New England Equity Income Fund
Prospectus and Application
November 28, 1995
New England Equity Income Fund (the "Fund") is a newly-organized
series of New England Funds Trust III (the "Trust"), a registered open-
end management investment company.
The Fund's investment objective is current income and capital growth.
There can be no assurance that the Fund will achieve its objective,
which may be changed without shareholder approval. The Fund has only
one class of shares available, Class A shares.
This prospectus sets forth information you should know before
investing in the Fund. Please read it carefully and keep it for
future reference. A statement of additional information in two parts
(the "Statement") about the Fund dated November 28, 1995 has been
filed with the Securities and Exchange Commission (the "SEC") and is
available free of charge. To obtain a copy of the Statement, write to
New England Funds, L.P. (the "Distributor"), SAI Fulfillment Desk, 399
Boylston Street, Boston, MA 02116 or call toll free at 1-800-225-5478.
The Statement contains more detailed information about the Fund and is
incorporated into this prospectus by reference.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION, ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Table of Contents
Page
3 FUND EXPENSES AND FINANCIAL INFORMATION
3 Schedule of Fees Sales charges, yearly operating
expenses.
4 INVESTMENT STRATEGY
4 How the Fund Pursues Its Investment Objective
4 INVESTMENT RISKS It is important to understand the
risks inherent in
the Fund before you invest.
7 FUND MANAGEMENT
7 BUYING FUND SHARES
7 Minimum Investment
8 5 Ways to Buy Fund Shares Everything you need to know to
open and add to a New England
Equity Income Fund account.
Through your investment dealer
By mail
By wire transfer
By Investment Builder
By electronic purchase through ACH
9 Sales Charges
10 Reduced Sales Charges
11 OWNING FUND SHARES
11 Exchanging Among New England Funds
12 Fund Dividend Payments
12 SELLING FUND SHARES
12 4 Ways to Sell Fund Shares How to withdraw money or close
your account.
Through your investment dealer
By telephone
By mail
By Systematic Withdrawal Plan
14 Repurchase Option An opportunity to reinvest your
redemption
proceeds within 120 days for no
sales charge.
14 FUND DETAILS Additional information you may
find important.
14 How Fund Share Price is Determined
15 Income Tax Considerations
15 The Fund's Expenses
15 Performance Criteria
16 Additional Facts About the Fund
17 Glossary of Terms
Fund Expenses and Financial Information
Schedule of Fees
Expenses are one of several factors to consider when you invest in the
Fund. The following table summarizes your maximum transaction costs
from investing in the Fund and estimated annual expenses. The Example
shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Fund for the periods specified.
Shareholder transaction expenses - paid directly by shareholders
Maximum Initial Sales Charge Imposed on a Purchase 5.75%
(as a percentage of offering price)(1)(2)
Maximum Contingent Deferred Sales Charge (as a (3)
percentage of original purchase price or redemption
proceeds, as applicable)(2)
Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
(1) A reduced sales charge applies in some cases.
(2) Does not apply to reinvested distributions.
(3) A 1.00% contingent deferred sales charge applies with respect to
any portion of certain purchases greater than $1,000,000 redeemed
within approximately 1 year after purchase. See "Sales Charges."
Annual operating expenses - paid directly by the Fund, and indirectly
by its shareholders
(as a percentage of net assets)
Management Fees (after voluntary expense 0.00%*
limitation)
12b-1 Fees (after voluntary expense 0.00%*
limitation)
Other Expenses** 1.50%
Total Expenses (after voluntary expense 1.50%*
limitation)
*After fee waiver and expense reduction by the Fund's adviser and/or
the Distributor. Without the voluntary limitations, Management
Fees, 12b-1 Fees, Other Expenses and Total Expenses would be 0.70%,
0.25%, 2.35% and 3.30%, respectively.
**Other Expenses are based on estimated amounts for the current fiscal
year.
Example
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and
(2) redemption at period end. The 5% return and expenses in the
Example should not be considered indicative of actual or expected Fund
performance or expenses, both of which will vary.
1 Year $72
3 Years $102
The purpose of this fee schedule is to assist you in understanding
the various costs and expenses that you will bear directly or
indirectly if you invest in the Fund.
For additional information about the Fund's fees and other expenses,
please see "Fund Management," "Additional Facts About the Fund" and
"The Fund's Expenses."
A wire fee (currently $5.00) will be deducted from your proceeds if
you elect to transfer redemption proceeds by wire.
Please keep in mind that the Example shown above is hypothetical.
The information above should not be considered a representation of
past or future return or expenses; actual return or expenses may be
more or less than those shown.
Investment Strategy
The Fund's objective is current income and capital growth.
How the Fund Pursues Its Investment Objective
Under normal market circumstances, the Fund will invest at least 80%
of its assets in dividend-paying common or preferred stocks. The
Fund's portfolio will be selected to seek a current dividend yield
which is comparable to the published composite yield of the Standard &
Poor's Index of 500 Common Stocks (the "S&P Index") and significant,
long-term capital appreciation. The Fund may also invest in non
dividend-paying stocks, other equity securities, fixed income
securities, Rule 144A securities, zero coupon bonds and strips and may
engage in repurchase agreements.
Investment Risks
It is important to understand the following risks inherent in the Fund
before you invest.
[]Equity Securities
Equity securities are securities that represent an ownership
interest (or the right to acquire such an interest) in a company,
and include common and preferred stocks and securities exercisable
for or convertible into common or preferred stocks (such as
warrants, convertible debt securities and convertible preferred
stock).
While offering greater potential for long-term growth, equity
securities are more volatile and more risky than some other forms of
investment. Therefore, the value of your investment in the Fund may
sometimes decrease instead of increase. The Fund may invest in
equity securities of companies with relatively small market
capitalization. Securities of such companies may be more volatile
than the securities of larger, more established companies and the
broad equity market indices. See "Small Companies" below. The
Fund's investments may include securities traded "over-the-counter"
as well as those traded on a securities exchange. Some over-the-
counter securities may be more difficult to sell under some market
conditions.
The Fund may invest in convertible securities, including corporate
bonds, notes or preferred stocks that can be converted into common
stocks or other equity securities. Convertible securities also
include other securities, such as warrants, that provide an
opportunity for equity participation. Because convertible
securities can be converted into equity securities, their values
will normally move up or down as the value of the underlying equity
securities moves up or down. The movements in the prices of
convertible securities, however, often will be smaller than the
movements in the value of the related equity securities. Warrants
have no voting rights, pay no dividends and have no rights with
respect to the assets of the corporation issuing them. They do not
represent ownership of the securities for which they are
exercisable, but only the right to buy such securities at a
particular price. The credit risk associated with convertible
securities is generally reflected by their being rated, if at all,
below investment grade by organizations such as Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Ratings Group
("S&P"). Less than 35% of the Fund's assets will be invested in
convertible or debt securities rated below investment grade and
unrated convertible or debt securities of comparable quality.
[]Fixed-Income Securities
Because interest rates vary, it is impossible to predict the income
of a fund that invests in fixed-income securities for any particular
period. Fluctuations in the value of the Fund's investments in
fixed-income securities will cause the Fund's net asset value to
increase or decrease.
Fixed-income securities are subject to market and credit risk.
Market risk relates to changes in a security's value as a result of
changes in interest rates generally. Credit risk relates to the
ability of the issuer to make payments of principal and interest.
[]Repurchase Agreements
In repurchase agreements, the Fund buys securities from a seller,
usually a bank or brokerage firm, with the understanding that the
seller will repurchase the securities at a higher price at a later
date. Such transactions afford an opportunity for the Fund to earn
a return on available cash at minimal market risk, although the Fund
may be subject to various delays and risks of loss if the seller is
unable to meet its obligation to repurchase.
[]Short-Term Trading
Although the Fund seeks long-term growth or return, the Fund may,
consistent with its investment objective, engage in portfolio
trading in anticipation of, or in response to, changing economic or
market conditions and trends. These policies may result in higher
turnover rates in the Fund's portfolio which may produce higher
transaction costs and a higher level of taxable capital gains.
Portfolio turnover considerations will not limit the investment
discretion of the Fund's subadviser in managing the Fund's assets.
[]Small Companies
The Fund, in the discretion of its subadviser, may invest without
limit in the securities of companies with smaller capitalization.
Investments in companies with relatively small capitalization may
involve greater risk than is usually associated with more
established companies. These companies often have sales and
earnings growth rates which exceed those of companies with larger
capitalization. Such growth rates may in turn be reflected in more
rapid share price appreciation. However, companies with smaller
capitalization often have limited product lines, markets or
financial resources and they may be dependent upon a relatively
small management group. The securities may have limited
marketability and may be subject to more abrupt or erratic movements
in price than securities of companies with larger capitalization or
the market averages in general. The net asset value of funds that
invest in companies with smaller capitalization therefore may
fluctuate more widely than market averages.
[]Lower Quality Fixed-Income Securities
Fixed-income securities rated BB or lower by S&P or Ba or lower by
Moody's (and comparable unrated securities) are of below "investment
grade " quality. Lower quality fixed-income securities generally
provide higher yields, but are subject to greater credit and market
risk, than higher quality fixed-income securities. Lower quality
fixed-income securities are considered predominantly speculative
with respect to the ability of the issuer to meet principal and
interest payments. Achievement of the investment objective of a
mutual fund investing in lower quality fixed-income securities may
be more dependent on the fund's adviser's or sub-adviser's own
credit analysis than for a fund investing in higher quality bonds.
The market for lower quality fixed-income securities may be more
severely affected than some other financial markets by economic
recession or substantial interest rate increases, by changing public
perceptions of this market or by legislation that limits the ability
of certain categories of financial institutions to invest in these
securities. In addition, the secondary market may be less liquid
for lower rated fixed-income securities. This lack of liquidity at
certain times may affect the valuation of these securities and may
make the valuation and sale of these securities more difficult.
Securities of below investment grade are commonly known as junk
bonds. For more information, see the Statement's Appendix A -
Description of Bond Ratings.
[]Foreign Securities
Investments in foreign securities present risks not typically
associated with investments in comparable securities of U.S.
issuers.
There may be less information publicly available about a foreign
corporate or government issuer than about a U.S. issuer, and foreign
corporate issuers are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign issuers are
less liquid and at times more volatile than securities of comparable
U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than those in the United States, and
judgments against foreign entities may be more difficult to obtain
and enforce. With respect to certain foreign countries, there is a
possibility of governmental expropriation of assets, confiscatory
taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those
countries. The receipt of interest on foreign government securities
may depend on the availability of tax or other revenues to satisfy
the issuer's obligations.
The Fund's investments in foreign securities may include investments
in countries whose economies or securities markets are not yet
highly developed. Special considerations associated with these
investments (in addition to the considerations regarding foreign
investments generally) may include, among others, greater political
uncertainties, an economy's dependence on revenues from particular
commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential
buyers for such securities and delays and disruptions in securities
settlement procedures.
Most foreign securities in the Fund's portfolio will be denominated
in foreign currencies or traded in securities markets in which
settlements are made in foreign currencies. Similarly, any income
on such securities is generally paid to the Fund in foreign
currencies. The value of these foreign currencies relative to the
U.S. dollar varies continually, causing changes in the dollar value
of the Fund's portfolio investments (even if the local market price
of the investments is unchanged) and changes in the dollar value of
the Fund's income available for distribution to its shareholders.
The effect of changes in the dollar value of a foreign currency on
the dollar value of the Fund's assets and on the net investment
income available for distribution may be favorable or unfavorable.
The Fund may incur costs in connection with conversions between
various currencies. In addition, the Fund may be required to
liquidate portfolio assets, or may incur increased currency
conversion costs, to compensate for a decline in the dollar value of
a foreign currency occurring between the time when the Fund declares
and pays a dividend, or between the time when the Fund accrues and
pays an operating expense in U.S. dollars.
[]Zero Coupon Bonds and Strips
The Fund may invest in zero coupon bonds and "strips." Zero coupon
bonds do not make regular interest payments; rather, they are sold
at a discount from face value. Principal and accrued discount
(representing interest accrued but not paid) are paid at maturity.
"Strips" are debt securities that are stripped of their interest
after the securities are issued, but otherwise are comparable to
zero coupon bonds. The market values of "strips" and zero coupon
bonds generally fluctuate in response to changes in interest rates
to a greater degree than do interest paying securities of comparable
term and quality. Under many market conditions, investments in
stripped securities may be illiquid, making it difficult for the
Fund to dispose of them or determine their current value.
[]Miscellaneous
The Fund will not invest more than 15% of its assets in "illiquid
securities," that is, securities which are not readily resalable,
which include securities whose disposition is restricted by federal
securities laws. Investment in restricted or other illiquid
securities involves the risk that the Fund may be unable to sell
such a security at the desired time. Also, the Fund may incur
expenses, losses or delays in the process of registering restricted
securities prior to resale.
The Fund may purchase Rule 144A securities. These are privately
offered securities that can be resold only to certain qualified
institutional buyers. Investing in Rule 144A securities could have
the effect of increasing the level of fund illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested
in purchasing these securities. Rule 144A securities are treated as
illiquid, unless the Fund's subadviser has determined, under
guidelines established by the Trust's trustees, that the particular
issue of Rule 144A securities is liquid.
The Fund may purchase securities on a "when-issued" or "delayed-
delivery" basis. This means that the Fund enters into a commitment
to buy the security before the security has been issued, or, in the
case of a security that has already been issued, to accept delivery
of the security on a date beyond the usual settlement period. If
the value of a security purchased on a "when-issued" or "delayed-
delivery" basis falls or market rates of interest increase between
the time the Fund commits to buy the security and the delivery date,
the Fund may sustain a loss in value of or yield on the security.
For more information on "when-issued" and "delayed-delivery"
securities, see the Statement.
Although it is not possible to predict the portfolio turnover rate
with certainty, the Fund's subadviser does not expect the Fund's
portfolio turnover rate to exceed 100%.
Fund Management
New England Funds Management, L.P. ("NEFM"), 399 Boylston Street,
Boston, Massachusetts 02116, is the investment adviser of the Fund
but has delegated day-to-day portfolio management responsibility to
the Fund's subadviser, Loomis, Sayles & Company, L.P. ("Loomis
Sayles"). Founded in 1926, Loomis Sayles, One Financial Center,
Boston, Massachusetts 02111, is one of the country's oldest and
largest investment counsel firms. Mauricio F. Cevallos, Vice
President and Manager of Loomis Sayles and Peter Ramsden, Vice
President of Loomis Sayles, have served as the Fund's portfolio
managers since the Fund's inception in November 1995. Mr. Cevallos
has been employed by Loomis Sayles for more than ten years. Mr.
Ramsden joined Loomis Sayles in 1991 and, prior to that time, was a
MBA candidate at the University of Michigan. NEFM oversees, evaluates
and monitors the investment advisory services provided to the Fund and
furnishes general business management and administration to the Fund.
The Fund pays NEFM a management fee at the annual rate of 0.70% of the
first $200 million of the Fund's average daily net assets, 0.65% of
the next $300 million of such assets and 0.60% of such assets in
excess of $500 million. NEFM pays Loomis Sayles for providing
subadvisory services to the Fund a subadvisory fee at the annual rate
of 0.40% of the first $200 million of the average daily net assets of
the Fund, 0.325% of the next $300 million of such assets and 0.275% of
such assets in excess of $500 million.
The general partners of each of Loomis Sayles, NEFM and the
Distributor are special purpose organizations that are indirect,
wholly-owned subsidiaries of New England Investment Companies, L.P.
("NEIC"). NEIC's sole general partner, New England Investment
Companies, Inc., is a wholly-owned subsidiary of New England Mutual
Life Insurance Company ("The New England").
In placing portfolio transactions for the Fund, Loomis Sayles seeks
the most favorable price and execution available.
In addition to selecting and reviewing the investments of the Fund,
Loomis Sayles provides executive and other personnel for the
management of the Trust. The Trust's Board of Trustees supervises the
affairs of the Trust.
Under an agreement between NEFM and the Distributor, NEFM pays the
Distributor to provide certain administrative services to the Fund.
In addition to the management fee paid to NEFM and the fees paid to
the Distributor, the Fund pays all expenses not borne by NEFM, Loomis
Sayles or the Distributor, including, but not limited to, the charges
and expenses of the Fund's custodian and transfer agent, independent
auditors and legal counsel, all brokerage commissions and transfer
taxes in connection with portfolio transactions, all taxes and filing
fees, the fees and expenses for registration or qualification of its
shares under the federal or state securities laws, all expenses of
shareholders' and trustees' meetings and of preparing, printing and
mailing prospectuses and reports to shareholders and the compensation
of trustees who are not directors, officers or employees of NEFM,
Loomis Sayles or their affiliates, other than affiliated registered
investment companies.
Buying Fund Shares
Minimum Investment
$2,500 is the minimum for an initial investment in the Fund and $50 is
the minimum for each subsequent investment. There are special initial
investment minimums for the following plans:
[]$25 (for initial and subsequent investments) for payroll deduction
investment programs for 401(k), SARSEP, 403(b) retirement plans and
certain other retirement plans.
[]$50 for automatic investing through the Investment Builder program.
[]$250 for retirement plans with tax benefits such as corporate
pension and profit sharing plans, IRAs and Keogh plans.
[]$1,000 for accounts registered under the Uniform Gifts to Minors Act
or the Uniform Transfers to Minors Act.
5 Ways to Buy Fund Shares
[] Through your investment dealer:
Many investment dealers have a sales agreement with the Distributor
and would be pleased to accept your order.
[] By mail:
For an initial investment, simply complete an application and return
it, with a check payable to New England Funds, P.O. Box 8551, Boston,
MA 02266-8551. Proceeds of redemptions of Fund shares purchased by
check may not be available for up to ten days after the purchase date.
For subsequent investments, please mail your check to New England
Funds, P.O. Box 8551, Boston, MA 02266-8551 along with a letter of
instruction or an additional deposit slip from your statements. To
make investing even easier, you can also order personalized investment
slips by calling 1-800-225-5478.
[] By wire transfer of Federal Funds:
For an initial investment, call us at 1-800-225-5478 between 8:00 a.m.
and 6:00 p.m. (Eastern time) to obtain an account number and wire
transfer instructions.
For subsequent investments, direct your bank to transfer funds to
State Street Bank and Trust Company, ABA #011000028, DDA #99011538,
Credit New England Equity Income Fund, Shareholder Name, Shareholder
Account Number. Funds may be transferred between 9:00 a.m. and 4:00
p.m. (Eastern time). Your bank may charge a fee for this service.
[] By Investment Builder:
Investment Builder is New England Funds' automatic investment plan.
You may authorize automatic monthly transfers of $50 or more from your
bank checking or savings account to purchase shares of one or more New
England Funds.
For an initial investment, please indicate that you would like to
begin an automatic investment plan through Investment Builder on the
enclosed application. Indicate the amount of the monthly investment
and enclose a voided check from your bank account.
To add Investment Builder to an existing account, please call us at 1-
800-225-5478 for a Service Options form.
[] By electronic purchase through ACH:
You may purchase additional shares electronically through the
Automated Clearing House ("ACH") system as long as your bank or credit
union is a member of the ACH system and you have a completed, approved
ACH application on file with the Fund.
To purchase through ACH, call us at 1-800-225-5478 between 8 a.m. and
6 p.m. (Eastern time) for instructions or call Tele#Facts at 1-800-346-
5984 twenty-four hours a day. If you purchase your shares through
ACH, you will receive the net asset value next determined after your
order is received. Proceeds of redemptions of Fund shares purchased
through ACH may not be available for up to ten days after the purchase
date.
General
All purchase orders are subject to acceptance by the Fund and will be
effected at the net asset value next determined after the order is
received in proper form by State Street Bank and Trust Company ("State
Street Bank") (except orders received by your investment dealer before
the close of trading on the New York Stock Exchange [the "Exchange"]
and transmitted to the Distributor by 5:00 p.m. [Eastern time] on the
same day, which will be effected at the net asset value determined on
that day). Although the Fund does not anticipate doing so, it
reserves the right to suspend or change the terms of sales of shares.
You will not receive any certificates for your shares unless you
request them in writing from New England Funds, L.P. The Fund's "open
account" system for recording your investment eliminates the problems
and expense of handling and safekeeping certificates. If you wish
transactions in your account to be effected by another person under a
power of attorney from you, special rules apply. Please contact your
investment dealer or the Distributor for details.
Sales Charges
Shares are offered at net asset value plus a sales charge which varies
depending on the size of your purchase. They are also subject to a
0.25% annual service fee. The current sales charges are:
Sales Charge as a % of
Dealer's
Concession
Public as % of
Value of Offering Amount Offering
Total Investment Price Invested Price
Less than 5.75% 6.10% 5.00%
$50,000
$50,000 - 4.50% 4.71% 4.00%
$99,999
$100,000 - 3.50% 3.63% 3.00%
$249,999
$250,000 - 2.50% 2.56% 2.15%
$499,999
$500,000 - 2.00% 2.04% 1.70%
$999,999
$1,000,000 or None None *
more
*The Distributor may, at its discretion, pay investment dealers who
initiate and are responsible for such purchases a commission of up
to the following amounts: 1% on the first $2 million invested; .80%
on the next $1 million; .20% on the next $2 million; and .08% on the
excess over $5 million. These commissions are not payable if the
purchase represents the reinvestment of a redemption made during the
previous 12 calendar months.
Contingent Deferred Sales Charge. For purchases of $1,000,000 or more
of the Fund, a contingent deferred sales charge ("CDSC"), at the rate
of 1% of the lesser of the purchase price or the net asset value at
the time of redemption, applies to redemptions of shares within one
year after purchase. If an exchange is made to Class A shares of any
of New England Cash Management Trust Money Market Series or U.S.
Government Series or New England Tax Exempt Money Market Trust (the
"Money Market Funds"), then the one-year holding period for purposes
of determining the expiration of the CDSC will stop and will resume
only when an exchange is made back into Class A shares of a series of
the Trust, New England Funds Trust I or New England Funds Trust II
(the "Trusts"). For purposes of the CDSC, it is assumed that the
shares held the longest are the first to be redeemed. No CDSC applies
to a redemption of shares followed by a reinvestment effected within
30 days after the date of the redemption.
No CDSC applies in connection with (1) redemptions by retirement plans
qualified under Internal Revenue Code Sections 401(a) or 403(b)(7)
when such redemptions are necessary to make distributions to plan
participants; (2) distributions from an IRA due to death, disability
or a tax-free return of an excess contribution; (3) distributions by
other employee benefit plans to pay benefits; and (4) distributions by
a Section 401(a) plan due to death. For Section 403(b)(7) and IRA
accounts established before January 3, 1995, the CDSC is waived for
redemptions made after attainment of age 591/2. The CDSC is waived
for redemptions made to make required minimum distributions after
attainment of age 701/2 for Section 403(b)(7) and IRA accounts
established on or after January 3, 1995. There is also no CDSC on
redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder if the
redemption is made within one year after the shareholder's death or
disability. Also, there is no CDSC on certain withdrawals pursuant to
a Systematic Withdrawal Plan. See "Systematic Withdrawal Plan" below.
The Fund receives the net asset value next determined after an order
is received. The sales charge is allocated between the investment
dealer and the Distributor. The Distributor receives the CDSC. For
purposes of the CDSC, an exchange from one series of the Trusts to
another series of the Trusts is not considered a redemption or a
purchase. For federal tax purposes, however, such an exchange is
considered a redemption and a purchase and, therefore, would be
considered a taxable event on which you may recognize a gain or a
loss.
The Distributor may, at its discretion, reallow the entire sales
charge imposed on the sale of shares to investment dealers from time
to time. The staff of the SEC is of the view that dealers receiving
all or substantially all of the sales charge may be deemed
underwriters of a fund's shares.
For new amounts invested, the Distributor may, at its expense, pay
investment dealers who sell shares of the Fund at net asset value to
an eligible governmental authority 0.025% of the average daily net
assets of an account at the end of each calendar quarter for up to one
year. These commissions are not payable if the purchase represents
the reinvestment of redemption proceeds from any series of the Trusts
or if the account is registered in street name.
The Distributor may, at its expense, provide additional promotional
incentives or payments to dealers who sell shares of the Fund. In
some instances these incentives are provided to certain dealers who
achieve sales goals or who have sold or may sell significant amounts
of shares. New England Funds, L.P., from time to time, may provide
financial assistance programs to dealers in connection with
conferences, sales or training programs, seminars, advertising and
sales campaigns and/or shareholder services arrangements. Certain
dealers who have sold or may sell significant amounts of shares also
may receive compensation in the form of payment for travel expenses,
including lodging, incurred in connection with trips taken by invited
registered representatives to locations, within or outside of the
U.S., for educational seminars or meetings of a business nature.
The Distributor may provide non-cash incentives for achievement of
specified sales levels by representatives of participating broker-
dealers and financial institutions. Such incentives include, but are
not limited to, merchandise from gift catalogues or other sources,
gift certificates or vouchers through membership in the New England
Funds Flagship Club. The participation of representatives in such
incentive programs is at the discretion of the broker-dealer or
financial institution with which the representative is associated.
Reduced Sales Charges
[]Letter of Intent - if aggregate purchases of all series and classes
of the Trusts over a 13-month period will reach a breakpoint (a
dollar amount at which a lower sales charge applies), smaller
individual amounts can be invested at the sales charge applicable to
that breakpoint.
[]Combining Accounts - purchases by all qualifying accounts of all
series and classes of the Trusts (which do not include the Money
Market Funds unless the shares were purchased through an exchange
from a series of the Trusts) may be combined with purchases of
qualifying accounts of a spouse, parents, children, siblings,
grandparents or grandchildren, individual fiduciary accounts, sole
proprietorships and/or single trust estates. The values of all
accounts are combined to determine the sales charge.
[]Unit holders of unit investment trusts - unit investment trust
distributions of less than $1 million may be invested in the Fund at
a reduced sales charge of 1.50% of the public offering price (or
1.52% of the net amount invested).
[]Eligible governmental authorities - no sales charge or CDSC applies
to investments by any state, county or city or any instrumentality,
department, authority or agency thereof that has determined that the
Fund is a legally permissible investment and that is prohibited by
applicable investment laws from paying a sales charge or commission
in connection with the purchase of shares of any registered
investment company.
[]Clients of an adviser or subadviser (affiliated with NEIC) - no
sales charge or CDSC applies to investments of $100,000 or more in
the Fund by (1) clients of an adviser or subadviser (affiliated with
NEIC) to any series of the Trusts; any director, officer or partner
of a client of an adviser or subadviser (affiliated with NEIC) to
any series of the Trusts; and the parents, spouses and children of
the foregoing; (2) any individual who is a participant in a Keogh or
IRA plan under a prototype plan document of an adviser or subadviser
(affiliated with NEIC) to any series of the Trusts if at least one
participant in the plan qualifies under category (1) above; and (3)
an individual who invests through an IRA and is a participant in an
employee benefit plan that is a client of an adviser or subadviser
(affiliated with NEIC) to any series of the Trusts. Any investor
eligible for these arrangements should so indicate in writing at the
time of the purchase.
[]Shares of the Fund may be purchased at net asset value with no sales
charge or CDSC by advisory accounts through investment advisers that
are registered under the Investment Advisers Act of 1940 and
affiliated with broker-dealers.
[]Shares of the Fund may be purchased at net asset value by affiliates
of NEFM.
[]There is no sales charge or CDSC related to investments by 401(a),
401(k), 457 or 403(b) plans that have total investment assets equal
to or in excess of $5 million.
[]There is no sales charge, CDSC or initial investment minimum related
to investments by certain current and retired employees of the
Trusts' investment advisers and subadvisers (affiliated with NEIC),
the Distributor or any other company affiliated with The New
England; current and former directors and trustees of the Trusts or
their predecessor companies; agents and general agents of The New
England and its insurance company subsidiaries; current and retired
employees of such agents and general agents; registered
representatives of broker-dealers that have selling arrangements
with the Distributor; the spouse, parents, children, siblings,
grandparents or grandchildren of the persons listed above; any
trust, pension, profit sharing or other benefit plan for any of the
foregoing persons; and any separate account of The New England or of
any insurance company affiliated with The New England.
The reduction or elimination of the sales charge in connection with
sales described above reflects the absence or reduction of sales
expenses associated with such sales.
Owning Fund Shares
Exchanging Among New England Funds
You may exchange Class A shares of the Fund for the Class A shares of
any other series of the Trusts (except New England Growth Fund, which
is subject to special eligibility restrictions) without paying a sales
charge. You may also exchange your shares for Class A shares of the
Money Market Funds. Class A shares of the Money Market Funds acquired
through exchanges from the Fund may be exchanged for Class A shares of
any other series of the Trusts (except New England Growth Fund)
without paying a sales charge.
To make an exchange, please call 1-800-225-5478 between 8 a.m. and 6
p.m. (Eastern time), call Tele#Facts at
1-800-346-5984 twenty-four hours a day or write to New England Funds.
The exchange must be for a minimum of $500 (or the total net asset
value of your account, whichever is less), except that under the
Automatic Exchange Plan the minimum is $50. All exchanges are subject
to the minimum investment and eligibility requirements of the series
into which you are exchanging. In connection with any exchange, you
must receive a current prospectus of the series into which you are
exchanging. The exchange privilege may be exercised only in those
states where shares of such other series may be legally sold.
You have the automatic privilege to exchange your Fund shares by
telephone. New England Funds, L.P. will employ reasonable procedures
to confirm that your telephone instructions are genuine, and, if it
does not, it may be liable for any losses due to unauthorized or
fraudulent instructions. New England Funds, L.P. will require a form
of personal identification prior to acting upon your telephone
instructions, will provide you with written confirmations of such
transactions and will record your instructions.
Except as otherwise permitted by SEC rule, shareholders will receive
at least 60 days' advance notice of any material change to the
exchange privilege.
Fund Dividend Payments
The Fund pays dividends at least annually. The Fund pays as dividends
substantially all net investment income and distributes net realized
long-term capital gains (after applying any available capital loss
carryovers). The trustees of the Trust may adopt a different schedule
as long as payments are made at least annually. If you intend to
purchase shares of the Fund shortly before it declares a dividend, you
should be aware that a portion of the purchase price may in effect be
returned to you as a taxable dividend.
You have the option to reinvest all distributions in additional Class
A shares of the Fund or in Class A shares of other series of the
Trusts, to receive distributions from dividends and interest in cash
while reinvesting distributions from capital gains in additional Class
A shares of the Fund or of other series of the Trusts, or to receive
all distributions in cash. Income distributions and capital gains
distributions will be reinvested in Class A shares of the Fund at net
asset value (without a sales charge) unless you select another option.
You may change your distribution option by notifying New England Funds
in writing or by calling 1-800-225-5478. If you elect to receive your
dividends in cash and the dividend checks sent to you are returned
"undeliverable" to the Fund or remain uncashed for six months, your
cash election will automatically be changed and your future dividends
will be reinvested.
DIVIDEND DIVERSIFICATION PROGRAM
You may also establish a dividend diversification program that allows
you to have all dividends and any other distributions automatically
invested in Class A shares of another New England Fund, subject to the
investor eligibility requirements of that other fund and to state
securities law requirements. Investments will be made at the
appropriate offering price, which may include a sales charge.
Dividends will be invested in the selected fund's shares on the
dividend record date. A dividend diversification account must be in
the same registration (shareholder name) as the distributing fund
account and, if a new account in the purchased fund is being
established, the purchased fund's minimum investment requirements must
be met. Before establishing a dividend diversification program into
any other New England Fund, you must obtain a copy of that fund's
prospectus.
Selling Fund Shares
4 Ways to Sell Fund Shares
[] Through your investment dealer:
Call your authorized investment dealer for information.
[] By telephone:
You or your investment dealer may redeem (sell) shares by telephone
using any of the three methods described below:
Wired to Your Bank Account - If you have previously selected the
telephone redemption privilege on your account, shares may be redeemed
by calling 1-800-225-5478 between 8 a.m. and 6 p.m. (Eastern time).
Shares may also be redeemed by calling Tele#Facts at 1-800-346-5984
twenty-four hours a day. Redemption requests accepted after the
Exchange has closed (4:00 p.m. Eastern time) will be processed at the
next-determined net asset value. The proceeds (less any applicable
CDSC) generally will be wired on the next business day to the bank
account previously chosen by you on your application. A wire fee
(currently $5.00) will be deducted from the proceeds.
Your bank must be a member of the Federal Reserve System or have a
correspondent bank that is a member. If your account is with a
savings bank, it must have only one correspondent bank that is a
member of the System.
Mailed to Your Address of Record - Shares may be redeemed by calling
1-800-225-5478 and requesting that a check for the proceeds (less any
applicable CDSC) be mailed to the address on your account, provided
that the address has not changed during the previous month and that
the proceeds are for $100,000 or less. Generally, the check will be
mailed to you on the business day after your redemption request is
received.
Through ACH - Shares may be redeemed electronically through the ACH
system, provided that you have an approved ACH application on file
with the Fund. To redeem through ACH, call 1-800-225-5478 prior to
3:00 p.m. (Eastern time) on a day when the Fund is open for business
or call Tele#Facts at 1-800-346-5984 twenty-four hours a day. If your
telephone call is made to Tele#Facts before 4:00 p.m., the redemption
will be processed the day the call is made, unless it is a day when
the Exchange closes before 4:00 p.m. and your call is made after the
Exchange closes. The proceeds (less any applicable CDSC) generally
will arrive at your bank within three business days; their
availability will depend on your bank's particular rule. If you have
recently purchased your shares through the ACH system, the Fund may
withhold redemption proceeds until the funds have cleared, which may
take up to ten days.
[] By mail:
You may redeem your shares at their net asset value (less any
applicable CDSC) next determined after receipt of your request in good
order by sending a written request (including any necessary special
documentation) to New England Funds, P.O. Box 8551, Boston, MA 02266-
8551.
The request must include the name of the Fund, your account number,
the exact name(s) in which your shares are registered, the number of
shares or the dollar amount to be redeemed and whether you wish the
proceeds mailed to your address of record, wired to your bank account
or transmitted through ACH. All owners of the shares must sign the
request in the exact names in which the shares are registered (this
appears on your confirmation statement) and indicate any special
capacity in which you are signing (such as trustee, custodian, under
power of attorney or on behalf of a partnership, corporation or other
entity).
If you are redeeming shares worth less than $100,000 and the proceeds
check is made payable to the registered owner(s) and mailed to the
record address, no signature guarantee is required. Otherwise, you
generally must have your signature guaranteed by an eligible guarantor
institution in accordance with procedures established by New England
Funds, L.P. Signature guarantees by notaries public are not
acceptable.
Additional written information may be required for redemptions by
certain benefit plans and IRAs. Contact the Distributor or your
investment dealer for details.
If you hold certificates for your shares, you must enclose them with
your redemption request or your request will not be honored. The Fund
recommends that certificates be sent by registered mail.
[] By Systematic Withdrawal Plan:
You may establish a Systematic Withdrawal Plan that allows you to
redeem shares and receive payments on a regular schedule. In the case
of shares subject to a CDSC, the amount or percentage you specify may
not exceed, on an annualized basis, 10% of the value of your Fund
account. Redemption of shares pursuant to the Plan will not be
subject to a CDSC. For information, contact the Distributor or your
investment dealer. Since withdrawal payments may have tax
consequences, you should consult your tax adviser before establishing
such a plan.
General. Redemption requests will be effected at the net asset value
next determined after your redemption request is received in proper
form by State Street Bank or your investment dealer (except that
orders received by your investment dealer before the close of regular
trading on the Exchange and transmitted to the Distributor by 5:00
p.m. Eastern time on the same day will receive that day's net asset
value). Redemption proceeds (less any applicable CDSC) will normally
be mailed to you within seven days after State Street Bank or the
Distributor receives your request in good order.
During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If you are unable to
contact the Distributor by telephone, shares may be redeemed by
delivering the redemption request in person to the Distributor or by
mail as described above. Requests are processed at the net asset
value next determined after the request is received.
Special rules apply with respect to redemptions under powers of
attorney. Please call your investment dealer or the Distributor for
more information.
Telephone redemptions are not available for tax qualified retirement
plans or for Fund shares held in certificate form. If certificates
have been issued for your investment, you must send them to New
England Funds along with your request before a redemption request can
be honored. See the instructions for redemption by mail above.
The Fund may suspend the right of redemption and may postpone payment
for more than seven days when the Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the SEC when
trading on the Exchange is restricted or during an emergency which
makes it impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets, or during any other
period permitted by the SEC for the protection of investors.
Repurchase Option
You may apply your redemption proceeds (without a sales charge) to the
repurchase of Class A shares of any series of the Trusts. To qualify,
you must reinvest some or all of the proceeds within 120 days after
your redemption and notify New England Funds or your investment dealer
at the time of reinvestment that you are taking advantage of this
privilege. You may reinvest the proceeds either by returning the
redemption check or by sending your check for some or all of the
redemption amount. Please note: For federal income tax purposes, a
redemption is a sale that involves tax consequences (even if the
proceeds are later reinvested). Please consult your tax adviser.
Fund Details
How Fund Share Price Is Determined
The Fund's holdings of equity securities are valued at the most recent
sales prices on an applicable exchange or NASDAQ, or, in the case of
unlisted securities (or listed securities which were not traded during
the day), at the last quoted bid prices. Price information on listed
securities is generally taken from the closing price on the exchange
where the security is primarily traded. Short-term notes are valued
at cost, or, where applicable, amortized cost, which method is
intended to approximate market value. All other securities and assets
of the Fund are valued at their fair market value as determined in
good faith by the subadviser (or a pricing service selected by the
subadviser) under the supervision of the Trust's Board of Trustees.
The net asset value of the Fund's shares is determined as of the close
of regular trading (normally 4:00 p.m. Eastern time) on the Exchange
each day it is open for trading.
The net asset value per share is determined by dividing the value of
the Fund's assets (the current U.S. dollar value, in the case of
securities principally traded outside the United States) plus any cash
and other assets (including dividends and interest receivable but not
collected) less all liabilities (including accrued expenses), by the
number of shares of the Fund outstanding. The public offering price
of shares is determined by adding the applicable sales charge to the
net asset value. See "Buying Fund Shares - Sales Charges" above.
The price you pay for a share will be determined using the next set of
calculations made after your order is accepted by New England Funds,
L.P. In other words, if, on a Tuesday morning, your properly
completed application is received, your wire is received or your
dealer places your trade for you, the price you pay will be determined
by the calculations made as of the close of regular trading on the
Exchange on Tuesday. If you buy shares through your investment
dealer, the dealer must receive your order by the close of regular
trading on the Exchange and transmit it to the Distributor by 5:00
p.m. (Eastern time) to receive that day's public offering price.
Income Tax Considerations
The Fund intends to meet all requirements of the Internal Revenue Code
of 1986, as amended, necessary to qualify as a "regulated investment
company" and thus does not expect to pay any federal income tax on
investment income and capital gains distributed to shareholders in
cash or in additional shares. Unless you are a tax-exempt entity,
your distributions derived from the Fund's short-term capital gains
and ordinary income are taxable to you as ordinary income. (A portion
of these distributions may qualify for the dividends-received
deduction for corporations.) Distributions derived from the Fund's
long-term capital gains ("capital gains distributions"), if designated
as such by the Fund, are taxable to you as long-term capital gains,
regardless of how long you have owned shares in the Fund. Both income
distributions and capital gains distributions are taxable whether you
elect to receive them in cash or additional shares.
To avoid an excise tax, the Fund intends to distribute prior to
calendar year end virtually all the Fund's ordinary income and net
capital gains earned during that calendar year. If declared in
December to shareholders of record in that month, and paid the
following January, these distributions will be considered for federal
income tax purposes to have been received by shareholders on December
31.
The Fund is required to withhold 31% of all income dividends and
capital gains distributions it pays to you if you do not provide a
correct, certified taxpayer identification number, if the Fund is
notified that you have underreported income in the past, or if you
fail to certify to the Fund that you are not subject to such
withholding. In addition, the Fund will be required to withhold 31%
of the gross proceeds of Fund shares you redeem if you have not
provided a correct, certified taxpayer identification number. If you
are a tax-exempt shareholder, however, these back-up withholding rules
will not apply so long as you furnish the Fund with an appropriate
certification.
Annually, if you earn more than $10 in taxable income from the Fund,
you will receive a Form 1099 to assist you in reporting the prior
calendar year's distributions on your federal income tax return. You
should consult your tax adviser about any state or local taxes that
may apply to such distributions. Be sure to keep the Form 1099 as a
permanent record. A fee may be charged for any duplicate information
requested.
The foregoing is a summary of certain federal income tax consequences
of an investment in the Fund for shareholders who are U.S. citizens or
corporations. Shareholders should consult a competent tax adviser as
to the effect of an investment in the Fund on their particular
federal, state and local tax situations.
The Fund's Expenses
Under a Service Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor a
monthly service fee at an annual rate not to exceed 0.25% of the
Fund's average daily net assets. The Distributor may pay up to the
entire amount of this fee to securities dealers who are dealers of
record with respect to the Fund's shares, for providing personal
services to investors in shares of the Fund and/or the maintenance of
shareholder accounts. The service fee is payable only to reimburse
the Distributor for amounts it pays or expends in connection with the
provision of personal services to investors and/or the maintenance of
shareholder accounts. To the extent that the Distributor's
reimbursable expenses in any year exceed the maximum amount payable
under the Service Plan for that year, such expenses may be carried
forward for reimbursement in future years in which the Plan remains in
effect.
Performance Criteria
The Fund may include total return information in advertisements or
other written sales material. The Fund will show average annual total
return for the one-, five- and ten-year periods (or the life of the
Fund, if shorter) through the end of the most recent calendar quarter.
Total return is measured by comparing the value of a hypothetical
$1,000 investment in a Fund at the beginning of the relevant period to
the value of the investment at the end of the period (assuming
deduction of the current maximum sales charge and automatic
reinvestment of all dividends and capital gains distributions). Total
return may be quoted with or without giving effect to any voluntary
expense limitations in effect during the relevant period. The Fund
may also show total return over other periods, on an aggregate basis
for the period presented, or without deduction of a sales charge. If
a sales charge is not deducted in calculating total return, the Fund's
total return is higher.
All performance information is based on past results and is not an
indication of likely future performance.
Additional Facts About the Fund
[]New England Funds Trust III was organized in 1995 as a Massachusetts
business trust and is authorized to issue an unlimited number of
full and fractional shares in multiple series.
[]When you invest in the Fund, you acquire freely transferable shares
of beneficial interest that entitle you to receive dividends as
determined by the Trust's trustees and to cast a vote for each share
you own at shareholder meetings. Shares of the Fund vote separately
from shares of other series of the Trust, except as otherwise
required by law.
[]Except for matters that are explicitly identified as "fundamental"
in this prospectus or Part I of the Statement, the investment
policies of the Fund may be changed without shareholder approval or,
in most cases, prior notice. The investment objective of the Fund
is not fundamental. If there is a change in the Fund's objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their current financial position and needs.
[]The Trust does not generally hold regular shareholder meetings and
will do so only when required by law. Shareholders of the Trust may
remove the trustees of the Trust from office by votes cast at a
shareholder meeting or by written consent.
[]The transfer and dividend paying agent for the Fund is New England
Funds, L.P., 399 Boylston Street, Boston, MA 02116. New England
Funds, L.P. has subcontracted certain of its obligations as such to
State Street Bank, 225 Franklin Street, Boston, MA 02110.
[]If the balance in your account with the Fund is less than a minimum
amount set by the trustees of the Trust from time to time (currently
$500 for all accounts except as indicated below and except for
Individual Retirement Accounts, which have a $25 minimum), the Fund
may close your account and send the proceeds to you. Shareholders
who are affected by this policy will be notified of the Fund's
intention to close the account and will have 60 days immediately
following the notice to bring the account up to the minimum. The
minimum does not apply to Keoghs and pension and profit sharing
plans, automatic investment plans or accounts that have fallen below
the minimum solely because of fluctuations in the Fund's net asset
value per share.
[]The Fund's annual report will contain additional performance
information and will be made available upon request and without
charge.
Glossary of Terms
Capital gain distributions - Payments to shareholders of net profits
earned from selling securities in a fund's portfolio. Capital gain
distributions are usually paid once a year.
Contingent Deferred Sales Charge (CDSC) - A fee that may be charged
when a shareholder sells fund shares.
Distribution fee - An annual asset-based sales charge that is used to
pay for sales-related expenses.
Income Distributions - Payments to shareholders resulting from
interest or dividend income earned by a fund's portfolio.
Mutual fund - The pooled assets of a group of investors,
professionally managed in pursuit of a specific objective.
Net asset value (NAV) - The market value of one share of a mutual fund
on any given day without sales charge or CDSC. Determined by dividing
the fund's total net assets by the number of fund shares outstanding.
New England Funds, L.P. - The distributor and transfer agent of the
New England Funds.
Open end management investment company - A mutual fund that allows
investors to redeem fund shares directly from the fund company on any
business day.
Public offering price (POP) - The price of one share of a mutual fund,
including its initial sales charge, if there is one.
Record date - The date on which mutual fund investors must own a
fund's shares to be eligible to receive specific income or capital
gain distributions.
Service fee - Payments by a fund for personal service to investors
and/or for maintenance of shareholder accounts by a fund's distributor
or a financial representative.
Total return - The change in value of an investment in a fund over a
specific time period, assuming all earnings are reinvested in
additional shares of the fund. Expressed as a percentage.
Yield - The rate at which a fund earns net investment income,
expressed as a percentage. Yield calculations are standardized among
mutual funds, based on a formula developed by the Securities and
Exchange Commission.
12b-1 fees - Fees paid by a mutual fund under a plan adopted under SEC
Rule 12b-1. Can include both distribution fees and service fees.
<PAGE>
NEW ENGLAND FUNDS
New England Equity Income Fund
STATEMENT OF ADDITIONAL INFORMATION
November 28, 1995
This Statement of Additional Information (the "Statement")
contains information which may be useful to investors but which is not
included in the prospectus of New England Equity Income Fund (the
"Fund"). This Statement is not a prospectus and is only authorized
for distribution when accompanied or preceded by the Fund's prospectus
dated November 28, 1995 (the "Prospectus"). The Statement should be
read together with the prospectus. Investors may obtain a free copy
of the prospectus from New England Funds, L.P., Prospectus Fulfillment
Desk, 399 Boylston Street, Boston, Massachusetts 02116.
T a b l e o f C o n t e n t s
Page
Investment Restrictions 2
Fund Charges and Expenses 3
Miscellaneous Investment Practices 4
Management of the Trust 10
Portfolio Transactions and Brokerage 15
Description of the Trust and Ownership of 16
Shares
How to Buy Shares 18
Net Asset Value and Public Offering Price 18
Reduced Sales Charges 19
Shareholder Services 21
Redemptions 25
Standard Performance Measures 27
Income Dividends, Capital Gain Distributions 29
and Tax Status
Financial Statements 31
Report of Independent Accountants 33
Appendix A - Description of Bond Ratings A-1
Appendix B - Publications That May Be Referred to in Trust B-1
Advertisements and Sales Literature
- ---------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ----------------------------------------------------------------------
The following is a description of restrictions on the investments
to be made by the Fund. Restrictions marked with an asterisk may not
be changed without the approval of a majority of the outstanding
voting securities of the Fund. The percentages set forth below and
the percentage limitations set forth in the Prospectus will apply at
the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs or exists immediately
after and as a result of the purchase of such security.
The Fund will not:
*(1) Purchase any security (other than U.S. Government Securities)
if, as a result, more than 25% of the Fund's total assets (taken
at current value) would be invested in any one industry (in the
utilities category, gas, electric, water and telephone companies
will be considered as being in separate industries, and each
foreign country's government (together with subdivisions thereof)
will be considered to be a separate industry);
(2) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and
sales of securities), or make short sales except where, by virtue
of ownership of other securities, it has the right to obtain,
without payment of further consideration, securities equivalent in
kind and amount to those sold, and the Fund will not deposit or
pledge more than 10% of its total assets (taken at current value)
as collateral for such sales. (For this purpose, the deposit or
payment by the Fund of initial or variation margin in connection
with futures contracts or related options transactions is not
considered the purchase of a security on margin);
(3) Acquire more than 10% of any class of securities of an issuer
(taking all preferred stock issues of an issuer as a single class
and all debt issues of an issuer as a single class) or acquire
more than 10% of the outstanding voting securities of an issuer;
*(4) Borrow money in excess of 25% of its total assets, and then
only as a temporary measure for extraordinary or emergency
purposes;
(5) Pledge more than 25% of its total assets (taken at cost). (For
the purpose of this restriction, collateral arrangements with
respect to options, futures contracts, options on futures
contracts and swap contracts and with respect to initial and
variation margin are not deemed to be a pledge of assets);
(6) Invest more than 5% of its total assets (taken at current value)
in securities of businesses (including predecessors) less than
three years old;
(7) Purchase or retain securities of any issuer if officers and
trustees of New England Funds Trust III (the "Trust") or of the
investment adviser or subadviser of the Fund who individually own
more than 1/2 of 1% of the shares or securities of that issuer,
together own more than 5%;
*(8) Make loans, except by entering into repurchase agreements or
by purchase of bonds, debentures, commercial paper, corporate
notes and similar evidences of indebtedness, which are a part of
an issue to the public or to financial institutions, or through
the lending of the Fund's portfolio securities;
*(9) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, real estate or commodities or commodity
contracts, except that the Fund may buy and sell futures
contracts, swap contracts and related options. (This restriction
does not prevent the Fund from purchasing securities of companies
investing in the foregoing);
*(10)Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;
(11) Make investments for the purpose of exercising control or
management;
(12) Participate on a joint or joint and several basis in any
trading account in securities. (The "bunching" of orders for the
purchase or sale of portfolio securities with any investment
adviser or subadviser of the Fund or accounts under any such
investment adviser's or subadviser's management to reduce
brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account
in securities for purposes of this restriction.);
(13) Write, purchase or sell options or warrants, except that the
Fund may (a) acquire warrants or rights to subscribe to securities
of companies issuing such warrants or rights, or of parents or
subsidiaries of such companies, (b) write, purchase and sell put
and call options on securities, securities indexes or futures
contracts and (c) enter into currency forward contracts;
(14) Purchase any illiquid security if, as a result, more than 15%
of its net assets (taken at current value) would be invested in
such securities;
(15) Invest in the securities of other investment companies,
except by purchases in the open market involving only customary
brokers' commissions. Under the Investment Company Act of 1940
(the "1940 Act"), the Fund may not (a) invest more than 10% of its
total assets (taken at current value) in such securities, (b) own
securities of any one investment company having value in excess of
5% of the total assets of the Fund (taken at current value), or
(c) own more than 3% of the outstanding voting stock of any one
investment company; or
*(16)Issue senior securities. (For the purpose of this restriction
none of the following is deemed to be a senior security: any
pledge or other encumbrance of assets permitted by restrictions
(2) or (5) above; any borrowing permitted by restriction (4)
above; any collateral arrangements with respect to forward
contracts, options, futures contracts, swap contracts and options
on futures contracts or swap contracts and with respect to initial
and variation margin; the purchase or sale of options, forward
contracts, futures contracts, swap contracts or options on futures
contracts or swap contracts; and the issuance of shares of
beneficial interest permitted from time to time by the provisions
of the Trust's Declaration of Trust and by the 1940 Act, the rules
thereunder, or any exemption therefrom.)
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FUND CHARGES AND EXPENSES
- ----------------------------------------------------------------------
INVESTMENT ADVISORY FEES
Pursuant to an advisory agreement dated November 28, 1995, New
England Funds Management, L.P. ("NEFM") has agreed, subject to the
supervision of the board of trustees of the Trust, to manage the
investment and reinvestment of the assets of the Fund and to provide a
range of administrative services to the Fund. For the services
described in the advisory agreement, NEFM is paid a fee at the annual
rate of 0.70% of the first $200 million of the Fund's average net
assets, 0.65% of the next $300 million of such assets and 0.60% of
such assets in excess of $500 million.
The advisory agreement for Fund provides that NEFM may delegate
its responsibilities thereunder to other parties. As explained in the
Prospectus, NEFM has delegated responsibility for the investment and
reinvestment of the Fund's assets to Loomis, Sayles & Company, L.P.
("Loomis Sayles"), as subadviser. NEFM pays Loomis Sayles for
providing subadvisory services at the annual rate of 0.40% of the
first $200 million of the Fund's average net assets, 0.325% of the
next $300 million of such assets and 0.275% of such assets in excess
of $500 million.
Pursuant to a voluntary agreement that may be terminated at any
time, NEFM and Loomis Sayles bear all expenses (other than any
brokerage costs, interest, taxes or extraordinary expenses) of the
Fund in excess of 1.00% annually of the Fund's average daily net
assets.
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MISCELLANEOUS INVESTMENT PRACTICES
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The following information relates to certain investment
practices in which the Fund may engage.
Loans of Portfolio Securities. The Fund may lend its portfolio
securities to broker-dealers under contracts calling for cash
collateral equal to at least the market value of the securities
loaned, marked to the market on a daily basis. (The Fund at the
present time has no intention to engage in the lending of portfolio
securities.) The Fund will continue to benefit from interest or
dividends on the securities loaned and will also receive interest
through investment of the cash collateral in short-term liquid
investments, which may include shares of money market funds subject
to any investment restriction listed in above. No loans will be made
if, as a result, the aggregate amount of such loans outstanding at
any one time would exceed 15% of the Fund's total assets (taken at
current value). Any voting rights, or rights to consent, relating to
securities loaned pass to the borrower. However, if a material event
affecting the investment occurs, such loans will be called so that
the securities may be voted by the Fund. The Fund pays various fees
in connection with such loans, including shipping fees and reasonable
custodian and placement fees approved by the board of trustees of the
Trust or persons acting pursuant to the direction of the board.
These transactions must by fully collateralized at all times,
but involve some credit risk to the Fund if the other party should
default on its obligation and the Fund is delayed in or prevented
from recovering the collateral.
U.S. Government Securities. The Fund may invest in some or all of
the following U.S. Government Securities:
. U.S. Treasury Bills - Direct obligations of the United States
Treasury which are issued in maturities of one year or less. No
interest is paid on Treasury bills; instead, they are issued at a
discount and repaid at full face value when they mature. They are
backed by the full faith and credit of the United States Government.
. U.S. Treasury Notes and Bonds - Direct obligations of the United
States Treasury issued in maturities that vary between one and 40
years, with interest normally payable every six months. These
obligations are backed by the full faith and credit of the United
States Government.
. "Ginnie Maes" - Debt securities issued by a mortgage banker or
other mortgagee which represent an interest in a pool of mortgages
insured by the Federal Housing Administration or the Farmer's Home
Administration or guaranteed by the Veterans Administration. The
Government National Mortgage Association ("GNMA") guarantees the
timely payment of principal and interest when such payments are due,
whether or not these amounts are collected by the issuer of these
certificates on the underlying mortgages. An assistant attorney
general of the United States has rendered an opinion that the
guarantee by GNMA is a general obligation of the United States backed
by its full faith and credit. Mortgages included in single family or
multi-family residential mortgage pools backing an issue of Ginnie
Maes have a maximum maturity of up to 30 years. Scheduled payments
of principal and interest are made to the registered holders of
Ginnie Maes (such as the Fund) each month. Unscheduled prepayments
may be made by homeowners, or as a result of a default. Prepayments
are passed through to the registered holder (such as the Fund, which
reinvests any prepayments) of Ginnie Maes along with regular monthly
payments of principal and interest.
. "Fannie Maes" - The Federal National Mortgage Association
("FNMA") is a government-sponsored corporation owned entirely by
private stockholders that purchases residential mortgages from a list
of approved seller/servicers. Fannie Maes are pass-through
securities issued by FNMA that are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith
and credit of the United States Government.
. "Freddie Macs" - The Federal Home Loan Mortgage Corporation
("FHLMC") is a corporate instrumentality of the United States
Government. Freddie Macs are participation certificates issued by
FHLMC that represent an interest in residential mortgages from
FHLMC's National Portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal, but Freddie Macs are
not backed by the full faith and credit of the United States
Government.
As described in the Prospectus, U.S. Government Securities do
not involve the credit risks associated with investments in other
types of fixed-income securities, although, as a result, the yields
available from U.S. Government Securities are generally lower than
the yields available from corporate fixed-income securities. Like
other fixed-income securities, however, the values of U.S. Government
Securities change as interest rates fluctuate. Fluctuations in the
value of portfolio securities will not affect interest income on
existing portfolio securities but will be reflected in the Fund's net
asset value. Since the magnitude of these fluctuations will
generally be greater at times when the Fund's average maturity is
longer, under certain market conditions the Fund may, for temporary
defensive purposes, accept lower current income from short-term
investments rather than investing in higher yielding long-term
securities.
When-Issued Securities. The Fund may enter into agreements with
banks or broker-dealers for the purchase or sale of securities at an
agreed-upon price on a specified future date. Such agreements might
be entered into, for example, when the Fund anticipates a decline in
interest rates and is able to obtain a more advantageous yield by
committing currently to purchase securities to be issued later. When
the Fund purchases securities in this manner (i.e., on a when-issued
or delayed-delivery basis), it is required to create a segregated
account with the Trust's custodian and to maintain in that account
cash or U.S. Government Securities in an amount equal to or greater
than, on a daily basis, the amount of the Fund's when-issued or
delayed-delivery commitments. The Fund will make commitments to
purchase on a when-issued or delayed-delivery basis only securities
meeting the Fund's investment criteria. The Fund may take delivery
of these securities or, if it is deemed advisable as a matter of
investment strategy, the Fund may sell these securities before the
settlement date. When the time comes to pay for when-issued or
delayed-delivery securities, the Fund will meet its obligations from
the then available cash flow or the sale of securities, or from the
sale of the when-issued or delayed- delivery securities themselves
(which may have a value greater or less than the Fund's payment
obligation).
Repurchase Agreements. The Fund may enter into repurchase agreements
by which the Fund purchases a security and obtains a simultaneous
commitment from the seller to repurchase the security at an agreed-
upon price and date. The resale price is in excess of the purchase
price and reflects an agreed-upon market rate unrelated to the coupon
rate on the purchased security. Such transactions afford the Fund
the opportunity to earn a return on temporarily available cash at
minimal market risk. While the underlying security may be a bill,
certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the United States Government, the
obligation of the seller is not guaranteed by the United States
Government and there is a risk that the seller may fail to repurchase
the underlying security. In such event, the Fund would attempt to
exercise rights with respect to the underlying security, including
possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including (a) possible declines
in the value of the underlying security during the period while the
Fund seeks to enforce its rights thereto, (b) possible reduced levels
of income and lack of access to income during this period and (c)
inability to enforce rights and the expenses involved in the
attempted enforcement.
Zero Coupon Securities. Zero coupon securities are debt obligations
that do not entitle the holder to any periodic payments of interest
either for the entire life of the obligation or for an initial period
after the issuance of the obligations. Such securities are issued
and traded at a discount from their face amounts. The amount of the
discount varies depending on such factors as the time remaining until
maturity of the securities, prevailing interest rates, the liquidity
of the security and the perceived credit quality of the issuer. The
market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically
and are likely to respond to changes in interest rates to a greater
degree than do non-zero coupon securities having similar maturities
and credit quality. In order to satisfy a requirement for
qualification as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"), the Fund must
distribute each year at least 90% of its net investment income,
including the original issue discount accrued on zero coupon
securities. Because the Fund will not on a current basis receive
cash payments from the issuer of a zero coupon security in respect of
accrued original issue discount, in some years the Fund may have to
distribute cash obtained from other sources in order to satisfy the
90% distribution requirement under the Code. Such cash might be
obtained from selling other portfolio holdings of the Fund. In some
circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might
otherwise make it undesirable for the Trust to sell such securities
at such time.
Convertible Securities. The Fund may invest in convertible
securities including corporate bonds, notes or preferred stocks of
U.S. or foreign issuers that can be converted into (that is,
exchanged for) common stocks or other equity securities. Convertible
securities also include other securities, such as warrants, that
provide an opportunity for equity participation. Because convertible
securities can be converted into equity securities, their values will
normally vary in some proportion with those of the underlying equity
securities. Convertible securities usually provide a higher yield
than the underlying equity, however, so that the price decline of a
convertible security may sometimes be less substantial than that of
the underlying equity security.
Options and Futures
. Futures Contracts - A futures contract is an agreement between
two parties to buy and sell a particular commodity (e.g., an interest-
bearing security) for a specified price on a specified future date.
In the case of futures on an index, the seller and buyer agree to
settle in cash, at a future date, based on the difference in value of
the contract between the date it is opened and the settlement date.
The value of each contract is equal to the value of the index from
time to time multiplied by a specified dollar amount.
When a trader, such as the Fund, enters into a futures contract,
it is required to deposit with (or for the benefit of) its broker as
"initial margin" an amount of cash or short-term high-quality
securities (such as U.S. Treasury Bills or high-quality tax exempt
bonds acceptable to the broker) equal to approximately 2% to 5% of
the delivery or settlement price of the contract (depending on
applicable exchange rules). Initial margin is held to secure the
performance of the holder of the futures contract. As the value of
the contract changes, the value of futures contract positions
increases or declines. At the end of each trading day, the amount of
such increase and decline is received and paid respectively by and to
the holders of these positions. The amount received or paid is known
as "variation margin." If the Fund has a long position in a futures
contract, it will establish a segregated account with the Fund's
custodian containing cash or certain illiquid assets equal to the
purchase price of the contract (less any margin on deposit). For
short positions in futures contracts, the Fund will establish a
segregated account with the Fund's custodian with cash or high grade
liquid debt assets that, when added to the amounts deposited as
margin, equal the market value of the instruments or currency
underlying the futures contracts.
Although futures contracts by their terms require actual
delivery and acceptance of securities (or cash in the case of index
futures), in most cases the contracts are closed out before
settlement. A futures sale is closed by purchasing a futures
contract for the same aggregate amount of the specific type of
financial instrument or commodity and with the same delivery date.
Similarly, the closing out of a futures purchase is closed by the
purchaser selling an offsetting futures contract.
Gain or loss on a futures position is equal to the net variation
margin received or paid over the time the position is held, plus or
minus the amount received or paid when the position is closed, minus
brokerage commissions.
. Options - An option on a futures contract obligates the writer,
in return for the premium received, to assume a position in a futures
contract (a short position if the option is a call and a long
position if the option is a put), at a specified exercise price at
any time during the period of the option. Upon exercise of the
option, the delivery of the futures position by the writer of the
option to the holder of the option generally will be accompanied by
delivery of the accumulated balance in the writer's futures margin
account, which represents the amount by which the market price of the
futures contract, at exercise, exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option.
The premium paid by the purchaser of an option will reflect, among
other things, the relationship of the exercise price to the market
price and volatility of the underlying contract, the remaining term
of the option, supply and demand and interest rates. Options on
futures contracts traded in the United States may only be traded on a
United States board of trade licensed by the Commodity Futures
Trading Commission.
An option on a security entitles the holder to receive (in the
case of a call option) or to sell (in the case of a put option) a
particular security at a specified exercise price. An "American
style" option allows exercise of the option at any time during the
term of the option. A "European style" option allows an option to be
exercised only at the end of its term. Options on securities may be
traded on or off a national securities exchange.
A call option on a futures contract written by the Fund is
considered by the Fund to be covered if the Fund owns the security
subject to the underlying futures contract or other securities whose
values are expected to move in tandem with the values of the
securities subject to such futures contract, based on historical
price movement volatility relationships. A call option on a security
written by the Fund is considered to be covered if the Fund owns a
security deliverable under the option. A written call option is also
covered if the Fund holds a call on the same futures contract or
security as the call written where the exercise price of the call
held (a) is equal to or less than the exercise price of the call
written or (b) is greater than the exercise price of the call written
if the difference is maintained by the Fund in cash, Treasury bills
or other high grade liquid obligations in a segregated account with
its custodian.
A put option on a futures contract written by the Fund, or a put
option on a security written by the Fund, is covered if the Fund
maintains cash, U.S. Treasury bills or other high-grade liquid debt
obligations with a value equal to the exercise price in a segregated
account with the Fund's custodian, or else holds a put on the same
futures contract (or security, as the case may be) as the put written
where the exercise price of the put held is equal to or greater than
the exercise price of the put written.
If the writer of an option wishes to terminate its position, it
may effect a closing purchase transaction by buying an option
identical to the option previously written. The effect of the
purchase is that the writer's position will be cancelled. Likewise,
the holder of an option may liquidate its position by selling an
option identical to the option previously purchased.
Closing a written call option will permit the Fund to write
another call option on the portfolio securities used to cover the
closed call option. Closing a written put option will permit the
Fund to write another put option secured by the segregated cash, U.S.
Treasury bills or other high-grade liquid obligations used to secure
the closed put option. Also, effecting a closing transaction will
permit the cash or proceeds from the concurrent sale of any futures
contract or securities subject to the option to be used for other
Fund investments. If the Fund desires to sell particular securities
covering a written call option position, it will close out its
position or will designate from its portfolio comparable securities
to cover the option prior to or concurrent with the sale of the
covering securities.
The Fund will realize a profit from closing out an option if the
price of the offsetting position is less than the premium received
from writing the option or is more than the premium paid to purchase
the option; the Fund will realize a loss from closing out an option
if the price of the offsetting option position is more than the
premium received from writing the option or is less than the premium
paid to purchase the option. Because increases in the market price
of a call option will generally reflect increases in the market price
of the covering securities, any loss resulting from the closing of a
written call option position is expected to be offset in whole or in
part by appreciation of such covering securities.
Since premiums on options having an exercise price close to the
value of the underlying securities or futures contracts usually have
a time value component (i.e., a value that diminishes as the time
within which the option can be exercised grows shorter), an option
writer may profit from the lapse of time even though the value of the
futures contract (or security in some cases) underlying the option
(and of the security deliverable under the futures contract) has not
changed. Consequently, profit from option writing may or may not be
offset by a decline in the value of securities covering the option.
If the profit is not entirely offset, the Fund will have a net gain
from the options transaction, and the Fund's total return will be
enhanced. Likewise, the profit or loss from writing put options may
or may not be offset in whole or in part by changes in the market
value of securities acquired by the Fund when the put options are
closed.
. Risks - The use of futures contracts and options involves risks.
One risk arises because of the imperfect correlation between
movements in the price of futures contracts and movements in the
price of the securities that are the subject of the hedge. The
Fund's hedging strategies will not be fully effective unless the Fund
can compensate for such imperfect correlation. There is no assurance
that the Fund will be able to effect such compensation.
The correlation between the price movement of the futures
contract and the hedged security may be distorted due to differences
in the nature of the markets. If the price of the futures contract
moves more than the price of the hedged security, the Fund would
experience either a loss or a gain on the future that is not
completely offset by movements in the price of the hedged securities.
In an attempt to compensate for imperfect price movement
correlations, the Fund may purchase or sell futures contracts in a
greater dollar amount than the hedged securities if the price
movement volatility of the hedged securities is historically greater
than the volatility of the futures contract. Conversely, the Fund
may purchase or sell fewer contracts if the volatility of the price
of hedged securities is historically less than that of the futures
contracts.
The price of index futures may not correlate perfectly with
movement in the relevant index due to certain market distortions.
First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal
relationship between the index and futures markets. Secondly, the
deposit requirements in the futures market are less onerous than
margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities
market. In addition, trading hours for foreign stock index futures
may not correspond perfectly to hours of trading on the foreign
exchange to which a particular foreign stock index future relates.
This may result in a disparity between the price of index futures and
the value of the relevant index due to the lack of continuous
arbitrage between the index futures price and the value of the
underlying index. Finally, hedging transactions using stock indices
involve the risk that movements in the price of the index may not
correlate with price movements of the particular portfolio securities
being hedged.
Price movement correlation also may be distorted by the
illiquidity of the futures and options markets and the participation
of speculators in such markets. If an insufficient number of
contracts are traded, commercial users may not deal in futures
contracts or options because they do not want to assume the risk that
they may not be able to close out their positions within a reasonable
amount of time. In such instances, futures and options market prices
may be driven by different forces than those driving the market in
the underlying securities, and price spreads between these markets
may widen. The participation of speculators in the market enhances
its liquidity. Nonetheless, speculators trading spreads between
futures markets may create temporary price distortions unrelated to
the market in the underlying securities.
Positions in futures contracts and options on futures contracts
may be established or closed out only on an exchange or board of
trade. There is no assurance that a liquid market on an exchange or
board of trade will exist for any particular contract or at any
particular time. The liquidity of markets in futures contracts and
options on futures contracts may be adversely affected by "daily
price fluctuation limits" established by commodity exchanges which
limit the amount of fluctuation in a futures or options price during
a single trading day. Once the daily limit has been reached in a
contract, no trades may be entered into at a price beyond the limit,
which may prevent the liquidation of open futures or options
positions. Prices have in the past exceeded the daily limit on a
number of consecutive trading days. If there is not a liquid market
at a particular time, it may not be possible to close a futures or
options position at such time, and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash
payments of variation margin. However, if futures or options are
used to hedge portfolio securities, an increase in the price of the
securities, if any, may partially or completely offset losses on the
futures contract.
An exchange-traded option may be closed out only on a national
securities or commodities exchange which generally provides a liquid
secondary market for an option of the same series. If a liquid
secondary market for an exchange-traded option does not exist, it
might not be possible to effect a closing transaction with respect to
a particular option with the result that the Fund would have to
exercise the option in order to realize any profit. If the Fund is
unable to effect a closing purchase transaction in a secondary
market, it will be not be able to sell the underlying security until
the option expires or it delivers the underlying security upon
exercise. Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient
trading interest in certain options; (ii) restrictions may be imposed
by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be
imposed with respect to particular classes or series of options or
underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an
exchange or the Options Clearing Corporation or other clearing
organization may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that exchange (or
in that class or series of options) would cease to exist, although
outstanding options on that exchange that had been issued by the
Options Clearing Corporation as a result of trades on that exchange
would continue to be exercisable in accordance with their terms.
The successful use of transactions in futures and options
depends in part on the ability of the Fund's subadviser to forecast
correctly the direction and extent of interest rate movements within
a given time frame. To the extent interest rates move in a direction
opposite to that anticipated, the Fund may realize a loss on the
hedging transaction that is not fully or partially offset by an
increase in the value of portfolio securities. In addition, whether
or not interest rates move during the period that the Fund holds
futures or options positions, the Fund will pay the cost of taking
those positions (i.e., brokerage costs). As a result of these
factors, the Fund's total return for such period may be less than if
it had not engaged in the hedging transaction.
Options trading involves price movement correlation risks
similar to those inherent in futures trading. Additionally, price
movements in options on futures may not correlate with price
movements in the futures underlying the options. Like futures,
options positions may become less liquid because of adverse economic
circumstances. The securities covering written option positions are
expected to offset adverse price movements if those options positions
cannot be closed out in a timely manner, but there is no assurance
that such offset will occur. Also, an option writer may not effect a
closing purchase transaction after it has been notified of the
exercise of an option.
. Over-the-Counter Options - An over-the-counter option (an option
not traded on a national securities exchange) may be closed out only
with the other party to the original option transaction. While the
Fund will seek to enter into over-the-counter options only with
dealers who agree to or are expected to be capable of entering into
closing transactions with the Fund, there can be no assurance that
the Fund will be able to liquidate an over-the-counter option at a
favorable price at any time prior to its expiration. Accordingly,
the Fund might have to exercise an over-the-counter option it holds
in order to realize any profit thereon and thereby would incur
transactions costs on the purchase or sale of the underlying assets.
If the Fund cannot close out a covered call option written by it, it
will not be able to sell the underlying security until the option
expires or is exercised. Furthermore, over-the-counter options are
not subject to the protections afforded purchasers of listed options
by the Options Clearing Corporation or other clearing organization.
. Economic Effects and Limitations - Income earned by the Fund
from its hedging activities will be treated as capital gain and, if
not offset by net recognized capital losses incurred by the Fund,
will be distributed to shareholders in taxable distributions.
Although gain from futures and options transactions may hedge against
a decline in the value of the Fund's portfolio securities, that gain,
to the extent not offset by losses, will be distributed in light of
certain tax considerations and will constitute a distribution of that
portion of the value preserved against decline.
The Fund will not "over hedge," that is, maintain open short
positions in futures or options contracts if, in the aggregate, the
market value of its open positions exceeds the current market value
of its securities portfolio plus or minus the unrealized gain or loss
on such open positions, adjusted for the historical price volatility
relationship between the portfolio and futures and options contracts.
. Future Developments - The above discussion relates to the Fund's
proposed use of futures contracts, options and options on futures
contracts currently available. The relevant markets and related
regulations are still in the developing stage. In the event of
future regulatory or market developments, the Fund may also use
additional types of futures contracts or options and other investment
techniques for the purposes set forth above.
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MANAGEMENT OF THE TRUST
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The Trustee of the Trust and its principal occupations during the past
five years are as follows:
GRAHAM T. ALLISON, JR.--Trustee (55); 79 John F. Kennedy Street,
Cambridge, MA 02138; Douglas Dillon Professor and Director for
the Center of Science and International Affairs, John F. Kennedy
School of Government; Special Advisor to the United States
Secretary of Defense; formerly, Assistant Secretary of Defense;
formerly Dean, John F. Kennedy School of Government.
KENNETH J. COWAN -- Trustee (63); One Beach Drive, S.E. #2103, St.
Petersburg, Florida 33701; Retired; formerly, Senior Vice
President-Finance and Chief Financial Officer, Blue Cross of
Massachusetts, Inc. and Blue Shield of Massachusetts, Inc.;
formerly, Director, Neworld Bank for Savings and Neworld Bancorp.
SANDRA O. MOOSE -- Trustee (53); 135 E. 57th Street New York, NY
10022; Senior Vice President and Director, The Boston Consulting
Group, Inc. (management consulting); Director, GTE Corporation
and Rohm and Haas Company (specialty chemicals).
HENRY L. P. SCHMELZER* -- Trustee and President (52); President, Chief
Executive Officer and Director, NEF Corporation; President and
Chief Executive Officer, New England Funds, L.P.; President and
Chief Executive Officer, New England Funds Management, L.P.
("NEFM"); Director, Back Bay Advisors(R), Inc.; formerly,
Director, New England Securities Corporation ("New England
Securities").
* Trustee deemed an "interested person" of the Trusts, as defined in
the 1940 Act.
JOHN A. SHANE -- Trustee (62); 300 Unicorn Drive, Woburn,
Massachusetts 01801; President, Palmer Service Corporation
(venture capital organization); General Partner, The Palmer
Organization and Palmer Partners L.P.; Director, Arch
Communications Group, Inc. (paging service); Director, Dowden
Publishing Company, Inc. (publishers of medical magazines);
Director, Eastern Bank Corporation; Director, Gensym Corporation
(expert system software); Director, Overland Data, Inc.
(manufacturer of computer tape drives); Director, Summa Four,
Inc. (manufacturer of telephone switching equipment); Director,
United Asset Management Corporation (holding company for
institutional money management); formerly, Director, Abt
Associates, Inc. (consulting firm); formerly, Director, Aviv
Corporation (manufacturer of controllers); formerly, Director,
Banyan Systems, Inc. (manufacturer of network software); and
formerly, Director, Cerjac Inc. (manufacturer of telephone
testing equipment).
PETER S. VOSS* -- Chairman of the Board, Chief Executive Officer and
Trustee (48); President and Chief Executive Officer of New
England Investment Companies, L.P. ("NEIC"); Director, President
and Chief Executive Officer of New England Investment Companies,
Inc.; Chairman of the Board and Director, NEF Corporation;
Chairman of the Board and Director, Back Bay Advisors(R), Inc.;
Director, The New England; formerly, Executive Vice President,
Bank of America; formerly, Group Head of International Banking,
Trading and Securities, Security Pacific National Bank and Chief
Executive Officer, Security Pacific Investment Group.
* Trustee deemed an "interested person" of the Trusts, as defined in
the 1940 Act.
PENDLETON P. WHITE -- Trustee (64); 6 Breckenridge Lane, North,
Savannah, Georgia 31411; Retired; formerly, President and Chairman
of the Executive Committee, Studwell Associates (executive search
consultants); formerly, Trustee, The Faulkner Corporation.
Officers of the Trust and their principal occupations during the past
five years are as follows:
FRANK NESVET -- Treasurer; Senior Vice President and Chief Financial
Officer, NEF Corporation, Senior Vice President and Chief
Financial Officer, New England Funds, L.P.; Senior Vice
President, Chief Financial Officer and Treasurer, NEFM.
MAURICIO CEVALLOS -- Vice President; Vice President, Loomis Sayles &
Company ("Loomis Sayles").
PETER RAMSDEN -- Vice President; Vice President, Loomis Sayles; MBA
candidate at University of Michigan.
ROBERT P. CONNOLLY -- Secretary and Clerk; Senior Vice President and
General Counsel, NEF Corporation; Senior Vice President and
General Counsel, New England Funds, L.P.; Senior Vice President
and General Counsel, NEFM; formerly, Managing Director and
General Counsel, Kroll Associates, Inc. (business consulting
company); formerly Managing Director and General Counsel,
Equitable Capital Management Corporation (investment management
company).
Except as indicated above, the address of each officer affiliated
with New England Funds, L.P. is 399 Boylston Street, Boston,
Massachusetts 02116. The address of Mr. Cevallos is 101 East 52nd
Street, New York, NY 10022 and the address of Mr. Ramsden is One
Financial Center, Boston, MA 02111.
Trustees Fees
For the initial period of its operations, the Fund will pay no
compensation to Trustees.
During the year ended December 31, 1994, the Trustees of the
Trust who have not been deemed "interested persons" of the Trust as
defined in the 1940 Act, received the amounts set forth below for
serving on the governing boards of 36 other mutual fund portfolios
that have NEFM or an affiliate thereof as investment adviser or
principal underwriter (the "Other Funds").
Total Compensation from
the Other Funds in
Name of Trustee 1994
-------------- ----------------------
Graham T. -0-
Allison, Jr. *
Kenneth J. Cowan $59,375
Sandra O. Moose $52,875
John A. Shane $55,875
Pendleton P. $58,375
White
* Mr. Allison became a Trustee of the Other Funds on April 1, 1995.
The Trust provides no pension or retirement benefits to Trustees,
but has adopted a deferred payment arrangement under which each
Trustee may elect not to receive fees from the Trust on a current
basis but to receive in a subsequent period an amount equal to the
value that such fees would have if they had been invested in series of
the Trust on the normal payment date for such fees. As a result of
this method of calculating the deferred payments, each series, upon
making the deferred payments, will be in the same financial position
as if the fees had been paid on the normal payment dates.
At November 15 1995, the officers and trustees of the Trust as a
group owned less than 1% of the outstanding shares of the Trust.
Advisory Agreements
The Fund pays all expenses not borne by its adviser or
subadviser including, but not limited to, the charges and expenses of
the Fund's custodian and transfer agent, independent auditors and
legal counsel, all brokerage commissions and transfer taxes in
connection with portfolio transactions, all taxes and filing fees,
the fees and expenses for registration or qualification of its shares
under the federal or state securities laws, all expenses of
shareholders' and trustees' meetings and of preparing, printing and
mailing reports to shareholders and any compensation of Trustees who
are not directors, officers or employees of the Fund's adviser,
subadviser or their affiliates, other than affiliated registered
investment companies. The Fund also pays the Distributor for certain
legal and accounting services provided to the Fund by the
Distributor.
Under the advisory agreement, if the total ordinary business
expenses of the Fund or the Trust as a whole for any fiscal year
exceed the lowest applicable limitation (based on percentage of
average net assets or income) prescribed by any state in which the
shares of the Fund or Trust are qualified for sale, the Fund's
adviser shall pay such excess. At present, the most restrictive
state annual expense limitation is 2-1/2% of the average annual net
assets up to $30,000,000, 2% of the next $70,000,000 and 1-1/2% of
such assets in excess of $100,000,000. The adviser will not be
required to reduce its fee or pay such expenses to an extent or under
circumstances which might result in the Fund's inability to qualify
as a regulated investment company under the Code. The term
"expenses" is defined in the advisory agreement and excludes
brokerage commissions, taxes, interest, distribution-related expenses
and extraordinary expenses. This means that the distribution fees
payable to New England Funds, L.P. under the Fund's Distribution
Agreement and the Distribution Plan would be excluded from
"expenses."
The advisory agreement between NEFM and the Fund and the
subadvisory agreement between NEFM and Loomis Sayles each 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
by vote of a majority of the outstanding voting securities of the
Fund and (ii) by vote of a majority of the trustees who are not
"interested persons" of the Trust, as that term is defined in the
1940 Act, cast in person at a meeting called for the purpose of
voting on such approval. Any amendment to an advisory agreement must
be approved by vote of a majority of the outstanding voting
securities of the Fund and by vote of a majority of the 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. Each
agreement may be terminated without penalty by vote of the board of
trustees or by vote of a majority of the outstanding voting
securities of the Fund, upon 60 days' written notice, or by the
Fund's adviser upon 90 days' written notice, and each terminates
automatically in the event of its assignment. The subadvisory
agreement also may be terminated by the subadviser upon 90 days'
notice and automatically terminated upon termination of the related
advisory agreement. In addition, the advisory agreement will
automatically terminate if the Trust or the Fund shall at any time be
required by the Distributor to eliminate all reference to the words
"New England" or the letters "TNE" in the name of the Trust or the
Fund, unless the continuance of the agreement after such change of
name is approved by a majority of the outstanding voting securities
of the Fund and by a majority of the Trustees who are not interested
persons of the Trust or the Fund's adviser.
The advisory agreement and the subadvisory agreement provide
that the adviser and subadviser shall not be subject to any liability
in connection with the performance of its services thereunder in the
absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
NEFM is an independently operated subsidiary of NEIC.
Loomis Sayles was organized in 1926 and is one of the oldest and
largest investment counsel firms in the country. An important
feature of the Loomis Sayles investment approach is its emphasis on
investment research. Recommendations and reports of the Loomis
Sayles research department are circulated throughout the Loomis
Sayles organization and are available to the individuals in the
Loomis Sayles organization who have been assigned the responsibility
for making investment decisions for the Fund's portfolio. Loomis
Sayles provides investment advice to numerous other institutional and
individual clients. These clients include some accounts of The New
England and its affiliates ("New England Accounts"). Loomis Sayles
is a subsidiary of NEIC.
Certain officers of Loomis Sayles who are also officers of the
Trust have responsibility for the management of other client
portfolios. The other investment companies and clients served by
Loomis Sayles sometimes invest in securities in which the Fund also
invests. If the Fund and such other investment companies and clients
advised by Loomis Sayles desire to buy or sell the same portfolio
securities at about the same time, purchases and sales will be
allocated, to the extent practicable, on a pro rata basis in
proportion to the amounts desired to be purchased or sold for each.
It is recognized that in some cases the practices described in this
paragraph could have a detrimental effect on the price or amount of
the securities which the Fund purchases or sells. In other cases,
however, it is believed that these practices may benefit the Fund.
It is the opinion of the trustees that the desirability of retaining
Loomis Sayles as subadviser for the Fund outweighs the disadvantages,
if any, which might result from these practices.
Distribution Agreement and Rule 12b-1 Plan. New England Funds,
L.P. serves as the general distributor of the Fund. Under the
agreement, New England Funds, L.P. is not obligated to sell a
specific number of shares. New England Funds, L.P. bears the cost of
making information about the Fund available through advertising and
other means and the cost of printing and mailing prospectuses to
persons other than shareholders. The Fund pays the cost of
registering and qualifying its shares under state and federal
securities laws and the distribution of prospectuses to existing
shareholders.
New England Funds, L.P. is compensated under each agreement
through receipt of the sales charges on Class A shares described
below under "Net Asset Value and Public Offering Price" and is paid
by the Fund the service fee described in the Prospectus.
As described in the Prospectus, the Fund has adopted a Service
Plan under Rule 12b-1 plan (the "Plan") which, among other things,
permit it to pay the Fund's distributor (currently New England Funds,
L.P.) monthly fees out of its net assets. Pursuant to Rule 12b-1
under the Investment Act of 1940 (the "1940 Act"), the Plan was
approved by the shareholders of the Fund, and (together with the
related Distribution Agreement) by the Trust's board of trustees,
including a majority of the trustees who are not interested persons
of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or the
Distribution Agreement (the "Independent Trustees").
The Plan may be terminated by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding
voting securities of the Fund. The Plan may be amended by vote of
the trustees, including a majority of the Independent Trustees, cast
in person at a meeting called for that purpose. Any change in the
Plan that would materially increase the fees payable thereunder by
the Fund requires approval of the holders of such shares. The
Trust's trustees review quarterly a written report of such amounts
expended under the Plan and the purposes for which such expenses have
been incurred. For so long as the Plan is in effect, selection and
nomination of those trustees who are not interested persons of the
Trust shall be committed to the discretion of such disinterested
persons.
The Distributor may enter into selling agreements with
investment dealers, including New England Securities Corporation
("New England Securities"), an affiliate of the Distributor, for the
sale of the Fund's shares. New England Securities is registered as a
broker-dealer under the Securities Exchange Act of 1934.
The Distribution Agreement for the Fund may be terminated at any
time on 60 days' written notice without payment of any penalty by New
England Funds, L.P. or by vote of a majority of the outstanding
voting securities of the Fund or by vote of a majority of the
Independent Trustees.
The Distribution Agreement and the Plan will continue in effect
for successive one-year periods, provided that each such continuance
is specifically approved (i) by the vote of a majority of the
Independent Trustees and (ii) by the vote of a majority of the entire
board of trustees cast in person at a meeting called for that purpose
or by a vote of a majority of the outstanding securities of the Fund.
With the exception of New England Funds, L.P., New England
Securities and their direct and indirect corporate parents (NEIC and
The New England), no interested person of the Trust nor any trustee
of the Trust had any direct or indirect financial interest in the
operation of the Plan or any related agreement.
Benefits to the Trust and its shareholders resulting from the
Plan are believed to include (1) enhanced shareholder service, (2)
asset retention, (3) enhanced bargaining position with third party
service providers and economies of scale arising from having higher
asset levels and (4) portfolio management opportunities arising from
having an enhanced positive cash flow.
New England Funds, L.P. controls the words "New England" in the
name of New England Funds Trust III and the Fund and if it should
cease to be the Fund's principal underwriter, the Trust or the Fund
may be required to change their names and delete these words. New
England Funds, L.P. also acts as principal underwriter for New
England Funds Trusts I and II, New England Cash Management Trust and
New England Tax Exempt Money Market Trust.
Custodial Arrangements. State Street Bank and Trust Company
("State Street Bank"), Boston, Massachusetts 02102, is the Trust's
custodian. As such, State Street Bank holds in safekeeping
certificated securities and cash belonging to the Fund and, in such
capacity, is the registered owner of securities in book-entry form
belonging to the Fund. Upon instruction, State Street Bank receives
and delivers cash and securities of the Fund in connection with Fund
transactions and collects all dividends and other distributions made
with respect to Fund portfolio securities. State Street Bank also
maintains certain accounts and records of the Trust and calculates
the total net asset value, total net income and net asset value per
share of the Fund on a daily basis.
Independent Accountants. The Fund's independent accountants are
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110. The
independent accountants of the Fund conduct an annual audit of the
Fund's financial statements, assist in the preparation of federal and
state income tax returns and consult with the Fund as to matters of
accounting and federal and state income taxation. The statement of
assets and liabilities of the Fund included herein has been so
included in reliance on the report of such firm as experts in
auditing and accounting.
Other Arrangements
Pursuant to a contract between the Fund and New England Funds,
L.P., New England Funds, L.P. acts as shareholder servicing and
transfer agent for the Fund and is responsible for services in
connection with the establishment, maintenance and recording of
shareholder accounts, including all related tax and other reporting
requirements and the implementation of investment and redemption
arrangements offered in connection with the sale of the Fund's
shares. The Fund pays a $250 monthly fee to New England Funds, L.P.
for these services, which New England Funds, L.P. pays in full to
State Street Bank for it to provide, through its subsidiary, Boston
Financial Data Services, Inc. ("BFDS"), transaction processing and
other services.
- ---------------------------------------------------------------------
PORTFOLIO TRANSACTIONS AND BROKERAGE
- ---------------------------------------------------------------------
In placing orders for the purchase and sale of portfolio
securities for the Fund, Loomis Sayles always seek the best price and
execution. Some of the Fund's portfolio transactions are placed with
brokers and dealers who provide Loomis Sayles with supplementary
investment and statistical information or furnish market quotations
to the Fund, or other investment companies advised by Loomis Sayles.
The business would not be so placed if the Fund would not thereby
obtain the best price and execution. Although it is not possible to
assign an exact dollar value to these services, they may, to the
extent used, tend to reduce the expenses of Loomis Sayles. The
services may also be used by Loomis Sayles in connection with their
other advisory accounts and in some cases may not be used with
respect to the Fund.
In placing orders for the purchase and sale of equity
securities, Loomis Sayles selects only brokers which it believes are
financially responsible, will provide efficient and effective
services in executing, clearing and settling an order and will charge
commission rates that, when combined with the quality of the
foregoing services, will produce best price and execution for the
transaction. This does not necessarily mean that the lowest
available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing
rates. Loomis Sayles will use its best efforts to obtain information
as to the general level of commission rates being charged by the
brokerage community from time to time and will evaluate the overall
reasonableness of brokerage commissions paid on transactions by
reference to such data. In making such evaluation, all factors
affecting liquidity and execution of the order, as well as the amount
of the capital commitment by the broker in connection with the order,
are taken into account. The Fund will not pay a broker a commission
at a higher rate than otherwise available for the same transaction in
recognition of the value of research services provided by the broker
or in recognition of the value of any other services provided by the
broker which do not contribute to the best price and execution of the
transaction.
General
Portfolio turnover is not a limiting factor with respect to
investment decisions. The Fund anticipates that its portfolio
turnover rate will vary significantly from time to time depending on
the volatility of economic and market conditions.
Subject to procedures adopted by the Board of Trustees of the
Trust, the Fund's brokerage transactions may be executed by brokers
that are affiliated with the Distributor, or the adviser or
subadviser. Any such transactions will comply with Rule 17e-1 under
the 1940 Act.
Under the 1940 Act, persons affiliated with the Trust are
prohibited from dealing with the Fund as a principal in the purchase
and sale of securities. Since transactions in the over-the-counter
market usually involve transactions with dealers acting as principals
for their own accounts, affiliated persons of the Trust, such as New
England Securities, may not serve as the Trust's dealer in connection
with such transactions.
It is expected that the portfolio transactions in fixed-income
securities will generally be with issuers or dealers on a net basis
without a stated commission. Securities firms may receive brokerage
commissions on transactions involving options, futures and options on
futures and the purchase and sale of underlying securities upon
exercise of options. The brokerage commissions associated with
buying and selling options may be proportionately higher than those
associated with general securities transactions.
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DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
- ---------------------------------------------------------------------
The Trust is a newly organized Massachusetts business trust.
The Fund, organized in 1995, is expected to commence operations on
November 28 1995. The Fund currently has one class of shares.
The Declaration of Trust currently permits trustees to issue an
unlimited number of full and fractional shares of the Fund. The Fund
is represented by a particular series of shares. The Declaration of
Trust further permits the Trust's trustees to divide the shares of
each series into any number of separate classes, each having such
rights and preferences relative to other classes of the same series
as the trustees may determine. The shares of the Fund do not have
any preemptive rights. Upon termination of the Fund, whether
pursuant to liquidation of the Trust or otherwise, shareholders the
Fund are entitled to share pro rata in the net assets attributable to
the Fund available for distribution to shareholders. The Declaration
of Trust also permits the trustees to charge shareholders directly
for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its
shares and all income, earnings, profits, losses and proceeds
therefrom, subject only to the rights of the creditors, are allocated
to, and constitute the underlying assets of the Fund. The underlying
assets of the Fund are segregated and are charged with the expenses
with respect to the Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust that are not readily
identifiable as belonging to the Fund are allocated by or under the
direction of the trustees in such manner as the trustees determine to
be fair and equitable. While the expenses of the Trust are allocated
to the separate books of account of the Trust's series, certain
expenses may be legally chargeable against the assets of all classes
of the Trust's series.
The Declaration of Trust also permits the Trust's trustees,
without shareholder approval, to subdivide any series or class of
shares or Fund into various sub-series or sub-classes with such
dividend preferences and other rights as the trustees may designate.
While the trustees have no current intention to exercise this power,
it is intended to allow them to provide for an equitable allocation
of the impact of any future regulatory requirements which might
affect various classes of shareholders differently. The trustees may
also, without shareholder approval, establish one or more additional
series or classes or merge two or more existing series or classes.
The Declaration of Trust provides for the perpetual existence of
the Trust. The Trust may be terminated at any time by vote of at
least two-thirds of the outstanding shares of the Trust. Similarly,
the Fund may be terminated by a vote of at least two-thirds of its
outstanding shares. The Declaration of Trust further provides that
the Trust's board of trustees may terminate the Trust or the Fund
without shareholder vote upon written notice to its shareholders.
Voting Rights
As summarized in the Prospectus, shareholders are entitled to
one vote for each full share held (with fractional votes for each
fractional share held) and may vote (to the extent provided therein)
in the election of trustees and the termination of the Trust and on
other matters submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted
to a vote of all shareholders of a Trust, all Trust shares entitled
to vote shall be voted together irrespective of series or class
unless the rights of a particular series or class would be adversely
affected by the vote, in which case a separate vote of that series or
class shall also be required to decide the question. Also, a
separate vote shall be held whenever required by the 1940 Act or any
rule thereunder. Rule 18f-2 under 1940 Act provides in effect that a
series or class shall be deemed to be affected by a matter unless it
is clear that the interests of each series or class in the matter are
substantially identical or that the matter does not affect any
interest of such series or class. On matters affecting an individual
series or class, only shareholders of that series or class are
entitled to vote. Consistent with the current position of the
Securities and Exchange Commission (the "SEC"), shareholders of all
series and classes vote together, irrespective of series or class, on
the election of trustees and the selection of the Trust's independent
accountants, but shareholders of each series vote separately on other
matters requiring shareholder approval, such as certain changes in
investment policies of that series or the approval of the investment
advisory agreement relating to that series, and shareholders of each
class within a series vote separately as to the Rule 12b-1 plan (if
any) relating to that class.
There will normally be no meetings of shareholders for the
purpose of electing trustees except that, in accordance with the 1940
Act, (i) the Trust will hold a shareholders' meeting for the election
of trustees at such time as less than a majority of the trustees
holding office have been elected by shareholders, and (ii) if, as a
result of a vacancy on the board of trustees, less than two-thirds of
the trustees holding office have been elected by the shareholders,
that vacancy may only be filled by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent
signed by the holders of two-thirds of the outstanding shares and
filed with a Trust's custodian or by a vote of the holders of two-
thirds of the outstanding shares at a meeting duly called for that
purpose, which meeting shall be held upon the written request of the
holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset
value of at least $25,000 or at least 1% of the outstanding shares
stating that such shareholders wish to communicate with the other
shareholders for the purpose of obtaining the signatures necessary to
demand a meeting to consider removal of a trustee, the Trust has
undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting
shareholders).
Except as set forth above, the trustees shall continue to hold
office and may appoint successor trustees. Voting rights are not
cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust
except (i) to change the Trust's or a series' name or to cure
technical problems in a Declaration of Trust, (ii) to establish and
designate new series or classes of Trust shares or (iii) to
establish, designate or modify new and existing series or classes of
Trust shares or other provisions relating to Trust shares in response
to applicable laws or regulations.
Shareholder and Trustee Liability
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the trustees.
The Declaration of Trust provides for indemnification out of the
Fund's property for all loss and expense of any shareholder held
personally liable for the obligations of the Fund by reason of owning
shares of the Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered
remote since it is limited to circumstances in which the disclaimer
is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the board of
trustees will not be liable for errors of judgment or mistakes of
fact or law. However, nothing in the Declaration of Trust protects a
trustee against any liability to which the trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or
her office. The By-Laws of the Trust provide for indemnification by
the Trust of trustees and officers of the Trust, except with respect
to any matter as to which any such person did not act in good faith
in the reasonable belief that his or her action was in or not opposed
to the best interests of the Trust. Such persons may not be
indemnified against any liability to the Trust or the Trust's
shareholders to which he or she would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
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HOW TO BUY SHARES
- ---------------------------------------------------------------------
The procedures for purchasing shares of the Fund are summarized
in the Prospectus. Banks may charge a fee for transmitting funds by
wire. With respect to shares purchased by federal funds,
shareholders should bear in mind that wire transfers may take two or
more hours to complete.
For purchase of Fund shares by mail, the settlement date is the
first business day after receipt of the check by the transfer agent
so long as it is received by the close of regular trading of the New
York Stock Exchange (the "Exchange") on a day when the Exchange is
open; otherwise the settlement date is the following business day.
For telephone orders, the settlement date is the third business day
after the order is made.
Shares may also be purchased either in writing, by phone or by
electronic funds transfer using Automated Clearing House ("ACH"), or
by exchange as described in the Prospectus through firms that are
members of the National Association of Securities Dealers, Inc. and
that have selling agreements with New England Funds, L.P.
New England Funds, L.P. may at its discretion accept a telephone
order for the purchase of $5,000 or more of the Fund's shares.
Payment must be received by New England Funds, L.P. within three
business days following the transaction date or the order will be
subject to cancellation. Telephone orders must be placed through New
England Funds, L.P. or your investment dealer.
- ---------------------------------------------------------------------
NET ASSET VALUE AND PUBLIC OFFERING PRICE
- ---------------------------------------------------------------------
The method for determining the public offering price and net
asset value per share is summarized in the Prospectus.
The total net asset value of the shares of the Fund (the excess
of the assets of the Fund over its liabilities) is determined as of
the close of regular trading (normally 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. The weekdays that
the Exchange is expected to be closed are New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Securities listed on a national
securities exchange or on the NASDAQ national market system are
valued at their last sale price, or, if there is no reported sale
during the day, the last reported bid price estimated by a broker.
Unlisted securities traded in the over-the-counter market are valued
at the last reported bid price in the over-the-counter market or on
the basis of yield equivalents as obtained from one or more dealers
that make a market in the securities. U.S. Government Securities are
traded in the over-the-counter market. Options, interest rate
futures and options thereon that are traded on exchanges are valued
at their last sale price as of the close of such exchanges.
Securities for which current market quotations are not readily
available and all other assets are taken at fair value as determined
in good faith by the board of trustees, although the actual
calculations may be made by persons acting pursuant to the direction
of the board.
Generally, trading in fixed-income securities, as well as
trading in equity securities in markets outside the United States, is
substantially completed each day at various times prior to the close
of the Exchange. The value of equity securities of non-U.S. issuers
not traded on a U.S. exchange will be valued at their last sale
price, if any, on the exchange on which they principally trade.
Occasionally, events affecting the value of fixed-income securities
and of equity securities of non-U.S. issuers not traded on a U.S.
exchange may occur between the completion of substantial trading of
such securities for the day and the close of the Exchange, which
events will not be reflected in the computation of the Fund's net
asset value. If events materially affecting the value of the Fund's
securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or in
accordance with procedures approved by the trustees.
The per share net asset value of the Fund's shares is computed
by dividing the number of shares outstanding into the total net asset
value. The public offering price of a share of the Fund is the net
asset value per share next determined after a properly completed
purchase order is accepted by New England Funds, L.P. or State Street
Bank, plus a sales charge as set forth in the Fund's prospectus.
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REDUCED SALES CHARGES
- ---------------------------------------------------------------------
Special purchase plans are enumerated in the text of the
Prospectus.
Cumulative Purchase Discount. A shareholder making an
additional purchase of Fund shares may be entitled to a discount on
the sales charge payable on that purchase. This discount will be
available if the shareholder's "total investment" in the Fund reaches
the breakpoint for a reduced sales charge in the table under "Net
Asset Value and Public Offering Price," in the Prospectus. The total
investment is determined by adding the amount of the additional
purchase, including sales charge, to the current public offering
price of all series and classes of shares of the Trust, New England
Funds Trust I and New England Funds Trust II (the "Trusts") held by
the shareholder in one or more accounts. If the total investment
exceeds the breakpoint, the lower sales charge applies to the entire
additional investment even though some portion of that additional
investment is below the breakpoint to which a reduced sales charge
applies. For example, if a shareholder who already owns shares of
one or more series of the Trusts with a value at the current public
offering price of $30,000 makes an additional purchase of $20,000 of
Class A shares of the Fund, the reduced sales charge of 4.5% of the
public offering price will apply to the entire amount of the
additional investment.
Letter of Intent. A Letter of Intent (a "Letter"), which can be
effected at any time, is a privilege available to investors which
reduces the sales charge on investments in Class A shares.
Ordinarily, reduced sales charges are available for single purchases
of Class A shares only when they reach certain breakpoints (e.g.,
$50,000, $100,000, etc.). By signing a Letter, a shareholder
indicates an intention to invest enough money in Class A shares
within 13 months to reach a breakpoint. If the shareholder's
intended aggregate purchases of all series and classes of the Trusts
over a defined 13-month period will be large enough to qualify for a
reduced sales charge, the shareholder may invest the smaller
individual amounts at the public offering price calculated using the
sales load applicable to the 13-month aggregate investment.
A Letter is a non-binding commitment, the amount of which may be
increased, decreased or canceled at any time. The effective date of
a Letter is the date it is received in good order at New England
Funds, L.P., or, if communicated by a telephone exchange or order, at
the date of telephoning provided a signed Letter, in good order,
reaches New England Funds, L.P. within five business days.
A reduced sales charge is available for aggregate purchases of
all series and classes of shares of the Trusts pursuant to a written
Letter effected within 90 days after any purchase. In the event the
account was established prior to 90 days before the Letter effective
date, the account will be credited with Rights of Accumulation
("ROA") towards the breakpoint level that will be reached upon the
completion of the 13 months' purchases. The ROA credit is the value
of all shares held as of the effective date of the Letter based on
the "public offering price computed on such date."
The cumulative purchase discount, described above, permits the
aggregate value at the current public offering price of Class A
shares of any accounts with the Trusts held by a shareholder to be
added to the dollar amount of the intended investment under a Letter,
provided the shareholder lists them on the account application.
State Street Bank will hold in escrow shares with a value at the
current public offering price of 5% of the aggregate amount of the
intended investment. The amount in escrow will be released when the
Letter is completed. If the shareholder does not purchase shares in
the amount indicated in the Letter, the shareholder agrees to remit
to State Street Bank the difference between the sales charge actually
paid and that which would have been paid had the Letter not been in
effect, and authorizes State Street Bank to redeem escrowed shares in
the amount necessary to make up the difference in sales charges.
Reinvested dividends and distributions are not included in
determining whether the Letter has been completed.
Combining Purchases. Purchases of all series and classes of the
Trusts by or for an investor, the investor's spouse, parents,
children, siblings, grandparents or grandchildren and any other
account of the investor, including sole proprietorships, in the
Trusts may be treated as purchases by a single individual for
purposes of determining the availability of a reduced sales charge.
Purchases for a single trust estate or a single fiduciary account may
also be treated as purchases by a single individual for this purpose,
as may purchases on behalf of a participant in a tax-qualified
retirement plan and other employee benefit plans, provided that the
investor is the sole participant in the plan.
Combining with Other Series and Classes of the Trusts. A
shareholder's total investment for purposes of the cumulative
purchase discount and purchases under a Letter of Intent includes the
value at the current public offering price of any shares of series
and classes of the Trusts that the shareholder owns (which do not
include shares of New England Cash Management Trust and New England
Tax Exempt Money Market Trust ("New England Money Market Funds")
unless such shares were purchased by exchanging shares of the
Trusts). Shares owned by persons described in the preceding
paragraph may also be included.
Sponsored Arrangements. Class A shares may be purchased at a
reduced sales charge pursuant to "sponsored arrangements," which
include programs under which an association makes recommendations to,
or permits group solicitation of, its members in connection with the
purchase of shares of the series of the Trusts on an individual
basis. The amount of the sales charge reduction will reflect the
anticipated reduction in sales expenses associated with sponsored
arrangements. The reduction in sales expenses, and therefore the
reduction in sales charge, will vary depending on factors such as the
size and stability of the association's membership, the term of the
association's existence and certain characteristics of its members.
Unit Holders of Unit Investment Trusts. Unit investment trust
distributions may be invested in the Fund at a reduced sales charge
of 1.50% of the public offering price (or 1.52% of the net amount
invested); for large purchases on which a sales charge of less than
1.50% would ordinarily apply, such lower charge also applies to
investments of unit investment trust distributions.
Clients of Advisers or Subadvisers (Affiliated with NEIC). No
sales charge or contingent deferred sales charge ("CDSC") applies to
investments of $100,000 or more in Class A shares of series of the
Trusts by (1) clients of an adviser or subadviser (affiliated with
NEIC) to series of the Trusts; any director, officer or partner of a
client of an adviser or subadviser (affiliated with NEIC) to series
of the Trusts; and the spouse, parents, children, siblings,
grandparents or grandchildren of the foregoing; (2) any individual
who is a participant in a Keogh or IRA Plan under a prototype of an
adviser or subadviser (affiliated with NEIC) to a series of the
Trusts if at least one participant in the plan qualifies under
category (1) above; and (3) an individual who invests through an IRA
and is a participant in an employee benefit plan that is a client of
an adviser or subadviser (affiliated with NEIC) to series of the
Trusts. Any investor eligible for this arrangement should so
indicate in writing at the time of the purchase.
Offering to Employees of The New England and Associated
Entities. There is no sales charge, CDSC or initial investment
minimum related to investments in Class A shares of any series of the
Trusts by any of the Trusts' investment advisers or subadvisers
(affiliated with NEIC), New England Funds, L.P. or any other company
affiliated with The New England; current and former directors and
trustees of the Trusts; agents and general agents of The New England
and its insurance company subsidiaries; current and retired employees
of such agents and general agents; registered representatives of
broker dealers that have selling arrangements with New England Funds,
L.P.; the spouse, parents, children, siblings, grandparents or
grandchildren of the persons listed above and any trust, pension,
profit sharing or other benefit plans for any of the foregoing
persons and any separate account of The New England or any other
company affiliated with The New England.
Eligible Governmental Authorities. There is no sales charge or
CDSC related to investments in Class A shares of any series of the
Trusts (except the Star Advisers Fund) by any of the state, county or
city or any instrumentality, department, authority or agency thereof
that has determined that a series of the Trusts is a legally
permissible investment and that is prohibited by applicable
investment laws from paying a sales charge or commission in
connection with the purchase of shares of any registered investment
company.
Investment Advisory Accounts. There is no sales charge or CDSC
to investments in Class A shares of any series of the Trusts by any
of the advisory accounts through investment advisers registered under
the Investment Advisers Act of 1940 and affiliated with broker-
dealers.
Affiliates of NEFM. Shares of the Fund may be purchased at net
asset value by affiliates of NEFM.
The reduction or elimination of the sales charge in connection
with sales described above reflects the absence or reduction of sales
expenses associated with such sales.
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SHAREHOLDER SERVICES
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Open Accounts
A shareholder's investment is automatically credited to an open
account maintained for the shareholder by State Street Bank.
Following each transaction in the account, a shareholder will receive
a confirmation statement disclosing the current balance of shares
owned and the details of recent transactions in the account. After
the close of each calendar year, State Street Bank will send each
shareholder a statement providing federal tax information on
dividends and distributions paid to the shareholder during the year.
This statement should be retained as a permanent record. New England
Funds, L.P. may charge a fee for providing duplicate information.
The open account system provides for full and fractional shares
expressed to three decimal places and, by making the issuance and
delivery of stock certificates unnecessary, eliminates problems of
handling and safekeeping, and the cost and inconvenience of replacing
lost, stolen, mutilated or destroyed certificates.
The costs of maintaining the open account system are paid by the
Trust and no direct charges are made to shareholders. Although the
Trust has no present intention of making such direct charges to
shareholders, it reserves the right to do so. Shareholders will
receive prior notice before any such charges are made.
Automatic Investment Plans
Subject to the Fund's investor eligibility requirements,
investors may automatically invest in additional shares of the Fund
on a monthly basis by authorizing New England Funds, L.P. to draw
checks on an investor's bank account. The checks are drawn under the
Investment Builder Program, a program designed to facilitate such
periodic payments, and are forwarded to New England Funds, L.P. for
investment in the Fund. A plan may be opened with an initial
investment of $50 or more and thereafter regular monthly checks of
$50 or more will be drawn on the investor's account. The reduced
minimum initial investment pursuant to an automatic investment plan
is referred to in the Prospectus. An Investment Builder application
must be completed to open an automatic investment plan. An
application may be found in the Prospectus or may be obtained by
calling New England Funds, L.P. at 1-800-225-5478 or your investment
dealer.
This program is voluntary and may be terminated at any time by
the investor or by New England Funds, L.P. upon notice to existing
plan participants.
The Investment Builder Program plan may be discontinued by
written notice to New England Funds, L.P., which must be received at
least five business days prior to any payment date. The plan may be
discontinued by State Street Bank at any time without prior notice if
any check is not paid upon presentation; or by written notice to the
investor at least thirty days prior to any payment date. State
Street Bank is under no obligation to notify shareholders as to the
nonpayment of any check.
Retirement Plans Offering Tax Benefits
The federal tax laws provide for a variety of retirement plans
offering tax benefits. These plans may be funded with shares of the
Fund or with certain other investments. The plans include H.R. 10
(Keogh) plans for self-employed individuals and partnerships,
individual retirement accounts (IRAs), corporate pension trust and
profit sharing plans, including 401(k) plans, and retirement plans
for public school systems and certain tax exempt organizations, i.e.,
403(b) plans.
The reduced minimum initial investment available to retirement
plans offering tax benefits is referred to in the Prospectus. For
these plans, initial and subsequent investments in the Fund must be
at least $25 for each participant in a plan, and income dividends and
capital gain distributions must be reinvested (unless the investor is
over age 59 1/2 or disabled). Plan documents and further information
can be obtained from New England Funds, L.P.
An investor should consult a competent tax or other adviser as
to the suitability of the Fund's shares as a vehicle for funding a
plan, in whole or in part, under the Employee Retirement Income
Security Act of 1974 and as to the eligibility requirements for a
specific plan and its state as well as federal tax aspects.
Systematic Withdrawal Plans
An investor owning Fund shares having a value of $5,000 or more
at the current public offering price may establish a Systematic
Withdrawal Plan providing for periodic payments of a fixed or
variable amount. An investor may terminate the plan at any time. A
form for use in establishing such a plan is available from the
servicing agent or your investment dealer. Withdrawals may be paid
to a person other than the shareholder if a signature guarantee is
provided. Please consult your investment dealer or New England
Funds, L.P.
A shareholder under a Systematic Withdrawal Plan may elect to
receive payments monthly, quarterly, semiannually or annually for a
fixed amount of not less than $50 or a variable amount based on (1)
the market value of a stated number of shares, (2) a specified
percentage of the account's market value or (3) a specified number of
years for liquidating the account (e.g., a 20-year program of 240
monthly payments would be liquidated at a monthly rate of 1/240,
1/239, 1/238, etc.). The initial payment under a variable payment
option may be $50 or more.
In the case of shares subject to a contingent deferred sales
charge ("CDSC"), the amount or percentage you specify may not, on an
annualized basis, exceed 10% of the value, as of the time you make
the election, of your account with the Fund. No CDSC applies to a
redemption pursuant to the Plan.
All shares under the Plan must be held in an open
(uncertificated) account. Income dividends and capital gain
distributions will be reinvested (without a sales charge) at net
asset value determined on the record date.
Since withdrawal payments represent proceeds from the
liquidation of shares, withdrawals may reduce and possibly exhaust
the value of the account, particularly in the event of a decline in
net asset value. Accordingly, the shareholder should consider
whether a Systematic Withdrawal Plan and the specified amounts to be
withdrawn are appropriate in the circumstances. The Fund and New
England Funds, L.P. make no recommendations or representations in
this regard. It may be appropriate for the shareholder to consult a
tax adviser before establishing such a plan.
It may be disadvantageous for a shareholder to purchase on a
regular basis additional Fund shares with a sales charge while
redeeming shares under a Systematic Withdrawal Plan. Accordingly,
the Fund and New England Funds, L.P. do not recommend additional
investments in the Fund by a shareholder who has a withdrawal plan in
effect and who would be subject to a sales load on such additional
investments.
Because of statutory restrictions this plan is not available to
pension or profit-sharing plans, IRAs or 403(b) plans that have State
Street Bank as trustee.
Exchange Privilege
A shareholder may exchange the shares of the Fund for Class A
shares of the same class of any other series of the Trusts (subject
to the investor eligibility requirements of the series into which the
exchange is being made) on the basis of relative net asset values at
the time of the exchange without any sales charge. You may also
elect to exchange your shares of the Fund for Class A shares of
either of the Money Market Funds. On all exchanges of Class A shares
subject to a CDSC into the Money Market Funds, the exchange stops the
aging period relating to the contingent deferred sales charge. These
options are summarized in the Prospectus. An exchange may be
effected, provided that neither the registered name nor address of
the accounts are different and provided that a certificate
representing the shares being exchanged has not been issued to the
shareholder, by (1) a telephone request to New England Funds, L.P. at
1-800-223-7124 or (2) a written exchange request to New England
Funds, P.O. Box 8551, Boston, MA 02266-8551. You must acknowledge
receipt of a current prospectus for a series before an exchange for
that series can be effected.
The investment objectives of the series of the Trusts are as follows:
Stock Funds:
New England Capital Growth Fund seeks long-term growth of
capital.
New England Value Fund seeks a reasonable long-term investment
return from a combination of market appreciation and dividend income
from equity securities.
New England Balanced Fund seeks a reasonable long-term
investment return from a combination of long-tern capital
appreciation and moderate current income.
New England Growth Opportunities Fund seeks opportunities for
long-term growth of capital and income.
New England International Equity Fund seeks total return from
long-term growth of capital and dividend income primarily through
investment in a diversified portfolio of marketable international
equity securities.
New England Star Advisers Fund seeks long-term of capital.
New England Growth Fund seeks long-term of capital through
investment in equity securities of companies whose earnings are
expected to grow at a faster rate than the U.S. economy.
Bond Funds:
New England Government Securities Fund seeks a high level of
current income consistent with safety of principal by investing in
U.S. Government securities and engaging in transactions involving
related options, futures an options on futures.
New England Limited Term U.S. Government Fund seeks a high
current return consistent with preservation of capital.
New England Adjustable Rate U.S. Government Fund seeks a high
level of current income consistent with low volatility of principal.
New England Strategic Income Fund seeks high current income with
a secondary objective of capital growth.
New England Bond Income Fund seeks a high level of current
income consistent with what the Fund considers reasonable risk. The
Bond Income Fund invests primarily in corporate and U.S. Government
bonds.
New England High Income Fund seeks high current income plus the
opportunity for capital appreciation to produce a high total return.
New England Tax Exempt Income Fund seeks as high a level of
current income exempt from federal income taxes as is consistent with
reasonable risk and protection of shareholder's' capital. The Tax
Exempt Income Fund invests primarily in debt securities, the interest
of which is, in the opinion of the debt issuer's counsel, exempt from
federal income tax ("tax exempt bonds"), and may engage in
transactions in financial futures contracts and options on futures.
New England Massachusetts Tax Free Income Fund seeks as high a
level of current income exempt from federal income tax and
Massachusetts personal income taxes as Back Bay Advisors(R), the
Fund's investment adviser, believes is consistent with preservation
of capital.
New England Intermediate Term Tax Free Fund of California seeks
as high a level of current income exempt from federal income tax and
its state personal income tax as is consistent with preservation of
capital.
New England Intermediate Term Tax Free Funds of New York seeks
as high a level of current income exempt from federal income tax and
its state personal income tax and New York City personal income tax
as is consistent with preservation of capital.
Money Market Funds:
NEW ENGLAND CASH MANAGEMENT TRUST -
Money Market Series -- maximum current income consistent with
preservation of capital and liquidity.
U.S. Government Series -- highest current income consistent
with preservation of capital and liquidity.
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST -- current income exempt
from federal income taxes consistent with preservation of capital and
liquidity.
As of May 1, 1995, the net assets of the series in the Trusts
totaled over $4.5 billion.
An exchange constitutes a sale of shares for federal income tax
purposes in which the investor may realize a long- or short-term
capital gain or loss.
Automatic Exchange Plan
As described in the Prospectus following the caption "Owning
Fund Shares", a shareholder may establish an Automatic Exchange Plan
under which shares of the Fund are automatically exchanged each month
for Class A shares of one or more of the other series in the Trusts.
Registration on all accounts must be identical. The exchanges are
made on the 15th of each month or the first business day thereafter
if the 15th is not a business day until the account is exhausted or
until New England Funds, L.P. is notified in writing to terminate the
plan. Exchanges may be made in amounts of $500 or over ($1000 for
spousal IRAs). The Service Options Form is available from New
England Funds, L.P. or your financial representative to establish an
Automatic Exchange Plan.
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REDEMPTIONS
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The procedures for redemption of shares of the Fund are
summarized in the Prospectus.
Signatures on redemption requests must be guaranteed by an
"Eligible Guarantor Institution," as defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934. However, a signature guarantee
will not be required if the proceeds of the redemption do not exceed
$100,000 and the proceeds check is made payable to the registered
owner(s) and mailed to the record address.
If you select the telephone redemption service in the manner
described in the next paragraph, shares of the Fund may be redeemed
by calling toll free 1-800-225-5478. A wire fee, currently $5.00,
will be deducted from the proceeds. Telephone redemption requests
must be received by the close of regular trading on the Exchange.
Requests made after that time or on a day when the Exchange is not
open for business cannot be accepted and a new request on a later day
will be necessary. The proceeds of a telephone withdrawal will
normally be sent on the first business day following receipt of a
proper redemption request.
In order to redeem shares by telephone, a shareholder must
either select this service when completing the Fund application or
must do so subsequently on the Service Options Form, available from
your investment dealer. When selecting the service, a shareholder
must designate a bank account to which the redemption proceeds should
be sent. Any change in the bank account so designated may be made by
furnishing to your investment dealer a completed Service Options Form
with a signature guarantee. Whenever the Service Options Form is
used, the shareholder's signature must be guaranteed as described
above. Telephone redemptions may only be made if the designated bank
is a member of the Federal Reserve System or has a correspondent bank
that is a member of the System. If the account is with a savings
bank, it must have only one correspondent bank that is a member of
the System.
The redemption price will be the net asset value per share (less
any applicable CDSC) next determined after the redemption request and
any necessary special documentation are received by State Street Bank
or your investment dealer in proper form. Payment normally will be
made by State Street Bank on behalf of the Fund within seven days
thereafter. However, in the event of a request to redeem shares for
which the Trust has not yet received good payment, the Fund reserves
the right to withhold payments of redemption proceeds if the purchase
of shares was made by a check which was deposited less than fifteen
days prior to the redemption request (unless the Fund is aware that
the check has cleared).
The Fund will normally redeem shares for cash; however, the Fund
reserves the right to pay the redemption price wholly or partly in
kind if the board of trustees determines it to be advisable and in
the interest of the remaining shareholders of the Fund. If portfolio
securities are distributed in lieu of cash, the shareholder will
normally incur brokerage commissions upon subsequent disposition of
any such securities. However, the Fund has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which the Fund is obligated
to redeem shares solely in cash for any shareholder during any 90-day
period up to the lesser of $250,000 or 1% of the total net asset
value of the Trust at the beginning of such period. The Fund does
not currently intend to impose any redemption charge (other than the
CDSC imposed by the Distributor), although it reserves the right to
charge a fee not exceeding 1% of the redemption price. A redemption
constitutes a sale of shares for federal income tax purposes on which
the investor may realize a long- or short-term capital gain or loss.
See also "Income Dividends, Capital Gain Distributions and Tax
Status," below.
Reinstatement Privilege
The Prospectus describes redeeming shareholders' reinstatement
privileges. Written notice and the investment check from persons
wishing to exercise this reinstatement privilege must be received by
your investment dealer within 120 days after the date of the
redemption. The reinstatement or exchange will be made at net asset
value next determined after receipt of the notice and the investment
check and will be limited to the amount of the redemption proceeds or
to the nearest full share if fractional shares are not purchased.
Even though an account is reinstated, the redemption will
constitute a sale for federal income tax purposes. Investors who
reinstate their accounts by purchasing shares of series in the Trusts
should consult with their tax advisers with respect to the effect of
the "wash sale" rule if a loss is realized at the time of the
redemption.
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STANDARD PERFORMANCE MEASURES
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Calculations of Yield
Calculation of Total Return. Total return is a measure of the
change in value of an investment in the Fund over the period covered,
which assumes that any dividends or capital gains distributions are
automatically reinvested in shares of the Fund rather than paid to
the investor in cash. The formula for total return used by the Fund
is prescribed by the SEC and includes three steps: (1) adding to the
total number of shares that would be purchased by a hypothetical
$1,000 investment in the Fund (with or without giving effect to the
deduction of sales charge or CDSC, if applicable) all additional
shares that would have been purchased if all dividends and
distributions paid or distributed during the period had been
automatically reinvested; (2) calculating the value of the
hypothetical initial investment as of the end of the period by
multiplying the total of shares owned at the end of the period by the
net asset value per share on the last trading day of the period; (3)
dividing this account value for the hypothetical investor by the
amount of the initial investment, and annualizing the result for
periods of less than one year. Total return may be stated with or
without giving effect to any expense limitations in effect for the
Fund.
Performance Comparisons
The Fund may from time to time include its total return in
advertisements or in information furnished to present or prospective
shareholders. The Fund may from time to time include in
advertisements its total return and the ranking of those performance
figures relative to such figures for groups of mutual funds
categorized by Lipper Analytical Services as having similar
investment objectives.
Total return may also be used to compare the performance of the
Fund against certain widely acknowledged standards or indices for
stock and bond market performance or against the U.S. Bureau of Labor
Statistics' Consumer Price Index.
The Standard & Poor's Composite Index of 500 Stocks (the "S&P
500") is a market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of
common stocks of companies listed on the Exchange, although the
common stocks of a few companies listed on the American Stock
Exchange or traded over-the-counter are included. The 500 companies
represented include 400 industrial, 60 transportation and 40
financial services concerns. The S&P 500 represents about 80% of the
market value of all issues traded on the Exchange.
The Dow Jones Industrial Average is a market value-weighted and
unmanaged index of 30 large industrial stocks traded on the Exchange.
The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the
prices of goods and services in major expenditure groups.
Lipper Analytical Services, Inc. is an independent service that
monitors the performance of over 1,300 mutual funds, and calculates
total return for the funds grouped by investment objective.
Articles and releases, developed by the Fund and other parties,
about the Fund regarding performance, rankings, statistics and
analyses of the Fund and the fund group's asset levels and sales
volumes, numbers of shareholders in the Fund or in the aggregate for
New England Funds, statistics and analyses of industry sales volumes
and asset levels, and other characteristics may appear in
advertising, promotional literature, publications and on various
computer networks, including, but not limited to, those publications
and computer networks listed in Appendix B to this Statement. In
particular, some or all of these publications may publish their own
rankings or performance reviews of mutual funds, including the Fund.
References to or reprints of such articles may be used in the Fund's
advertising and promotional literature. Such advertising and
promotional material may refer to NEIC, its structure, goals and
objectives and the advisory subsidiaries of NEIC, including their
portfolio management responsibilities, portfolio managers and their
categories and background; their tenure, styles and strategies and
their shared commitment to fundamental investment principles and may
identify specific clients, as well as discuss the types of
institutional investors who have selected the advisers to manage
their investment portfolios and the reasons for that selection. The
references may discuss the independent, entrepreneurial nature of
each advisory organization and allude to or include excerpts from
articles appearing in the media regarding NEIC, its advisory
subsidiaries and their personnel.
The Fund may use the accumulation charts below in its
advertisements to demonstrate the benefits of monthly savings at an
8% and 10% rate of return, respectively.
Investments At 8% Rate of Return
5 yrs. 10 15 20 25 30
$ 50 3,698 9,208 17,417 29,647 47,868 75,015
75 5,548 13,812 26,126 44,471 71,802 112,522
100 7,396 18,417 34,835 59,295 95,737 150,029
150 11,095 27,625 52,252 88,942 143,605 225,044
200 14,793 36,833 69,669 118,589 191,473 300,059
500 36,983 92,083 174,173 296,474 478,683 750,148
Investments At 10% Rate of Return
5 yrs. 10 15 20 25 30
$ 50 3,904 10,328 20,896 38,285 66,895 113,966
75 5,856 15,491 31,344 57,427 100,342 170,949
100 7,808 20,655 41,792 76,570 133,789 227,933
150 11,712 30,983 62,689 114,855 200,684 341,899
200 15,616 41,310 83,585 153,139 267,578 455,865
500 39,041 103,276 208,962 382,848 668,945 1,139,663
The Fund's advertising and sales literature may refer to
historical, current and prospective economic trends and may include
historical and current performance and total returns of investment
alternatives to the New England Funds. Articles, releases,
advertising and literature may discuss the range of services offered
by the Trusts and New England Funds, L.P., as distributor and
transfer agent of the Fund, with respect to investing in shares of
the Fund and other series of the Trusts and customer service. Such
materials may discuss the multiple classes of shares available
through the Trusts and their features and benefits, including the
details of the pricing structure.
Advertising and sales literature may also refer to the beta
coefficient of the New England Funds. A beta coefficient is a
measure of systematic or undiversifiable risk of a stock. A beta
coefficient of more than 1 means that the company's stock has shown
more volatility than the market index (e.g., Standard & Poor's 500)
to which it is being related. If the beta is less than 1, it is less
volatile than the market average to which it is being compared. If
it equals 1, its risk is the same as the market index. High
variability in stock price may indicate greater business risk,
instability in operations and low quality of earnings. The beta
coefficients of the New England Funds may be compared to the beta
coefficients of other funds.
The Fund may enter into arrangements with banks exempted from
registration under the Securities Exchange Act of 1934. Advertising
and sales literature developed to publicize such arrangements will
explain the relationship of the bank to New England Funds and New
England Funds, L.P. as well as the services provided by the bank
relative to the Fund. The material may identify the bank by name and
discuss the history of the bank including, but not limited to, the
type of bank, its asset size, the nature of its business and services
and its status and standing in the industry.
In addition, sales literature may be published concerning topics
of general investor interest for the benefit of registered
representatives and the Fund's prospective shareholders. These
materials may include, but are not limited to, discussions of college
planning, retirement planning, reasons for investing and historical
examples of the investment performance of various classes of
securities, securities markets and indices.
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INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
- ---------------------------------------------------------------------
As described in the Fund's prospectus, it is the policy of the
Fund to pay its shareholders, as dividends, substantially all net
investment income and to distribute annually all net realized capital
gains, if any, after offsetting any capital loss carryovers.
Income dividends and capital gain distributions are payable in
full and fractional shares of the Fund based upon the net asset value
determined as of the close of the Exchange on the record date for
each dividend or distribution. Shareholders, however, may elect to
receive their income dividends or capital gain distributions, or
both, in cash. The election may be made at any time by submitting a
written request directly to New England Funds. In order for a change
to be in effect for any dividend or distribution, it must be received
by New England Funds on or before the record date for such dividend
or distribution.
As required by federal law, detailed federal tax information
will be furnished to each shareholder for each calendar year on or
before January 31 of the succeeding year.
The Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Code. In order to qualify, the
Fund must, among other things (i) derive at least 90% of its gross
income from dividends, interest, payments with respect to certain
securities loans, gains from sale of securities or foreign
currencies, or other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies; (ii)
derive less than 30% of its gross income from gains from the sale or
other disposition of securities held for less than three months;
(iii) distribute at least 90% of its dividend, interest and certain
other taxable income each year; and (iv) at the end of each fiscal
quarter maintain at least 50% of the value of its total assets in
cash, government securities, securities of other regulated investment
companies, other securities of issuers which represent, with respect
to each issuer, no more than 5% of the value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer,
and with no more than 25% of its assets invested in the securities
(other than those of the U.S. government or other regulated
investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or
related trades and businesses. To the extent it qualifies for
treatment as a regulated investment company, the Fund will not be
subject to federal income tax on income paid to its shareholders in
the form of dividends or capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess,
if any, of the Fund's "required distribution" over its actual
distributions in any calendar year. Generally, the "required
distribution" is 98% of the Fund's ordinary income for the calendar
year plus 98% of its capital gain net income recognized during the
one-year period ending on October 31 (or December 31, if the Fund so
elects) plus undistributed amounts from prior years. The Fund
intends to make distributions sufficient to avoid imposition of the
excise tax. Distributions declared by the Fund during October,
November or December to shareholders of record on a date in any such
month and paid by the Fund during the following January will be
treated for federal tax purposes as paid by the Fund and received by
shareholders on December 31 of the year in which declared.
Shareholders of the Fund will be subject to federal income taxes
on distributions made by the Fund whether received in cash or
additional shares of the Fund. Distributions by the Fund of net
income and short-term capital gains, if any, will be taxable to
shareholders as ordinary income. Distributions of long-term capital
gains, if any, will be taxable to shareholders as long-term capital
gains, without regard to how long a shareholder has held shares of
the Fund. A loss on the sale of shares held for 12 months or less
will be treated as a long-term capital loss to the extent of any long-
term capital gain dividend paid to the shareholder with respect to
such shares.
Dividends and distributions on Fund shares received shortly
after their purchase, although in effect a return of capital, are
subject to federal income taxes.
The Fund's transactions, if any, in foreign currencies are
likely to result in a difference between the Fund's book income and
taxable income. This difference may cause a portion of the Fund's
income distributions to constitute a return of capital for tax
purposes or require the Fund to make distributions exceeding book
income to avoid excise tax liability and to qualify as a regulated
investment company.
The Fund may limit its investments in certain "passive foreign
investment companies" in order to avoid certain taxes that arise as a
result of such investments.
Redemptions and exchanges of Fund shares are taxable events and,
accordingly, shareholders may realize gains and losses on these
transactions. If shares have been held for more than one year, gain
or loss realized will be long-term capital gain or loss, provided the
shareholder holds the shares as a capital asset. However, if a
shareholder sells Fund shares at a loss within six months after
purchasing the shares, the loss will be treated as a long-term
capital loss to the extent of any long-term capital gain
distributions received by the shareholder. Furthermore, no loss will
be allowed on the sale of Fund shares to the extent the shareholder
acquired other shares of the same Fund within 30 days prior to the
sale of the loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations currently
in effect. For the complete provisions, reference should be made to
the pertinent Code sections and regulations. The Code and
regulations are subject to change by legislative or administrative
actions.
Dividends and distributions also may be subject to state and
local taxes. Shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income
tax law. Non-U.S. investors should consult their tax advisers
concerning the tax consequences of ownership of shares of the Fund,
including the possibility that distributions may be subject to a 30%
United States withholding tax (or a reduced rate of withholding
provided by treaty).
<PAGE>
FINANCIAL STATEMENTS
NEW ENGLAND FUNDS TRUST III
Statement of Assets & Liabilities
November 15, 1995
ASSETS
Cash............................................. $100,000
Deferred Organizational Expenses................. 20,000
---------
Total Assets................................ 120,000
LIABILITIES
Accrued Expenses................................. 20,000
---------
Net Assets.................................. $100,000
=========
Shares of beneficial interest, no par value,
outstanding...................................... 8,000
=========
Computation of net asset value and offering
price:
Net asset value and redemption price per share
($100,000 divided by 8,000 shares of beneficial
interest)........................................ $12.50
=========
Offering price per share ( $12.50 x 100/94.25)*.. $13.26*
=========
* Based upon single purchases of less than $50,000.
Reduced sales charges apply for purchases in excess of
this amount.
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. New England Funds Trust III (the "Trust") consisting of a
single series of shares, New England Equity Income Fund, was organized
on August 22, 1995 and had no operations prior to November 15, 1995
other than those relating to organizational matters, including the
sale of 8000 shares of beneficial interest to Loomis Sayles & Company.
Costs incurred and to be incurred in connection with the Trust's
organization and registration, up to $25,000, will be paid by the
Trust and amortized over the period of benefit, not to exceed 60
months from the date the Trust commences operations. Loomis Sayles
Funded Pension Plan and Trust has agreed that in the event any of the
initial shares in the Trust during such period are redeemed, proceeds
of the redemption will be reduced by the pro rata portion of any
unamortized organizational expenses in the same proportion as the
number of the initial shares redeemed bears to the number of initial
shares held at the time of redemption. To the extent that the
proceeds of the redemption are less than such pro rata portion of any
unamortized organizational expenses, Loomis Sayles Funded Pension Plan
and Trust has agreed to reimburse the Trust promptly.
2. For details regarding the Trust's investment advisory
agreement, see "Fund Charges and Expenses - Investment Advisory Fees"
and "Management of the Trust - Advisory Agreements" and for details
regarding the income tax status of the Trust, see "Income Dividends,
Capital Gain Distributions and Tax Status" elsewhere in this Statement
of Additional Information.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders
of New England Funds Trust III
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of
the New England Funds Trust III, consisting of a single series of
shares, New England Equity Income Fund, at November 21, 1995 in
conformity with generally accepted accounting principles. This
financial statement is the responsibility of the Fund's management;
our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this
financial statement in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/PRICE WATERHOUSE LLP
Price Waterhouse LLP
Boston, Massachusetts
November 21, 1995
<PAGE>
- ---------------------------------------------------------------------
APPENDIX A
- ---------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group
AAA
This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest
and repay principal.
AA
Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay interest and repay principal is very strong, and in
the majority of instances they differ from AAA issues only in small
degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to repay
principal and pay interest for bonds in this category than for bonds
in higher rated categories.
BB, B, CCC, CC, C
Bonds rated BB, B, CCC, CC and C are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
CI
The rating CI is reserved for income bonds on which no interest is
being paid.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or Minus (-); The ratings from "AA' to "B" may be modified
by the addition of a plus or minus sigh to show relative standing
within the major rating categories.
Moody's Investors Service, Inc.
Aaa
Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large, or by an exceptionally stable, margin, and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds that are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present that make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to
impairment sometime in the future.
Baa
Bonds that are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, if fact, have
speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long period
of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default of there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Should no rating be assigned by Moody's, the reason may be one of the
following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there
is not longer available reasonable up-to-date data to permit a
judgment to be formed; if a bond is called for redemption; or for
other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated
by the symbols Aa1, A1, Baa1, and B1.
- ---------------------------------------------------------------------
APPENDIX B
- ---------------------------------------------------------------------
PUBLICATIONS THAT MAY BE REFERRED TO IN TRUST ADVERTISEMENTS AND
SALES LITERATURE
ABC and affiliates
Adam Smith's Money World
America On Line
Anchorage Daily News
Atlanta Constitution
Atlanta Journal
Arizona Republic
Austin American Statesman
Baltimore Sun
Barron's
Bergen County Record (NJ)
Bloomberg Business News
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Financial News Network
Financial Planning
Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the) Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Advisor
Investment Company Institute
Investment Dealers Digest
Investment Profiles
Investment Vision
Investor's Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
LA Times
Leckey, Andrew (syndicated column)
Lear's
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
New York Times
Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UPI
US News and World Report
USA Today
USA TV Network
Value Line
Wall St. Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ
WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
Worth Magazine
WRKO
