NEW ENGLAND FUNDS TRUST I, N-30D, 1997-09-03

NEW ENGLAND FUNDS TRUST I
N-30D, 1997-09-03

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<PAGE>

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SEMIANNUAL REPORT
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[LOGO]
NEW ENGLAND FUNDS(R)
Where The Best Minds Meet(R)

- --------------------------------------------------------------------------------

New England
Capital Growth Fund

[Graphic Omitted]

- ------------------
JUNE 30, 1997
- ------------------

<PAGE>
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AUGUST 1997
- --------------------------------------------------------------------------------

DEAR NEW ENGLAND FUNDS SHAREHOLDER,

[Photo of Henry L.P. Schmelzer]

Spurred by bright economic prospects, the broader U.S. stock market continued
its record run during the first half of the year, experiencing only short-lived
setbacks along the way. These fresh gains come on top of significant increases
in 1995 and 1996, leaving many investors wary of what might come next. Bond
markets, meanwhile, contended with some volatility in interest rates, but have
been relatively stable this year.

Building a portfolio for variable markets
Investors should not abandon well-conceived financial programs for fear of a
down market. Whether today's market levels are excessive -- only hindsight will
tell. So you should remain patient and realistic, alert to the possibility of
periodic market declines. Consultation with your financial representative should
be a regular part of your planning. Your representative can help you take
prudent steps to adjust your portfolio, whatever the next trend may bring.

Strategic initiatives deliver shareholder benefits
Four years ago New England Funds embarked on a new strategic direction.
Expressed in our corporate slogan Where The Best Minds Meet(R), this new thrust
has meant improved performance for many of our funds, award-winning service and
a host of behind-the-scenes enhancements designed to help our shareholders and
their financial representatives.

Our sights, like yours, are focused on the long term. At the same time, we work
to enhance service every day. We also keep a disciplined eye on the performance
that each fund manager achieves. Through these persistent efforts we're
convinced we'll merit your continued commitment and loyalty. Thank you for your
confidence in New England Funds.

Sincerely,

/s/ Henry L.P. Schmelzer
Henry L.P. Schmelzer, President

<PAGE>

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NEW ENGLAND CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------

AWARD-WINNING SERVICE -- TWO YEARS RUNNING
- --------------------------------------------------------------------------------

- --------------------- For two years running we're proud to announce that
DALBAR, Dalbar, an independent evaluator of mutual fund
QUALITY service, has awarded New England Funds its Quality
TESTED SERVICE Tested Service Seal for "providing the highest
1996 tier of service excellence in the mutual fund
- --------------------- industry." New England Funds is one of just three
DALBAR mutual fund companies to earn this distinction in
HONORS COMMITMENT TO: each of the last two years -- another reason why
INVESTORS we are becoming known as the mutual fund company
- --------------------- Where The Best Minds Meet.

INVESTMENT RESULTS THROUGH JUNE 30, 1997
- --------------------------------------------------------------------------------

Putting Performance in Perspective
The charts comparing your Fund's performance to a benchmark index provide 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.

See next page [symbol - hand pointing right]

<PAGE>
- --------------------------------------------------------------------------------
NEW ENGLAND CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------

[A chart in the form of a line graph appears here illustratng a $10,000
investment in the Fund since inception 8/3/92, compared to the S&P Index over
the same period. The data for this chart are as follows:]

- --------------------------------------------------------------------------------
A $10,000 INVESTMENT IN CLASS A SHARES
- --------------------------------------------------------------------------------

COMPARED TO STANDARD & POOR'S 500(R) INDEX(4)
SINCE INCEPTION THROUGH JUNE 1997

Net Asset With Maximum S&P 500
Value(1) Sales Charge(2) Index(4)

8/3/92 $10,000 $ 9,425 $10,000
6/93 $11,838 $11,157 $10,918
6/94 $11,221 $10,576 $11,112
6/95 $14,696 $13,851 $14,000
6/96 $17,609 $16,597 $17,630
6/97 $20,700 $19,509 $23,735

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>
- --------------------------------------------------------------------------------
NEW ENGLAND CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS 6/30/97
- --------------------------------------------------------------------------------
SINCE
CLASS A (Inception 8/3/92) YTD 1 YEAR 3 YEARS INCEPTION
Net Asset Value(1) 10.90% 17.55% 22.64% 15.97%
With Max. Sales Charge(2) 4.50 10.79 20.25 14.58
Standard & Poor's 500(4) 20.59 34.63 28.79 19.14
Lipper Growth Fund Average(5) 14.28 23.96 22.86 16.60
- --------------------------------------------------------------------------------
SINCE
CLASS B (Inception 9/13/93) YTD 1 YEAR 3 YEARS INCEPTION
Net Asset Value(1) 10.46% 16.65% 21.71% 14.72%
With CDSC(3) 5.46 11.65 21.03 14.18
Standard & Poor's 500(4) 20.59 34.63 28.79 21.75
Lipper Growth Fund Average(5) 14.28 23.96 22.86 16.84
- --------------------------------------------------------------------------------
Class C (Inception 12/30/94) YTD 1 YEAR SINCE INCEPTION
Net Asset Value(1) 10.46% 16.66% 22.62%
Standard & Poor's 500(4) 20.59 34.63 33.31
Lipper Growth Fund Average(5) 14.28 23.96 25.85

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

(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) 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) Contingent Deferred Sales Charge (CDSC) performance assumes a maximum 5%
sales charge is applied to a redemption of Class B shares. The sales charge
will decrease over time, declining to zero six years after the purchase of
shares.

(4) Standard & Poor's 500(R) 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.
<PAGE>
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NEW ENGLAND CAPITAL GROWTH FUND
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QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------

Q. Please discuss the Fund's performance in light of the current investment
environment.

[Photos omitted]
Scott Pape and Bruce Ebel
Loomis, Sayles & Co., L.P.

New England Capital Growth Fund produced total return of 10.90% (Class A shares
at net asset value) for the semiannual period ended June 30, 1997. While Fund
performance lagged behind the 20.59% Return on the Standard & Poor's 500 Stock
Index(R), results were more in line with the average growth fund return of
14.28%, as measured by the Lipper Growth Fund Average.

Our position in smaller, emerging growth stocks hampered results relative to
large company stocks. As in 1996, the market remained narrow in its focus --
favoring a limited number of large-capitalization stocks for their liquidity and
perceived lower risk. Mid- and smaller-capitalization companies failed to keep
pace, often despite strong fundamentals. In May and June, these emerging sectors
began to recover and performance improved.

Q. What were the Fund's key portfolio sectors and strategies?

We emphasized consumer staples, including household products, food, beverage and
health care companies with less economic sensitivity and strong international
recognition. We also liked technology, a sector whose customers continue to reap
the benefits of improving price performance. In business services, another group
we favored, credit-card processors, insurers and others continued to prosper as
a basic raw material -- computing power -- became less costly. Larger holdings
that did well include Microsoft, Coca Cola, Gillette and American International
Group (AIG).

Meanwhile, we minimized holdings in utilities, where we see little growth ahead,
and in energy, where current earnings growth rates appear unsustainable.

We committed more than 30% of the Fund to emerging growth companies, a sector
where valuations are more attractive than they have been in years. Compared to
larger companies, these firms rely less on cost cuts and restructuring to boost
earnings, focusing instead on product innovation and niche markets. Some
better-known holdings are Parametric Technologies, CUC International, Thermo
Electron and Tellabs.

Q. What is your market outlook? What does it imply for the Fund?

Factors supporting current price levels should persist: moderate economic
growth, low inflation, stable interest rates, record earnings and strong dollar
flows into financial assets.

Appreciation may slow for those few corporate giants that have accounted for
much of the market's rise. We believe investor interest will broaden to
encompass smaller companies whose valuations appear reasonable. Finally, we
remain committed to our basic strategy of owning "America's premier companies"
- -- industry leaders with outstanding growth potential.

- --------------------------------------------------------------------------------
YOUR FUND'S FIVE LARGEST INVESTMENTS 6/30/97
- --------------------------------------------------------------------------------
COMPANY PERCENTAGE OF ASSETS
- --------------------------------------------------------------------------------
1. STARBUCKS CORP. 2.54
- --------------------------------------------------------------------------------
2. GILLETTE CO. 2.51
- --------------------------------------------------------------------------------
3. MICROSOFT CORP. 2.35
- --------------------------------------------------------------------------------
4. GENERAL ELECTRIC CO. 2.20
- --------------------------------------------------------------------------------
5. CUC INTERNATIONAL, INC. 2.19
- --------------------------------------------------------------------------------

Portfolio holdings subject to change.

<PAGE>
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PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Investments as of June 30, 1997
(unaudited)

<TABLE>
<CAPTION>
COMMON STOCKS--99.8% OF TOTAL NET ASSETS

SHARES DESCRIPTION VALUE (a)
- -------------------------------------------------------------------------------------
AEROSPACE--1.5%
<C> <S> <C>
55,200 Boeing Co. (c) .............................................. $ 2,929,050
------------
AIRLINES--1.1%
79,800 Southwest Airlines .......................................... 2,064,825
------------
APPAREL & TEXTILES--0.5%
17,900 NIKE, Inc., Class B ......................................... 1,044,913
------------
BANKS--2.0%
7,600 Chase Manhattan Corp. ....................................... 737,675
36,000 First Bank Systems, Inc. .................................... 3,073,500
------------
3,811,175
------------
BEVERAGES--1.3%
36,300 Coca-Cola Co. ............................................... 2,450,250
------------
BUSINESS SERVICES--14.2%
80,000 ABR Information Services, Inc. (c) .......................... 2,320,000
30,000 Aurum Software, Inc. ........................................ 720,000
67,000 Automatic Data Processing, Inc. ............................. 3,149,000
85,000 Checkfree Corp. (c) ......................................... 1,498,125
58,600 Cintas Corp. ................................................ 4,028,750
50,000 Danka Business Systems (ADR) (d) ............................ 2,043,750
87,600 First Data Corp. ............................................ 3,848,925
91,250 Fiserv, Inc. (c) ............................................ 4,072,031
71,250 Paychex, Inc. ............................................... 2,707,500
9,600 Stewart Enterprises, Inc. ................................... 403,200
44,000 Sun Guard Data Systems ...................................... 2,046,000
35,625 Sykes Enterprises, Inc. (c) ................................. 926,250
------------
27,763,531
------------
CHEMICALS--1.8%
81,900 Monsanto Co. ................................................ 3,526,819
------------
COMPUTER SOFTWARE & SERVICES--10.4%
21,400 Computer Associates International, Inc. ..................... 1,191,713
13,000 Electronic Arts ............................................. 437,125
45,400 HBO & Co. ................................................... 3,126,925
49,400 HNC Software, Inc. (c) ...................................... 1,883,375
33,000 McAfee Associates, Inc. ..................................... 2,083,125
36,300 Microsoft Corp. (c) ......................................... 4,587,412
60,700 Oracle Systems Corp. (c) .................................... 3,057,763
92,500 Parametric Technology Corp. (c) ............................. 3,937,031
------------
20,304,469
------------
COMPUTERS & BUSINESS EQUIPMENT--8.3%
46,200 3Com Corp. (c) .............................................. 2,079,000
74,600 Cascade Communications Corp. (c) ............................ 2,060,825
43,500 Cisco Systems, Inc. (c) ..................................... 2,919,938
35,200 Hewlett-Packard Co. ......................................... 1,971,200
71,900 PairGain Technologies, Inc. (c) ............................. 1,114,450
46,000 QUALCOMM, Inc. (c) .......................................... 2,340,250
68,500 Tellabs, Inc. (c) ........................................... 3,827,437
------------
16,313,100
------------
CONGLOMERATES--1.3%
72,000 Thermo Electron Corp. (c) ................................... 2,448,000
------------
CONSTRUCTION MATERIALS--0.6%
25,000 Fastenal Co. ................................................ 1,225,000
------------
CONTAINERS & GLASS--0.4%
13,300 Crown Cork & Seal Company, Inc. ............................. 710,719
------------
ELECTRICAL EQUIPMENT--2.2%
65,600 General Electric Co. ........................................ 4,288,600
------------
ELECTRONIC COMPONENTS--6.7%
20,000 Altera Corp. (c) ............................................ 1,010,000
23,000 Intel Corp. ................................................. 3,261,688
60,000 LSI Logic Corp. (c) ......................................... 1,920,000
18,750 Molex, Inc. ................................................. 684,375
90,325 Molex, Inc., Class A ........................................ 3,150,084
44,200 Solectron Corp. (c) ......................................... 3,094,000
------------
13,120,147
------------
ELECTRONICS--1.7%
48,900 Andrew Corp. (c) ............................................ 1,375,312
31,000 Cymer, Inc. (c) ............................................. 1,511,250
4,800 Texas Instruments, Inc. ..................................... 403,500
------------
3,290,062
------------
FINANCIAL SERVICES--2.7%
36,700 Charles Schwab Corp. ........................................ 1,493,231
80,000 MGIC Investment Corp. ....................................... 3,835,000
------------
5,328,231
------------
FOOD & BEVERAGES--0.5%
8,400 Hershey Foods Corp. ......................................... 464,625
5,800 Pioneer HI Bred International, Inc. ......................... 464,000
------------
928,625
------------
GAS & PIPELINE UTILITIES--0.5%
21,900 Enron Corp. ................................................. 893,794
------------
HEALTH CARE--DRUGS--9.6%
32,000 Abbott Laboratories ......................................... 2,136,000
56,600 Amgen, Inc. ................................................. 3,289,875
47,700 Biogen, Inc. (c) ........................................... 1,615,838
18,200 Eli Lilly & Co. ............................................. 1,989,487
36,300 Johnson & Johnson ........................................... 2,336,812
39,600 Merck & Co. ................................................. 4,098,600
230,000 Oncor, Inc. (c) ............................................. 905,625
12,100 Pfizer, Inc. ................................................ 1,445,950
65,000 Somatogen, Inc. (c) ......................................... 300,625
4,700 Warner-Lambert Co. .......................................... 583,975
------------
18,702,787
------------
HEALTH CARE--MEDICAL TECHNOLOGY--3.2%
29,300 Boston Scientific Corp. (c) ................................. 1,800,119
64,700 CardioThoracic Systems, Inc. ................................ 905,800
70,000 Idexx Laboratories, Inc. (c) ................................ 870,625
32,200 Medtronic, Inc. (c) ......................................... 2,608,200
------------
6,184,744
------------
HEALTH CARE--SERVICES--3.7%
54,600 Columbia/HCA Healthcare Corp. (c) ........................... 2,146,463
139,400 Healthsouth Corp. (c) ....................................... 3,476,287
46,500 Phycor, Inc. (c) ............................................ 1,601,344
------------
7,224,094
------------
HOTELS & RESTAURANTS--4.2%
11,600 Boston Chicken, Inc. (c) .................................... 162,400
18,600 Circus Circus Enterprises, Inc. (c) ......................... 458,025
20,000 Einstein Noah Bagel Corp. (c) ............................... 238,750
65,000 Lone Star Steakhouse & Saloon (c) ........................... 1,690,000
40,000 Primadonna Resorts, Inc. (c) ................................ 772,500
127,500 Starbucks Corp. (c) ......................................... 4,964,531
------------
8,286,206
------------
HOUSEHOLD PRODUCTS--4.5%
19,500 Corning, Inc. ............................................... 1,084,687
51,760 Gillette Co. ................................................ 4,904,260
15,700 Kimberly-Clark Corp. ........................................ 781,075
50,000 Newell Co. .................................................. 1,981,250
------------
8,751,272
------------
INSURANCE--2.0%
23,700 American International Group, Inc. (c) ...................... 3,540,187
7,100 Travelers, Inc. ............................................. 447,744
------------
3,987,931
------------
MACHINERY--1.5%
60,600 Illinois Tool Works, Inc. ................................... 3,026,213
------------
MEDIA & ENTERTAINMENT--1.0%
25,500 Walt Disney Co. ............................................. 2,046,375
------------
OIL--INDEPENDANT PRODUCERS--1.4%
46,100 Anadarko Petroleum Corp. .................................... 2,766,000
------------
OIL--MAJOR INTEGRATED--0.3%
7,000 Amoco Corp. ................................................. 608,563
------------
OIL SERVICES--2.0%
26,800 Baker Hughes, Inc. .......................................... 1,036,825
30,700 Rowan Companies, (c) ........................................ 865,356
16,100 Schlumberger, Ltd. .......................................... 2,012,500
------------
3,914,681
------------
PHOTOGRAPHY--0.6%
15,600 Eastman Kodak Co. ........................................... 1,197,300
------------
RETAIL--0.5%
26,400 Wal-Mart Stores, Inc. ....................................... 892,650
------------
RETAIL--SPECIALTY--5.3%
166,000 CUC International, Inc. (c) ................................. 4,284,875
45,000 Home Depot, Inc. ............................................ 3,102,187
251,700 Petsmart, Inc. (c) .......................................... 2,894,550
------------
10,281,612
------------
TELECOMMUNICATION--0.7%
11,200 MCI Communications Corp. .................................... 428,750
20,600 Paging Network, Inc. (c) .................................... 180,894
25,500 WorldCom, Inc. (c) .......................................... 816,000
------------
1,425,644
------------
TOBACCO--1.6%
71,000 Philip Morris Companies, Inc. ............................... 3,150,625
------------
Total Common Stocks (Identified Cost $147,079,104) .......... 194,888,007
------------
</TABLE>

SHORT TERM INVESTMENTS--0.2%

<TABLE>
<CAPTION>
FACE
AMOUNT DESCRIPTION VALUE (a)
- -----------------------------------------------------------------------------------------
<C> <S> <C>
$515,956 Associates Corp. North America, 6.100%, 7/01/97 ............. $ 515,956
------------
Total Short Term Investments (Identified Cost $515,956) ..... 515,956
------------
Total Investments--100.0% (Identified Cost $147,595,060) (b) 195,403,963
Other assets less liabilities ............................... (60,269)
------------
Total Net Assets--100% ...................................... $195,343,694
============
(a)See Note 1a.
(b)Federal Tax Information:
At June 30, 1997 the net unrealized appreciation on investments
based on cost of $147,595,060 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 .............. $ 55,614,484
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value .............. (7,805,581)
------------
Net unrealized appreciation ............................. $ 47,808,903
============
(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.

See accompanying notes to financial statements.

</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1997
(unaudited)

<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments at value .................................. $195,403,963
Receivable for:
Fund shares sold .................................... 138,255
Securities sold ..................................... 279,991
Dividends and interest .............................. 111,864
Foreign taxes ....................................... 141
Unamortized organization expense ...................... 5,899
Prepaid registration expense .......................... 8,000
------------
195,948,113
LIABILITIES
Payable for:
Securities purchased ................................ $255,313
Fund shares redeemed ................................ 150,673
Withholding taxes ................................... 794
Accrued expenses:
Management fees ..................................... 119,266
Deferred trustees' fees ............................. 10,902
Accounting and administrative ....................... 3,450
Other expenses ...................................... 64,021
--------
604,419
------------
NET ASSETS .............................................. $195,343,694
============
Net Assets consist of:
Capital paid in ..................................... $136,665,578
Undistributed net investment losses ................. (948,137)
Accumulated net realized gains ...................... 11,817,350
Unrealized appreciation on investments .............. 47,808,903
------------
NET ASSETS .............................................. $195,343,694
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($150,953,176 divided by 7,064,288 shares of
beneficial interest) ................................. $21.37
======
Offering price per share
(100/94.25 of $21.37) .................................. $22.67*
======
Net asset value and offering price of Class B shares
($43,566,727 divided by 2,104,866 shares of beneficial
interest) ............................................. $20.70**
======
Net asset value and offering price of Class C shares
($823,791 divided by 39,794 shares of beneficial interest) $20.70
======
Identified cost of investments ........................ $147,595,060
============
</TABLE>

*Based upon single purchases of less than $50,000.
Reduced sales charges apply for purchases in excess of this amount.
**Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.

See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six months Ended June 30, 1997
(unaudited)

<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Dividends ................................................. $ 549,370(a)
Interest .................................................. 37,274
----------
586,644
Expenses
Management fees ......................................... $683,324
Service fees - Class A .................................. 177,728
Service and distribution fees - Class B ................. 196,757
Service and distribution fees - Class C ................. 3,458
Trustees' fees and expenses ............................. 11,373
Accounting and administrative ........................... 20,702
Custodian ............................................... 44,320
Transfer agent .......................................... 293,309
Audit and tax services .................................. 16,000
Legal ................................................... 9,956
Printing ................................................ 26,106
Registration ............................................ 26,984
Amortization of organization expenses ................... 11,950
Miscellaneous ........................................... 5,322
--------
Total expenses ............................................ 1,527,289
-----------
Net investment loss ....................................... (940,645)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on Investments - net ........................ 7,745,307
Unrealized appreciation on Investments - net ............. 12,278,829
-----------
Net gain on investment transactions ....................... 20,024,136
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .................. $19,083,491
===========
</TABLE>

(a) Net of foreign taxes of: $1,210

See accompanying notes to financial statements.

<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

(unaudited)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
---------------- ----------------
FROM OPERATIONS
<S> <C> <C>
Net investment loss ..................................... $ (1,428,178) $ (940,645)
Net realized gain on investments ........................ 18,744,410 7,745,307
Unrealized appreciation on investments .................. 8,386,925 12,278,829
------------- ------------
Increase in net assets from operations .................. 25,703,157 19,083,491
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gain on investments
Class A ............................................... (14,938,405) 0
Class B ............................................... (3,853,333) 0
Class C ............................................... (66,669) 0
------------- ------------
(18,858,407) 0
------------- ------------
Increase (decrease) in net assets derived from capital
share transactions 22,332,195 (3,008,649)
------------- ------------
Total increase in net assets ............................ 29,176,945 16,074,842

NET ASSETS
Beginning of the period ................................. 150,091,907 179,268,852
------------- ------------
End of the period ....................................... $ 179,268,852 $195,343,694
============= ============
UNDISTRIBUTED NET INVESTMENT LOSS
Beginning of the period ................................. $ 0 $ (7,492)
============= ============
End of the period ....................................... $ (7,492) $ (948,137)
============= ============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

(unaudited)

<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
AUGUST 3(c) SIX MONTHS
THROUGH YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, --------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .... $12.50 $14.23 $15.27 $15.02 $18.41 $19.27
------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income (Loss) ........... 0.02 0.00 (0.08) (0.11)(b) (0.14)(g) (0.09)
Net Realized and Unrealized Gain
(Loss) on Investments ................. 1.84 1.12 (0.17) 4.74 3.22 2.19
------ ------ ------ ------ ------ ------
Total From Investment Operations ...... 1.86 1.12 (0.25) 4.63 3.08 2.10
------ ------ ------ ------ ------ ------
Less Distributions
Dividends From Net Investment Income ... (0.02) 0.00 0.00 0.00 0.00 0.00
Distributions From Net Realized Capital
Gains ................................. (0.11) (0.08) 0.00 (1.24) (2.22) 0.00
------ ------ ------ ------ ------ ------
Total Distributions .................... (0.13) (0.08) 0.00 (1.24) (2.22) 0.00
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period ......... $14.23 $15.27 $15.02 $18.41 $19.27 $21.37
====== ====== ====== ====== ====== ======
Total Return (%) (e) .................... 14.9 7.9 (1.6) 30.7 17.1 10.9
Ratio of Operating Expenses to Average
Net Assets (%)a ....................... 1.00(d) 1.23 1.63 1.61 1.50 1.51 (d)
Ratio of Net Investment Income (loss) to
Average Net Assets (%) ................ 0.74(d) (0.03) (0.45) (0.67) (0.71) (0.87)(d)
Portfolio Turnover Rate (%) ............ 15 77 82 69 74 35 (d)
Average Commission Rate (f) ............. -- -- -- -- $ 0.0509 $ 0.0507
Net Assets, End of Period (000) ........ $ 34,772 $ 98,735 $ 95,803 $ 123,504 $ 141,326 $150,953

(a) The ratio of operating expenses to
average net assets without giving
effect to voluntary expense
limitations would have been (%) ..... 2.20(d) 1.58 -- -- -- --
(b) Per share net investment income (loss)
does not reflect the period's reclassification
of permanent differences between book and tax
basis net investment income (loss). See Note 1d.
(c) Commencement of Operations.
(d) Computed on an annualized basis.
(e) A sales charge is not reflected in total return calculations. Periods less
than one year are not annualized.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
upon which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
(g) Per share net investment income (loss) has been calculated using the
average shares outstanding during the year.
</TABLE>

See accompanying notes to financial statements.

<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- continued
- --------------------------------------------------------------------------------

(unaudited)

<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------
SEPTEMBER 13(c) SIX MONTHS
THROUGH YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ----------------------------------- JUNE 30,
1993 1994 1995 1996 1997
----------- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...... $14.79 $15.24 $14.89 $18.09 $18.74
------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income (Loss) .............. 0.00 (0.08) (0.16)(b) (0.28)(g) (0.15)
Net Realized and Unrealized Gain (Loss) on
Investments ............................. 0.53 (0.27) 4.60 3.15 2.11
------ ------ ------ ------ ------
Total From Investment Operations .......... 0.53 (0.35) 4.44 2.87 1.96
------ ------ ------ ------ ------
Less Distributions
Distributions From Net Realized Capital
Gains ................................... (0.08) 0.00 (1.24) (2.22) 0.00
------ ------ ------ ------ ------
Total Distributions ....................... (0.08) 0.00 (1.24) (2.22) 0.00
------ ------ ------ ------ ------
Net Asset Value, End of Period ............ $15.24 $14.89 $18.09 $18.74 $20.70
====== ====== ====== ====== ======
Total Return (%)(e) ....................... 3.6 (2.3) 29.7 16.2 10.5
Ratio of Operating Expenses to
Average Net Assets (%)(a) ................. 2.29 (d) 2.38 2.36 2.25 2.26 (d)
Ratio of Net Investment Income (loss) to
Average Net Assets (%) .................... (1.15)(d) (1.20) (1.42) (1.46) (1.62)(d)
Portfolio Turnover Rate (%) ............... 77 82 69 74 35 (d)
Average Commission Rate (f) ............... -- -- -- $0.0509 $0.0507
Net Assets, End of Period (000) ........... $6,748 $15,390 $26,234 $37,439 $43,567

(a) The ratio of operating expenses to
average net assets without giving
effect to voluntary expense
limitations would have been (%) ....... 2.29(d) -- -- -- --
(b) Per share net investment income (loss) does not reflect the period's
reclassification of permanent differences between book and tax basis net
investment income (loss). See Note 1d.
(c) Commencement of Operations.
(d) Computed on an annualized basis.
(e) A contingent deferred sales charge is not reflected in total return
calculations in the case of the Class B shares. Periods less than one year
are not annualized.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
upon which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
(g) Per share net investment income (loss) has been calculated using the
average shares outstanding during the year.
</TABLE>

See accompanying notes to financial statements.

(unaudited)

<TABLE>
<CAPTION>
CLASS C
-----------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------- JUNE 30,
1995 1996 1997
------ ------ ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .... $14.89 $18.08 $18.74
------ ------ ------
Income From Investment Operations
Net Investment Income (Loss) ............ (0.09)(a) (0.28)(e) (0.14)
Net Realized and Unrealized Gain (Loss)
on Investments ........................ 4.52 3.16 2.10
------ ------ ------
Total From Investment Operations ........ 4.43 2.88 1.96
------ ------ ------
Less Distributions
Distributions From Net Realized Capital
Gains ................................. (1.24) (2.22) 0.00
------ ------ ------
Total Distributions ..................... (1.24) (2.22) 0.00
------ ------ ------
Net Asset Value, End of Period .......... $18.08 $18.74 $ 20.70
====== ====== =======
Total Return (%)(c) ..................... 29.7 16.2 10.5
Ratio of Operating Expenses to Average
Net Assets (%) ........................ 2.36 2.25 2.26 (b)
Ratio of Net Investment Income (loss) to
Average Net Assets (%) ................ (1.42) (1.46) (1.62)(b)
Portfolio Turnover Rate (%) ............. 69 74 35 (b)
Average Commission Rate (d) ............. -- $0.0509 $0.0507
Net Assets, End of Period (000) ......... $354 $504 $824
</TABLE>

(a) Per share net investment income (loss) does not reflect the period's
reclassification of permanent differences between book and tax basis net
investment income (loss). See Note 1d.
(b) Computed on an annualized basis.
(c) Periods less than one year are not annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
upon which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
(e) Per share net investment income (loss) has been calculated using the
average shares outstanding during the year.

See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1997
(unaudited)

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 six years
of purchase (or five years if purchased before May 1,1997). 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 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.

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 subadviser 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.

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 six months ended June 30, 1997 were $32,310,967 and
$35,904,451, respectively.

3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund pays
management fees to its investment adviser, New England Funds Management L.P.
("NEFM") at the annual rate of 0.75% of the first $200 million of the Fund's
average daily net assets, 0.70% of the next $300 million and 0.65% of such
assets in excess of $500 million. NEFM pays the Fund's investment subadviser,
Loomis Sayles & Company, L.P. at the rate of 0.60% of the first $25 million of
the Fund's average daily net assets, 0.55% of the next $75 million and 0.50%
of the next $100 million, 0.35% of the next $300 million and 0.300% of such
assets in excess of $500 million. Certain officers and directors of NEFM are
also officers or trustees of the Fund. NEFM and Loomis Sayles & Company, L.P.
are wholly owned subsidiaries of New England Investment Companies, L.P.
("NEIC") which is a subsidiary of Metropolitan Life Insurance Company ("Met
Life"). Fees earned by NEFM and Loomis Sayles & Company, L.P. under the
management agreement in effect during the six months ended June 30, 1997 are
as follows:

FEES EARNED
-----------
$196,781 New England Funds Management, L.P.
$486,543 Loomis Sayles & Company, L.P.

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 six months ended June 30, 1997 these expenses
amounted to $20,702 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 six months ended June 30, 1997, the Fund
paid New England Funds $197,430 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 six
months ended June 30, 1997, the Fund paid New England Funds $177,728 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 June 30, 1997 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
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 six months
ended June 30, 1997, the Fund paid New England Funds $49,189 and $864 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 six months ended June 30, 1997, the Fund paid New
England Funds $147,568 and $2,594 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 six months
ended June 30, 1997 amounted to $238,950.

E. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation
directly to its officers or trustees who are directors, officers or employees
of NEFM, New England Funds, NEIC or their affiliates, other than registered
investment companies. Each other trustee is compensated by the Fund as
follows:

Annual Retainer $2,121
Meeting Fee $114/meeting
Committee Meeting Fee $68/meeting
Committee Chairman Retainer $75/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 been, had it been invested in the
Fund on the normal payment date.

4. CAPITAL SHARES. At June 30, 1997 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 SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
---------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold .......................... 1,203,520 $23,479,369 575,029 $11,250,839
Shares issued in connection with
the reinvestment of:
Distributions from net
realized gain ................... 756,936 14,477,042 0 0
--------- ----------- ------- -----------
1,960,456 37,956,411 575,029 11,250,839
Shares repurchased ................... (1,337,035) (26,121,440) (843,678) (16,556,131)
--------- ----------- ------- -----------
Net increase (decrease) .............. 623,421 $11,834,971 (268,649) $(5,305,292)
--------- ----------- ------- -----------

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
---------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -----------
Shares sold .......................... 567,615 $10,820,271 265,886 $5,096,673
Shares issued in connection with
the reinvestment of:
Distributions from net
realized gain .................... 198,737 3,703,740 0 0
--------- ----------- ------- -----------
766,352 14,524,011 265,886 5,096,673
Shares repurchased ................... (218,153) (4,167,995) (159,251) (3,056,086)
--------- ----------- ------- -----------
Net increase ......................... 548,199 $10,356,016 106,635 $ 2,040,587
--------- ----------- ------- -----------

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
---------------------------- --------------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- -----------
Shares sold .......................... 21,535 $ 414,964 22,395 $ 430,546
Shares issued in connection with
the reinvestment of:
Distributions from net
realized gain .................... 3,454 64,268 0 0
--------- ----------- ------- -----------
24,989 479,232 22,395 430,546
Shares repurchased ................... (17,682) (338,024) (9,471) (174,490)
--------- ----------- ------- -----------
Net increase ......................... 7,307 $ 141,208 12,924 $ 256,056
--------- ----------- ------- -----------

Increase (decrease) derived from
capital shares transactions ........ 1,178,927 $22,332,195 (149,090) $(3,008,649)
========= =========== ======= ===========
</TABLE>
<PAGE>

NEW ENGLAND BALANCED FUND
NEW ENGLAND VALUE FUND
SUPPLEMENT DATED AUGUST 1, 1997
TO NEW ENGLAND STOCK FUNDS CLASSES A, B AND C PROSPECTUS DATED MAY 1, 1997
AND NEW ENGLAND STOCK FUNDS CLASS Y PROSPECTUS
DATED MAY 1, 1997 (AS SUPPLEMENTED JULY 28, 1997)

THE FOLLOWING INFORMATION SUPPLEMENTS THE SECOND PARAGRAPH IN THE "FUND
MANAGEMENT" SECTION:

Carol C. McMurtrie, Tricia H. Mills and (beginning in August 1997) Roderic
Dillon are the portfolio managers of the Value Fund. Ms. McMurtrie and Ms.
Mills have served in that capacity since 1993. Ms. McMurtrie, Ms. Mills and
(beginning in August 1997) Mr. Dillon are also the portfolio managers of the
equity portion of the Balanced Fund and are responsible for allocating the
assets of the Balanced Fund between equity and fixed-income securities. Ms.
McMurtrie and Ms. Mills have served in these capacities since July 1997. The
portfolio management team for the fixed-income portion of the Balanced Fund
consists of Meri Anne Beck, John Hyll and Barr Segal, who have had portfolio
management responsibility for the Fund's fixed-income investments since 1990,
1994 and 1996, respectively. Messrs. Dillon, Hyll and Segal are Vice
Presidents of Loomis Sayles. Mr. Hyll has been employed by Loomis Sayles for
more than five years. Mr. Segal was a Senior Portfolio Manager at TCW Group
before joining Loomis Sayles in 1996. Mr. Dillon rejoins Loomis Sayles in
August 1997 following several years as principal of Dillon Capital Management.
<PAGE>

GLOSSARY FOR MUTUAL FUND INVESTORS
- --------------------------------------------------------------------------------

TOTAL RETURN - The change in value of a mutual fund investment over a specific
time period, assuming all earnings are reinvested in additional shares of the
fund. Expressed as a percentage.

INCOME DISTRIBUTIONS - Payments to shareholders resulting from the net interest
or dividend income earned by a fund's portfolio.

CAPITAL GAINS DISTRIBUTIONS - Payments to shareholders of profits earned from
selling securities in a fund's portfolio. Capital gains distributions are
usually paid once a year.

PRICE/EARNINGS RATIO - Current market price of a stock divided by its
earnings per share. Also known as the "multiple," the price/earnings ratio gives
investors an idea of how much they are paying for a company's earning power and
is a useful tool for evaluating the costs of different issues.

GROWTH INVESTING - An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.

VALUE INVESTING - A relatively conservative investment approach that focuses on
companies that may be temporarily out of favor or whose earnings or assets
aren't fully reflected in their stock prices. Value stocks will tend to have a
lower price/earnings ratio than that of growth stocks.

STANDARD & POOR'S 500 - Market value-weighted index showing the change in
aggregate market value of 500 stocks relative to the base period of 1941-1943.
It is composed mostly of companies listed on the New York Stock Exchange.
<PAGE>

- --------------------------------------------------------------------------------
NEW ENGLAND FUNDS
- --------------------------------------------------------------------------------

STOCK FUNDS
Star Small Cap Fund
Growth Fund
Star Advisers Fund
Capital Growth Fund
Growth Opportunities Fund
Value Fund
Balanced Fund

INTERNATIONAL STOCK FUNDS
International Equity Fund
Star Worldwide Fund

BOND FUNDS
High Income Fund
Strategic Income Fund
Bond Income Fund
Government Securities 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.

VISIT OUR WORLD WIDE WEB SITE AT www.mutualfunds.com

New England Funds, L.P., Distributor
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 fees
and other items of interest. Investors are advised to read the
prospectus carefully before investing.
<PAGE>

----------------
Bulk Rate
U.S. Postage
Paid
Brockton, MA
Permit No. 770
----------------
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NEW ENGLAND FUNDS(R)

Where The Best Minds Meet(R)

- -----------------------
399 Boylston Street
Boston, Massachusetts
02116
- -----------------------

- --------------------- ---------------------
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QUALITY QUALITY
TESTED SERVICE TESTED SERVICE
1995 1996
- --------------------- ---------------------
DALBAR DALBAR
HONORS COMMITMENT TO: HONORS COMMITMENT TO:
INVESTORS INVESTORS
- --------------------- ---------------------

CG58-0697

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