracle
Systems, a leader in database management software, and Cisco Systems, a princi
pal provider of inter-networking software used to connect computers
worldwide. During the fourth quarter, we reduced technology holdings
slightly in the wake of increasing price volatility, locking in some of the
sizeable gains made earlier in the year.
In 1995, we also built up our position in medical technology stocks, adding two
distinguished companies - Medtronic, a leading worldwide manufacturer of
pacemakers and implantable defribrillators, and Boston Scientific, a pioneer
in technology for interventional cardiology procedures such as angioplasty.
Both companies enjoyed strong profits during the year and contributed greatly
to the performance of the Fund. Pharmaceutical companies in the portfolio such
as Johnson & Johnson, Merck, and biotechnology leader Amgen also benefited from
strong revenue gains, due in large part to their proprietary products and
increasing international sales.
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New England Capital Growth Fund
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Financial stocks contributed to Fund performance in the first half of the
year. The prices of First Data Corp., a premier data processing company, and
MBNA, one of the largest credit card issuers in the nation, were driven up by
strong earnings. By mid-year, as the growth rate of earnings slowed, we
began to shift out of the financial sector and into other areas, including
consumer non-durables and medical technology.
The Fund's portfolio includes several Fortune 100
companies doing business internationally. During 1995, we maintained
positions in Gillette and Coca-Cola, and added Procter & Gamble and Duracell.
All benefited from strong consumer demand abroad and favorable currency
exchange rates.
We also took advantage of the growth opportunities found in emerging stocks
by increasing the Fund's weighting from 23% to 33%. Examples include
technology stars Informix Corp. and Parametric, retailers Starbucks and
PETsMART INC., transaction processors Paychex Inc., and Medaphis, and medical
providers HealthSouth and Ventritex. Each is a superbly managed industry lead
er. Correspondingly, we reduced our investment in mid-size and large,
blue-chip companies, which offered relatively less upside potential.
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New England Capital Growth Fund
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OUTLOOK FOR OUR SHAREHOLDERS
Although there is no guarantee, we believe the stock market will generate
positive returns for investors in 1996, as it has in most Presidential
election years. While we don't expect a repeat of 1995's impressive
performance, we do expect a favorable climate for growth stocks. American
business should benefit from domestic economic growth of about 2% and
continuing low interest rates and inflation. Companies doing business
internationally should continue to profit from the low value of the U.S.
dollar.
Economic conditions that favor smaller, emerging companies should continue.
Therefore, our interest in the technology and medical technology sectors -
areas where attractive emerging companies can be found - remains strong.
The Fund will continue to own America's premier companies - leaders in their
respective industries, with strong management and excellent prospects for
increased revenues and earnings. We feel these stocks offer investors the
best opportunities for long-term growth.
<PAGE>
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New England Capital Growth Fund
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YOUR FUND'S FIVE LARGEST INVESTMENTS 12/31/95
COMPANY PERCENTAGE
OF ASSETS
1. AMERICAN INTERNATIONAL GROUP, INC. 2.8%
A major international insurance holding company
2. ANADARKO PETROLEUM CORP. 2.5%
Oil and gas developers and producers
3. EASTMAN KODAK CO. 2.5%
Photographic manufacturer
4. BOSTON SCIENTIFIC CORP. 2.4%
Medical device manufacturer
5. HEWLETT-PACKARD CO. 2.3%
Manufacturer of precision electronic products
and systems for data management
YOUR FUND'S TEN LARGEST INDUSTRY POSITIONS 12/31/95
INDUSTRY PERCENTAGE
OF ASSETS
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DRUGS/HEALTHCARE 11.8%
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BUSINESS SERVICES 10.9%
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COMPUTER SOFTWARE & SERVICES 8.9%
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ELECTRONICS & COMPONENTS 7.7%
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OFFICE EQUIPMENT 6.8%
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RETAIL 5.9%
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MEDICAL TECHNOLOGY 5.7%
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HOME PRODUCTS 4.3%
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INSURANCE 4.1%
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TELECOMMUNICATIONS 4.0%
Portfolio holdings subject to change.
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[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
Where The Best Minds Meet(TM)
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Portfolio Composition, Financial Statements and Highlights
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NEW ENGLAND
CAPITAL GROWTH FUND
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December 31, 1995
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PORTFOLIO COMPOSITION
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Investments as of December 31, 1995
COMMON STOCKS--96.0% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
SHARES VALUE (A)
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- ---
<C> <S> <C>
BANKS--SAVINGS AND LOAN--2.0%
60,000 First Bank System, Inc. ................................ $ 2,977,500
------------
BEVERAGES--3.2%
45,000 Coca Cola Co. .......................................... 3,341,250
25,000 Pepsico, Inc. .......................................... 1,396,875
------------
4,738,125
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BUSINESS SERVICES--10.9%
40,000 Checkfree Corp. ........................................ 860,000
45,000 Ceridian Corp. (c)...................................... 1,856,250
54,600 Cintas Corp. ........................................... 2,429,700
40,000 Danka Business Systems ADR(d)........................... 1,480,000
47,000 First Data Corp. ....................................... 3,143,125
92,250 Fiserv, Inc. (c)........................................ 2,767,500
45,000 Medaphis Corp. (c) ..................................... 1,665,000
44,500 Paychex, Inc............................................ 2,219,438
------------
16,421,013
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CHEMICALS MAJOR--0.7%
20,000 Air Products & Chemicals, Inc. ......................... 1,055,000
------------
COMPUTER SOFTWARE & SERVICES--8.9%
20,000 Adobe Systems, Inc. .................................... 1,240,000
33,700 Autodesk, Inc. ......................................... 1,154,225
17,700 Broderbund Software, Inc. (c) .......................... 1,075,275
54,000 FTP Software, Inc. ..................................... 1,566,000
90,000 Informix Corp. ......................................... 2,700,000
32,000 Microsoft Corp. (c)..................................... 2,808,000
68,000 Oracle Systems Corp. (c)................................ 2,881,500
------------
13,425,000
------------
ELECTRONIC COMPONENTS--7.7%
58,000 Intel Corp. ............................................ 3,291,500
50,000 LSI Logic Corp. (c)..................................... 1,637,500
38,000 Micron Technology, Inc. ................................ 1,505,750
32,000 Motorola, Inc. ......................................... 1,824,000
52,000 Premier Industrial Corp. ............................... 1,274,000
32,000 Solectron Corp. (c)..................................... 1,412,000
12,900 Texas Instruments, Inc. ................................ 667,575
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11,612,325
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ELECTRICAL EQUIPMENT--1.4%
29,000 General Electric Co. ................................... 2,088,000
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<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCKS--CONTINUED
SHARES VALUE (A)
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- --
FINANCIAL SERVICES--MISCELLANEOUS--2.0%
32,000 Dean Witter Discover & Co. ............................. $ 1,504,000
42,000 MBNA Corp. ............................................. 1,548,750
------------
3,052,750
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FOOD--PACKAGED & MISCELLANEOUS--2.2%
27,400 Dreyers Grand Ice Cream, Inc. .......................... 911,050
112,000 Starbucks, Corp. (c).................................... 2,352,000
------------
3,263,050
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HEALTH CARE--DRUGS--8.2%
47,400 Amgen, Inc. (c)......................................... 2,814,375
21,000 Johnson & Johnson....................................... 1,798,125
51,000 Merck & Co., Inc. ...................................... 3,353,250
200,000 Oncor, Inc. ............................................ 900,000
40,000 SmithKline Beecham PLC ADR (d).......................... 2,220,000
65,000 Somatogen, Inc. (c)..................................... 1,226,875
------------
12,312,625
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HEALTH CARE MED TECH--5.7%
75,000 Boston Scientific Corp. (c)............................. 3,675,000
60,000 Medtronic, Inc. ........................................ 3,352,500
84,000 Ventritex, Inc. (c)..................................... 1,459,500
------------
8,487,000
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HEALTH CARE SERVICES--3.6%
55,000 Columbia HCA Healthcare Corp. .......................... 2,791,250
88,300 Healthsouth Corp. (c)................................... 2,571,738
------------
5,362,988
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HOME PRODUCTS--4.3%
45,000 Duracell International, Inc. ........................... 2,328,749
54,000 Gillette Co. ........................................... 2,814,750
15,700 Procter & Gamble Co. ................................... 1,303,100
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6,446,599
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HOTELS & RESTAURANTS--2.7%
31,900 Boston Chicken, Inc. (c)............................... 1,024,788
50,000 McDonalds Corp. ....................................... 2,256,250
56,000 Primadonna Resorts, Inc. (c)............................ 826,000
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4,107,038
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCKS--CONTINUED
SHARES VALUE (A)
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- -
INSURANCE--4.1%
45,000 American International Group, Inc. ..................... $ 4,162,500
32,000 EXEL Ltd. .............................................. 1,952,000
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6,114,500
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MEDIA AND ENTERTAINMENT--3.1%
41,500 Walt Disney Co. ........................................ 2,448,500
46,000 Viacom, Inc. Class "B'.................................. 2,179,250
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4,627,750
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NATURAL GAS--PIPELINES--1.5%
60,000 Enron Corp. ........................................... 2,287,500
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OFFICE EQUIPMENT--6.8%
32,500 Cisco Systems, Inc. (c)................................ 2,425,313
42,000 Hewlett Packard Co. ................................... 3,517,500
34,500 Parametric Technology Corp. ........................... 2,294,250
69,000 Silicon Graphics, Inc. (c).............................. 1,897,500
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10,134,563
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OIL--INDEPENDENT PRODUCERS--2.5%
70,000 Anadarko Petroleum Corp. ............................... 3,788,750
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PHOTOGRAPHIC--2.5%
55,000 Eastman Kodak Co. ...................................... 3,685,000
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RETAIL--5.9%
70,000 CUC International (c)................................... 2,388,749
125,000 Office Depot, Inc. (c)................................. 2,468,750
75,000 Office Max, Inc. (c).................................... 1,678,125
74,500 PetsMart, Inc. (c)...................................... 2,309,500
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8,845,124
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TELECOMMUNICATIONS--4.0%
16,000 Glenayre Technologies, Inc. (c)......................... 996,000
67,500 Qualcomm, Inc. (c)...................................... 2,902,500
57,000 Tellabs, Inc. (c)....................................... 2,109,000
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6,007,500
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TOBACCO--2.1%
35,000 Philip Morris Companies, Inc. ......................... 3,167,500
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Total Common Stocks (Identified Cost $116,864,051)...... 144,007,200
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<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
FACE
AMOUNT VALUE (A)
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- -
SHORT TERM INVESTMENTS--4.0%
$6,077,000 Repurchase agreement with State Street Bank & Trust
Co. dated 12/29/95 at 5.000% to be repurchased at
$6,080,376 on 1/02/96 collateralized by $5,755,000
U.S. Treasury Note 7.125% due 9/30/99 with a value
of $6,207,250..................................... $ 6,077,000
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Total Short-Term Investments (Identified Cost
$6,077,000)....................................... 6,077,000
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Total Investments--100.0% (Identified Cost
$122,941,051)(b).................................. 150,084,200
Cash, receivables and other assets................ 372,920
Liabilities........................................ (365,213)
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Total Net Assets--100%............................. $150,091,907
============
<FN>
(a) See Note 1A.
(b) Federal Tax Information: At December 31, 1995 the net
unrealized appreciation on investments based on cost of
$122,941,051 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................................................. $ 31,917,058
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value......... (4,773,909)
------------
Net unrealized appreciation............................... $ 27,143,149
============
(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 values of
ADRs are significantly influenced by trading on exchanges
not located in the United States or Canada.
</TABLE>
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STATEMENT OF ASSETS & LIABILITIES
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December 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Investments at value.................................. $150,084,200
Cash.................................................. 173
Receivable for:
Fund shares sold...................................... 162,648
Dividends and interest................................ 165,515
Unamortized organization expense...................... 36,584
Prepaid registration expense.......................... 8,000
------------
150,457,120
LIABILITIES
Payable for:
Fund shares redeemed.................................. $150,371
Dividends declared.................................... 23,922
Accrued expenses:
Management fees....................................... 96,270
Deferred trustees' fees............................... 4,785
Accounting and administrative......................... 3,900
Other expenses........................................ 85,965
--------
365,213
------------
$150,091,907
============
NET ASSETS
Net Assets consist of:
Capital paid in....................................... $118,767,428
Accumulated net realized gains........................ 4,181,330
Unrealized appreciation on investments................ 27,143,149
------------
NET ASSETS............................................. $150,091,907
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($123,504,050 divided by 6,709,516 shares of
beneficial interest).................................. $18.41
======
Offering price per share (100/94.25 of $18.41)......... $19.53*
======
Net asset value and offering price of Class B shares
($26,234,116 divided by 1,450,032 shares of beneficial
interest)............................................. $18.09**
======
Net asset value and offering price of Class C shares
($353,741 divided by 19,563 shares of beneficial
interest)............................................. $18.08
======
Identified cost of investments......................... $122,941,051
============
<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 charge.
</TABLE>
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STATEMENT OF OPERATIONS
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Year Ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................. $ 1,072,704(a)
Interest.............................................. 166,479
-----------
1,239,183
Expenses
Management fees....................................... $989,864
Service fees--Class A................................. 277,682
Service and distribution fees--Class B................ 207,706
Service and distribution fees--Class C................ 1,362
Trustees' fees and expenses........................... 23,271
Accounting and administrative......................... 47,876
Custodian............................................. 105,394
Transfer agent........................................ 446,623
Audit and tax services................................ 41,000
Legal................................................. 21,592
Printing.............................................. 44,059
Registration.......................................... 44,026
Amortization of organization expenses................. 17,863
Miscellaneous......................................... 8,353
--------
Total expenses........................................ 2,276,671
-----------
Net investment loss................................... (1,037,488)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on Investments--net..................... 15,135,922
Unrealized appreciation on Investments--net .......... 19,442,310
-----------
Net gain on investment transactions................... 34,578,232
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NET INCREASE IN NET ASSETS FROM OPERATIONS............. $33,540,744
===========
<FN>
(a) Net of foreign taxes of: $448.
</TABLE>
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STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss............................... $ (587,279) $ (1,037,488)
Net realized gain (loss) on investments........... (544,430) 15,135,922
Unrealized appreciation (depreciation) on
investments...................................... (853,950) 19,442,310
------------ ------------
Increase (decrease) in net assets from operations. (1,985,659) 33,540,744
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain on investments
Class A........................................... 0 (7,789,254)
Class B........................................... 0 (1,581,720)
Class C........................................... 0 (14,547)
------------ ------------
0 (9,385,521)
------------ ------------
Increase in net assets derived from capital share
transactions..................................... 7,695,257 14,743,856
------------ ------------
Total increase in net assets...................... 5,709,598 38,899,079
NET ASSETS
Beginning of the year............................. 105,483,230 111,192,828
------------ ------------
End of the year................................... $111,192,828 $150,091,907
============ ============
(OVER)/UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the year............................. $ 0 $ (578,964)
============ ============
End of the year................................... $ (578,964) $ 0
============ ============
</TABLE>
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FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
CLASS A
----------------------------------------
AUGUST 3(*)
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------
1992 1993 1994 1995
------------ ------- ------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 12.50 $ 14.23 $ 15.27 $ 15.02
------- ------- ------- --------
Income From Investment Operations
Net Investment Income (loss)........ 0.02 0.00 (0.08)
(0.11)++
Net Realized and Unrealized Gain
(Loss) on Investments.............. 1.84 1.12 (0.17) 4.74
------- ------- ------- --------
Total From Investment Operations.... 1.86 1.12 (0.25) 4.63
------- ------- ------- --------
Less Distributions
Dividends From Net Investment
Income............................. (0.02) 0.00 0.00 0.00
Distributions From Net Realized
Capital Gains...................... (0.11) (0.08) 0.00 (1.24)
------- ------- ------- --------
Total Distributions................. (0.13) (0.08) 0.00 (1.24)
------- ------- ------- --------
Net Asset Value, End of Period...... $ 14.23 $ 15.27 $ 15.02 $ 18.41
======= ======= ======= ========
Total Return (%).................... 14.9*** 7.9 (1.6) 30.7
Ratio of Operating Expenses to
Average Net Assets (%)+............ 1.00** 1.23 1.63 1.61
Ratio of Net Investment Income
(loss) to Average Net Assets (%)... 0.74** (0.03) (0.45) (0.67)
Portfolio Turnover Rate (%)......... 15 77 82 69
Net Assets, End of Period (000)..... $34,772 $98,735 $95,803 $123,504
<FN>
+The ratio of operating expenses to
average net assets without giving
effect to the voluntary expense
limitations described in Note 4 to
the Financial Statements would have
been (%)......................... 2.20** 1.58 -- --
++Per share net investment income
(loss) does not reflect the current
period's reclassification of
permanent differences between book
and tax basis net investment income
(loss). See Note 1d.
*Commencement of Operations.
**Computed on an annualized basis.
***Not computed on an annualized
basis.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------- ------------
SEPTEMBER 13(*) YEAR YEAR YEAR
THROUGH ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1995
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $14.79 $ 15.24 $ 14.89 $14.89
------ ------- ------- ------
Income From Investment
Operations
Net Investment Income
(loss)................. 0.00 (0.08) (0.16)++ (0.09)++
Net Realized and
Unrealized Gain (Loss)
on Investments......... 0.53 (0.27) 4.60 4.52
------- ------- ------- ------
Total From Investment
Operations............. 0.53 (0.35) 4.44 4.43
------- ------- ------- ------
Less Distributions
Dividends From Net
Investment Income...... 0.00 0.00 0.00 0.00
Distributions From Net
Realized Capital Gains. (0.08) 0.00 (1.24) (1.24)
------- -------- ------- ------
Total Distributions..... (0.08) 0.00 (1.24) (1.24)
------- -------- ------- ------
Net Asset Value, End of
Period................. $15.24 $ 14.89 $ 18.09 $18.08
====== ======= ======= ======
Total Return (%)........ 3.6*** (2.3) 29.7 29.7
Ratio of Operating
Expenses to
Average Net Assets (%)+. 2.29** 2.38 2.36 2.36
Ratio of Net Investment
Income (loss) to
Average Net Assets (%). 1.15)** (1.20) (1.42) (1.42)
Portfolio Turnover Rate
(%).................... 77 82 69 69
Net Assets, End of
Period (000)........... $6,748 15,390 $26,234 $ 354
<FN>
+The ratio of operating
expenses to average net
assets without giving
effect to the voluntary
expense limitations
described in Note 4 to
the Financial
Statements would have
been (%)............. 2.29** -- -- --
++Per share net
investment income
(loss) does not reflect
the current period's
reclassification of
permanent differences
between book and tax
basis net investment
income (loss). See Note
1d.
*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 and Class C shares. The Fund commenced its
public offering of Class B shares on September 13, 1993 and of Class C shares
on December 30, 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. 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 income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Interest income for the Funds 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.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--Continued
- --------------------------------------------------------------------------------
December 31, 1995
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 relating to shareholder
distributions 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 portfolio's ability to dispose of the underlying
securities.
F. ORGANIZATION EXPENSE. Costs incurred in fiscal 1992 in connection with the
Fund's organization and registration, amounting to approximately $75,980 in the
aggregate, were paid by the Fund and are being amortized by the Fund based on
projected annual average net assets over 60 months.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the
Fund for the year ended December 31, 1995 were $92,679,252 and $88,644,651,
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:
<TABLE>
<CAPTION>
FEES EARNED ANNUAL PERCENTAGE RATE ANNUAL NET ASSET VALUE LEVELS
- ----------- ---------------------- -----------------------------
<S> <C> <C>
$989,864 0.750% the first $200 million
0.700% the next $300 million
0.650% the excess over $500 million
</TABLE>
<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 $47,876 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 $333,332 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 $277,682 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
$563,284.
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 $51,927 and $340 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
$155,779 and $1,022 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 $479,210.
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:
<TABLE>
<S> <C>
Annual Retainer $2,400
Meeting Fee $125/meeting
Committee Meeting Fee $75/meeting
Committee Chairman Retainer $125/year
</TABLE>
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 three classes, Class A, Class B
and Class C capital stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold............... 1,854,656 $ 27,571,569 1,535,548 $ 27,180,134
Shares issued in
connection with the
reinvestment of:
Distributions from net
realized gain........... 0 0 401,895 7,531,962
---------- ------------ ---------- ------------
1,854,656 27,571,569 1,937,443 34,712,096
Shares repurchased........ (1,944,564) (28,617,642) (1,605,071) (27,758,920)
---------- ------------ ---------- ------------
Net increase (decrease)... (89,908) (1,046,073) 332,372 6,953,176
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
Shares sold............... 700,346 $ 10,332,881 486,105 $ 8,582,384
Shares issued in
connection with the
reinvestment of:
Distributions from net
realized gain........... 0 0 82,435 1,520,869
---------- ------------ ---------- ------------
700,346 10,332,881 568,540 10,103,253
Shares repurchased........ (109,499) (1,591,551) (152,230) (2,660,581)
---------- ------------ ---------- ------------
Net increase.............. 590,847 8,741,330 416,310 7,442,672
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
Shares sold............... 19,788 $ 352,389
Shares issued in
connection with the
reinvestment of:
Distributions from net
realized gain........... 772 14,201
---------- ------------
20,560 366,590
Shares repurchased........ (997) (18,582)
---------- ------------
Net increase ............. 19,563 348,008
---------- ------------ ---------- ------------
Increase derived from
capital shares
transactions............. 500,939 $ 7,695,257 768,245 $ 14,743,856
========== ============ ========== ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of NEW ENGLAND CAPITAL GROWTH 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 Capital Growth 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 provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 7, 1996
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
At a special shareholders' meeting held on December 28, 1995, shareholders of
the Capital Growth Fund voted for the following proposals:
<TABLE>
<CAPTION>
VOTED ABSTAINED BROKER
VOTED FOR AGAINST VOTES NON-VOTES TOTAL
VOTES
------------- ----------- ----------- ---------- ------
- -------
<S> <C> <C> <C> <C> <C>
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. 3,812,527.611 100,425.627 147,065.695
4,060,018.933
============= =========== ===========
2. To approve a new
Advisory Agreement
between the Fund and
New England Funds
Management, L.P.
("NEFM") 3,767,864.506 122,354.089 146,845.338 22,955.000
4,060,018.933
============= =========== =========== ==========
3. To approve a related
Sub-Advisory
Agreement between
NEFM and such Fund's
current investment
adviser. 3,754,110.865 130,823.390 152,129.678 22,955.000
4,060,018.933
============= =========== =========== ==========
</TABLE>
<PAGE>
- ------------------------------------------------------------------------
Regular Investing Pays
- ------------------------------------------------------------------------
FIVE GOOD REASONS TO INVEST REGULARLY
1. It's an easy way to build assets
2. It's 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 Funds' 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 can't always
call us during regular business hours? With Tele#Facts, New England Funds'
24-hours a day automated telephone system, you can call us any time that's
convenient for you - day or night!
By calling 1-800-346-5984 from any Touch-ToneRegistration Mark 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 you'll enjoy this easy-to-use
and convenient service from New England Funds!
<PAGE>
- -----------------------------------------------------------------------
SAVING FOR RETIREMENT
- -----------------------------------------------------------------------
An Early Start Can Make a Big Difference
With today's lengthening life spans, you may be retired for 20 years or more
after you complete your working career. Living these retirement years the way
you've dreamed of will require considerable financial resources. While it's
never too late to start a retirement savings program, it's certainly never
too early: The sooner you begin, the longer the time your money has to grow.
The chart below illustrates this point dramatically. One investor starts at
age 30, saves for just 10 years, then leaves the investment to grow. The
second investor starts 10 years later but saves much longer - for 25 years,
in fact. Can you guess which investor accumulates the greater retirement nest
egg?
For the answer, look at the chart.
AN EARLY START CAN MAKE A BIG DIFFERENCE
[A chart in the form of a line graph appears here, comparing the growth of
investments made for 10 years by an investor who begins investing at age 30 to
the growth of investments made for twenty-five years by an investor who begins
investing at age 40. A hypothetical appreciation of 10% is assumed. The data
points from the graph are as follows:]
Investor A - Begins at age 30 for 10 years:
Age Growth of Investments
30 $2,000
35 $15,431
40 $35,062
45 $90,943
55 $146,464
60 $235,882
65 $379,890
Investor B - Begins investing at age 40 for 25 years:
Age Growth of Investments
40 $2,000
45 $15,431
50 $37,062
55 $71,899
60 $128,005
65 $216,364
Assumes 10% hypothetical appreciation. For illustrative purposes only and not
indicative of future performance of any New England Fund.
Investor A invested $20,000, less than half of investor B's commitment - and
for less than half the time. Yet investor A wound up with a much greater
retirement nest egg. The reason? It's all thanks to an early start.
New England Funds has prepared a number of informative retirement planning
guides. Call your financial representative or New England Funds today, and
ask for the guide that best fits your personal needs.
<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 Fund's current prospectus, which contains
information about distribution charges, management and other items of interest.
Investors are advised to read the prospectus carefully before investing.
<PAGE>
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
NEW ENGLAND FUNDS
Where the best Minds Meet[TM]
399 Boylston Street
Boston, Massachusetts
02116
[ARTWORK]
QUALITY
TESTED SERVICE
1996
DALBAR
HONORS COMMITMENT TO:
INVESTORS
CG56
[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
"See accompanying notes to the financial statements")
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 and similar graphic symbols are omitted.
(7) Page numbering is different.
