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Supplement dated August 3, 1998 to the May 1, 1998 Prospectuses for New England
Star Funds Class A, B and C (as supplemented July 15, 1998) and New England
Stock Funds Class Y
FOR NEW ENGLAND STAR WORLDWIDE FUND
CHANGE IN PORTFOLIO MANAGERS
Oscar Castro and John Boich of Montgomery have assumed day-to-day responsibility
for the management of the Montgomery segment of the New England Star Worldwide
Fund. Messrs. Castro and Boich are each a Senior Portfolio Manager and Principal
of Montgomery and each has been employed by Montgomery since 1993. They have
co-managed Montgomery's Global Opportunities Fund since its inception on
September 30, 1993.
CHANGE IN INVESTMENT STRATEGY
The paragraph regarding Montgomery in the "Fund Investments - Star Worldwide
Fund" section of the Prospectus is revised to read as follows:
Montgomery Asset Management, LLC ("Montgomery") normally will invest at
least 65% of its segment of the Fund's portfolio in equity securities of
companies, which may be of any size, throughout the world. The segment of
the Fund managed by Montgomery emphasizes common stocks, but may also
invest up to 35% of its segment in debt securities, including up to 5% in
debt securities rated below investment grade. Montgomery may invest its
segment of the Fund in securities denominated in one or more foreign
currencies.
Montgomery invests in companies that it believes have potential for
above-average growth in sales and earnings on a sustained basis and that
are reasonably priced. A number of factors are considered in evaluating
potential investments, including a company's per share sales and earnings
growth; return on capital; balance sheet; financial and accounting
policies; overall financial strength; industry sector; competitive
advantages; and quality of management.
Messrs. Castro and Boich have reviewed the portfolio holdings of the Montgomery
segment of the Fund and expect that it will take approximately 2 to 3 months to
reposition the Montgomery segment's portfolio holdings to match the new
investment strategy as set forth above.
REDUCTION IN SUBADVISORY FEE
The subadvisory fees payable by NEFM to Montgomery are now at the annual rate
of:
0.85% of the first $25 million of the average daily net assets of the
segment of the Fund that Montgomery manages, 0.65% of the next $25
million of such assets, and 0.55% of such assets in excess of $50
million.
This change in subadvisory fees paid by NEFM does not affect the management fee
paid by the Fund.
All of the above changes are effective August 3, 1998.
FOR NEW ENGLAND STAR ADVISERS FUND
The following supplements the disclosure found in the paragraph in the "Fund
Management" section of the Prospectus describing subadvisory fees paid by NEFM
to Janus Capital Corporation ("Janus Capital"):
For the Star Advisers Fund, NEFM pays Janus Capital a subadvisory fee at
the annual rate of 0.55% of the first $50 million of the average daily net
assets of the segment of the Fund that Janus Capital manages and 0.50% of
such assets in excess of $50 million.
