<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 Growth Fund
[graphic omitted]
WHERE
THE BEST MINDS
MEET(R)
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JUNE 30, 1999
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<PAGE>
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August 1999
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[Photo of Bruce R. Speca]
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"MOST INVESTMENT PROFESSIONALS I KNOW AGREE THAT PROPER ASSET ALLOCATION IS A
BEDROCK PRINCIPLE OF SOUND INVESTING."
Dear Shareholder,
Performance results for the New England Family of Funds were driven mainly by
two important changes that took place in our financial markets during the first
half of 1999. First, the long, upward climb of large-capitalization stocks
slowed dramatically as attention turned to stocks with more reasonable
valuations. Then, bond investors grew fearful that our persistently strong
economy would lead the Federal Reserve Board to impose higher interest rates.
Your manager's commentary on the following pages details how these trends
affected your fund's strategy and performance.
As I watch investments come in and out of favor, I'm reminded of the importance
of asset allocation - the practice of dividing your portfolio among different
kinds of stocks and bonds. The idea is to own more or less of each investment
type according to your feelings about risk and your investment time horizon.
Most investment professionals I know agree that proper asset allocation is a
bedrock principle of sound investing. In addition to broadening diversification,
it seeks to avoid exposure to narrow market segments and can help reduce
volatility.
While a diversified portfolio may have given solid returns during the past year,
many investors were disappointed when they compared those returns to the
performance of large-company growth stocks or to the soaring returns of Internet
stocks. Suddenly, investors were asking: Is asset allocation dead? Certainly
not! Like so much in life, market cycles are inevitable. Different categories of
investments will be popular at different times, and a sensible asset allocation
program can help you as market trends change.
I know it can be tempting to jump on a bandwagon and go after "easy money." But
I encourage you, instead, to maintain a rational, long-term perspective and to
consult your financial representative regularly to review and fine-tune your
investments, including a well-diversified asset allocation program. Thank you
for your continued interest. We look forward to helping you achieve your
long-term financial objectives.
Sincerely,
/s/ Bruce R. Speca
Bruce R. Speca
President and CEO
<PAGE>
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NEW ENGLAND GROWTH FUND
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INVESTMENT RESULTS THROUGH JUNE 30, 1999
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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 periods shown below appear 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 and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index, and would
incur transaction costs and other expenses even if they could.
GROWTH OF A $10,000 INVESTMENT IN CLASS A SHARES
JUNE 1979 THROUGH JUNE 1999
[Two charts in the form of line graphs appear here. The first chart illustrates
the growth of a $10,000 investment in Class A Shares since 6/30/99, compared to
the S&P 500. The second chart illustrates the growth of a $10,000 investment in
Class A Shares since 6/30/89, compared to the S&P 500. The data points from the
graphs are as follows:]
NET MAXIMUM
ASSET SALES S&P
VALUE(1) CHARGE(2) 500(4)
- ----------------------------------------------------------
6/79 10,000 9,425 10,000
6/80 12,666 11,938 11,722
6/81 19,908 18,764 14,127
6/82 19,906 18,762 15,738
6/83 40,774 38,430 25,325
6/84 31,466 29,656 24,145
6/85 41,490 39,105 31,592
6/86 57,556 54,246 42,860
6/87 72,261 68,106 53,635
6/88 66,870 63,025 49,908
6/89 71,712 67,588 60,109
6/90 88,521 83,431 69,961
6/91 99,896 94,152 75,130
6/92 117,528 110,770 85,168
6/93 126,777 119,487 96,725
6/94 127,817 120,467 98,108
6/95 160,665 151,427 123,606
6/96 183,207 172,672 155,657
6/97 250,077 235,698 209,561
6/98 329,177 310,249 272,618
6/99 364,267 343,322 334,557
JUNE 1989 THROUGH JUNE 1999
NET MAXIMUM
ASSET SALES S&P
VALUE(1) CHARGE(2) 500(4)
- ----------------------------------------------------------
6/89 10,000 9,425 10,000
6/90 12,344 11,634 11,639
6/91 13,930 13,129 12,499
6/92 16,389 15,447 14,169
6/93 17,679 16,662 16,092
6/94 17,824 16,799 16,322
6/95 22,404 21,116 20,564
6/96 25,548 24,079 25,896
6/97 34,873 32,867 34,864
6/98 45,903 43,263 45,354
6/99 50,796 47,875 55,659
This illustration represents past performance of Class A shares and cannot
predict future results. Investment return and principal value may vary,
resulting in a gain or loss on the sale of shares. Class B and C share
performance will differ from that shown based on differences in inception date,
fees and sales charges. All index and Fund performance assumes reinvestment of
distributions.
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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
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<PAGE>
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NEW ENGLAND GROWTH FUND
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<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS - 6/30/99
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CLASS A (INCEPTION 11/27/68) 6 MONTHS 1 YEAR 5 YEARS 10 YEARS 15 YEARS 20 YEARS
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value(1) 5.1% 10.7% 23.3% 17.6% 17.7% 19.7%
With Maximum Sales Charge(2) -0.9 4.3 21.8 17.0 17.3 19.3
- --------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B (INCEPTION 2/28/97) 6 MONTHS 1 YEAR SINCE INCEPTION
<S> <C> <C> <C>
Net Asset Value(1) 4.8% 9.8% 21.8%
With CDSC(3) -0.3 5.4 20.9
- --------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS C (INCEPTION 9/1/98) 6 MONTHS SINCE INCEPTION
<S> <C> <C>
Net Asset Value(1) 4.8% 28.0%
With CDSC(3) 3.8 27.0
- --------------------------------------------------------------------------------------------------------
<CAPTION>
SINCE SINCE
FUND'S FUND'S
6 1 5 10 15 20 CLASS B CLASS C
COMPARATIVE PERFORMANCE MONTHS YEAR YEARS YEARS YEARS YEARS INCEPTION INCEPTION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500(4) 12.4% 22.7% 27.8% 18.7% 19.2% 17.9% 28.7% 51.1%
Lipper Growth Average(5) 11.7 18.9 22.6 16.2 16.3 16.2 23.8 41.2
Morningstar Large Blend Average(6) 10.5 17.5 23.2 16.1 16.6 - 23.5 39.5
- --------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO CHARTS
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.
(1) Net Asset Value (NAV) performance assumes reinvestment of distributions and
does not reflect the payment of a sales charge at the time of purchase.
Returns would have been lower had sales charges been reflected.
(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
reinvestment of all distributions and, for Class B shares, assumes
reinvestment of all distributions and assumes that a maximum 5.00% sales
charge is applied to redemptions. The sales charge will decrease over time,
declining to zero six years after the purchase of shares. With CDSC
performance for Class C shares assumes a maximum 1.00% sales charge on
redemptions within the first year of purchase.
(4) The Standard & Poor's Composite Index of 500 Stocks (S&P 500(r)) is a market
value-weighted unmanaged index of common stock prices. It is a common
measure of stock total return performance. The performance of the index has
not been adjusted for ongoing management, distribution and operating
expenses and sales charges applicable to mutual fund investments. It is not
possible to invest directly in an index.
(5) Lipper Growth Fund Average is an average (calculated on the basis of net
asset value) of funds with similar investment objectives as calculated by
Lipper Inc., an independent mutual fund ranking service. Class C since
inception return is calculated from 8/31/98.
(6) Morningstar Large Blend Average is an average (calculated on the basis of
net asset value) of funds with similar investment objectives as calculated
by Morningstar, Inc., an independent mutual fund ranking service. Class C
since inception return is calculated from 8/31/98. The Morningstar Large
Blend Average does not track a 20-year performance average.
<PAGE>
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NEW ENGLAND GROWTH FUND
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QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGER
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[Photo of G. Kenneth Heebner]
G. Kenneth Heebner
Capital Growth
Management
Q. How did New England Growth Fund perform during the six months ending June 30,
1999?
For the six-month period ended June 30, 1999, New England Growth Fund posted a
return of 5.1% based on net asset value for Class A shares. That lagged the
average growth fund's return, as measured by Lipper Inc., an independent mutual
fund ranking company. The Fund's return reflects a $0.58 per share gain to
$11.94 on June 30.
Q. What was the investment environment like over the past six months?
Economic growth in the U.S. continued to be strong in the first half of 1999.
Globally, we saw a pronounced comeback in Asia, led by South Korea and Japan.
For example, Korean business activity expanded by more than 10% in the first
quarter of 1999, and Japan's gross domestic product increased at an annual rate
of 7.5%. Economic growth in Europe was sluggish, but data from the end of the
period indicated that it might be on the upswing. This pervasive global economic
expansion started to create an environment that was more conducive to inflation
than the backdrop we witnessed in 1998, when foreign economic weakness helped
suppress prices in the U.S. domestic economy. In response, interest rates have
risen in the U.S., particularly among long-maturity bonds.
Q. Did this backdrop lead you to alter your investment strategy?
Yes. During 1998, we invested the portfolio in anticipation of lower interest
rates and higher price/earnings (P/E) ratios for stocks. (A price-to-earnings
ratio is a rule of thumb that investors use to help gauge whether a stock's
price is high or low in terms of the company's earning power - the higher the
ratio, the more expensive the stock.) However, the global economic turnaround
prompted an adjustment of the Fund's portfolio. I believe stronger economic
growth in 1999 will result in a continued gradual rise in interest rates. In
June, the Federal Reserve Board raised short-term rates in an effort to slow
growth and head off inflation.
Reflecting this changed outlook, we've searched for growth at a reasonable price
- - turning to companies with lower P/E ratios that would most likely benefit from
an accelerating economy. As such, approximately 15% of the Fund's portfolio is
currently invested in real estate investment trusts (REITs). Real estate tends
to benefit from a strong economy and valuations for REITs were low and their
yields relatively high. For example, I added Equity Office Properties Trust to
the portfolio. The largest office REIT in the U.S., Equity Office Properties
Trust is a diversified portfolio of office buildings in most major cities.
Q. Where else did you find opportunities?
Your Fund invested in two commodity cyclical companies, Alcoa and Dow Chemical.
These companies should benefit directly from increases in global raw material
prices. I also sought to take advantage of strong consumer spending - sparked by
the robust economy - by purchasing Circuit City and Best Buy, two retailers that
sell appliances and big-ticket consumer electronics items.
YOUR FUND'S 10 LARGEST INVESTMENTS - 6/30/99
% OF
COMPANY NET ASSETS
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1. TEXAS INSTRUMENTS, INC. 8.0
2. APPLIED MATERIALS, INC. 6.1
3. BEST BUY COMPANY, INC. 6.0
4. INTERNATIONAL BUSINESS MACHINES CORP. 5.6
5. KONINKLIJKE PHILIPS ELECTRONICS NV 5.5
6. CIRCUIT CITY STORES 5.2
7. EQUITY OFFICE PROPERTIES TRUST 5.2
8. ALCOA, INC. 5.1
9. AFLAC, INC. 5.1
10. BANK AMERICA CORP. 5.1
Portfolio holdings and asset allocations will vary.
In addition, your Fund has taken advantage of opportu-nities offered abroad,
where it appears there are several years of growth in the offing. For example,
the Fund invests in Philips Electronics, an international conglomerate that
earns most of its revenues outside of the U.S. We maintained our investment in
Volkswagen, because 80% of the company's earnings come from Europe where the
company is gaining market share and is poised to benefit from increased business
activity. In addition, we added a large position in AFLAC, a U.S. insurer that
gathers more than three-quarters of its earnings from Japan, an economy we
believe will rise out of recession and show strong growth in coming years.
Q. Which stocks helped performance, and which ones did not?
One of the strongest performers was Texas Instruments, a manufacturer of digital
processing microchips widely used in Internet wireless communications and
Internet applications. The company enjoyed a 45% market share. Best Buy and
Circuit City benefited from strong consumer spending, and IBM continued to
thrive through its balance-sheet restructuring and share-repurchase programs.
More recently, IBM's hardware business has shown more strength than in the past.
On the negative side, Volkswagen was hurt by management's cautionary comments
about the company's earnings outlook while the firm was engaged in labor
negotiations. Bank stocks, including the Fund's investments in Chase Manhattan
and BankAmerica, also underperformed because of rising interest rates. Chase has
since been sold from the portfolio.
Q. What is your outlook for the coming months?
I believe there will be a tendency for overall P/E ratios in the market to
decline in response to an upward drift in interest rates. To put it simply,
higher interest rates make investors less willing to pay the higher P/E ratios
that have characterized some of the market's best performers recently. Our
challenge will be to find promising companies with lower valuations or with
earnings growth rapid enough to withstand an overall compression in P/E ratios.
We'll also look for companies that are economically sensitive, including
opportunities outside of the U.S. or in U.S. multinationals, because monetary
authorities abroad are looking to stimulate economic growth, not sustain or slow
it as in the U.S.
The portfolio manager's commentary reflects the conditions and actions taken
during the reporting period, which are subject to change. A shift in opinion may
result in strategic and other portfolio changes.
The Fund invests in foreign securities. Investing in foreign securities involves
special risks. REITS are subject to changes in underlying real estate values,
rising interest rates, limited diversification of holdings, higher costs and
prepayment risk associated with related mortgages. These risks may increase
share price volatility. See the Fund's prospectus for details.
<PAGE>
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PORTFOLIO COMPOSITION
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Investments as of June 30, 1999
(unaudited)
COMMON STOCK - 99.6% OF TOTAL NET ASSETS
SHARES DESCRIPTION VALUE (A)
- -------------------------------------------------------------------------------
AUTOMOTIVE - 4.4%
6,900,000 Volkswagen AG (ADR) .............................. $ 87,112,500
--------------
BANKS - 5.1%
1,380,000 Bank America Corp. ............................... 101,171,250
--------------
BEVERAGES & TOBACCO - 5.0%
1,410,000 Anheuser-Busch Companies, Inc. ................... 100,021,875
--------------
BUSINESS SERVICES - 3.2%
1,190,000 Waste Management, Inc. ........................... 63,962,500
--------------
CHEMICALS - 1.9%
295,000 Dow Chemical Co. ................................. 37,428,125
--------------
DRUGS & HEALTH CARE - 2.8%
900,000 United Healthcare Corp. .......................... 56,362,500
--------------
ELECTRONIC & COMMUNICATION EQUIPMENT - 2.2%
475,000 Nokia Corp. (ADR) ................................ 43,492,188
--------------
ELECTRONIC COMPONENTS - 8.0%
1,100,000 Texas Instruments, Inc. .......................... 159,500,000
--------------
ELECTRONICS - 11.7%
1,660,000 Applied Materials, Inc. (c) ...................... 122,632,500
1,097,560 Koninklijke Philips Electronics NV (ADR) ......... 110,716,365
--------------
233,348,865
--------------
INSURANCE - 13.8%
2,130,000 AFLAC, Inc. ...................................... 101,973,750
655,000 American General ................................. 49,370,625
604,175 American International Group ..................... 70,726,236
255,000 Jefferson Pilot .................................. 16,877,812
665,000 UNUM Corp. ....................................... 36,408,750
--------------
275,357,173
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LEISURE & LODGING - 3.1%
3,760,000 Mirage Resorts, Inc. (c) ......................... 62,980,000
--------------
NON-FERROUS METALS - 5.1%
1,660,000 Alcoa, Inc. ...................................... 102,712,500
--------------
OFFICE EQUIPMENT & SUPPLIES - 5.6%
868,000 International Business Machines .................. 112,189,000
--------------
OIL SERVICES - 1.9%
610,000 Schlumberger, Ltd. ............................... 38,849,375
--------------
REAL ESTATE - 14.6%
1,087,500 Apartment Investment & Management Co. ............ 46,490,625
1,370,000 Boston Properties, Inc. .......................... 49,148,750
4,042,500 Equity Office Properties Trust ................... 103,589,062
610,000 Equity Residential Properties Trust .............. 27,488,125
540,000 Spieker Properites, Inc. ......................... 20,992,500
1,255,000 Vornado Reality Trust ............................ 44,317,188
--------------
292,026,250
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RETAIL - SPECIALTY - 11.2%
1,787,000 Best Buy Company, Inc. (c) ....................... $ 120,622,500
1,120,000 Circuit City Stores .............................. 104,160,000
--------------
224,782,500
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Total Common Stock (Identified Cost $1,745,288,104) 1,991,296,601
--------------
SHORT TERM INVESTMENT - 0.5%
PRINCIPAL
AMOUNT
$10,900,000 Chevron Corp., 5.500%, 7/01/1999 ................. 10,900,000
--------------
Total Short Term Investment
(Identified Cost $10,900,000) .................. 10,900,000
--------------
Total Investment - 100.1%
(Identified Cost $1,756,188,104)(b) ............ 2,002,196,601
Other assets less liabilities .................... (2,327,797)
--------------
Total Net Assets - 100% .......................... $1,999,868,804
==============
(a) See Note 1a of Notes to Financial Statements.
(b) Federal Tax Information: At June 30, 1999 the net unrealized
appreciation on investments based on cost of $1,756,188,104
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 ...... $ 299,581,910
Aggregate gross unrealized depreciation for
all investments in which there is an excess of tax cost
over value .............................................. (53,573,413)
--------------
Net unrealized appreciation ............................... $ 246,008,497
==============
(c) Non-income producing security.
ADR An American Depository Receipt 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
- --------------------------------------------------------------------------------
June 30, 1999
(unaudited)
ASSETS
Investments at value (Identified cost $1,756,188,104) $2,002,196,601
Cash .......................................... 1,981
Receivable for:
Fund shares sold ............................ 1,559,403
Securities sold ............................. 12,399,339
Dividends and interest ...................... 3,214,041
Tax reclaims ................................ 320,526
--------------
2,019,691,891
LIABILITIES
Payable for:
Securities purchased ....................... $ 16,206,779
Fund shares redeemed ....................... 2,043,447
Accrued expenses:
Management fees ............................ 1,068,163
Deferred trustees' fees .................... 139,221
Accounting and administrative .............. 80,744
Other expenses ............................. 284,733
--------------
19,823,087
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NET ASSETS ................................... $1,999,868,804
==============
Net assets consist of:
Capital paid in .............................. $1,461,079,949
Undistributed net investment income .......... 5,587,866
Accumulated net realized gains (losses) ...... 287,192,492
Unrealized appreciation (depreciation) on
investments ............................... 246,008,497
--------------
NET ASSETS ................................... $1,999,868,804
==============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($1,866,520,475 / 156,347,000 shares of
beneficial interest) .............................. $11.94
======
Offering price per share (100 / 94.25 of $11.94) .... $12.67*
======
Net asset value and offering price of Class B shares
($125,713,938 / 10,764,981 shares
of beneficial interest) ....................... $11.68**
======
Net asset value and offering price of Class C shares
($7,634,391 / 653,749 shares of beneficial interest) $11.68**
======
* Based upon single purchases of less than $50,000.
Reduced sales charges apply for purchases in excess of this amount.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
See accompanying notes to financial statements.
<PAGE>
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1999
(unaudited)
INVESTMENT INCOME
Dividends (net of foreign taxes of $130,230) $ 16,806,271
Interest ................................... 245,265
-------------
17,051,536
Expenses
Management fees ............................ $ 6,464,351
Service fees - Class A ..................... 2,287,262
Service and distribution fees - Class B .... 503,345
Service and distribution fees - Class C .... 25,808
Trustees' fees and expenses ................ 51,671
Accounting and administrative .............. 254,849
Custodian .................................. 136,531
Transfer agent ............................. 1,414,389
Audit and tax services ..................... 15,250
Legal ...................................... 38,192
Printing ................................... 89,703
Registration ............................... 71,212
Insurance .................................. 16,600
Miscellaneous .............................. 14,547
-------------
Total expenses ............................... 11,383,710
-------------
Net investment income ........................ 5,667,826
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on investments - net .. 290,361,502
Unrealized appreciation (depreciation) on
Investments - net ........................ (198,896,365)
-------------
Net gain (loss) on investment transactions . 91,465,137
-------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 97,132,963
=============
See accompanying notes to financial statements.
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1998 1999
--------------- ---------------
FROM OPERATIONS
<S> <C> <C>
Net investment income ................................... $ 12,046,963 $ 5,667,826
Net realized gain (loss) on investments ................. 175,025,357 290,361,502
Unrealized appreciation (depreciation) on investments ... 294,812,738 (198,896,365)
--------------- ---------------
Increase (decrease) in net assets from operations ....... 481,885,058 97,132,963
--------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A ............................................... (12,963,989) 0
Class B ............................................... (12,876) 0
Class C ............................................... 0 0
In excess of net investment income
Class A ............................................... (228,906) 0
Class B ............................................... (491) 0
Class C ............................................... 0 0
Net realized gain on investments
Class A ............................................... (176,759,139) 0
Class B ............................................... (5,423,472) 0
Class C ............................................... (11,012) 0
In excess of realized gain on investments
Class A ............................................... (46,985,929) 0
Class B ............................................... (1,441,662) 0
Class C ............................................... (2,926) 0
Return of capital
Class A ............................................... (48,136,496) 0
Class B ............................................... (1,595,598) 0
Class C ............................................... (3,240) 0
--------------- ---------------
(293,565,736) 0
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM CAPITAL SHARE TRANSACTIONS ................ 236,759,604 153,611
--------------- ---------------
Total increase (decrease) in net assets .................... 425,078,926 97,286,574
NET ASSETS
Beginning of the period ................................ 1,477,503,304 1,902,582,230
--------------- ---------------
End of the period ...................................... $ 1,902,582,230 $ 1,999,868,804
=============== ===============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period ....................................... $ (79,960) $ 5,587,866
=============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<CAPTION>
Class A
--------------------------------------------------------------------
Six Months
Year Ended December 31, Ended
-------------------------------------------------------- June 30,
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $ 10.44 $ 8.87 $ 10.55 $ 11.63 $ 10.41 $ 11.36
-------- -------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income (Loss) ........................... 0.11 0.05 0.04 0.01 0.08(a) 0.04
Net Realized and Unrealized Gain (Loss) on Investments . (0.84) 3.30 2.07 2.79 3.00 0.54
-------- -------- -------- -------- -------- --------
Total From Investment Operations ....................... (0.73) 3.35 2.11 2.80 3.08 0.58
-------- -------- -------- -------- -------- --------
Less Distributions
Distributions From Net Investment Income ............... (0.11) (0.05) (0.04) 0.00 (0.10) 0.00
Distributions From Net Realized Gain on Investments .... (0.73) (1.62) (0.99) (4.02) (1.32) 0.00
Distributions in Excess of Realized Gain on
Investments ........................................... 0.00 0.00 0.00 0.00 (0.35) 0.00
Distributions From Return of Capital ................... 0.00 0.00 0.00 0.00 (0.36) 0.00
-------- -------- -------- -------- -------- --------
Total Distributions .................................... (0.84) (1.67) (1.03) (4.02) (2.13) 0.00
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ......................... $ 8.87 $ 10.55 $ 11.63 $ 10.41 $ 11.36 $ 11.94
======== ======== ======== ======== ======== ========
Total Return (%) (b) ................................... (7.1) 38.1 20.9 23.5 33.4 5.1
Ratio of Operating Expenses to Average Net Assets(%) ... 1.19 1.20 1.18 1.12 1.12 1.14(c)
Ratio of Net Investment Income to Average Net Assets(%) 1.05 0.42 0.33 0.08 0.74
0.63(c)
Portfolio Turnover Rate (%) ............................ 141 235 199 214 202 228(c)
Net Assets, End of Period (000,000) .................... $ 988 $ 1,201 $ 1,297 $ 1,460 $ 1,825 $ 1,867
(a) Per share net investment income has been calculated using the average shares outstanding during the year.
(b) A sales charge is not reflected in total return calculations.
(c) Computed on an annualized basis
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Class B Class C
------------------------------------- --------------------------
February 28, September 1,
1997(a) Year Six Months 1998(a) Six Months
through Ended Ended through Ended
December 31, December 31, June 30, December 31, June 30,
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $ 12.47 $ 10.32 $ 11.15 $ 11.18 $ 11.15
======== ======== ======== ======== ========
Income From Investment Operations
Net Investment Income (Loss) ........................... (0.07) (0.00)(b) 0.00 (0.00)(b) 0.00
Net Realized and Unrealized
Gain (Loss) on Investments ............................ 1.94 2.95 0.53 2.09 0.53
-------- -------- -------- -------- --------
Total From Investment Operations ....................... 1.87 2.95 0.53 2.09 0.53
-------- -------- -------- -------- --------
Less Distributions
Distributions in Excess
of Net Investment Income .............................. 0.00 (0.06) 0.00 (0.06) 0.00
Distributions From Net Realized
Gain on Investments ................................... (4.02) (1.32) 0.00 (1.32) 0.00
Distributions in Excess
of Realized Gain on Investments ....................... 0.00 (0.35) 0.00 (0.35) 0.00
Distributions From Return of Capital ................... 0.00 (0.39) 0.00 (0.39) 0.00
-------- -------- -------- -------- --------
Total Distributions .................................... (4.02) (2.12) 0.00 (2.12) 0.00
-------- -------- -------- -------- --------
Net Asset Value, End of Period ......................... $ 10.32 $ 11.15 $ 11.68 $ 11.15 $ 11.68
======== ======== ======== ======== ========
Total Return (%) (c) ................................... 14.4 32.4 4.8 22.2 4.8
Ratio of Operating Expenses to Average Net Assets (%) .. 1.87 (d) 1.87 1.89(d) 1.87 (d) 1.89(d)
Ratio of Net Investment Income to Average Net Assets (%) (0.67)(d) (0.01) (0.12)(d) (0.01)(d) (0.12)(d)
Portfolio Turnover Rate (%) ............................ 214(d) 202 228(d) 202(d) 228(d)
Net Assets, End of Period (000,000) .................... $ 18 $ 75 $ 126 $ 2 $ 8
(a) Commencement of operations.
(b) Per share net investment loss has been calculated using the average shares outstanding during the year.
(c) A contingent deferred sales charge is not reflected in total return calculations.
(d) Computed on an annualized basis.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For the Period Ended June 30, 1999
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES. 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 Fund seeks long-term growth of capital
through investment in equity securities of companies whose earnings are expected
to grow at a faster rate than the United States economy. The Declaration of
Trust permits the Trustees to issue an unlimited number of shares of the Trust
in multiple series (each such series of shares a "Fund").
The Fund offers Class A, Class B and Class C shares. 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 a front end sales charge and do not convert
to any class of shares, but they do pay a higher ongoing distribution fee than
Class A shares and may be subject to a contingent deferred sales charge if those
shares are redeemed within one year. 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. All other securities and assets are valued at their
fair value as determined in good faith by the Fund's adviser under the
supervision of the Fund's Trustees.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date. 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 including interest. The Fund's adviser is responsible
for determining that the value of the collateral is at all times at least equal
to the repurchase price. Repurchase agreements could involve certain risks in
the event of default or insolvency of the other party including possible delays
or restrictions upon the Fund's ability to dispose of the underlying securities.
2. PURCHASES AND SALES OF SECURITIES. For the six months ended June 30, 1999,
purchases and sales of securities (excluding short-term investments) were
$2,200,705,652 and $2,198,845,160 respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. During the six
months ended June 30, 1999, the Fund incurred management fees payable to its
investment adviser, Capital Growth Management, L.P. ("Capital Growth
Management"). Capital Growth Management is an affiliate of Nvest Companies, L.P.
("Nvest"), formerly known as New England Investment Companies, L.P., which is a
subsidiary of Metropolitan Life Insurance Company ("MetLife"). The management
agreement in effect during the six months ended June 30, 1999 provided for fees
as set forth below:
FEES EARNED ANNUAL PERCENTAGE RATE ANNUAL NET ASSET VALUE LEVELS
----------- ---------------------- -----------------------------
$ 6,464,351 0.750% the first $200 million
0.700% the next $300 million
0.650% the next $1,500 million
0.600% the excess over $2 billion
The effective annualized management fee for the six months ended June 30, 1999
was 0.67%.
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. Nvest Services Company, Inc. ("NSC")
is a wholly owned subsidiary of Nvest and performs certain accounting and
administrative services for the Fund. The Fund reimburses NSC for all or part of
NSC's expenses of providing these services which include the following:
(i) expenses for personnel performing bookkeeping, accounting and financial
reporting functions and related clerical functions relating to the Fund, and
(ii) expenses for services required in connection with the preparation of
registration statements and prospectuses, registration of shares in various
states, shareholder reports and notices, proxy solicitation material furnished
to shareholders of the Fund or regulatory authorities and reports and
questionnaires for SEC compliance. For the six months ended June 30, 1999 these
expenses amounted to $254,849 and are shown separately in the financial
statements as accounting and administrative.
C. TRANSFER AGENT FEES. NSC is the transfer and shareholder servicing agent for
the Fund and Boston Financial Data Services serves as the sub-transfer agent for
the Fund. For the six months ended June 30, 1999, the Fund paid NSC $1,052,168
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 a Service and Distribution Plan 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, L.P. ("New England
Funds"), the Fund's distributor, a wholly owned subsidiary of Nvest, a monthly
service fee at the annual rate of 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 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, 1999, the Fund paid New England Funds
$2,287,262 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 as of June 30, 1999 is $2,030,882.
Under the Class B and Class C Plans, the Fund pays New England Funds monthly
service fees at the annual rate of 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, 1999, the Fund paid New England Funds $125,836 and $6,452 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 a
monthly distribution fee at the annual rate of 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, 1999, the Fund paid New England Funds $377,509
and 19,356 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, 1999 amounted to $1,906,040.
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, Nvest, NSC or their affiliates, other than registered
investment companies. Each other Trustee receives a retainer fee at the annual
rate of $40,000 and meeting attendance fees of $3,500 for each meeting of the
Board of Trustees attended. Each committee member receives an additional
retainer fee at the annual rate of of $6,000 while each committee chairman
receives a retainer fee (beyond the $6,000 fee) at the annual rate of $4,000.
These fees are allocated to the various New England Funds based on a formula
that takes into account, among other factors, the relative net assets of each
fund.
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. Deferred amounts remain in the Fund until distributed in
accordance with the Plan.
4. CAPITAL SHARES. At June 30, 1999 there was an unlimited number of shares of
beneficial interest authorized, divided into three classes, Class A, Class B and
Class C capital stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
---------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold ...................................... 13,369,466 $151,330,209 12,881,506 $149,463,792
------------ ------------ ------------ ------------
Shares issued in connection with the reinvestment of:
Distributions .................................. 28,926,825 276,829,718 0 0
------------ ------------ ------------ ------------
42,296,291 428,159,927 12,881,506 149,463,792
------------ ------------ ------------ ------------
Shares repurchased ............................... (21,781,147) (248,558,136) (17,238,279) (200,335,676)
------------ ------------ ------------ ------------
Net increase (decrease) .......................... 20,515,144 $179,601,791 (4,356,773) $(50,871,884)
------------ ------------ ------------ ------------
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
---------------------------- ----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold ...................................... 5,027,895 $ 56,325,194 4,866,739 $ 55,509,858
------------ ------------ ------------ ------------
Shares issued in connection with the reinvestment of:
Distributions .................................. 845,686 7,957,904 0 0
------------ ------------ ------------ ------------
5,873,581 64,283,098 4,866,739 55,509,858
------------ ------------ ------------ ------------
Shares repurchased ............................... (827,997) (8,943,834) (867,644) (9,875,945)
------------ ------------ ------------ ------------
Net increase (decrease) .......................... 5,045,584 $ 55,339,264 3,999,095 $ 45,633,913
------------ ------------ ------------ ------------
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
---------------------------- ----------------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold ...................................... 186,014 $ 1,864,243 516,231 $ 5,896,937
------------ ------------ ------------ ------------
Shares issued in connection with the reinvestment of:
Distributions .................................. 1,828 17,199 0 0
------------ ------------ ------------ ------------
187,842 1,881,442 516,231 5,896,937
------------ ------------ ------------ ------------
Shares repurchased ............................... (5,731) (62,893) (44,592) (505,355)
------------ ------------ ------------ ------------
Net increase (decrease) .......................... 182,111 $ 1,818,549 471,639 $ 5,391,582
------------ ------------ ------------ ------------
Increase derived from capital shares transactions 25,742,839 $236,759,604 113,961 $ 153,611
============ ============ ============ ============
</TABLE>
5. LINE OF CREDIT. The Fund along with certain other portfolios that comprise
the New England Funds (the "Funds") participate in a $100,000,000 committed line
of credit provided by Citibank, N.A. under a credit agreement (the "Agreement")
dated March 4, 1999. Advances under the Agreement are taken primarily for
temporary or emergency purposes. Borrowings under the Agreement bear interest at
a rate tied to one of several short-term rates that may be selected from time to
time. In addition, the Funds are charged a facility fee equal to 0.08% per annum
on the unused portion of the line of credit. The annual cost of maintaining the
line of credit and the facility fee is apportioned pro rata among the
participating Funds. There were no borrowings under the line of credit during
the period ended June 30, 1999.
<PAGE>
NEW ENGLAND BALANCED FUND
Supplement Dated August 15, 1999 to New England Stock Funds
Class A, B and C Prospectus
and New England Stock and Star Funds Class Y Prospectus
Each dated May 3, 1999
Effective immediately, John Hyll will remain on the Fund as the sole portfolio
manager of the fixed income portion. Meri Ann Beck and Barr Segal are no longer
acting as portfolio managers of this portion. Jeff Wardlow and Gregg Watkins
will continue to manage the equity portion of the Fund.
<PAGE>
- --------------------------------------------------------------------------------
GLOSSARY FOR MUTUAL FUND INVESTORS
TOTAL RETURN - The change in value of a mutual fund investment over a specific
time period, assuming all earnings are reinvested in additional shares of the
fund. Expressed as a percentage.
INCOME DISTRIBUTIONS - Payments to shareholders resulting from the net interest
or dividend income earned by a fund's portfolio.
CAPITAL GAINS DISTRIBUTIONS - Payments to shareholders of profits earned from
selling securities in a fund's portfolio. Capital gains distributions are
usually paid once a year.
MARKET CAPITALIZATION - The value of a company's issued and outstanding common
stock, as priced by the market:
NUMBER OF OUTSTANDING SHARES X CURRENT MARKET PRICE OF A SHARE = MARKET
CAPITALIZATION.
PRICE/EARNINGS RATIO - Current market price of a stock divided by its earnings
per share. Also known as the "multiple," the price/earnings ratio gives
investors an idea of how much they are paying for a company's earning power and
is a useful tool for evaluating the costs of different issues.
GROWTH INVESTING - An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.
VALUE INVESTING - A relatively conservative investment approach that focuses on
companies that may be temporarily out of favor or whose earnings or assets
aren't fully reflected in their stock prices. Value stocks will tend to have a
lower price/earnings ratio than that of growth stocks.
STANDARD & POOR'S 500(R) (S&P 500) - Market value-weighted index showing the
change in aggregate market value of 500 stocks relative to the base period of
1941-1943. It is composed mostly of companies listed on the New York Stock
Exchange. It is not possible to invest directly in an index.
<PAGE>
- --------------------------------------------------------------------------------
REGULAR INVESTING PAYS
- --------------------------------------------------------------------------------
FIVE GOOD REASONS TO INVEST REGULARLY
1. It's an easy way to build assets.
2. It's convenient and effortless.
3. It requires a low minimum to get started.
4. It can help you reach important long-term goals like financing retirement or
college funding.
5. It can help you benefit from the ups and downs of the market.
With Investment Builder, New England Funds' automatic investment program, you
can invest as little as $100 a month in your New England fund automatically --
without even writing a check. And, as you can see from the chart below, your
monthly investments can really add up over time.
- --------------------------------------------------------------------------------
THE POWER OF MONTHLY INVESTING
- --------------------------------------------------------------------------------
[A line graph appears here, illustrating the hypothetical accumulation of
monthly investments at an 8% annual rate of return. The data points of the
graph are as follows:]
Monthly investments of $100
Years Growth of Monthly Investments
0 $0
5 $7,322
10 $18,079
15 $33,886
20 $57,111
25 $91,236
Monthly investments of $200
Years Growth of Monthly Investments
0 $0
5 $14,643
10 $36,158
15 $67,772
20 $114,222
25 $182,472
Monthly investments of $500
Years Growth of Monthly Investments
0 $0
5 $36,608
10 $90,396
15 $169,429
20 $285,555
25 $456,181
For illustrative purposes only. These figures represent hypothetical
accumulation at an 8% annual rate of return, and are not indicative of future
performance of any New England Fund. The value of a New England Fund will
fluctuate with changing market conditions.
This program cannot assure a profit nor protect against a loss in a declining
market. It does, however, ensure that you buy more shares when the price is low
and fewer shares when the price is high. Because this program involves
continuous investment in securities regardless of fluctuating prices, the
investor should consider his or her financial ability to continue purchases
during periods of high or low prices.
You can start an Investment Builder program with your current New England Funds
account. To open an Investment Builder account today, call your financial
representative or New England Funds at 1-800-225-5478.
Past performance is no guarantee of future results. Please call New England
Funds for a prospectus, which contains more information, including charges and
other ongoing expenses. Please read prospectus carefully before you invest.
<PAGE>
- --------------------------------------------------------------------------------
NEW ENGLAND FUNDS
- --------------------------------------------------------------------------------
LARGE-CAP EQUITY FUNDS
Capital Growth Fund
Growth Fund
Growth and Income Fund
(formerly Growth Opportunities Fund)
Balanced Fund
Value Fund
ALL-CAP EQUITY FUNDS
Star Advisers Fund
Star Worldwide Fund
International Equity Fund
Bullseye Fund
Equity Income Fund
SMALL-CAP EQUITY FUNDS
Star Small Cap Fund
GOVERNMENT INCOME FUNDS
Limited Term U.S. Government Fund
Government Securities Fund
TAX-FREE INCOME FUNDS
Municipal Income Fund
Intermediate Term Tax Free
Fund of California
Massachusetts Tax Free Income Fund
MONEY MARKET FUNDS
Cash Management Trust,
Money Market Series
Tax Exempt Money Market Trust
CORPORATE INCOME FUNDS
Short Term Corporate Income Fund
(formerly Adjustable Rate U.S. Government Fund)
Bond Income Fund
High Income Fund
Strategic Income Fund
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.
New England Funds, L.P., and other firms selling shares of New England Funds are
members of the National Association of Securities Dealers, Inc. (NASD). As a
service to investors, the NASD has asked that we inform you of the availability
of a brochure on its Public Disclosure Program. The program provides access to
information about securities firms and their representatives. Investors may
obtain a copy by contacting the NASD at 800-289-9999 or by visiting their Web
site at www.NASDR.com.
- --------------------------------------------------------------------------------
Y2K Readiness Report: New England Funds has kept pace with the Y2K challenge.
Mission critical systems have been tested and non-mission critical systems are
scheduled for completion by September 30, 1999. Y2K is a top priority at New
England Funds. For more information on our Y2K readiness, please visit our Web
site at www.mutualfunds.com.
THIS MATERIAL REPRESENTS YEAR 2000 READINESS DISCLOSURE PURSUANT TO THE YEAR
2000 INFORMATION AND READINESS DISCLOSURE ACT.
- --------------------------------------------------------------------------------
<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
---------------------
GF58-0699
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