<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary information statement [ ] Confidential, for use of the
Commission only (as permitted
by Rule 14c-5(d)(2))
[X] Definitive information statement
NEW ENGLAND FUNDS TRUST I
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(Name of Registrant as Specified in Its (Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
NEW ENGLAND STAR ADVISERS FUND
NEW ENGLAND STAR WORLDWIDE FUND
INFORMATION STATEMENT
This information statement is being furnished by the Board of Trustees of
New England Funds Trust I (the "Trust") to the shareholders of New England
Star Advisers Fund (the "Star Advisers Fund") and New England Star Worldwide
Fund (the "Star Worldwide Fund") (each a "Fund" and together, the "Funds"),
each a series of the Trust. This information statement is being mailed on or
about June 18, 1998 to all the Funds' shareholders of record as of May 18,
1998. A copy of each Fund's Annual Report dated December 31, 1997 may be
obtained without charge by writing to New England Funds, L.P. ("NEF") at 399
Boylston Street, Boston, Massachusetts 02116, or by calling (800) 225-5478.
NO SHAREHOLDER VOTE WILL BE TAKEN WITH RESPECT TO THE MATTERS DESCRIBED IN
THIS INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
INTRODUCTION
The Star Advisers Fund and the Star Worldwide Fund are multi-manager
mutual funds. New England Funds Management, L.P. ("NEFM") acts as adviser to
the Funds. The portfolio of the Star Advisers Fund is divided into four
segments, each of which is managed by a different money management firm, each
as sub-adviser to NEFM. The portfolio of the Star Worldwide Fund is divided
into five segments, each of which is managed by a different money management
firm, except that two of the segments are managed by the same money management
firm, each as sub-adviser to NEFM. Prior to April 1, 1998, Founders Asset
Management, Inc. ("Founders") managed one of the segments of each Fund (each a
"Segment" and together, the "Segments") pursuant to separate sub-advisory
agreements dated August 30, 1996 (each a "Previous Sub-Advisory Agreement" and
together, the "Previous Sub-Advisory Agreements") by and between Founders and
NEFM. On April 1, 1998, Founders Asset Management LLC ("New Founders"), a 90%-
owned indirect subsidiary of Mellon Bank, N.A. ("Mellon") and surviving entity
of a merger (the "Merger") between Founders and New Founders (as described
below under "The Merger"), began managing each Segment pursuant to new sub-
advisory agreements between NEFM and New Founders dated April 1, 1998 (each a
"New Sub-Advisory Agreement" and together, the "New Sub-Advisory Agreements").
As required by the Investment Company Act of 1940 (the "1940 Act"), each
Previous Sub-Advisory Agreement provided for automatic termination in the
event of its "assignment." Because the Merger represented an ownership and
control change of Founders, it constituted an "assignment" under the 1940 Act
and thus terminated the Previous Sub-Advisory Agreements.
The 1940 Act generally provides that an investment adviser or sub-adviser
to a mutual fund may act as such only pursuant to a written contract which has
been approved by a vote of the fund's shareholders, as well as by a vote of a
majority of the trustees of the fund who are not parties to such contract or
interested persons of any party to such contract. The Trust and NEFM, however,
have received from the Securities and Exchange Commission an exemption from
the shareholder approval voting requirement in certain circumstances (the "SEC
Exemption"). Under the SEC Exemption, NEFM is permitted, under specified
conditions, to enter into new and amended sub-advisory agreements for the
management of the portfolio of a Fund or a segment thereof, including
agreements with new sub-advisers and agreements with existing sub-advisers if
there is a material change in the terms of the sub-advisory agreement or if
there is an "assignment," as defined in the 1940 Act, or other event causing
termination of the existing sub-advisory agreement, without obtaining the
approval of such Fund's shareholders of such new or amended sub-advisory
agreement. Such agreements must nevertheless be approved by the Trust's Board
of Trustees, in accordance with the requirements of the 1940 Act. One of the
conditions of the SEC Exemption is that within 90 days after entering into a
new or amended sub-advisory agreement without shareholder approval, such Fund
must provide an information statement to its shareholders setting forth
substantially the information that would be required to be contained in a
proxy statement for a meeting of shareholders to vote on the approval of the
agreement. In accordance with the SEC Exemption, the Trust is furnishing this
information statement to each Fund's shareholders in order to provide
information regarding the Merger and the New Sub-Advisory Agreements with New
Founders.
THE MERGER
Under an Agreement and Plan of Reorganization dated December 11, 1997, as
amended (the "Merger Agreement"), by and among Mellon, Founders, New Founders
and Bjorn K. Borgen, the Chairman, Chief Executive Officer, sole director and
controlling shareholder of Founders, Founders agreed to merge into New
Founders, a newly-created, wholly-owned indirect subsidiary of Mellon. On
April 1, 1998, pursuant to the Merger Agreement, Founders merged into New
Founders and thereafter ceased to exist as a separate entity. New Founders,
the surviving entity, assumed all of Founder's assets, liabilities, business,
personnel and operations upon the consummation of the Merger. The shareholders
of Founders received a total of $270 million from Mellon in consideration for
their Founders shares. Following the Merger, a group of Founders' executives
and portfolio managers purchased an aggregate 10% equity interest in New
Founders. Mr. Borgen is not a shareholder, director or officer of New
Founders.
Except as described above, the Merger did not change the management or
operations of Founders, nor any of the personnel managing the Segments or the
other services or business activities relating to the Segments. Senior members
of the Founders management team and other key Founders employees continue to
be responsible for managing the day-to-day affairs of New Founders as
employees of New Founders under written agreements. New Founders does not
believe that the Merger caused or will cause any reduction in the quality of
services now provided to each Fund, or have any adverse effect on New
Founders' ability to fulfill its obligations relating to the Funds.
ADVISORY AGREEMENTS
NEFM has acted as the Star Worldwide Fund's adviser since the Fund's
inception on December 29, 1995, and currently acts as the Fund's adviser
pursuant to an advisory agreement dated August 30, 1996 (the "Star Worldwide
Advisory Agreement"). The Star Worldwide Fund's initial shareholder approved
the Star Worldwide Advisory Agreement on December 29, 1995. The purpose of the
submission of this agreement for shareholder approval at such time was for its
initial approval upon the Star Worldwide Fund's inception and the approval of
its continuance following the change in control of NEFM in connection with the
merger of NEFM's former parent company, New England Mutual Life Insurance
Company, with and into Metropolitan Life Insurance Company ("MetLife"), with
MetLife as the surviving company, which merger was consummated on August 30,
1996 (the "MetLife Merger"). The Trustees of the Trust, at a meeting held on
May 9, 1997, approved the Star Worldwide Advisory Agreement's continuation for
a one-year period beginning on June 1, 1997.
NEFM has acted as the Star Advisers Fund's adviser since January 2, 1996,
and currently acts as the Star Advisers Fund's adviser pursuant to an advisory
agreement dated August 30, 1996, as amended May 9, 1997 (the "Star Advisers
Advisory Agreement" and together with the Star Worldwide Advisory Agreement,
the "Advisory Agreements"). (Prior to January 2, 1996, New England Investment
Companies, L.P. (now known as Nvest, L.P.) ("NEIC") acted as the Star Advisers
Fund's adviser.) The Star Advisers Fund's shareholders last approved the Star
Advisers Advisory Agreement on December 28, 1995. The purpose of the
submission of this agreement for shareholder approval at such time was for its
initial approval and to approve its continuation following the MetLife Merger.
The Trustees of the Trust, at a meeting held on May 9, 1997, approved an
amendment to the Star Advisers Advisory Agreement to reduce the management
fees payable by the Star Advisers Fund thereunder and approved the
continuation of the Star Advisers Advisory Agreement, as so amended, for a
one-year period beginning on June 1, 1997.
Under the Advisory Agreements, NEFM has overall advisory and
administrative responsibility with respect to the Funds. The Advisory
Agreements also provide that NEFM will, subject to NEFM's rights to delegate
such responsibilities to third parties, provide to the Funds both (1)
portfolio management services (defined to mean managing the investment and
reinvestment of the assets of the Funds, subject to the supervision and
control of the Trustees of the Trust) and (2) administrative services (defined
to mean furnishing or paying the expenses of the Funds for office space,
facilities and equipment, services of executive and other personnel of the
Trust and certain other administrative and general management services). Under
the Star Advisers Advisory Agreement, a management fee is payable by the Star
Advisers Fund to NEFM at the annual rate of 1.05% of the first $1 billion of
the Fund's average daily net assets and 1.00% of such assets in excess of $1
billion. Prior to May 9, 1997, the Star Advisers Advisory Agreement provided
for a management fee payable by the Star Advisers Fund to NEFM at the annual
rate of 1.05% of the Fund's average daily net assets. For the fiscal year
ended December 31, 1997, the aggregate management fee paid by the Star
Advisers Fund to NEFM under that Fund's Advisory Agreement was $4,960,311.
Under the Star Worldwide Advisory Agreement, a management fee is payable by
the Star Worldwide Fund to NEFM at the annual rate of 1.05% of the Fund's
average daily net assets. For the fiscal year ended December 31, 1997, the
aggregate management fee paid by the Star Worldwide Fund to NEFM under that
Fund's Advisory Agreement was $864,011.
PREVIOUS SUB-ADVISORY AGREEMENTS
NEFM has delegated its responsibility under the Star Advisers Advisory
Agreement and the Star Worldwide Advisory Agreement to provide portfolio
management services to each Fund to four sub-advisers and to five sub-
advisers, respectively. NEFM delegated responsibility for managing the assets
of the Segment of each Fund pursuant to the Previous Sub-Advisory Agreements.
(Prior to January 2, 1996, Founders managed the assets of each Segment
pursuant to sub-advisory agreements between Founders and NEIC.) Each Previous
Sub-Advisory Agreement required Founders to manage the investment and
reinvestment of the assets of the relevant Segment, subject to the supervision
of NEFM. Under the terms of each Previous Sub-Advisory Agreement, Founders was
authorized to effect portfolio transactions for the relevant Segment, using
its own discretion and without prior consultation with NEFM. Founders was also
required to report periodically to NEFM and the Trustees of the Trust.
Under the Previous Sub-Advisory Agreement relating to the Star Advisers
Fund, Founders was entitled to receive from NEFM (and not from the Fund) a
sub-advisory fee at the annual rate of 0.55% of the first $50 million of the
average daily net assets of the Star Advisers Fund's Segment, 0.50% of the
next $200 million of such assets and 0.475% of such assets in excess of $250
million. For the fiscal year ended December 31, 1997, the aggregate sub-
advisory fee paid by NEFM to Founders under the Previous Sub-Advisory
Agreement for the Star Advisers Fund was $1,263,834. Under the Previous Sub-
Advisory Agreement relating to the Star Worldwide Fund, Founders was entitled
to receive from NEFM (and not from the Fund) a sub-advisory fee at the annual
rate of 0.65% of the first $50 million of the average daily net assets of the
Star Worldwide Fund's Segment, 0.60% of the next $50 million of such assets
and 0.55% of the excess of $100 million of such assets. For the fiscal year
ended December 31, 1997, the aggregate sub-advisory fee paid by NEFM to
Founders under the Previous Sub-Advisory Agreement for the Star Worldwide Fund
was $291,060.
The Previous Sub-Advisory Agreements were approved by the Star Advisers
Fund's shareholders on December 28, 1995 and by the Star Worldwide Fund's
initial shareholder on December 29, 1995, respectively. The purpose of the
submission of the Previous Sub-Advisory Agreements for shareholder approval at
such time was for their initial approval and to approve their continuation
following the MetLife Merger. At a meeting held on May 9, 1997, the Trustees
of the Trust approved the continuation of each Previous Sub-Advisory Agreement
for a one-year period beginning June 1, 1997.
NEW SUB-ADVISORY AGREEMENTS
Like the Previous Sub-Advisory Agreements with respect to Founders, each
New Sub-Advisory Agreement requires New Founders to manage the investment and
reinvestment of the assets of the relevant Segment, subject to the supervision
of NEFM. Under the terms of each New Sub-Advisory Agreement, New Founders is
authorized to effect portfolio transactions for the relevant Segment, using
its own discretion and without prior consultation with NEFM. New Founders is
also required to report periodically to NEFM and the Trustees of the Trust.
Each New Sub-Advisory Agreement provides that it will continue in effect
for two years from its date of execution and thereafter from year to year if
its continuance is approved at least annually (i) by the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
relevant Fund, and (ii) by vote of a majority of the Trustees who are not
"interested persons," as that term is defined in the 1940 Act, of the Trust,
NEFM or New Founders, cast in person at a meeting called for the purpose of
voting on such approval. Any amendment to either New Sub-Advisory Agreement
must be approved by NEFM and New Founders, and, if required by law, by vote of
a majority of the outstanding voting securities of the relevant Fund and by
vote of a majority of Trustees of the Trust who are not such interested
persons, cast in person at a meeting called for the purpose of voting on such
approval. The New Sub-Advisory Agreements were approved by the Trustees of the
Trust at a meeting held on January 29, 1998.
Each New Sub-Advisory Agreement may be terminated without penalty by vote
of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the relevant Fund, upon sixty days' written
notice, or by New Founders or NEFM upon sixty days' written notice, and each
will terminate automatically in the event of its assignment. Each New Sub-
Advisory Agreement will automatically terminate if the Advisory Agreement for
the relevant Fund is terminated. Like the Previous Sub-Advisory Agreements
with respect to Founders, the New Sub-Advisory Agreements provide that New
Founders will not be subject to any liability for any error of judgment, any
mistake of law or any loss arising out of any investment or other act or
omission in the course of, connection with, or arising out of any service to
be rendered under the New Sub-Advisory Agreements, except by reason of New
Founders' willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard by New Founders
of its obligations and duties.
As compensation for its services under each New Sub-Advisory Agreement,
New Founders is entitled to receive from NEFM sub-advisory fees calculated at
the same rate as those payable to Founders under the respective Previous Sub-
Advisory Agreement described above.
Each Previous Sub-Advisory Agreement by its terms terminated upon the
Merger, since the Merger constituted a change of control of Founders for
purposes of the 1940 Act. Because of this, the Trustees of the Trust approved
the New Sub-Advisory Agreements, which became effective on April 1, 1998 upon
the consummation of the Merger. The New Sub-Advisory Agreements are
substantially identical to the Previous Sub-Advisory Agreements, except for
their dates and except that references to Founders have been changed to
references to New Founders.
The Trustees of the Trust believe that the terms of each New Sub-Advisory
Agreement are fair to, and in the best interest of, the relevant Fund and its
shareholders.
In evaluating the New Sub-Advisory Agreements, the Trustees of the Trust
considered the fact that the Previous Sub-Advisory Agreements and the New Sub-
Advisory Agreements are substantially identical to each other, including the
terms relating to the services to be provided and the fees that were payable
by NEFM to Founders or New Founders thereunder. The Trustees considered the
performance of Founders in providing services to the Segment, and the skills
and capabilities of the personnel of Founders.
The Trustees of the Trust reviewed material furnished by Founders and
Mellon. Those materials include information regarding Founders, New Founders,
Mellon, their respective affiliates and their personnel, operations and
financial condition and the terms of the Merger and the possible effects of
the Merger on the Funds and the shareholders of the Funds. It was represented
to the Trustees that Founders and Mellon believed that the operations of the
Funds and the capability of New Founders to provide services to the Segments
would not be adversely affected by the Merger and could be enhanced from the
resources of Mellon, although there could be no assurance as to any particular
benefits that may result.
In approving the New Sub-Advisory Agreements, the Trustees of the Trust
carefully evaluated the experience of Founders' key personnel in portfolio
management (all of whom continue to be employed by New Founders following the
consummation of the Merger), the arrangements made to secure the continued
service of the key personnel in portfolio management and the high quality of
services New Founders is expected to continue to provide to the Segments, and
gave careful consideration to all factors deemed to be relevant to the Funds,
including, but not limited to: (1) the performance of the Segments since the
Funds' commencement of operations; (2) the research-intensive nature and
quality of the services rendered to the Segments; (3) the importance of such
research and services to the fulfillment of the particular investment
objective of the Funds and the investment policies of the Segments; (4) that
the compensation payable to New Founders by NEFM under each New Sub-Advisory
Agreement is at the same rate as the compensation payable by NEFM to Founders
under each respective Previous Sub-Advisory Agreement; (5) that the material
terms of each New Sub-Advisory Agreements are unchanged from the terms of each
respective Previous Sub-Advisory Agreement; (6) the reputation, qualification
and background of Founders (now New Founders) and Mellon and their respective
financial conditions; (7) the commitment of New Founders to pay or reimburse
the Funds for the expenses incurred in connection with the Merger so that
shareholders of the Funds would not bear those expenses; (8) the benefits
expected to be realized as a result of New Founders' affiliation with Mellon,
including the resources of Mellon that could be available to New Founders; (9)
Founders' brokerage policies and practices, as described below (all of which
have been adopted by New Founders); and (10) other factors they deemed
relevant.
Founders and Mellon both advised the Trustees of the Trust that they
expect that there will be no diminution in the scope and quality of sub-
advisory services provided to the Segments as a result of the Merger.
Accordingly, the Trustees of the Trust believe that the Segments should
continue to receive services under the New Sub-Advisory Agreements comparable
to those they received under the Previous Sub-Advisory Agreements.
BROKERAGE POLICIES
It is the policy of New Founders, in effecting transactions in portfolio
securities for the Segments, to seek the best execution of orders at the most
favorable prices. The determination of what may constitute best execution in a
securities transaction involves a number of judgmental considerations,
including, without limitation, the overall direct net economic result to the
Segment (involving both price paid or received and any commissions and other
costs), the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, the
availability of the broker to stand ready to execute possibly difficult
transactions for the Segment in the future, and the financial strength and
stability of the broker.
Subject to the policy of seeking best execution of orders at the most
favorable prices, New Founders may execute transactions with brokerage firms
which provide research services and products to New Founders. The phrase
"research services and products" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities, the furnishing of analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
the performance of accounts and the obtainment of products such as third party
publications, computer and electronic access equipment, software programs and
other information and accessories that may assist New Founders in furtherance
of its investment advisory responsibilities to its clients. Such services and
products permit New Founders to supplement its own research and analysis
activities, and provide it with information from individuals and research
staffs of many securities firms. Generally, it is not possible to place a
dollar value on the benefits derived from specific research services and
products. New Founders may receive a benefit from these research services and
products which is not passed on to the Segments in the form of a direct
monetary benefit. If New Founders determines that any research product or
service has a mixed use, such that it also serves functions that do not assist
in the investment decision-making process, New Founders will allocate in good
faith the cost of such service or product accordingly. The portion of the
product or service that New Founders determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. The non-research portion of the product or service must be paid for
in hard dollars from New Founders. Any such allocation may create a conflict
of interest for New Founders.
The amount of brokerage given to a particular broker-dealer is not made
pursuant to any agreement or commitment with any of the selected broker-
dealers that would bind New Founders to compensate the selected broker-dealer
for research provided. However, New Founders maintains an internal allocation
procedure to identify those broker-dealers which have provided it with
research and endeavors to direct sufficient commissions to them to ensure
continued receipt of research New Founders believes is useful.
Research services and products obtained by New Founders from brokers who
execute portfolio transactions for the Segments may be useful to New Founders
in providing investment advice to any of the clients it advises. Likewise,
information made available to New Founders from brokers effecting securities
transactions for other clients may be utilized on behalf of the Segments.
Thus, there may be no correlation between the amount of brokerage commissions
generated by a particular client and the indirect benefits received by client.
Subject to the policy of seeking the best execution of orders at the most
favorable prices and to such policies as the Board of Trustees of the Trust
may establish from time to time, sales of shares of the Funds may also be
considered as a factor in the selection of brokerage firms to execute
portfolio transactions for the Segments.
Because selection of executing brokers is not based solely on net
commissions, the Segments may pay an executing broker a commission higher than
that which might have been charged by another broker for that transaction. New
Founders will not knowingly pay higher mark-ups on principal transactions to
brokerage firms as consideration for receipt of research services or products.
While it is not practicable for New Founders to solicit competitive bids for
commissions on each portfolio transaction, consideration is regularly given to
available information concerning the level of commissions charged in
comparable transactions by various brokers. Transactions in over-the-counter
securities are normally placed with principal market makers, except in
circumstances where, in the opinion of New Founders, better prices and
execution are available elsewhere.
Subject to the policy of obtaining the best possible execution of orders
at the most favorable prices, New Founders may allocate brokerage transactions
to affiliated brokers. In order for the affiliated broker to effect portfolio
transactions for the Segments, the commissions, fees or other remuneration
received by the affiliated broker must be reasonable and fair compared to the
commissions, fees and other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period. Furthermore, the
Trustees of the Trust, including a majority of those Trustees who are not
"interested persons" of the Trust as defined in the 1940 Act, have adopted
procedures which are reasonably designed to provide that any commissions, fees
or other remuneration paid to an affiliated broker are consistent with the
foregoing standard.
INFORMATION ABOUT THE TRUST
The Trust is a diversified, open-end management investment company
organized in 1985 as a business trust under the laws of Massachusetts. The
Trust is a series type company with twelve investment portfolios. The Funds
are two of those portfolios. The address of the Trust is 399 Boylston Street,
Boston, Massachusetts 02116.
INFORMATION ABOUT MELLON
Mellon is a subsidiary of Mellon Bank Corporation ("MBC"), a publicly
owned multibank holding company incorporated under Pennsylvania law in 1971
and registered under the Federal Bank Holding Company Act of 1956, as amended.
Mellon and MBC are located at One Mellon Bank Center, Pittsburgh, Pennsylvania
15258. MBC provides a comprehensive range of financial products and services
in domestic and selected international markets. MBC's banking subsidiaries are
located in Pennsylvania, Massachusetts, Delaware, Maryland, New Jersey and
Florida while other subsidiaries are located in key business centers
throughout the United States and abroad. MBC currently ranks among the
nation's largest bank holding companies based on market capitalization.
MBC's principal wholly-owned subsidiaries are Mellon, The Boston Company,
Inc., Mellon Bank (DE) National Association, Mellon Bank (MD) National
Association, and a number of companies known as Mellon Financial Services
Corporation. MBC also owns a federal savings bank headquartered in
Pennsylvania, Mellon Bank, F.S.B. The Dreyfus Corporation ("Dreyfus"), one of
the nation's largest mutual fund companies, is a wholly-owned subsidiary of
Mellon. MBC's banking subsidiaries engage in retail financial services,
commercial banking, trust and investment management services, residential real
estate loan financing, mortgage servicing, equipment leasing, mutual fund
activities and various securities-related activities. Through its
subsidiaries, MBC managed more than $300 billion in assets as of December 31,
1997. As of December 31, 1997, various subsidiaries of MBC provided non-
investment services, such as custodial or administration services, for
approximately $1.5 trillion in assets.
INFORMATION ABOUT NEW FOUNDERS
New Founders was organized as a Delaware limited liability company on
November 26, 1997. The management board of New Founders consists of:
Christopher M. Condron, Chairman, who is also Vice Chairman and Chief
Operating Officer of MBC and President, Chief Executive Officer and Chief
Operating Officer of Dreyfus, 200 Park Avenue, New York, New York 10166;
Jonathan F. Zeschin, who was President and Chief Operating Officer of Founders
prior to the Merger and is now President and Chief Executive Officer of New
Founders, 2930 East Third Avenue, Denver, Colorado 80206; Gregory P. Contillo,
who was Senior Vice President-Institutional Marketing of Founders and is now
Senior Vice President and Chief Marketing Officer of New Founders; Stephen E.
Canter, Vice Chairman and Chief Investment Officer of Dreyfus; Michael W.
Gerding, who was Vice President-Investments of Founders and now is Senior Vice
President-Investments of New Founders, and who is the portfolio manager of the
Star Worldwide Fund Segment; Lawrence S. Kash, Vice Chairman-Distribution of
Dreyfus and W. Keith Smith, Senior Vice Chairman of MBC and Mellon, and
Chairman of Dreyfus and The Boston Company.
New Founders acts as investment adviser (or, where indicated, as sub-
adviser) to the following other mutual funds which have a similar objective to
that of the Star Advisers Fund:
<TABLE>
<CAPTION>
ANNUAL MANAGEMENT APPROXIMATE
(OR SUB-ADVISORY) NET ASSETS AS OF
FEE RATE (AS A % OF MARCH 31, 1998
FUND NET ASSETS) ($ MILLIONS)
- - ---- ---------------------------- ----------------
<S> <C> <C>
1.00% to $30 million;
0.75% next $270 million;
0.70% next $200 million;
Founders Growth Fund 0.65% thereafter $2,113.0
0.45% to $200 million;
Manufacturers Investment Trust -- Growth 0.35% next $300 million;
Trust(1) 0.30% thereafter $210.3
0.50% to next $50 million
0.45% next $150 million
North American Funds -- Growth Equity 0.425% next $300 million
Fund(1) 0.40% thereafter $29.8
</TABLE>
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(1) With respect to these funds, for which New Founders acts as sub-adviser,
the sub-advisory fee is paid by the fund's investment adviser out of its
management fee, not by the fund directly.
New Founders acts as investment adviser or sub-adviser to the following
other mutual funds which have a similar objective to that of the Star
Worldwide Fund:
<TABLE>
<CAPTION>
ANNUAL MANAGEMENT APPROXIMATE
(OR SUB-ADVISORY) NET ASSETS AS OF
FEE RATE (AS A % OF MARCH 31, 1998
FUND NET ASSETS) ($ MILLIONS)
- - ---- ---------------------------- -----------------
<S> <C> <C>
1.00% to $250 million;
0.780% next $250 million;
Founders International Equity Fund(1) 0.70% thereafter $18.5
1.00% to $250 million;
0.80% next $250 million;
Founders Worldwide Growth Fund 0.70% thereafter $333.7
0.60% to $50 million; 0.55%
next $150 million; 0.45%
Manufacturers Investment Trust -- Worldwide next $300 million; 0.35%
Growth Trust(2) thereafter $30.2
</TABLE>
- - --------------
(1) New Founders is continuing the practice of voluntarily reimbursing certain
expenses of this Fund to the extent they exceed 1.80% of the Fund's
average net assets, as undertaken by Founders on July 1, 1997.
(2) With respect to this fund, for which New Founders acts as sub-adviser, the
sub-advisory fee is paid by the fund's investment adviser out of its
management fee, not by the fund directly.
INFORMATION ABOUT NEFM
NEFM is a limited partnership. Its sole general partner, NEF Corporation,
is a wholly-owned subsidiary of NEIC Holdings, Inc. ("NEIC Holdings"), which
is a wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest Companies"). The
managing general partner of Nvest Companies is Nvest Corporation. The advising
general partner of Nvest Companies is Nvest, L.P. ("Nvest"). NEF Corporation
is the sole general partner of NEF, which is the principal underwriter for the
Fund. Nvest Companies owns the entire limited partnership interest in each of
NEF and NEFM. The sole general partner of Nvest is Nvest Corporation. Nvest
Corporation is a wholly-owned subsidiary of MetLife New England Holdings,
Inc., which is in turn a wholly-owned subsidiary of Metropolitan Life
Insurance Company ("MetLife"). MetLife owns, directly and indirectly,
approximately 47% of the outstanding limited partnership interests in Nvest
Companies.
The principal executive officer of NEF and NEFM is Henry L.P. Schmelzer,
who is the President and a Trustee of the Trust and whose principal occupation
is his positions with NEF and NEFM. The address of NEF, NEFM, NEF Corporation,
NEIC Holdings, Nvest, Nvest Companies, Nvest Corporation and Mr. Schmelzer is
399 Boylston Street, Boston, Massachusetts 02116. The address of MetLife New
England Holdings, Inc. and MetLife is One Madison Avenue, New York, New York
10010.
CERTAIN PAYMENTS TO AFFILIATES
In addition to paying management fees to NEFM, the Fund compensates NEF
(an affiliate of NEFM) for providing various services to the Fund and its
shareholders. For the fiscal year ended December 31, 1997, these payments for
the Star Advisers Fund amounted to $2,001,046 for transfer services, $967,853
for service and distribution (12b-1) fees for Class A shares, $4,220,821 for
service and distribution (12b-1) fees for Class B shares, $875,440 for service
and distribution (12b-1) fees for Class C shares and $130,709 for the
provision of certain legal and accounting services. In addition, NEF received
from the Star Advisers Fund's shareholders $3,121,649 in sales charges
(including contingent deferred sales charges in Class A & B shares. For the
fiscal year ended December 31, 1997, these payments for the Star Worldwide
Fund amounted to $640,111 for transfer services, $261,743 for service and
distribution (12b-1) fees for Class A shares, $1,037,171 for service and
distribution (12b-1) fees for Class B shares, $241,823 for service and
distribution (12b-1) fees for Class C shares and $43,566 for the provision of
certain legal and accounting services. In addition, NEF received from the Star
Worldwide Fund's shareholders $1,205,472 in sales charges (including
contingent deferred sales charges in Class A & B shares. The arrangements for
each Fund will not be affected in any way by the New Sub-Advisory Agreements.
During the fiscal year ended December 31, 1997, the Star Advisers Fund
paid brokerage commissions of $0 on portfolio transactions to Harris Associate
Securities L.P., an affiliate of NEFM. During that period, Harris Associates
L.P., a subsidiary of NEIC, was the sole limited partner of Harris Associates
Securities L.P. During the fiscal year ended December 31, 1997, the Star
Worldwide Fund paid brokerage commissions of $31,747 on portfolio transactions
to Harris Associate Securities L.P., an affiliate of NEFM. The amount
represents roughly 1% of the total brokerage commissions paid by the Fund
during that fiscal year. During that period, Harris Associates L.P., a
subsidiary of Nvest Companies, was the sole limited partner of Harris
Associates Securities L.P.
OTHER INFORMATION
The following persons are both (1) Trustees or officers of the Trust and
(2) officers or employees of NEFM (or officers or directors of that firm's
corporate general partner): Henry L.P. Schmelzer, Bruce Speca, Frank Nesvet
and John Pelletier. In addition, Peter S. Voss, President and Chief Executive
Officer of Nvest Companies and Nvest, L.P., is a Trustee and an officer of the
Trust.
As of May 18, 1998, to the Trust's knowledge, the following persons owned
of record or beneficially more than 5% of the outstanding shares of the
indicated class of the Star Advisers Fund:
NUMBER OF
CLASS SHAREHOLDERS OF SHARES PERCENT
----- ------------ --------- -------
Y New England Mutual 1,328,172 65.26%
Life Insurance Co.
Separate Investment Accts.
501 Boylston Street
Boston, MA 02116
Metropolitan Life Insurance Co. 315,798 15.52%
c/o GADC/GERALD AGENCY
501 Boylston Street
Boston, MA 02116
New England Life Insurance Co. 300,649 14.77%
501 Boylston Street
Boston, MA 02116
As of May 18, 1998, to the Trust's knowledge, there were no persons who
owned of record or beneficially more than 5% of the outstanding shares of any
class of the Star Worldwide Fund:
As of May 18, 1998, the officers and Trustees of the Trust as a group
owned less than 1% of the outstanding shares of the each Fund.
<PAGE>
[Logo]
NEW ENGLAND FUNDS(R)
Where The Best Minds Meet(R)
- - --------------------------------------------------------------------------------
June 1998
Dear New England Funds Shareholder:
As you may know, Founders Asset Management is one of the subadvisers of New
England Star Advisers Fund and New England Star Worldwide Fund. On April 1,
1998, Founders merged with Mellon Bank, N.A., one of the nation's largest banks.
Given Founders' management style and strong performance record, the firm will
continue to manage a segment of these two Star funds. In addition, the merger
will have no effect on your New England Funds account.
As a result of the change in ownership, New England Funds' Board of Trustees has
signed a new subadvisory agreement with Founders in accordance with the
regulations that govern the mutual fund industry. Under the new agreement,
management of the Founders' segments of the Funds will continue uninterrupted,
and with no change in management fee.
The enclosed Information Statement explains the merger in greater detail. If you
have any questions, please consult your financial representative, or call New
England Funds toll-free at 800-225-5478.
Sincerely,
/s/ Henry L.P. Schmelzer
Henry L.P. Schmelzer
President
New England Funds, L.P., Distributor o 399 Boylston Street,
Boston, Massachusetts 02116
http:/www.mutualfunds.com
