<PAGE>
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SEMIANNUAL REPORT
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[LOGO]
New England Funds(R)
Where The Best Minds Meet(R)
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New England Value Fund
[GRAPHIC]
- ------------------
June 30, 1997
- ------------------
<PAGE>
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AUGUST 1997
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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 VALUE FUND
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AWARD-WINNING SERVICE -- TWO YEARS RUNNING
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- --------------------- For two years running we're proud to announce that
[LOGO] 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>
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NEW ENGLAND VALUE FUND
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[A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class A Shares, since 6/30/87, compared to the S&P 500
Index. The data points from the graph are as follows:]
- --------------------------------------------------------------------------------
A $10,000 INVESTMENT IN CLASS A SHARES
- --------------------------------------------------------------------------------
COMPARED TO STANDARD & POOR'S 500(R) INDEX(4)
JUNE 1987 - JUNE 1997
Net Asset With Maximum S&P 500
Value(1) Sales Charge(2) Index(4)
6/30/87 $10,000 $ 9,425 $10,000
6/88 $ 8,624 $ 8,128 $ 9,310
6/89 $ 9,342 $ 8,804 $11,220
6/90 $10,469 $ 9,867 $13,061
6/91 $10,671 $10,058 $14,026
6/92 $12,191 $11,490 $15,915
6/93 $14,173 $13,358 $18,076
6/94 $15,134 $14,264 $18,396
6/95 $18,285 $17,233 $23,178
6/96 $22,002 $20,737 $29,188
6/97 $29,001 $27,333 $39,295
This illustration represents past performance of Class A shares and cannot
predict future results. Investment return and principal value may vary,
resulting in a gain or loss on the sale of shares. Class B, Class C and Class Y
share performance will be greater or less than that shown based on differences
in inception date, fees and sales charges. All Index and Fund performance
assumes reinvested distributions.
<PAGE>
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NEW ENGLAND VALUE FUND
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AVERAGE ANNUAL TOTAL RETURNS 6/30/97
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CLASS A (Inception 6/5/70) YTD 1 Year 5 Years 10 Years
Net Asset Value(1) 12.92% 31.81% 18.93% 11.24%
With Max. Sales Charge(2) 6.38 24.23 17.51 10.58
Standard & Poor's 500(4) 20.59 34.63 19.73 14.60
Lipper Growth & Income Avg.(5) 15.52 28.09 17.26 12.67
- --------------------------------------------------------------------------------
CLASS B (Inception 9/13/93) YTD 1 Year 3 Years Since Inception
Net Asset Value(1) 12.46% 30.75% 23.25% 18.87%
With CDSC(3) 7.46 25.75 22.59 18.38
Standard & Poor's 500(4) 20.59 34.63 28.79 21.75
Lipper Growth & Income Avg.(5) 15.52 28.09 23.54 18.09
- --------------------------------------------------------------------------------
CLASS C (Inception 12/30/94) YTD 1 Year Since Inception
Net Asset Value(1) 12.58% 30.91% 27.94%
Standard & Poor's 500(4) 20.59 34.63 33.31
Lipper Growth & Income Avg.(5) 15.52 28.09 27.53
- --------------------------------------------------------------------------------
CLASS Y (Inception 3/31/94) YTD 1 Year 3 Years Since Inception
Net Asset Value(1) 13.09% 32.11% 24.42% 22.68%
Standard & Poor's 500(4) 20.59 34.63 28.79 26.47
Lipper Growth & Income Avg.(5) 15.52 28.09 23.54 21.44
These returns represent past performance. Investment return and principal value
will fluctuate so that shares, upon redemption, may be worth more or less than
original cost. Class Y shares are available only to certain institutional
investors. Share price and return may vary.
NOTES TO CHARTS
(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 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 Composite Index of 500 stocks(R) (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 VALUE FUND
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QUESTIONS & ANSWERS WITH PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
[Photos of Carol McMurtrie,
and Tricia Mills]
Loomis, Sayles & Company, L.P.
Q. How did New England Value Fund perform in the first half of 1997?
For the six-month period ending June 30, 1997, your Fund produced a total return
of 12.92% (Class A shares at net asset value).
We're pleased to report that Lipper ranked your Fund's Class A shares in the top
24% (#126 out of 544) of its growth and income funds peer group for the one-year
period ended June 30, 1997. Longer term, your Fund ranks #55 out of 215 for five
years and #106 out of 126 for 10 years.
Q. How did changes in the market affect the Fund's performance?
The first half of 1997 was a turbulent one in terms of stock market performance.
Stock price movements did not reflect fundamental company developments so much
as the improvement in the overall financial outlook: stronger-than-expected
economic growth with stable inflation and stable interest rates. Also
influencing price movements were liquidity demands, particularly from large
index funds, which favor larger-cap stocks.
Q. How did changes within the portfolio affect performance?
An overweighting in strong financial stocks, such as NationsBank (up 32% through
6/30/97), contributed to Fund performance. Several other companies, including
Philips NV, Everest Reinsurance, EI duPont and Federal Express, also enjoyed
returns of 30% or more.
However, developments in specific holdings, such as York International,
Greentree Financial and United Meridian, hurt the portfolio's performance during
the first six months of the year. In the case of United Meridian, an oil and gas
exploration company, temporary setbacks in exploration activities off the coast
of West Africa and in onshore Texas prospects concerned stock investors and
caused the stock to lag the market. Longer term, the fundamental investment case
remains intact, as it does for both York International and Green Tree Financial.
We continued to focus on stock selection, adding such companies such as Warnaco,
a clothing manufacturer, Dayton Hudson, a department store/discount store
retailer and two new issues in the technology sector -- Symantec, a software
company and 3Com, a data networking company. What all these companies have in
common are good-to-excellent growth prospects selling at a substantial
price-to-earnings discount to the market.
Q. What is your outlook for the next six months?
Over the balance of 1997, we expect the rate of economic growth to moderate from
the high and unsustainable level achieved in the first quarter. At the same
time, inflation should remain in check while interest rates may move within a
fairly narrow range around current levels. We may also see the stock market's
volatility of the past few months continue through the rest of the year.
This environment underscores the value of careful stock selection, which will
remain key to performance in the next six months. We continue to emphasize
mid-capitalization stocks with low price-to-earnings ratios, believing that
their recent lagging performance relative to large-cap growth stocks has created
exceptional value.
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Important note: Effective in August 1997, your Fund's management team consists
of Carol C. McMurtrie, Tricia H. Mills and Roderic Dillon (not pictured in
this report).
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NEW ENGLAND VALUE FUND
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YOUR FUND'S FIVE LARGEST HOLDINGS 6/30/97*
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PERCENTAGE
COMPANY OF ASSETS
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1. AETNA, INC. 2.4%
Liability insurance
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2. PHILIPS ELECTRONICS NV (ADR) 2.4%
Consumer electronics manufacturer
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3. LEGGETT & PLATT, INC. 2.4%
Housing and building materials
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4. EVEREST REINSURANCE HOLDINGS, INC. 2.4%
Liability insurance
- --------------------------------------------------------------------------------
5. CARNIVAL CORP. 2.3%
Cruise line operator
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YOUR FUND'S TEN LARGEST STOCK SECTORS AS OF 6/30/97*
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PERCENTAGE
INDUSTRY OF ASSETS
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1. HEALTH CARE-SERVICES 8.3%
2. BANKS 8.0%
3. INSURANCE 7.8%
4. CHEMICALS 7.0%
5. HOUSING AND BUILDING MATERIALS 6.4%
6. CONGLOMERATES 6.4%
7. FREIGHT TRANSPORTATION 5.7%
8. TELECOMMUNICATION 5.6%
9. FINANCIAL SERVICES 4.8%
10. AEROSPACE 4.7%
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*Portfolio holdings and asset allocations will vary.
<PAGE>
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PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Investments as of June 30, 1997
(unaudited)
COMMON STOCKS -- 97.5% OF TOTAL NET ASSETS
SHARES DESCRIPTION VALUE (a)
- --------------------------------------------------------------------------------
AEROSPACE--4.7%
41,800 Lockheed Martin Corp. ............................ $ 4,328,912
91,500 Northrop Grumman Corp. ........................... 8,034,844
148,600 Raytheon Co. ..................................... 7,578,600
------------
19,942,356
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APPAREL & TEXTILES--3.9%
186,700 Reebok International, Ltd. ....................... 8,728,225
251,500 Warnaco Group .................................... 8,016,563
------------
16,744,788
------------
BANKS--8.0%
144,800 BankAmerica Corp. ................................ 9,348,650
77,000 Chase Manhattan Corp. ............................ 7,473,812
134,400 NationsBank Corp. ................................ 8,668,800
154,300 Norwest Corp. .................................... 8,679,375
------------
34,170,637
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BEVERAGES--1.7%
292,700 Whitman Corp. .................................... 7,408,969
------------
CHEMICALS--7.0%
370,400 Crompton & Knowles Corp. ......................... 8,241,400
146,400 EI duPont de Nemours & Co. ....................... 9,204,900
62,700 PPG Industries, Inc. ............................. 3,644,438
155,100 W. R. Grace & Co. ................................ 8,549,887
------------
29,640,625
------------
COMPUTERS & BUSINESS EQUIPMENT--3.1%
147,300 3Com Corp. (c) ................................... 6,628,500
168,000 EMC Corp. (c) .................................... 6,552,000
------------
13,180,500
------------
CONGLOMERATES--6.4%
98,200 Allied Signal, Inc. .............................. 8,248,800
139,000 Dover Corp. ...................................... 8,548,500
142,200 Philips Electronics NV (ADR) (d) ................. 10,220,625
------------
27,017,925
------------
ELECTRICAL EQUIPMENT--1.9%
178,200 York International Corp. ......................... 8,197,200
------------
ELECTRONIC COMPONENTS--0.8%
24,100 Intel Corp. ...................................... 3,417,681
------------
FINANCIAL SERVICES--4.8%
255,800 Federal Home Loan Mortgage Corp. ................. 8,793,125
179,900 Federal National Mortgage Association ............ 7,848,137
104,200 Green Tree Financial Corp. ....................... 3,712,125
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20,353,387
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FREIGHT TRANSPORTATION--5.7%
95,300 Burlington Northern Santa Fe ..................... 8,565,087
271,300 Canadian Pacific, Ltd. ........................... 7,715,094
136,900 Federal Express Corp. (c) ........................ 7,905,975
------------
24,186,156
------------
HEALTH CARE - SERVICES--8.3%
100,000 Aetna, Inc. ...................................... 10,237,500
502,700 Beverly Enterprises, Inc. (c) .................... 8,168,875
218,900 Columbia/HCA Healthcare Corp. (c) ................ 8,605,506
271,770 Foundation Health Systems, Inc. (c) .............. 8,238,028
------------
35,249,909
------------
HOUSEHOLD PRODUCTS--1.8%
153,800 Kimberly-Clark Corp. ............................. 7,651,550
------------
HOUSING & BUILDING MATERIALS--6.4%
115,000 Armstrong World Industries, Inc. ................. 8,438,125
234,900 Leggett & Platt, Inc. ............................ 10,100,700
206,600 Masco Corp. ...................................... 8,625,550
------------
27,164,375
------------
INSURANCE--7.8%
125,600 ACE, Ltd. ........................................ 9,278,700
87,800 Allstate Corp. ................................... 6,409,400
252,400 Everest Reinsurance Holdings, Inc. (c) ........... 10,001,350
231,700 TIG Holdings, Inc. ............................... 7,240,625
------------
32,930,075
------------
LEISURE TIME--4.2%
225,700 American Greetings Corp. ......................... 8,379,113
231,200 Carnival Corp. ................................... 9,537,000
------------
17,916,113
------------
OIL & GAS--2.6%
253,000 Tosco Corp. ...................................... 7,574,188
121,900 United Meridian Corp.(c) ......................... 3,657,000
------------
11,231,188
------------
PACKAGING--2.0%
159,500 Crown Cork & Seal Company, Inc. .................. 8,523,281
------------
RETAIL--3.1%
158,500 Dayton Hudson Corp. .............................. 8,430,219
237,800 Office Depot, Inc. ............................... 4,622,237
------------
13,052,456
------------
RETAIL - FOOD & DRUG--1.5%
218,000 The Kroger Co. (c) ............................... 6,322,000
------------
SOFTWARE--0.6%
130,100 Symantec Corp. ................................... 2,536,950
------------
TELECOMMUNICATION--5.6%
120,600 Ameritech Corp. .................................. 8,193,263
164,000 GTE Corp. ........................................ 7,195,500
134,423 SBC Communications, Inc. ......................... 8,317,423
------------
23,706,186
------------
TOBACCO--3.6%
79,200 Loews Corp. ...................................... 7,929,900
263,900 UST, Inc. ........................................ 7,323,225
------------
15,253,125
------------
TRUCKING & FREIGHT FORWARDING--2.0%
255,800 Ryder Systems, Inc. .............................. 8,441,400
------------
Total Common Stocks (Identified Cost $301,139,201). 414,238,832
------------
SHORT TERM INVESTMENT--4.3%
FACE
AMOUNT
- --------------------------------------------------------------------------------
$18,375,000 Associates Corp. North America,
6.080%, 7/01/97 ................................. 18,375,000
------------
Total Short Term Investment (Identified
Cost $18,375,000) ............................... 18,375,000
------------
Total Investments--101.8% (Identified
Cost $319,514,201) (b) .......................... 432,613,832
Other assets less liabilities .................... (7,839,577)
------------
Total Net Assets--100% ............................ $424,774,255
============
(a) See Note 1a.
(b) Federal Tax Information:
At June 30, 1997 the net unrealized appreciation on
investments based on cost of $319,514,201 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 ............................................. $117,311,211
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................... (4,211,580)
------------
Net unrealized appreciation ........................ $113,099,631
============
(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.
<PAGE>
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STATEMENT OF ASSETS & LIABILITIES
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<TABLE>
<CAPTION>
June 30, 1997
(unaudited)
ASSETS
<S> <C> <C>
Investments at value ..................................... $432,613,832
Cash ..................................................... 739
Receivable for:
Fund shares sold ....................................... 1,188,749
Dividends and interest ................................. 323,240
Foreign taxes .......................................... 2,886
Prepaid registration expense ............................. 8,000
------------
434,137,446
LIABILITIES
Payable for:
Securities purchased ................................... $4,372,920
Fund shares redeemed ................................... 4,574,559
Withholding taxes ...................................... 3,501
Accrued expenses:
Management fees ........................................ 251,533
Deferred trustees' fees ................................ 84,523
Accounting and administrative .......................... 5,915
Other expenses ......................................... 70,240
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9,363,191
------------
NET ASSETS ................................................. $424,774,255
============
Net Assets consist of:
Capital paid in ........................................ $283,731,398
Undistributed net investment income .................... 572,265
Accumulated net realized gains ......................... 27,370,759
Unrealized appreciation on investments and foreign
currency transactions ................................ 113,099,833
------------
NET ASSETS ................................................. $424,774,255
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($330,763,260 divided by 30,526,440 shares of beneficial
interest) .............................................. $10.84
======
Offering price per share (100/94.25 of $10.84) ............. $11.50*
======
Net asset value and offering price of Class B shares
($68,206,122 divided by 6,406,293 shares of beneficial
interest) .............................................. $10.65**
======
Net asset value and offering price of Class C shares
($5,059,973 divided by 474,916 shares of beneficial
interest) .............................................. $10.65
======
Net asset value and offering price of Class Y shares
($20,744,900 divided by 1,920,698 shares of
beneficial interest) ..................................... $10.80
======
Identified cost of investments ............................. $319,514,201
============
*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.
</TABLE>
<PAGE>
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1997
(unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Dividends ............................................. $ 2,766,823 (a)
Interest .............................................. 348,704
-----------
3,115,527
Expenses
Management fees ..................................... $ 1,386,601
Service fees - Class A .............................. 382,912
Service and distribution fees - Class B ............. 280,581
Service and distribution fees - Class C ............. 20,975
Trustees' fees and expenses ......................... 10,844
Accounting and administrative ....................... 34,953
Custodian ........................................... 68,666
Transfer agent ...................................... 366,169
Audit and tax services .............................. 16,100
Legal ............................................... 9,956
Printing ............................................ 31,668
Registration ........................................ 39,855
Miscellaneous ....................................... 15,243
-----------
Total expenses ........................................ 2,664,523
-----------
Net investment income ................................. 451,004
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on Investments - net .................... 18,686,504
-----------
Unrealized appreciation on:
Investments - net ..................................... 28,772,259
Foreign currency transactions - net ................... 256
-----------
28,772,515
-----------
Net gain on investment transactions ................... 47,459,019
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............. $47,910,023
===========
(a) Net of foreign taxes of: $25,508.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(unaudited)
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ------------
FROM OPERATIONS
Net investment income ................... $ 2,113,117 $ 451,004
Net realized gain on investments ........ 41,007,345 18,686,504
Unrealized appreciation on investments
and foreign currency transactions ..... 30,101,917 28,772,515
------------ ------------
Increase in net assets from operations .. 73,222,379 47,910,023
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A ............................... (1,859,247) 0
Class B ............................... (44,342) 0
Class C ............................... (3,710) 0
Class Y ............................... (105,836) 0
Net realized gain on investments
Class A ............................... (35,730,736) 0
Class B ............................... (5,470,122) 0
Class C ............................... (360,682) 0
Class Y ............................... (1,371,598) 0
------------ ------------
(44,946,273) 0
------------ ------------
Increase in net assets derived from
capital share transactions ............ 57,024,198 14,622,272
------------ ------------
Total increase in net assets ............ 85,300,304 62,532,295
NET ASSETS
Beginning of the period ................. 276,941,656 362,241,960
------------ ------------
End of the period ....................... $362,241,960 $424,774,255
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ................. $ 91,904 $ 121,261
============ ============
End of the period ....................... $ 121,261 $ 572,265
============ ============
See accompanying notes to financial statements.
<PAGE>
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FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ............... $ 6.69 $ 7.28 $ 7.87 $ 7.27 $ 8.78 $ 9.60
------ ------ ------ ------ ------ ------
Income From Investment
Operations
Net Investment Income ..... 0.09 0.07 0.08 0.10 0.06 0.02
Net Realized and Unrealized
Gain (Loss) on
Investments ............. 1.02 1.16 (0.19) 2.21 2.12 1.22
------ ------ ------ ------ ------ ------
Total From Investment
Operations .............. 1.11 1.23 (0.11) 2.31 2.18 1.24
------ ------ ------ ------ ------ ------
Less Distributions
Dividends From Net
Investment Income ....... (0.09) (0.07) (0.08) (0.09) (0.06) 0.00
Distributions From Net
Realized Capital Gains .. (0.43) (0.57) (0.41) (0.71) (1.30) 0.00
------ ------ ------ ------ ------ ------
Total Distributions ....... (0.52) (0.64) (0.49) (0.80) (1.36) 0.00
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period .................. $ 7.28 $ 7.87 $ 7.27 $ 8.78 $ 9.60 $10.84
====== ====== ====== ====== ====== ======
Total Return (%) (a) ...... 16.6 17.0 (1.4) 32.3 26.3 12.9
Ratio of Operating Expenses
to Average Net Assets (%). 1.32 1.34 1.37 1.37 1.31 1.29(c)
Ratio of Net Investment
Income to Average
Net Assets (%) .......... 1.26 0.83 1.00 1.22 0.78 0.34(c)
Portfolio Turnover Rate (%) 38 40 29 52 64 39(c)
Average Commission Rate (b) -- -- -- -- $ 0.0574 $ 0.0590
Net Assets, End of Period
(000) ................... $156,240 $189,779 $190,869 $241,038 $297,581 $330,763
(a) A sales charge is not reflected in total return calculations. Periods less
than one year are not annualized.
(b) 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.
(c) Computed on an annualized basis.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------
(unaudited)
CLASS B
---------------------------------------------------------
SEPTEMBER 13(a) SIX MONTHS
THROUGH YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------ JUNE 30,
1993 1994 1995 1996 1997
------------------------------------------ ----------
Net Asset Value,
Beginning of Period ... $ 7.97 $ 7.85 $ 7.23 $ 8.70 $ 9.47
------ ------ ------ ------ ------
Income From Investment
Operations
Net Investment Income .... 0.11 0.04 0.05 0.01 (0.02)
Net Realized and
Unrealized Gain (Loss)
on Investments ......... 0.39 (0.20) 2.18 2.07 1.20
------ ------ ------ ------ ------
Total From Investment
Operations ............. 0.50 (0.16) 2.23 2.08 1.18
------ ------ ------ ------ ------
Less Distributions
Dividends From Net
Investment Income ...... (0.05) (0.05) (0.05) (0.01) 0.00
Distributions From Net
Realized Capital Gains . (0.57) (0.41) (0.71) (1.30) 0.00
------ ------ ------ ------ ------
Total Distributions ...... (0.62) (0.46) (0.76) (1.31) 0.00
------ ------ ------ ------ ------
Net Asset Value,
End of Period........... $ 7.85 $ 7.23 $ 8.70 $ 9.47 $10.65
====== ====== ====== ====== ======
Total Return (%) (c) ..... 6.5 (2.0) 31.3 25.4 12.5
Ratio of Operating
Expenses to Average
Net Assets (%) ......... 2.16(b) 2.12 2.12 2.06 2.04(b)
Ratio of Net Investment
Income to Average
Net Assets (%) ......... 0.05(b) 0.25 0.47 0.03 (0.41)(b)
Portfolio Turnover Rate (%) 40 29 52 64 39 (b)
Average Commission Rate (d) -- -- -- $0.0574 $0.0590
Net Assets, End of
Period (000) .......... $2,182 $13,830 $27,941 $48,210 $68,206
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c) A contingent deferred sales charge is not reflected in total return
calculations. 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.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------
(unaudited)
CLASS C
--------------------------------------
YEAR ENDED, SIX MONTHS
DECEMBER 31, ENDED
---------------------- JUNE 30,
1995 1996 1997
---- ---- ----
Net Asset Value, Beginning of Period .... $ 7.23 $ 8.70 $ 9.46
------ ------ ------
Income From Investment Operations
Net Investment Income ................... 0.05 0.01 (0.02)
Net Realized and Unrealized Gain (Loss)
on Investments ........................ 2.18 2.06 1.21
------ ------ ------
Total From Investment Operations ........ 2.23 2.07 1.19
------ ------ ------
Less Distributions
Dividends From Net Investment Income .... 0.05) (0.01) 0.00
Distributions From Net Realized
Capital Gains ......................... (0.71) (1.30) 0.00
------ ------ ------
Total Distributions ..................... (0.76) (1.31) 0.00
------ ------ ------
Net Asset Value, End of Period .......... $ 8.70 $ 9.46 $10.65
====== ====== ======
Total Return (%) (b) .................... 31.3 25.2 12.6
Ratio of Operating Expenses to
Average Net Assets (%) ................ 2.12 2.06 2.04(a)
Ratio of Net Investment Income to
Average Net Assets (%) ................ 0.47 0.03 (0.41)(a)
Portfolio Turnover Rate (%) ............. 52 64 39 (a)
Average Commission Rate (c) ............. -- $0.0574 $0.0590
Net Assets, End of Period (000) ......... $1,224 $ 3,735 $5,060
(a) Computed on an annualized basis.
(b) Periods less than one year are not computed on an annualized basis.
(c) 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.
See accompanying notes to financial statements.
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- -------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
CLASS Y
---------------------------------------------------------
MARCH 31(a) SIX MONTHS
THROUGH YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, -------------------------- JUNE 30,
1994 1995 1994 1997
----------- ---- ---- -----
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 7.57 $ 7.24 $ 8.75 $ 9.55
------ ------ ------ ------
Income From Investment Operations
Net Investment Income ................. 0.10 0.12 0.08 0.03
Net Realized and Unrealized Gain (Loss)
on Investments ...................... 0.08 2.21 2.10 1.22
------ ------ ------ ------
Total From Investment Operations ...... 0.18 2.33 2.18 1.25
------ ------ ------ ------
Less Distributions
Dividends From Net Investment Income .. (0.10) (0.11) (0.08) 0.00
Distributions From Net Realized Capital
Gains ................................. (0.41) (0.71) (1.30) 0.00
------ ------ ------ ------
Total Distributions ................... (0.51) (0.82) (1.38) 0.00
------ ------ ------ ------
Net Asset Value, End of Period ........ $ 7.24 $ 8.75 $ 9.55 $10.80
====== ====== ====== ======
Total Return (%)(c) ................... 2.4 32.8 26.4 13.1
Ratio of Operating Expenses to
Average Net Assets (%) .............. 1.54(b) 1.12 1.06 1.04(b)
Ratio of Net Investment Income to
Average Net Assets (%) .............. 1.05(b) 1.47 1.03 0.59(b)
Portfolio Turnover Rate (%) ........... 29 52 64 39(b)
Average Commission Rate (d) ........... -- -- $0.0574 $0.0590
Net Assets, End of Period (000) ....... $4,001 $6,738 $12,716 $20,745
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c) Periods less than one year are not computed on an annualized basis.
(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.
</TABLE>
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, Class C and Class Y shares. The Fund commenced
its public offering of Class B shares on September 13, 1993, of Class C shares
on December 30, 1994 and of its Class Y shares on March 31, 1994. Class A shares
are sold with a maximum front end sales charge of 5.75%. Class B shares do not
pay a front end sales charge, but pay a higher ongoing distribution fee than
Class A shares, for eight years (at which point they automatically convert to
Class A shares), and are subject to a contingent deferred sales charge if those
shares are redeemed within 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. Class Y shares do not pay a
front end sales charge, a contingent deferred sales charge or distribution fee.
They are intended for institutional investors with a minimum of $1,000,000 to
invest. Expenses of the Fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class (including
the Rule 12b-1 service and distribution fees applicable to such class), and
votes as a class only with respect to its own Rule 12b-1 plan. Shares of each
class would receive their pro-rata share of the net assets of the Fund, if the
Fund were liquidated. In addition, the Trustees approve separate dividends on
each class of shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
A. SECURITY VALUATION. Equity securities are valued on the basis of valuations
furnished by a pricing service, authorized by the Board of Trustees, which
service provides the last reported sale price for securities listed on an
applicable securities exchange or on the NASDAQ national market system, or, if
no sale was reported and in the case of over-the counter securities not so
listed, the last reported bid price. Short-term obligations with a remaining
maturity of less than sixty days are stated at amortized cost, which
approximates market value.
B. SECURITY TRANSACTIONS AND RELATED 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 Fund is increased by the accretion of discount.
In determining net gain or loss on securities sold, the cost of securities has
been determined on the identified cost basis.
C. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute to its shareholders all of its income and any net realized capital
gains, at least annually. Accordingly, no provision for federal income tax has
been made.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. The timing and characterization of certain
income and capital gains distributions are determined in accordance with federal
tax regulations which may differ from generally accepted accounting principles.
Permanent book and tax basis differences will result in reclassification to the
capital accounts.
E. REPURCHASE AGREEMENTS. The Fund, through its custodian, receives delivery of
the underlying securities collateralizing repurchase agreements. It is the
Fund's policy that the market value of the collateral be at least equal to 100%
of the repurchase price. The Fund's 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.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the
Fund for the six months ended June 30, 1997 were $85,710,613 and $72,389,440,
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 0.535% of the first $200 million of
the Fund's average daily net assets, 0.350% 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
-----------
$534,616 New England Funds Management, L.P.
$851,985 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 $34,953 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 $263,106 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 $382,912 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 $1,651,994.
Under the Class B and Class C Plan, the Fund pays New England Funds a monthly
service fee at the annual rate of up to 0.25% of the average daily net assets
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 $70,145 and $5,244 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 $210,436 and $15,731 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 $526,080.
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 $2,099
Meeting Fee $114/meeting
Committee Meeting Fee $68/meeting
Committee Chairman Retainer $152/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 four classes, Class A, Class B,
Class C and Class Y capital stock. Transactions in capital shares were as
follows:
<PAGE>
<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 .......................... 4,640,471 $43,287,185 2,757,054 $27,477,566
Shares issued in connection with
the reinvestment of:
Dividends from net investment
income ............................ 189,563 1,810,327 0 0
Distributions from net realized gain 3,878,685 35,082,583 0 0
--------- ----------- --------- -----------
8,708,719 80,180,095 2,757,054 27,477,566
Shares repurchased ................... (5,137,827) (47,889,236) (3,241,338) (32,519,569)
--------- ----------- --------- -----------
Net increase (decrease) .............. 3,570,892 $32,290,859 (484,284) $(5,042,003)
--------- ----------- --------- -----------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
--------------------------- ---------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- --------- ----------- --------- -----------
Shares sold .......................... 1,765,384 $16,311,333 1,691,325 $16,601,793
Shares issued in connection with
the reinvestment of:
Dividends from net investment
income ............................ 4,900 46,158 0 0
Distributions from net realized gain 582,246 5,194,870 0 0
--------- ----------- --------- -----------
2,352,530 21,552,361 1,691,325 16,601,793
Shares repurchased ................... (471,337) (4,330,620) (377,599) (3,694,735)
--------- ----------- --------- -----------
Net increase ......................... 1,881,193 $17,221,741 1,313,726 $12,907,058
--------- ----------- --------- -----------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
--------------------------- ---------------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------- --------- ----------- --------- -----------
Shares sold .......................... 289,530 $ 2,676,616 320,372 $ 3,144,864
Shares issued in connection with
the reinvestment of:
Dividends from net investment
income ............................ 372 3,501 0 0
Distributions from net realized gain 37,948 339,671 0 0
--------- ----------- --------- -----------
327,850 3,019,788 320,372 3,144,864
Shares repurchased ................... (73,512) (674,174) (240,475) (2,319,294)
--------- ----------- --------- -----------
Net increase ......................... 254,338 $ 2,345,614 79,897 $ 825,570
--------- ----------- --------- -----------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
--------------------------- ---------------------------
CLASS Y SHARES AMOUNT SHARES AMOUNT
- ------- --------- ----------- --------- -----------
Shares sold .......................... 473,688 $ 4,397,728 671,111 $ 6,744,915
Shares issued in connection with
the reinvestment of:
Dividends from net investment
income............................. 11,141 105,840 0 0
Distributions from net realized gain 151,895 1,371,593 0 0
--------- ----------- --------- -----------
636,724 5,875,161 671,111 6,744,915
Shares repurchased ................... (75,923) (709,177) (81,645) (813,268)
--------- ----------- --------- -----------
Net increase ......................... 560,801 5,165,984 589,466 5,931,647
--------- ----------- --------- -----------
Increase derived from capital shares
transactions ....................... 6,267,224 $57,024,198 1,498,805 $14,622,272
========= =========== ========= ===========
</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>
- --------------------------------------------------------------------------------
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 and other items of interest.
Investors are advised to read the prospectus carefully before investing.
<PAGE>
--------------
(Logo)(R) BULK RATE
NEW ENGLAND FUNDS(R) U.S. POSTAGE
Where The Best Minds Meet(R) PAID
BROCKTON, MA
PERMIT NO. 770
--------------
---------------------
399 Boylston Street
Boston, Massachusetts
02116
---------------------
- --------------------- ---------------------
[Logo] [Logo]
QUALITY QUALITY
TESTED SERVICE TESTED SERVICE
1995 1996
- --------------------- ---------------------
DALBAR DALBAR
HONORS COMMITMENT TO: HONORS COMMITMENT TO:
INVESTORS INVESTORS
- --------------------- ---------------------
VL58-0697
[recycle symbol] Printed On Recycled Paper
